Sadot Group Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Preliminary Note The following Management’s Discussion and Analysis (“MD&A”), prepared as of May 15, 2026, should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Sadot Group Inc. (“Sadot Group”), for the three months ended March 31, 2026, together with the audited financial statements of the Company for the year ended December 31, 2025 and the accompanying MD&A for that fiscal year appearing in our Annual Report on 2024 Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 29, 2026. Unless otherwise indicated or the context otherwise requires, all references to the terms “Company,” “company,” “Sadot”, “we,” “us,” “our”, “Group” and similar terms refer to Sadot Group Inc., together with its consolidated subsidiaries. Our website address is http://sadotgroupinc.com. The information on, or that can be accessed through, our website is not part of this Report. The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are also available to the public through the SEC’s website at www.sec.gov. This MD&A is the responsibility of management. Prior to its release, the Company’s Board of Directors (the “Board”) approved this MD&A on the Audit Committee’s recommendation. The Company presents its financial statements in U.S. Dollars. Amounts in this MD&A are stated in U.S. Dollars unless otherwise indicated. Forward-Looking Statements This Report contains forward-looking statements as defined in the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance. These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of Sadot Group Inc’s management’s control. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “forecast,” “model,” “proposal,” “should,” “may,” “intend,” “estimate,” and “continue,” and similar expressions (or the negative versions of such words or expressions), are intended to identify forward-looking statements. These forward-looking statements include, without limitation, information concerning Sadot’s possible or assumed future results of operations, business strategies, debt levels, competitive position, industry environment and possible growth opportunities. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Reference is made to “Factors That May Affect Future Results and Financial Condition” in this Item 2 for a discussion of some of the uncertainties, risks and assumptions associated with these statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements except as required by law. OVERVIEW Sadot Group Inc. is our parent company and is headquartered in Burleson, Texas. During the three months ended March 31, 2026, we reported zero commodity sales revenue compared to $132.2 million in the prior-year period. This reflects the significant streamlining of our operations, including the closure of certain international offices and the completion of the sale of our Sadot Food Services segment on December 4, 2025. 43 As of March 31, 2026, Sadot Group consisted of one distinct operating unit and one discontinued operation. ● Sadot LLC (“Sadot Agri-Foods”): Sadot Group’s operating unit was intended to be a global Agri-Foods company engaged in farming, commodity trading and shipping of food and feed (e.g., soybean meal, wheat and corn) via dry bulk cargo ships across the globe. Sadot Agri-Foods competes with the ABCD commodity companies (ADM, Bunge, Cargill, Louis-Dreyfus) as well as many regional organizations. Sadot Agri-Foods operates, through a majority owned subsidiary, a roughly 5,000 acre farm in Zambia with a focus on major commodities such as wheat, soy and corn alongside high-value tree crops such as avocado and mango. A default judgment related to the farm was issued during the fourth quarter of 2025. While the company has appealed this ruling, it has recognized an impairment of $11.8 million on the Zambia farm to reflect the associated financial impact. In addition, the Company had a deposit on farmland in Indonesia which was written off during the fourth quarter of 2025. Sadot Agri-Foods was formed as part of the Company’s diversification strategy to own and operate, through its subsidiaries, the business lines throughout the food supply chain. Our business involved farming, commodity trading, and shipping of food and feed products, such as soybean meal, wheat, and corn, via dry bulk cargo ships across global markets. We have recently encountered substantial operational issues that have severely impacted our ability to conduct these activities effectively. These challenges include, but are not limited to, disruptions in our supply chain, such as delays in sourcing raw materials, logistical bottlenecks in shipping and transportation, and inefficiencies in our farming operations due to difficult regulatory environments including a legal system, adverse weather conditions, labor shortages, inefficient regulatory environments, various court proceedings or equipment failures. Additionally, geopolitical tensions, trade restrictions, fluctuating commodity prices, and increased competition in the agri-foods sector have compounded these issues, leading to halted or suspended trading activities and an inability to fulfill contracts or secure new ones. Between November 2022 and October 2025, Aggia LLC FZ (“Aggia”) was providing consultancy in connection with the food supply chain activities which were designed to become the most important focus of the Company. However, as a result of disappointing performances in 2025, the Company decided to end the relationship with Aggia. On November 20, 2025, the Company entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with Aggia. Pursuant to the Settlement Agreement, the Company and Aggia agreed to terminate the Services Agreement dated as of November 14, 2022, as amended (collectively, the “Agreement Documents”), and to fully settle, compromise, and discharge all claims, debts, obligations, and liabilities arising out of or related to the Agreement Documents. The Company is assessing the potential business opportunities surrounding supply chain, before making any decisions as to whether the Company wants to engage a replacement to the services previously provided by Aggia. ● In 2025, the Company sold the assets relating to its U.S.