Financial Analysis

"Acquisition On September 2, 2025, Crown 1 Foods, Inc. (formerly ""Jubilee Acquisition, Inc.""), a Nevada corporation and wholly owned subsidiary of the Company, acquired substantially all of the assets of Crown I Enterprises, Inc. (""Crown 1""), a full-service manufacturer of value-added proteins and ready-to-heat meals, for a $17.3 million cash payment. The acquisition aligns with the Company's long-term plan to become a leading national marketer and manufacturer of fresh deli-prepared foods. The results of the business acquired from Crown 1 have been included in the Company's Consolidated Statements of Operations from the date of the acquisition. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of the acquisition (in thousands): Assets acquired: Accounts receivable $ 3,725 Prepaid expenses and other current assets 37 Inventory 1,336 Property, plant, and equipment 12,263 Right of use asset 2,121 Intangible assets 1,273 Goodwill 814 Total assets acquired $ 21,569 Liabilities assumed: Accrued expenses and other current liabilities $ 2,137 Lease liability 2,121 Total liabilities assumed $ 4,258 Net assets acquired $ 17,311 The valuation of intangible assets consists of approximately $1.3 million of intangible assets representing customer relationships, which is subject to amortization over a useful life of five years. The purchase price was allocated based on the estimated fair value of the assets acquired and liabili …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies Litigation, Claims and Assessments From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results. Licensing and Royalty Agreements The Company has been party to a 50-year Development and License Agreement since 2010. Pursuant to the agreement, we have exclusively licensed certain trade secret recipes, formulas, methods, and ingredients for sauces combined with meatballs and meats in exchange for royalty payments calculated and paid annually based on: 6% of net sales up to $500 thousand; 4% of net sales between $500 thousand and $2.5 million; 2% of net sales between $2.5 million and $20 million; and 1% of net sales in excess of $20 million. The Company must pay a minimum royalty of $125 thousand each year to avoid expiration of its rights under the agreement. The Company incurred approximately $961 thousand, $679 thousand, and $637 thousand of royalty expenses under the Development and License Agreement for the fiscal years ended January 31, 2026, 2025, and 2024, respectively. Royalty expenses are inc …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Income Tax Provision Provision for income taxes for the years ended January 31, 2026, 2025, and 2024 consisted of the following (in thousands): January 31, 2026 January 31, 2025 January 31, 2024 Federal Current $ 277 $ 764 $ 1,451 Deferred 996 192 251 State and Local Current 217 (14) 342 Deferred 75 53 (36) Income tax provision $ 1,565 $ 995 $ 2,008 Beginning with fiscal year 2026 financial reporting, we adopted ASU 2023-09, "" Income Taxes (topic 740): Improvements to Income Tax Disclosures, "" prospectively. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the fiscal year ended January 31, 2026, is as follows (in thousands): January 31, 2026 Pre-tax book income $ 6,851 U.S. federal statutory rate 1,439 21.0 % State income tax, net of federal benefit 130 1.9 % Non-taxable or non-deductible items 215 3.1 % Effect of enacted tax laws and rate changes 22 0.3 % Return to provision and tax account true-up 38 0.6 % Stock-based compensation (307) (4.5 %) Taxes not based on income and other, net 28 0.4 % Income tax provision $ 1,565 22.8 % As previously disclosed for the fiscal years 2025 and 2024, prior to the adoption of ASU 2023-09, a reconciliation of the federal statutory tax rate to the effective income tax rate is as follows: Year Ended January 31, 2025 Year Ended January 31, 2024 U.S. federal statutory rate 21.0 % 21.0 % State income tax, net of federal benefit 2.1 % 3.3 % Adj …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

