SDOT 10-K & 10-Q changes, risk factors and insider trading

The following discussion and analysis of the results of operations and financial condition of Sadot Group Inc. (“Sadot Group”), together with its subsidiaries (collectively, the “Company”) as of December 31, 20242025 and 20232024 and for the years ended December 31, 20242025 and 20232024 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Annual Report on Form 10-K following Item 16. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to Sadot Group. refers to the names under which our corporate and franchised restaurants do business depending on the concept. This Annual Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Annual Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “forecast,” “model,” “proposal,” “should,” “may,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. 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. These risks and uncertainties include, among others, our liquidity and capital resources, our ability to obtain additional financing or refinance existing obligations, our ability to generate sufficient cash flows from operations, and conditions that raise substantial doubt about the Company’s ability to continue as a going concern. Reference is made to “Factors That May Affect Future Results and Financial Condition” in this Item 7 for a discussion of some of the uncertainties, risks and assumptions associated with these statements.

As of December 31, 2024,2025, Sadot Group consisted of one distinct operating unit and one discontinued operations.operation.

On OctoberSeptember 9, 2024,2025, the Company filed a Certificate of Change Pursuant to NRS 78.209 with the Nevada Secretary of State to effect a reverse stock split of the Company’s common stock at a ratio of one for- ten one-for-ten (the “Reverse Stock Split”), which became effective 12:01 am eastern on OctoberSeptember 18,15, 2024.2025. The Company did so to regain compliance with Nasdaq. As a result of the Reverse Stock Split, every 10 shares of the Company’s common Stockstock issued and outstanding on the effective date were consolidated into one issued and outstanding share. All stockholdersshareholders wherewho werewould entitledhave tootherwise receivereceived fractional shares as a result of the Reverse Stock Split received cash in lieu of any fractional share interest.interests There was no change in the par value of the Company’s common stock. The Company previously effected a 1-for-10 reverse stock split effective October 18, 2024. All share and per share amounts included in these consolidated financial statements have been adjusted to reflect both reverse stock splits. Please see Note 18 – Commitments and contingencies for further details.

Stock-based expenses include all expenses that are paid with stock. This includes stock-based consulting fees due to Aggia and other consultants, stock compensation paid to our board of directors, and stock compensation paid to employees. The consulting fees due to Aggia related to ongoing Sadot Agri-Foods and expansion of the global Agri-Foods commodities business. Based on the initial Services Agreement with Aggia LLC FZ, a Company formed under the laws of United Arab Emirates (“Aggia”), the consulting fees were calculated at approximately 80.0% of the Net Income generated by Sadot Agri-Foods through March 31, 2023. As of April 1, 2023 the consulting agreement was amended to calculate consulting fees on 40.0% of the Net income generated by Sadot LLC. For the years ended December 31, 2024 and 2023, $6.7 million and $6.2 million, respectively, are recorded as Stock-based expenses in the accompanying Consolidated Statements of Operations and Other Comprehensive Income / (Loss).

Total Other (expense) / income listed below the Loss from operations in the accompanying Unaudited Consolidated Statements of Operations and Other Comprehensive Income / (Loss) / Income consists of Gain of fair value remeasurement, Other income / (expense), Change in fair value of stock-based compensation, Gainloss on saledebt of trading securitiesextinguishment and Interest expense, net. Gain on fair value remeasurement consists of the fair value remeasurement recorded on a recurring basis on the forward sales contract which was deemed to be a derivative within the scope of ASC 815.

Net loss attributable to non-controlling interests was was$0.5 million and $0.3 million for the yearyears ended December 31, 2024.2025 and 2024, 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.

We generated Commodity sales of $246.9 million for the year ended December 31, 2025, compared to $700.9 million for the year ended December 31, 2024, compared to $717.5 million for the year ended December 31, 2023.2024. The $16.6$454.0 million decrease or 2.3% is attributable to a which64.8% is attributable to a decline in global prices of staple commodities, market seasonality, the largest global consumer being out of the market for the beginning of 2024. Furthermore, it is attributable to a much stronger scrutinization process which the company adhered to starting in Q3 2025. The Company was seeking to minimize the risks prior to engaging in large transactions unless these transactions can also guarantee a cash profit.

Cost of goods sold for the years ended December 31, 2025 and 2024 and 2023 totaled $695.8$242.4 million and $707.9$678.2 million, respectively. The $12.1$435.8 million change is primarily due to a direct result of the decrease in sales.sales, reclassifying Sadot Agri-Foods consulting fees to sales, general and administrative cost in 2025 and the reclass of gain on derivative contracts.

