Risk Factors Update Summary

• Net revenue from third parties decreased from $170,467 in 2022 to $148,493 in 2023.
• Implemented new entity-level controls and enhanced review procedures to address financial reporting weaknesses.
• Ownership interests in related parties disclosed, including greater than 10% shareholders with ownership interests. This change might result in increased scrutiny and potential conflicts of interest.
• Net revenue increased by $373.6 million in 2023, primarily due to recent acquisitions and organic growth.
• Gross profit decreased by $1.5 million in 2023, with a gross profit margin increase to 17.6%.
• Sales to related parties disclosed, with significant changes in amounts for various entities. This change might indicate potential related party transactions affecting financials.
• Net cash provided by operating activities decreased by $15.8 million to $31.3 million.
• Distribution, selling, and administrative expenses remained consistent at $195.1 million, with a decrease in professional fees by $2.9 million.
• Hired additional finance personnel and provided training to improve financial reporting and internal controls.
• Exit of low-margin chicken processing businesses led to a loss of $1.5 million in gross profit.
• The impact of pandemics may affect operations in 2023, with a decrease in net revenue by $373.6 million.
• The Company partially impaired machinery related to HFFI operations, recognizing an impairment expense of $1.2 million in 2023.
• Cost of revenue from third parties decreased from $958 in 2022 to $938 in 2023.
• The acquisition of Sealand Food, Inc. added $20.4 million in assets and $14.2 million in fair value changes.
• Average floating interest rates increased by approximately 1.64%, impacting interest expense.
• Gross profit decreased from $205,031 in 2022 to $204,031 in 2023.
• Distribution, selling, and administrative expenses increased by $72.9 million, mainly due to legal settlements.
• The Company fully impaired acquired developed technology associated with Syncglobal, Inc., recognizing an impairment expense of $0.4 million in 2022.
• Designed and implemented controls over stock compensation, corporate tax, and year-end financial reporting procedures.
• Professional fees decreased by $1.9 million to $13.9 million, net of settlement amounts received.
• Goodwill increased by $5.0 million to $85.1 million as of December 31, 2023.
• Material weakness in internal controls over financial reporting identified, impacting the effectiveness of disclosure controls. This change might result in increased audit scrutiny and investor concern.
• The Company amended mortgage term loans in 2023, pegging them to Term SOFR + 2.25% per annum.
• Interest expense increased by $4.0 million to $16.7 million in 2023, primarily due to disclosed costs.
• Net income decreased by $22.1 million in 2023, resulting in a loss of $2.2 million.
• Long-term investments decreased by $709,000 to $2,679,000.
• The Company amended the JPM Credit Agreement in 2024 to remove a cap on indebtedness and create a reserve on the borrowing base.
• The Company entered into an IRS contract with JPMorgan Chase Bank in 2023 for a fixed notional amount of $120.0 million.
• The Company recorded a gain of approximately $0.7 million from unwinding an IRS contract during the year ended December 31, 2021.
• The Company evaluated IRS contracts in 2022, determining fair values of $0.5 million in an asset position and $0.4 million in a liability position.