"Leases The Companys leases consist of office space, manufacturing space and machinery and equipment. The Company determines if an arrangement contains a lease at inception. Right of Use (""ROU"") assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of lease payments. The Company applies a portfolio approach for certain leases with similar characteristics, primarily related to finance leases, when it reasonably expects that the financial statement effects of applying the guidance to the portfolio would not differ materially from applying the guidance to individual leases. Operating lease liabilities are generally determined using the incremental borrowing rate applicable to the individual lease at the commencement date. The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise that option. Future obligations relating to the exercise of renewal options are included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonabl …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"Recent Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, "" Accounting for Convertible Instruments and Contracts in an Entitys Own Equity"" (ASU 2020-06), which simplifies an issuers accounting for convertible instruments by reducing the number of accounting models that require separate accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance. Entities can elect to adopt the new guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company adopted this guidance effective February 1, 2024, applying the modified retrospective method. Adoption of this guidance did not have a material impact on our consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07, ""Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ."" The new guidance is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendment is effective retrospectively for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Adoption of this standard led to enhanced s …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Related Party Transactions Promissory Note Related Party Upon consummation of the acquisition of T&L in December 2021, the Company executed a $3 million promissory note with the sellers. The promissory note requires annual principal payments of $750 thousand, payable on each anniversary of the closing, together with accrued interest at a rate of three and one-half percent (3.5%) per annum. As of January 31, 2026 and January 31, 2025, the outstanding balance under the note was $0 and $0.8 million, respectively. For the fiscal years ended January 31, 2026, 2025, and 2024 interest expense for this note was approximately $24 thousand, $50 thousand, and $77 thousand, respectively. As of January 31, 2026 and January 31, 2025, accrued interest was approximately $0 and $2 thousand, respectively. Lease Related Party The Company leases a facility in Farmingdale, NY from 148 Allen Blvd LLC for production and distribution of T&L and Olive Branch products. 148 Allen Blvd LLC is owned by Anthony Morello, Jr., President of T&L and various individuals related to Mr. Morello. This lease term is through November 30, 2031 with the option to extend the lease for two additional ten-year terms with base rent of approximately $20 thousand per month through December 31, 2026, increasing after that date to approximately $24 thousand through the end of the initial le ase term. The exercise of optional renewal is uncertain and therefore excluded from the calculation of the right of use asse …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

Segment Information For the fiscal years ended January 31, 2026, 2025, and 2024 t he Company was managed as a single operating segment. The Chief Executive Officer, who is the Companys Chief Operating Decision Maker (CODM), reviews financial information on an aggregate basis for purposes of allocating resources and assessing financial performance, as well as for making strategic operational decisions and managing the organization. As such, the Company has one reportable segment. Additionally, all of the Companys assets are maintained in the United States. The CODM utilizes net income as the primary measure of segment performance and relies on this metric in determining whether to allocate additional resources to the segment or other corporate purposes. Segment reporting for the fiscal years ended January 31, (in thousands): For the Fiscal Years Ended January 31, 2026 January 31, 2025 January 31, 2024 Net Sales $ 171,714 $ 123,328 $ 103,284 Costs of sales 128,668 92,795 72,951 Gross profit 43,046 30,533 30,333 Less: (A) Research and development 288 455 414 Direct Variable Costs (B) 11,200 7,798 7,161 Other selling, general, and administrative expenses 24,446 17,403 13,868 Total operating expenses 35,934 25,656 21,443 Income from operations 7,112 4,877 8,890 Interest expense (435) (477) (549) Interest income 211 218 Amortization of debt discount (37) (16) (22) Other income 104 27 Income from equity method investment 223 Income tax provision (1,565) (995) (2,008) Segment net inc …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"Summary of Significant Accounting Policies Basis of Presentation The Consolidated Financial Statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company and its wholly owned subsidiaries as of the reporting period ending dates and for the reporting periods. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Such estimates and assumption s impact, among other items, the following: allowance for credit losses, the fair value of stock-based compensation, inventory reserves, impairment of goodwill and intangible assets, estimates for unrealized returns, discounts, and other variable considerations that are netted against revenue, and the allocation of the purchase price of the acquisition of substantially all of the assets of Crown 1 Enterprises, Inc. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