Depreciation and amortization expenses for the years ended December 31, 20242025 and 20232024 totaled $0.3$0.1 million and $1.1$0.3 million, respectively. The $0.9$0.2 million decrease is mainly attributed to movingFarm Sadot Food Servicerelated assets tobeing Assetsfully Helddepreciated Forin Sale and no longer amortizing or depreciating the assets and the closing and refranchising of corporate locations and the disposal of the corresponding assets.2024.

Stock-based expenses for the year ended December 31, 2024, 2025, totaled $6.7$2.1 million compared to $6.2$6.7 million for the year ended December 31, 2023.2024. The increasedecrease in Stock-based consulting expenses is primarily the result of consultingthe feessettlement duewith Aggia entered in November 2025, in which Aggia was willing to Aggiawaive fortheir Sadotpreviously Agri-Foodsagreed consulting and Farming operations and the vesting of restricted stock for employees, board of directors and consultants.fees. Based on the original servicing agreement with Aggia, the consulting fees arewere calculated at approximately 40.0% of the Net income generated by Sadot LLCAgri-Foods. whichThis isexpense awas decreasesupposed fromto 80.0%be paid in the first quartervesting of 2023.restricted stock that was issued to Aggia. In November 2025 the services agreement was terminated pursuant to a settlement agreement which extinguished all remaining obligations under the arrangement.

Other (loss) income for the years ended December 31, 2025 and 2024 and 2023 totaled $17.1$(53.0) million and $1.7$(0.5) million, respectively. The other income was primarily attributable to anthe increaserecognition of impairment of $15.6significant assets of $31.0 million, loss on litigation of $13.5 million, loss on debt extinguishment of $3.6 million, all of which were not present in the prior year, as well as a decrease of $3.4 million in the gain on the fair value remeasurement as a result of the mark to market adjustment of derivatives, an increase of $2.8 million in the Changechange in fair value of stock-basedaccrued compensation due to the difference in the stock price at the time of the stock issuance and agreed upon price to Aggia, a decrease of $1.0 million in warrant modification expense, and an increase of $0.5 million on the Gain on sale of trading securities, partially offset by a decrease of $0.3 million in Other income and a $4.2 $1.0 million increase in Interest expense, net.

(2) See Note 34 for additional information (3) Consists of Deferredcurrent revenue,operating lease liability, current deferred revenue, and Otherother current liabilities. See Note 14 for full list of items in Other current liabilities.

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. At December 31, 2024,2025, current ratio, which equals Total current assets divided by Total current liabilities, was 1.16,0.05, ana increasedecrease of 0.08,1.11, compared to current ratio of 1.081.16 at December 31, 2023. 2024. At December 31, 2024,2025, working capital,capital (deficit), which equals Total current assets less Total current liabilities, was $20.5$(54.8) million, a increasedecrease of $12.2$75.3 million, compared to working capital of $8.3$20.5 million at December 31, 2023.2024. The increasedecrease in current ratio and working capital was primarily due to an increase in Otheraccounts current assets, an increase in Assets held for sale, andpayable, a decrease in net accounts payable,receivable due to large allowances, partially offset by a decrease in Accountsother receivable,current assets, a decrease in Inventory,assets anheld increasefor sale, a decrease in Otherinventory, a decrease in other current liabilities and ana increasedecrease in Liabilitiesliabilities held for sale. The Company believes that our existing cash on hand, current accounts receivable and future cash flows from our commodity trading, and farming will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

InThe theCompany event we areis required to obtain additional financing, either financing—whether through borrowings, private placements, public offerings, or somestrategic type of business combination,transactions such as a merger,mergers or buyout,asset theresales. There can be no assurance that wesuch efforts will be successfulsuccessful. in such pursuits. We may be unableFailure to acquireobtain the additionaladequate funding necessarycould to continue operating. Accordingly, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary forrequire us to sell one or more business lines of business, all or a portion of our assets, enter into a business combinationcombination, or reduce or eliminatecease operations. TheseAny possibilities,such transactions, to the extent available, may be on terms thatcould result in significant dilution to ourexisting shareholders or thatthe result in our shareholders losing allloss of their investment in our Company.