-centric restaurant business. Sadot Restaurant Group, LLC (“Sadot Food Services”) held three concepts, including two fast casual restaurant concepts, Pokémoto and Muscle Maker Grill. During 2024, the Company operated a subscription-based fresh prep meal concept, SuperFit Foods, which was sold in August 2024. Throughout 2024 the remaining corporate owned restaurants were sold and converted into franchise locations or closed. On December 4, 2025, the Company and its wholly-owned subsidiaries, Pokemoto LLC, Poke Co Holdings, LLC, and Muscle Maker Development, LLC (collectively, the “Sellers”), completed the sale of substantially all of the assets related to the Pokemoto and Muscle Maker Grill franchise businesses (the “Business”) to MARV Brands of America LLC, a Delaware limited liability company, and MARV Brands Inc., an Ontario business corporation (collectively, the “Buyers”), pursuant to an Asset Purchase Agreement dated December 4, 2025 (the “Purchase Agreement”). Under the terms of the Purchase Agreement, the Buyers acquired the assets of the Business, including franchise agreements, intellectual property (such as trademarks, recipes, operations manuals, and brand standards), inventory, marketing funds, gift card balances, and other related assets, for a total purchase price of $2,900,000 (the “Purchase Price”). The Purchase Price consisted of: (i) a $100,000 earnest money deposit previously paid by the Buyers; (ii) $2,600,000 paid at closing; and (iii) a $200,000 holdback amount (the “Holdback Amount”) payable subject to certain conditions, including the delivery of specified missing franchise and transfer agreements as outlined in a side letter agreement dated December 4, 2025 (the “Side Letter”). The Holdback Amount is contingent upon the Sellers delivering fully executed copies of various missing agreements on or before the holdback payment date. The deadline for delivery has lapsed and the Company has not delivered all required agreements. Accordingly, the $200,000 holdback receivable has been written off as of December 31, 2025. In connection with the closing, the parties also executed a Trademark Assignment Agreement dated December 4, 2025, pursuant to which the Company and Pokemoto LLC assigned all trademarks related to the Business to MARV Brands Inc. The transaction closed on December 4, 2025, and the Company received the closing payment in accordance with the wire instructions. The sale allowed the Company to divest its franchise restaurant operations and further focus on its agri-food operations. Please see Note 4 – Assets held for sale and Note 5 – Discontinued operations for further details. 44 Key Financial Definitions We review a number of financial and operating metrics, including the following key metrics and non-GAAP measures, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Governmental and other economic factors affecting our operations may vary. Three Months Ended March 31, 2026 2025 $’000 $’000 Commodity sales — 132,168 Cost of goods sold — (126,156 ) Gross profit / (loss) — 6,012 Depreciation and amortization expenses — (27 ) Stock-based expenses (359 ) (1,428 ) Sales, general and administrative expenses (2,166 ) (3,081 ) (Loss) / Income from operations (2,525 ) 1,476 EBITDA (3,034 ) 2,388 EBITDA attributable to Sadot Group Inc. (3,034 ) 2,506 Our key business and financial metrics are explained in detail below. Revenues Our revenues have historically been derived from Commodity sales. Revenues from commodity sales have declined substantially since Q2 2025. We generated no commodity sales revenue in the first quarter of 2026 as we continue to evaluate and streamline our agri-food operations following the divestiture of our food services business and the adverse judgment regarding our Zambia farm operations. The business has experienced significant trading difficulties around capital to support new trades, disputes on settlement of existing trades and a number of legal disputes on historic trades. Following the financial performance during the third quarter of 2025, management of the Company began evaluating alternative business lines to address this situation. All options are being assessed. The management continues to focus on monetizing the current assets of Sadot Agri-Foods as efficiently as possible. It should be highlighted that the risk of future impairments on current assets is a possibility going forward. Impairments on assets of the Trading business cannot be excluded in the near future or in the long run. Cost of Goods Sold Cost of goods sold includes commodity costs, labor, rent and other operating expenses. Depreciation and Amortization Expenses Depreciation and amortization expenses primarily consist of the depreciation of property and equipment. 