"Stockholders Equity Preferred Stock and Series A Preferred Stock The Company is authorized to issue 20 million shares of preferred stock, $0.00001 par value per share. The Company has designated 120 thousand shares of preferred stock as Series A Convertible Preferred stock. As of January 31, 2026 and 2025, no shares of Series A Convertible Preferred Stock were outstanding. Series B Preferred The Company has designated 200 thousand shares of preferred stock, $0.00001 par value per share, as Series B Preferred Stock. The holders of the Series B Preferred Stock shall be entitled to receive, upon liquidation, dissolution or winding up of the Company, the amount of cash, securities or other property to which such holder would be entitled to receive with respect to such shares of Series B Preferred Stock if such shares had been converted to common stock immediately prior to such liquidation. Holders of the Series B Preferred Stock were entitled to receive cumulative cash dividends at an annual rate of eight percent (8%). Holders of the Series B Preferred Stock shall have no voting rights. Each share of Series B Preferred stock shall be convertible, at the option of the holder, into shares of common stock at a rate of one share of Series B Preferred Stock into 15 shares of common stock. On June 22, 2023, all the holders of the Series B Preferred Stock converted the shares of Series B Preferred Stock into 819 thousand shares of common stock of the Company. As of both January 31, 202 …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies Litigation, Claims and Assessments From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. Licensing and Royalty Agreements On March 1, 2010, the Company was assigned a Development and License agreement, dated January 1, 2009, with Daniel Dougherty (the License Agreement). Under the terms of the License Agreement, the royalty rate payable by the Company is 6% of net sales up to $500 thousand of net sales (as defined in the agreement) for each year under the License Agreement; 4% of net sales from $500 thousand up to $2.5 million of net sales for each year under the License Agreement; 2% of net sales from $2.5 million up to $20 million of net sales for each year under the License Agreement; and 1% of net sales in excess of $20 million of net sales for each year under the License Agreement. In order to continue exclusivity, the Company must pay a minimum royalty of $125 thousand each year. The Company incurred approximately $300 thousand of royalty expenses for the three months ended April 30, 2026, compared to $357 thousand for the three months ended April 30, 2025. Royalty expenses are included in selling, general and administrative expenses on the Condensed Consolidated Statements of Operations. Purchase Commitme …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Income Tax Provision The Companys effective tax rate for the three months ended April 30, 2026 was 21.9%. Differences from the statutory rate primarily relate to state taxes. As of April 30, 2026, and January 31, 2026, the net deferred tax liability was approximately $530 thousand and $813 thousand, respectively. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future generation of taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. There was no valuation allowance on the Company's deferred tax assets as of April 30, 2026 or January 31, 2026. The Company evaluated the provisions of ASC 740, "" Accounting for Income Taxes "" related to the accounting for uncertainty in income taxes recognized in an enterprises financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Di …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases The Company accounts for leases in accordance with ASC 842 Leases (ASC 842). We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. We have operating leases for offices and other facilities used for our operations. We also have finance leases relating primarily to machinery and equipment. Our leases have remaining lease terms of approximately 1.2 years to 5.6 years. Supplemental cash flow and other information related to leases was as follows (in thousands): April 30, 2026 April 30, 2025 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 407 $ 257 Financing cash flows from finance leases $ 78 $ 102 The following table shows the weighted-average lease term and weighted-average discount rate for the Company's ROU lease assets: April 30, 2026 January 31, 2026 Weighted average remaining lease term (in years) Operating leases 3.91 4.15 Finance leases 3.53 3.75 Weighted average discount rate: Operating leases 6.39 % 6.41 % Finance leases 8.03 % 8.00 % Supplemental balance sheet information related to leases was as follows (in thousands): April 30, 2026 January 31, 2026 Operating Leases Operating lease ROU assets $ 7,438 $ 7,877 Current operating lease liabilities, included in current liabilities $ 1,74 …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"Recent Accounting Pronouncements In November 2024, the FASB issued ASU No. 2024-03, "" Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures "" (Subtopic 220-40): Disaggregation of Income Statement Expenses."" Additionally, in January 2025, the FASB issued ASU No. 2025-01 to clarify the effective date of ASU No. 2024-03. The new guidance aims to enhance disclosures about a public business entity's expenses by providing more specific information about certain costs and expenses at each interim and annual reporting period, enabling investors to better understand the entitys overall performance, including its cost structure, and assess potential future cash flows. This guidance is effective for fiscal years beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. The Company is in the process of evaluating the impact that this guidance will have on the Consolidated Financial Statements and related disclosures. In July 2025, the FASB issued ASU No. 2025-05, ""Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (""ASU 2025-05"")."" ASU 2025-05 provides (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating credit losses for current accounts receivable an …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