For the years ended December 31, 20242025 and 2023,2024, Net cash used in continuing operating activities was $2.8$8.7 million and $13.7$2.8 million, respectively, in operations and $0.5 million was used in and $0.1$3.8 million was provided by and $0.5 million was used in operations, respectively, in discontinued operations. Our Net cash used for the year ended December 31, 2024,2025, was primarily attributable to our Net incomeloss of $3.7$94.0 million, adjusted for net non-cash expense in the aggregate amount of $14.0$85.3 million offset by $7.5 $13.7 million of Net cash used in changes in the levels of operating assets and liabilities. Our Net cash used for the year ended December 31, 2023, 2024, was primarily attributable to our Net loss of $8.0$3.7 million, adjusted for net non-cash expenses in the aggregate amount of $5.6 $14.0 million, partially offset by $11.2$7.5 million of Net cash used in changes in the levels of operating assets and liabilities.

For the year ended December 31, 2025, Net cash used in investing activities was nil. For the year ended December 31, 2024, Net cash used in investing activities was $4.0 thousand, of which,which $37.0 thousand was used to purchase Property and equipment,equipment partially offset by $33.0 thousand, which was generated on the Disposaldisposal of property and equipment.equipment of $33.0 thousand. Net cash provided by investing activities for discontinued operations was $1.0 million for year ended December 31, 2024. For the year ended December 31, 2023, Net cash used in investing activities was $3.6 million, of which $7.3 million was used to purchase Property and equipment partially offset by investment from non-controlling interest of $3.7 million, and disposal of property and equipment of $25.0 thousand. Net cash provided by investing activities for discontinued operations was $0.1 million for the year ended December 31, 2023.2024.

Inherent in our business is the risk of matching the timing of our purchase and sales contracts. The prices of food and feed commodities (e.g., soybeans, wheat, corn, etcetc.) and carbon offset units we buy and sell are based on a constantly moving terminal market price determined by various exchanges (e.g., Chicago Board of Trade, Dalian Commodity, Exchange, etc.). Were we not to hedge such exposures, we could be exposed to significant losses due to the continually changing commodity prices.

We use commodity futures contracts to manage our exposure to this commodity price risk. It is generally our policy to hedge such risks to the extent practicable. We enter into hedges to limit our exposure to volatile price fluctuations that we believe would impact our gross margins on firm purchase and sales commitments. As an example, if we enter into fixed price contracts with our suppliers and variable priced sales contracts with our customers, we will generally enter into a futures contract to sell the commodity for future delivery in the month when we expect the commodity price to be fixed according to the sales contract terms. We repurchase this position once the pricing has been fixed with our customer. If the underlying commodity price increases, we suffer a hedging loss and have a unrealized loss on derivative contracts, but the sales price to the customer is based on a higher market price and offsets the loss. Conversely, if the commodity price decreases, we have a hedging gain and recognize a unrealized gain on derivative contracts, but the sales price to the customer is based on the lower market price and offsets the gain. At December 31, 20242025 and 20232024 we had aan unrealized loss on derivative contracts of $0.1 millionnil and nil,$0.1 million, respectively, on the books related to our hedging policy to manage our exposure to commodity price risk.

From time to time we may enter into forward sales contract that do not meet the definition or qualify for hedge accounting. Forward sales contracts are derivatives that were entered into to sell goods at a later date at a fixed or determinable price for a specific period. Forward sales contracts are recognized on the balance sheet at the value of the contract and the difference in the fair value and derivative liability is recorded as a unrealized gain on derivative contracts or unrealized loss on derivative contracts. If the underlying commodity price increases, we suffer a mark to market loss and have a unrealized loss on derivative contracts. Conversely, if the commodity price decreases, we have a hedging gain and recognize a unrealized gain on derivative contracts. At December 31, 20242025 and 20232024 we had derivative liabilities of $92.1 millionnil and $92.1 million, with a corresponding unrealized gain on derivative contracts of $18.6 millionnil and $1.5$18.6 million, respectively.

We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of the consolidated financial statements in alsoaccordance with U.S. GAAP requires usmanagement to makeapply estimatesestimates, judgments and assumptions that affect the amounts reported amountsin 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, liabilities, costs and expenses andprovisions related disclosures.to Welegal baseproceedings. ourManagement evaluates these estimates on historicalan experienceongoing basis and onupdates variousthem otheras assumptionscircumstances that we believe to be reasonable under the circumstances.evolve. Actual results could differ significantly from thethose estimatesestimates, madeand bysuch differences ourmay management.be We have not identified any critical accounting estimates.material.

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 DecemberJanuary 31,1, 20242025 did not have a material impact on the Company'sCompany’s Consolidated Financial Statements and related disclosures.

The following Management’s Discussion and Analysis (“MD&A”), prepared as of MayAugust 15,14, 2026, should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Sadot Group Inc. (“Sadot Group”), for the three and six months ended MarchJune 31,30, 2026, together with the audited financial statements 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 Report on 2024 Form 10-K for the year ended December 31, 2025, 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.

Sadot Group Inc. is our parent company and is headquartered in Burleson, Texas. During the three and six months ended MarchJune 31,30, 2026, we reported zero$0.0 million and $0.0 million commodity sales revenuerevenue, respectively, compared to $132.2$114.3 million and $246.5 million in the prior-year period.periods, respectively. 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.

As of MarchJune 31,30, 2026, Sadot Group consisted of one distinct operating unit and one discontinued operation.

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 two quarters 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 performance during the third quarter of 2025, management of the Company began evaluating alternative business lines to address this situation. All 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.

For the periods ended MarchJune 31,30, 2026 and 2025, $0.4 $(0.3 million) and $1.4$0.9 million, respectively, are recorded as Stock-based expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive ComprehensiveIncome / (Loss) / Income..

Other Income / (Expense) / Income

Total Other income / (expense) / income listed below the Loss from operations in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss) / Income consists of Change in fair value of stock-based compensation, loss on debt extinguishment and Interest expense, net.

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 statute of limitations and no longer deemed payable.

Net loss attributable to non-controlling interests was nil and $0.1$0.0 million for the periodsthree and six months ended MarchJune 31,30, 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.

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 and six months ended March June 30, 2026 and 2025:

Unaudited Condensed Consolidated Results of Operations - Three and Six Months Ended MarchJune 31,30, 2026 Compared to the Three and Six Months Ended MarchJune 31,30, 2025

The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss) / Income for the three months ended MarchJune 31,30, 2026 and 2025, respectively:

Our gross (loss) profit totaled nil$0.0 million and $5.0 million for the three months ended MarchJune 31,30, 2026,2026 compared to $6.0 million profit for the three months ended March 31,and 2025. The $6.0$5.0 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$0.0 formillion theand three months ended March 31, 2026, compared to $132.2$114.3 million for the three months ended MarchJune 31,30, 2025.2026 and 2025, respectively. This represented a decrease of $132.2 $114.3 million. This decrease is due to Sadot Agri Foods being unable to enter into additional trades because of lack of working capital.

Cost of goods sold for the three months ended March 31,June 30, 2026, totaled nil$0.0 million, compared to $126.2109.4 million for the three months ended MarchJune 31,30, 2025.2025, respectively. The $126.2 million or 100.0%100% change is a direct result of the decrease in sales.

Depreciation and amortization expenses for the three months ended March 31,June 30, 2026, totaled nil$175 thousand compared to $27.0 thousand,thousand for the three months ended MarchJune 31,30, 2025.2025, respectively. The $27.0$148.0 thousand increase decrease is attributed to Farm related assets being fully depreciated in 2024 and the lossamortization of the corporateTradeOS officeplatform leaseintangible andassets furnitureacquired induring Burleson.the second quarter of 2026.

Stock-based expenses for the three months ended March 31,June 30, 2026, totaled $265 $0.4 millionthousand compared to $1.4$(419) millionthousand for the three months ended MarchJune 31,30, 2025.2025, respectively. The $684 thousand decrease in Stock-based expenses expenses is primarily the result of the termination of the service agreement with Aggia entered in November 2025.

Sales, general and administrative expenses for the three and six months ended MarchJune 31,30, 2026, totaled $2.2$0.9 million and $3.1 million, respectively, compared to $3.1$2.8 million and $5.9 million for the three and six months ended MarchJune 31,30, 2025.2025, respectively. The $1.0$1.9 million and $2.8 million, respectively 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 for the three months ended MarchJune 31,30, 2026, totaled $2.3$40.9 million expense income compared to $0.8$1.4 million expense for the three months ended MarchJune 31,30, 2025.2025, respectively. The other income was primarily attributable to the recognition of impairmentGain on Deconsolidation of assetsSadot Latam of $0.1 million, loss on litigation of $0.1$42.4 million, loss on debt extinguishmentlitigation of $0.3$0.5 million, all of which were not present in the prior year, partially offset by a $0.3$0.5 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.expense.

As of MarchJune 31,30, 2026, we had a working capital deficit of $57.8$13.6 million (an increase of $3.0$41.2 million from $54.8 million atas of December 31, 2025) and cash of $0.68$0.12 million. Current liabilities significantly significantly exceed current assets, driven primarily by $49.0$8.5 million in accounts payable and accrued expenses and $11.1$5.2 million in current notes payable payable (net of discount).

Substantially all of our outstanding debt obligations matured on December 31, 2025 and, except for new obligations settled through the issuance of common stock in April, May, and July 2026, 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 aA compliance plan was submitted within the required 45-day period and are evaluating strategic options to regain compliance.period.

(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

AtAs Marchof 31,June 30, 2026, current ratio, which equals Total current assets divided by Total current liabilities, was 0.04,0.01, aan decrease of 0.01,0.04, compared to current ratio of 0.05 atas of December 31, 2025. As of June 30, At March 31, 2026, working capital (deficit), which equals Total current assets less Total current liabilities, was $(57.8)$13.6 million, an increasea decrease of $3.0 $41.2 million, compared to working capital deficit of $(54.8)$54.8 million atas of December 31, 2025. The decreaseimprovement in the current ratio and the decrease in the working capital wasdeficit were primarily due to anthe increasedeconsolidation inof accountsSadot 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.Latam.

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 increaseparticipate borrowingin toseveral covertransactions collection delays. Duringduring the threesecond monthsquarter endedof March 31, 2026 the company increased its net borrowing by $0.9 million.2026.

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 $2 million Threshold Threshold Amount is not met within six months of registration effectiveness, plus 2.0% monthly penalties for registration delays. These cash payments, combined with the Company’s negative working capital ($(6,98254,801) 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, 2025, with the Form S-1 ultimately filed on November 1414, 2025 and an effectiveness deadline of December 23.23, 2025. 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 MarchJune 31,30, 2026, the Company has accrued approximately $1.2$1.8 million related to these penalties, which is included in accrued expenses. Subsequent to June 30, 2026, a settlement was reached whereby the Company paid Helena for $350 thousand and the agreement was canceled.

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 toin date,December 2025, with the remaining 793,000 shares subjectissued toin May 2026 after we received shareholder approval under Nasdaq Rule 5635(d). As of December 31,June 2025,30, 2026, the Company has no accrued a liability foras the remaining 793,000all shares withinhave accruedbeen expenses.issued. 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 and Six Months Ended June 30, March 31, 2026 and 2025

For the three monthsand 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 threesix months ended MarchJune 31,30, 2025.2026, Net cash used in operating activities from discontinuedcontinuing operations was nil$716 thousand and $1.5 million, respectively, compared to $2.4 million and $5.4 million used in operating activities for the three and six months ended June 30, 2025, respectively. There were no operating cash flows from discontinued operations in the 2026 periods; Net cash provided by operating activities from discontinued operations was $8.0$116 thousand,thousand respectively,and $124 thousand for the three and six months ended MarchJune 31,30, 20262025, andrespectively. 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 threesix months ended MarchJune 31,30, 2025,2026, was primarily attributable to our Net income of $0.8 $40.1 million and $35.2 million, adjustedrespectively, forwhich included a non-cash gain on deconsolidation of subsidiary, offset by net non-cash income in the aggregate amount of $19.8$41.5 million and $23.6$39.9 million, respectively, and $782 thousand and $3.3 million, respectively, of Net cash provided by changes in the levels of operating assets and liabilities. For the six months ended June 30, 2025, our Net cash used was primarily attributable to Net income of $1.1 million, adjusted for net non-cash expense in the aggregate amount of $2.8 million, and $9.3 million of Net cash used in changes in the levels of operating assets and liabilities.

For the three and six months ended MarchJune 31,30, 20262026, and 2025, Net cash usedprovided in by investing activities was nil.$16 thousand and $16 thousand, respectively, arising entirely in the second quarter. Net cash provided by investing activities from discontinued operations for the three and six months ended MarchJune 31, 2026 and30, 2025 was nil$nil and $1.0$nil, million.respectively.

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 MarchJune 31,30, 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, 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 MarchJune 31,30, 2026 and does not expect it to have a material impact on its condensed consolidated financial financial statements and related disclosures.