45 Stock-Based Expenses Stock-based expenses include all expenses that are paid with stock. For the periods ended March 31, 2026 and 2025, $0.4 million and $1.4 million, respectively, are recorded as Stock-based expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive (Loss) / Income. Sales, General and Administrative Expenses Sales, general and administrative expenses include expenses associated with corporate and administrative functions that support our operations, including wages, benefits, travel expense, legal and professional fees, training, investor relations and other corporate costs. We incur incremental Sales, general and administrative expenses as a result of being a publicly listed company on the NASDAQ capital market. Other (Expense) / Income Total Other (expense) / income listed below the Loss from operations in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive (Loss) / Income consists of Change in fair value of stock-based compensation, loss on debt extinguishment and Interest expense, net. Loss on debt extinguishment Loss on debt extinguishment consist of the loss related to the exchange of stock for debt repayment, which is calculated using the variance between the agreed upon price per share of stock and the fair value of the stock on the date of the exchange and the gain recognized due to writing off accounts payable that have passed the statue of limitations and no longer deemed payable. Income Tax Benefit / (Expense) Income tax benefit / (expense) represent federal, state and local current and deferred income tax expense. Net Income (Loss) Attributable to Non-controlling Interests Net loss attributable to non-controlling interests was nil and $0.1 million for the periods ended March 31, 2026 and 2025, respectively. During the year ended December 31, 2023 the Company created a joint-venture in Zambia in which the Company has a 70% interest and the third-party equity ownership has a 30% Non-controlling interest. As described above, following the December 11, 2025 judgment by the High Court for Zambia, the Company lost possession, control, and ownership of the underlying farmland assets, which have been fully impaired. However, the Company retains a controlling interest in the Zambian entity, and therefore continues to consolidate the entity. The Company is appealing the judgment. Non-GAAP Measures EBITDA and EBITDA Margin are non-GAAP measures. We define EBITDA as Net loss, adjusted for depreciation, amortization, interest income / (expense), and income taxes. We believe that EBITDA and EBITDA Margin, (collectively, the “Non-GAAP Measures”) are useful metrics for investors to understand and evaluate our operating results and ongoing profitability because they permit investors to evaluate our recurring profitability from our ongoing operating activities. EBITDA and EBITDA Margin, have certain limitations, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under U.S. GAAP. We caution investors that amounts presented in accordance with our definitions of any of the Non-GAAP Measures may not be comparable to similar measures disclosed by other issuers, because some issuers calculate certain of the Non-GAAP Measures differently or not at all, limiting their usefulness as direct comparative measures. 46 Reconciliations of EBITDA and Other Non-GAAP Measures The following table presents a reconciliation of EBITDA from the most comparable U.S. GAAP measure, Net income and the calculations of the Net income Margin and EBITDA Margin for the three months ended March 30, 2026 and 2025: Three Months Ended March 31, 2026 2025 $’000 $’000 Net (Loss) / Income (4,868 ) 820 Adjustments to EBITDA: Depreciation and amortization expenses — 27 Interest expense, net 1,834 1,541 Income tax expense — — EBITDA (3,034 ) 2,388 EBITDA attributable to non-controlling interest — 118 EBITDA attributable to Sadot Group Inc. (3,034 ) 2,506 Gross profit / (loss) — 6,012 Gross profit / (loss) attributable to Sadot Group Inc. — 6,130 Net income/ (loss) margin attributable to Sadot Group Inc. N/A 0.6 % EBITDA margin attributable to Sadot Group Inc. N/A 1.9 % 47 Unaudited Condensed Consolidated Results of Operations - Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025 The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive (Loss) / Income for the three months ended March 31, 2026 and 2025, respectively: Three Months Ended March 31, Variance 2026 2025 $ % $’000 $’000 $’000 Commodity sales — 132,168 (132,168 ) (100.0 )% Cost of goods sold — (126,156 ) 126,156 (100.0 )% Gross profit / (loss) — 6,012 (6,012 ) (100.0 )% Depreciation and amortization expenses — (27 ) 27 (100.0 )% Stock-based expenses (359 ) (1,428 ) 1,069 (74.9 )% Sales, general and administrative expenses (2,166 ) (3,081 ) 915 (29.7 )% (Loss) / Income from operations (2,525 ) 1,476 (4,001 ) (271.1 )% Interest expense, net (1,834 ) (1,541 ) (293 ) 19.0 % Loss on impairment (93 ) — (93 ) NM Loss on litigation (125 ) — (125 ) NM Loss on debt extinguishment (262 ) — (262 ) NM Change in fair value of stock-based compensation — 778 (778 ) (100.0 )% (Loss) / Income for continuing operations before income tax (4,839 ) 713 (5,552 ) (778.7 )% Income tax expense — — — NM Net (Loss) / Income for continuing operations (4,839 ) 713 (5,552 ) (778.7 )% Net (Loss) / Income for discontinued operations (29 ) 107 (136 ) (127.1 )% Net loss attributable to non-controlling interest — 118 (118 ) (100.0 )% Net (Loss) / Income attributable to Sadot Group Inc. (4,868 ) 938 (5,806 ) (619.0 )% NM= not meaningful Gross Profit / (Loss) Three Months Ended March 31, Variance 2026 2025 $ % $’000 $’000 $’000 Commodity sales — 132,168 (132,168 ) (100.0 )% Cost of goods sold — (126,156 ) 126,156 (100.0 )% Gross profit / (loss) — 6,012 (6,012 ) (100.0 )% NM= not meaningful Our gross (loss) profit totaled nil for the three months ended March 31, 2026, compared to $6.0 million profit for the three months ended March 31, 2025. The $6.0 million decrease is primarily attributed to a decrease in Commodity sales partially offset by a decrease in Cost of goods sold. We generated Commodity sales of nil for the three months ended March 31, 2026, compared to $132.2 million for the three months ended March 31, 2025. This represented a decrease of $132.2 million. This decrease is due to Sadot Agri Foods being unable to enter into additional trades because of lack of working capital. 