"Related Party Transactions Promissory Notes Upon consummation of the acquisition of the T&L Creative Salads business in December 2021, the Company executed a $3 million promissory note with the sellers, which consist of Anthony Morello, Jr., President of Creative Salads and Olive Branch, as well as individuals related to Mr. Morello. The promissory note requires annual principal payments of $750 thousand, payable on each anniversary of the closing, together with accrued interest at a rate of three and one-half percent (3.5%) per annum. As of April 30, and January 31, 2026, there was no outstanding balance under the note. Interest expense related to this note was approximately $0 for the three months ended April 30, 2026, compared to $7 thousand for the three months ended April 30, 2025. On June 28, 2023, the Company completed the acquisition of 100% of Chef Inspirational Foods, LLC, in accordance with the terms of the Membership Interest Purchase Agreement dated June 28, 2023 by and among the Company, Siegel Suffolk Family, LLC, and R&I Loeb Family, LLC (the Sellers) for approximately $3.7 million, including approximately $1 million in cash at closing and a $2.7 million promissory note (the ""CIF Acquisition""). The promissory note required a principal payment of $1.2 million in cash on the first anniversary of the closing date (which was made during the year ended January 31, 2025) and a payment of $1.5 million in common stock of the Company on the second anniversar …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

Segment Information For the three months ended April 30, 2026 and April 30, 2025 the Company was managed as a single operating segment. The Chief Executive Officer, who is also the Companys Chief Operating Decision Maker (CODM), reviews financial information on an aggregate basis for purposes of allocating resources and assessing financial performance, as well as for making strategic operational decisions and managing the organization. As such, the Company has one reportable segment. Additionally, all of the Companys assets are maintained in the United States. Segment reporting for the three months ended April 30, (in thousands): For the Three Months Ended April 30, 2026 April 30, 2025 Net sales $ 52,766 $ 35,255 Costs of sales 40,339 26,071 Gross profit 12,427 9,184 Less: (a) Research and development 87 73 Direct Variable Costs (b) 3,247 2,433 Other selling, general, and administrative expenses 6,429 5,100 Total operating expenses 9,763 7,606 Income from operations 2,664 1,578 Interest expense (109) (88) Interest income 90 30 Amortization of debt discount (11) (3) Other income Income tax expense (577) (280) Segment net income 2,057 1,237 Reconciliation of profit Adjustments and reconciling items Consolidated net income $ 2,057 $ 1,237 (a) The significant expense categories and amounts align with the information that is regularly provided to the Chief Operating Decision Maker. (b) This category contains commission expenses, royalty expenses, and freight-related expenses. …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (""U.S. GAAP"") for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for any interim period are not necessarily indicative of results for the full year. The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the ""SEC""), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company's Consolidated Financial Statements in an annual report on Form 10-K have been condensed or om …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

"Stockholders Equity Restricted Stock Units RSUs generally vest on a graded basis over three to four years of service. The terms of the RSUs include vesting provisions based on continued service. The following is a summary of the Companys RSU activity: Restricted Stock Units Weighted Average Grant Date Fair Value Non-vested restricted stock units - February 1, 2026 438,048 $ 5.56 Granted 99,800 $ 14.69 Vested (35,900) $ 6.70 Forfeited - $ - Outstanding April 30, 2026 501,948 $ 7.29 During the three months ended April 30, 2026, the Company recognized stock-based compensation expense related to restricted stock units of an aggregate of approximately $242 thousand, compared to approximately $152 thousand for the three months ended April 30, 2025. The restricted stock expense was recorded to selling, general and administrative expenses or costs of sales depending on the nature of the related recipient's expense on the Condensed Consolidated Statements of Operations. As of April 30, 2026, there was unrecognized stock-based compensation expense of approximately $2.7 million related to future vesting of restricted stock units. Options The following is a summary of the Companys option activity: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding February 1, 2026 71,306 $ 4.79 7.86 $ 413 Granted - $ - Exercised - $ - Expired/forfeited - $ - Outstanding April 30, 2026 71,306 $ 4.79 7.36 $ 67 …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing