NOTE 2 – GOING CONCERN

The Company has concluded that substantial doubt exists regarding its ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued. The principal conditions giving rise to substantial doubt include the Company’s history of recurring net losses and continued working capital deficiencies. As of June 30, 2026, the Company reported an accumulated deficit of $104,579,639, net losses of $1,461,634 and $2,291,354 for the three and six months ended June 30, 2026, respectively, and a working capital deficit of approximately $2.5 million.

Management has evaluated the conditions that contributed to substantial doubt. The historical net losses and accumulated deficit are primarily attributable to non-cash or one-time, non-recurring expenses, including goodwill impairment, stock-based compensation, fair value share adjustment losses, and acquisition-related transaction costs.

As of June 30, 2026, total debt was approximately $8.3 million, which includes $3,472,500 in a note payable to Ross Sklar (“Sklar”), a significant minority shareholder, member of the Board and CEO of the Company. Of this amount, $1.0 million was funded in July and August 2025 in response to requests from the Company’s prior lender. Mr. Sklar’s ownership interest and operational role provide an incentive for him to be supportive of the Company regarding repayment of this note, consistent with prior periods.

On December 22, 2025, the Company entered into a Bridge Term Loan Promissory Note with The Starco Group, Inc. (“TSGI”), an entity wholly owned by Sklar, providing for up to $5,000,000 in borrowing capacity, including an initial disbursement of $4,500,000 (the “Bridge Loan”). The proceeds were used to repay the Company’s then current revolving loan facility in full and to provide additional working capital. The Bridge Loan bears interest at a variable rate based on the Wall Street Journal Prime Rate plus an applicable margin, requires monthly interest payments which began on January 1, 2026, and provides for scheduled principal amortization beginning January 1, 2027. The Bridge Loan includes customary covenants and events of default and may be prepaid without penalty.

Management is pursuing additional financing sources to enhance liquidity, provide working capital, and support repayment of existing obligations, if necessary. Management is also focused on strategic initiatives intended to increase revenue in the most profitable sales channels and reduce overall expenses as a percentage of revenue. Operational synergies from the Company’s shared services model and continued emphasis on profitable channels have contributed to improvements to date and are expected to continue.

On July 15, 2026, subsequent to the balance sheet date, the Company and each of its subsidiaries (including the newly acquired Custom Foods and its subsidiaries) entered into a secured credit facility with Pasadena Private Lending Inc. providing for term, accordion and revolving borrowings of up to $18.0 million, a portion of which was used to fund the acquisition of Custom Foods and to support working capital needs (see Note 16 – Subsequent Events). This financing is primarily acquisition-related, is guaranteed and cross-collateralized, and contains financial covenants; accordingly, it does not eliminate the substantial doubt described above.

While the payoff of the revolving loan facility and the execution of the Bridge Loan have provided near-term liquidity, these actions do not eliminate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s plans are not entirely within its control, and there can be no assurance that additional financing or operational improvements will be achieved as contemplated. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.