48 Cost of goods sold for the three months ended March 31, 2026, totaled nil compared to $126.2 million for the three months ended March 31, 2025. The $126.2 million or 100.0% change is a direct result of the decrease in sales. Depreciation and Amortization Expenses Three Months Ended March 31, Variance 2026 2025 $ % $’000 $’000 $’000 Depreciation and amortization expenses — (27 ) (27 ) (100.0 )% Depreciation and amortization expenses for the three months ended March 31, 2026, totaled nil compared to $27.0 thousand, for the three months ended March 31, 2025. The $27.0 thousand decrease is attributed to Farm related assets being fully depreciated in 2024 and the loss of the corporate office lease and furniture in Burleson. Stock-Based Expenses Three Months Ended March 31, Variance 2026 2025 $ % $’000 $’000 $’000 Stock-based expenses (359 ) (1,428 ) 1,069 (74.9 )% Stock-based expenses for the three months ended March 31, 2026, totaled $0.4 million compared to $1.4 million for the three months ended March 31, 2025. The decrease in Stock-based expenses is primarily the result of the termination of the service agreement with Aggia entered in November 2025. Sales, General and Administrative Expenses Three Months Ended March 31, Variance 2026 2025 $ % $’000 $’000 $’000 Sales, general and administrative expenses (2,166 ) (3,081 ) 915 29.7 % Sales, general and administrative expenses for the three months ended March 31, 2026, totaled $2.2 million compared to $3.1 million for the three months ended March 31, 2025. The $1.0 million decrease was primarily attributable to lower personnel-related costs resulting from a reduced staff count, as well as reduced operating and consulting expenses due to Sadot Agri-Foods being unable to enter into additional trades because of limited working capital availability. Other Income / (Expense) Three Months Ended March 31, Variance 2026 2025 $ % $’000 $’000 $’000 Total other income / (expense), net (2,314 ) (763 ) (1,551 ) 203.3 % Other income for the three months ended March 31, 2026, totaled $2.3 million expense compared to $0.8 million expense for the three months ended March 31, 2025. The other income was primarily attributable to the recognition of impairment of assets of $0.1 million, loss on litigation of $0.1 million, loss on debt extinguishment of $0.3 million, all of which were not present in the prior year, partially offset by a $0.3 million increase in Interest expense, net and $0.8 million decrease in change in fair value of stock-based compensation due to termination of agreement with Aggia. 49 Liquidity and Capital Resources As of March 31, 2026, we had a working capital deficit of $57.8 million (an increase of $3.0 million from $54.8 million at December 31, 2025) and cash of $0.68 million. Current liabilities significantly exceed current assets, driven primarily by $49.0 million in accounts payable and accrued expenses and $11.1 million in notes payable (net of discount). Substantially all of our outstanding debt obligations matured on December 31, 2025 and remain unpaid, placing us in default. These defaults, together with the working-capital deficit, raise substantial doubt about our ability to continue as a going concern within one year after the date these financial statements are issued. See Note 2 to the condensed consolidated financial statements for additional information. On May 5, 2026, we received a notice from Nasdaq indicating that we no longer satisfy the minimum shareholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1). We intend to submit a compliance plan within the required 45-day period and are evaluating strategic options to regain compliance. Working Capital We measure our liquidity in a number of ways, including the following: As of March 31, 2026 December 31, 2025 $’000 $’000 Cash 679 653 Accounts Receivable, net — 383 Other current assets (1) 1,697 1,721 Total current assets 2,376 2,757 Accounts payable and accrued expenses 48,961 47,335 Notes payable, net 11,072 10,196 Other current liabilities (2) 94 27 Total current liabilities 60,127 57,558 Working capital (3) (57,751 ) (54,801 ) Current ratio (4) 0.04 0.05 (1) Consists of VAT, prepaid expenses, and current notes receivable. (2) Consists of Operating lease liability and other current liabilities (3) Working Capital is defined as Total current assets less Total current liabilities (4) Current ratio is defined as Total current assets divided by Total current liabilities Availability of Additional Funds Our main financial objectives are to prudently manage financial risk, ensure access to liquidity and minimize cost of capital in order to efficiently finance our business and maintain balance sheet strength. We generally finance our ongoing operations with cash flows generated from operations, borrowings under various credit facilities and term loans. 50 At March 31, 2026, current ratio, which equals Total current assets divided by Total current liabilities, was 0.04, a decrease of 0.01, compared to current ratio of 0.05 at December 31, 2025. At March 31, 2026, working capital (deficit), which equals Total current assets less Total current liabilities, was $(57.8) million, an increase of $3.0 million, compared to working capital deficit of $(54.8) million at December 31, 2025. The decrease in current ratio and working capital was primarily due to an increase in accounts payable, a decrease in net accounts receivable due to large allowances, partially offset by a decrease in other current asset and an increase in other current liabilities. While the Company maintains a base of current assets, including inventories and receivables, the timing and certainty of converting these assets into cash has presented operational challenges and led the business to increase borrowing to cover collection delays. During the three months ended March 31, 2026 the company increased its net borrowing by $0.9 million. The Company is currently experiencing delays in converting receivables into cash, which has impacted the timing of available liquidity. Management continues to actively manage collections, review credit facilities, and negotiate repayment arrangements with certain creditors to support liquidity requirements. The Company is required to obtain additional financing—whether through borrowings, private placements, public offerings, or strategic transactions such as mergers or asset sales. There can be no assurance that such efforts will be successful. Failure to obtain adequate funding could require us to sell one or more business lines or assets, enter into a business combination, or reduce or cease operations. Any such transactions, to the extent available, could result in significant dilution to existing shareholders or the loss of their investment in our Company. We will need to raise additional capital. Such additional capital may not be available nor may the terms of such capital be generally acceptable. In addition, any future sale of our equity securities could dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Any failure to raise additional funds on favorable terms could have a material adverse effect on our liquidity and financial condition. Management has performed a going concern assessment covering a period of twelve months from the issuance date of these condensed consolidated financial statements. While there is no assurance that existing borrowings and the equity line of credit will provide sufficient funding to support operations for the full assessment period, management believes it remains appropriate to prepare the financial statements on a going-concern basis. Management believes the actions described above, if successfully executed, will provide sufficient liquidity to meet obligations as they become due. However, there can be no assurance that such plans will be realized or that additional financing will be available on acceptable terms. Accordingly, substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued. The accompanying unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Helena Purchase Agreement Impact on Liquidity The September 23, 2025 Helena Purchase Agreement provides potential access to up to $10 million but carries material cash obligations: $100,000 liquidated damages per 30-day period if the $2 million Threshold Amount is not met within six months of registration effectiveness, plus 2.0% monthly penalties for registration delays. These cash payments, combined with the Company’s negative working capital ($(6,982) thousand as of December 31, 2025 and debt maturities, increase liquidity pressure. The registration statement was initially filed but subsequently withdrawn. The original filing deadline was October 8, with the Form S-1 ultimately filed on November 14 and an effectiveness deadline of December 23. As a result of not meeting the required timelines, a penalty equal to 2% of the commitment amount was incurred, payable on the date of the triggering event and continuing on a monthly basis thereafter. As of March 31, 2026, the Company has accrued approximately $1.2 million related to these penalties, which is included in accrued expenses. 51 Settlement Agreement Impact on Capital Resources On November 20, 2025, the Company entered into a settlement agreement with Aggia LLC FZ that requires a cash payment of $75,000 and the issuance of 1,050,000 shares of common stock. The Company has issued 257,000 shares to date, with the remaining 793,000 shares subject to shareholder approval under Nasdaq Rule 5635(d). As of December 31, 2025, the Company has accrued a liability for the remaining 793,000 shares within accrued expenses. The settlement also resulted in the cancellation of outstanding promissory notes previously issued to Aggia. From a liquidity perspective, the settlement required a modest cash outflow of $75,000, with no additional contractual cash obligations, and therefore does not represent a significant ongoing use of cash resources. However, the settlement impacts capital resources by reducing outstanding debt obligations through the cancellation of the promissory notes and increasing reliance on equity-based financing. The issuance of the remaining shares will result in dilution to existing shareholders and may impact the Company’s ability to raise additional equity capital. Subsequent to March 31, 2026, the Company received shareholder approval for the issuance of the remaining 793,000 shares, satisfying the approval requirement under Nasdaq Rule 5635(d). Sources and Uses of Cash for the Three Months Ended March 31, 2026 and 2025 For the three months ended March 31, 2026, Net cash used in operating activities from continuing operation was $0.8 million compared to $3.0 million provided by operating activities for the three months ended March 31, 2025. Net cash used in operating activities from discontinued operations was nil and Net cash provided by operating activities from discontinued operations was $8.0 thousand, respectively, for the three months ended March 31, 2026 and 2025. Our Net cash used for the three months ended March 31, 2026, was primarily attributable to our Net loss of $4.9 million, adjusted for net non-cash income in the aggregate amount of $0.8 million and $3.3 million of Net cash used by changes in the levels of operating assets and liabilities. Our Net cash provided for the three months ended March 31, 2025, was primarily attributable to our Net income of $0.8 million, adjusted for net non-cash income in the aggregate amount of $19.8 million and $23.6 million of Net cash used in changes in the levels of operating assets and liabilities. For the three months ended March 31, 2026 and 2025, Net cash used in investing activities was nil. Net cash provided by investing activities from discontinued operations for the three months ended March 31, 2026 and 2025 was nil and $1.0 million. For the three months ended March 31, 2026, Net cash provided by financing activities from continuing operations was $0.8 million, consisting of proceeds from notes payable of $1.0 million, partially offset by repayments of various other notes payable of $0.2 million. Net cash used in financing activities from discontinued operations was nil and $20.0 thousand, respectively, for the three months ended March 31, 2026 and 2025. For the three months ended March 31, 2025, Net cash used in financing activities was $3.1 million, consisting of repayments of various other notes payable of $1.5 million partially offset by $4.6 million of proceeds from notes payable. Critical Accounting Policies and Estimates We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of the condensed consolidated financial statements in accordance with U.S. GAAP requires management to apply estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates that involve a higher degree of judgment include, among others, the determination of allowance on accounts receivable, assessment of impairment of assets, and provisions related to legal proceedings. Management evaluates these estimates on an ongoing basis and updates them as circumstances evolve. Actual results could differ from those estimates, and such differences may be material. 52 Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, which focuses on income tax disclosures by requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation, provide information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid. The standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The adoption of this guidance on January 1, 2025 did not have a material impact on its condensed consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). The standard is intended to enhance transparency of income statement disclosures, primarily through additional disaggregation of relevant expense captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods within fiscal years beginning after December 15, 2027. Entities can adopt the change prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of the standard on its condensed consolidated financial statements. In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging and Revenue from Contracts with Customers - Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASC 2025-07”) which applies to all entities that enter into non-exchange-traded contracts with underlyings based on operations or activities specific to one of the parties to the contract. The new guidance excludes from derivative accounting non-exchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. ASU 2025-07 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its condensed consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements. The amendments are intended to enhance interim disclosures through a more principles-based framework. The standard is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The Company has not adopted this guidance as of March 31, 2026 and is currently evaluating the impact of this guidance on its condensed consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which includes various targeted amendments to the Accounting Standards Codification. The effective dates vary by amendment. The Company has not adopted this guidance as of March 31, 2026 and does not expect it to have a material impact on its condensed consolidated financial statements and related disclosures. Seasonality There is a degree of seasonality in the growing cycles, procurement and transportation of crops. The farming industry historically experiences seasonal fluctuations in revenues and net income. Typically, the Company has lower sales and net income during the non-harvest seasons and higher sales and net income during the harvest season and as such, must have sufficient working capital to fund its operations at a reduced level. Failure to generate or obtain sufficient working capital during the winter may have a material adverse effect on the Company. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. 53 Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable.