NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations:

T & L Creative Salad, Inc. (“T&L”) was organized under the laws of the State of New York on March 2, 1988 and has elected to be taxed as a S Corporation on January 1, 2001. The company has a year-ended December 31.

T&L is a premier gourmet food manufacturer and distributor. The company manufactures a full line of foods for retail food chains and mass market club stores, delis, bagel stores, caterers and distributors. T&L uses high-quality meats, seafood and vegetables, prepared to meet the standards set forth by the USDA and the FDA. T&L actively sells its salads and prepared products to over 250 delis, bagel shops, smaller retail accounts and food distributors in the New York metropolitan area, representing over 35% of T&L’s current sales volume.

Basis of Presentation:

The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

Use of Estimates:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates and assumptions impact, among others, an allowance for doubtful accounts, inventory obsolescence, and other unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

Cash and Cash Equivalents:

T&L considers all highly liquid debt instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.

T&L CREATIVE SALADS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Risks and Uncertainties:

T&L operates in an industry that is subject to intense competition and change in consumer demand. T&L’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. T&L has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the grocery industry, (ii) general economic conditions in the various local markets in which the T&L competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with T&L’s distribution of the product. These factors, among others, make it difficult to project T&L’s operating results on a consistent basis.

T&L maintains cash balances at various financial institutions, in which deposits are insured by a federal agency up to $250,000. At various times, cash balances at these institutions may exceed the insurance limits.

Accounts Receivable:

Trade accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for trade accounts receivable. Balances which are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. As of December 31, 2020 the Company had a Allowance for Doubtful Accounts of $150,000.

Inventory:

Inventory is stated at the lower of cost, or market, as determined by the first-in, first-out method (FIFO) valuation method. Inventories on December 31, 2020, consist of Raw Material, Work in Process and Finished Goods.

Property and Equipment:

Property and equipment are recorded at cost. Depreciation is provided using accelerated and straight-line methods over the estimated useful lives of the assets.

T&L CREATIVE SALADS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Income Taxes:

T&L is treated as a S Corporation for federal and state income tax purposes. Consequently, T&L does not pay federal and state income taxes, but does pay city taxes. Instead, the stockholders’ include T&L’s taxable net income or loss on their personal tax returns.

T&L adopted the income tax standard for uncertain tax positions. As a result of the implementation, T&L has evaluated its tax position and determined it has no uncertain tax positions as of December 31, 2020. T&L classifies interest and penalties related to income tax liabilities, if applicable, as a component of income tax expense.

T&L’s federal income tax returns for 2018, 2019 and 2020 are subject to examination by the IRS and other state taxing authorities for three years after they were filed.

Revenue Recognition Policy:

T&L derives its revenues primarily from the sale of finished products to supermarkets and mass-market club stores, delis, bagel stores, caterers and distributors, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, revenue recognition occurs when the goods are transferred to its customers. T&L reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, T&L elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Incidental items that are immaterial in the context of the contract are recognized as expense.

T&L promotes its products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the transaction price based on amounts estimated as being due to customers and consumers at the end of a period. T&L derives these estimates principally on historical utilization and redemption rates. T&L does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions.

T&L CREATIVE SALADS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Revenue Recognition Policy: - (continued)

Payment terms in T & L’s invoices are based on the billing schedule established in contracts and purchase orders with customers. T & L recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, promotions and allowances are accounted for as a direct reduction of revenues.

T&L does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year.

Variable Consideration:

The nature of T & L’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.

Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that the significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.

Cost of Sales:

Cost of sales represents costs directly related to the production and manufacturing of the Company’s products. Costs include product development, freight-in, packaging, and print production costs.

Advertising Costs:

Advertising costs are charged to operations when incurred. Advertising expense for the period ended December 31, 2020 was approximately $11,000.

Subsequent Events:

Management has evaluated subsequent events and transactions through March 7, 2022, the date the financial statements were available to be issued, for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the financial statements were issued are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date.

The company’s assets were sold in December 2021.

T&L CREATIVE SALADS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 2 - RELATED PARTY LOANS AND TRANSACTIONS:

Related Party Loans represents unsecured interest free advances to stockholders.

T&L conducts business as a contract packager and manufacturer for a related company. Related company sales and accounts receivable for December 31, 2020, was $607,647 and $32,907, respectfully.

T&L leases its facility from related parties on a month-to-month basis. Lease expense for the year ended December 31, 2020, was $114,824. It also shares office and warehouse space with a related company.

These loans are secured by the Stockholders personal guarantees, a UCC-1 Blanket on all company assets and a 2^nd mortgage on real property.  

Future maturities of long-term debt are as follows:

T&L CREATIVE SALADS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

NOTE 4 - 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.

T&L has operating truck and automobile leases with monthly aggregate payments of $9,559 plus fuel, maintenance and excess mileage fees which expires in October 2022 and April 2023.

Aggregate minimum annual lease payments are as follows:

Lease expenses was approximately $115,000 for the year ended December 31, 2020 and is reported with the Other Factory Overhead in these financial statements.

NOTE 4 - COMMITMENTS AND CONTINGENCIES:

T&L is obligated to pay a consulting fee, the sum of $2,250 weekly to the founder and former stockholder, commencing July 23, 2018 and for each week thereafter for the remainder of the founders’ life. The consulting payments terminate in full upon the death of the founder. Due to the sale of T&L’s assets in December 2021 a final lump sum of approximately $1.4 million dollars was paid as full consideration of any remaining consulting obligation.

NOTE 5 - CONCENTRATIONS OF BUSINESS RISK:

T&L has major customers that aggregated approximately 59% of total revenue and 80% of total accounts receivable as of December 31, 2020.

NOTE 6 - RETIREMENT PLAN:

T&L sponsors a 401(k) and profit-sharing plan which covers all employees who meet certain age and eligibility requirements. The Company does not match contributions but may make a discretionary contribution. No discretionary contributions were made for the year ended December 31, 2020.

NOTE 6 – OTHER MATTERS:

Covid - 19 Pandemic:

As a means of aiding businesses hurt by the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law in March 2020 in response to the coronavirus emergency. The CARES Act provided a variety of payroll tax relief options to employers as an incentive to retain employees during the coronavirus emergency. These funds are being administered as loans and are backed by the Small Business Administration through the Paycheck Protection Program (PPP). These loans are eligible for forgiveness if certain payroll, rent and other facility expenses are met over an 8- or 24-week period after the loan is received. The Company received a Paycheck Protection Program Loan on May 6, 2020, for $796,042. On June 11, 2021, the Company received forgiveness of the loan, with accrued interest, therefore the loan will be included as income on the financial statements as PPP Loan Forgiveness for the year ended December 31, 2021.

DeVito & Co., LLC

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY INFORMATION

Board of Directors

T & L Creative Salads, Inc.

148 Allen Boulevard

Farmingdale, NY 11735

We have audited the financial statements of T & L Creative Salads, Inc. as of and for the year ended December 31, 2020, and our report thereon dated March 7, 2022, which expressed an unmodified opinion on those financial statements, appears on pages 1 through 2. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of costs of goods sold and operating expenses, which is the responsibility of management, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the financial statements and, accordingly, we do not express an opinion or provide any assurance on it.

DeVito & Co., LLC

Florham Park, NJ

March 7, 2022

26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552

info@devitocpa.com . www.devitocpa.com

OLIVE BRANCH FOODS, LLC.

FINANCIAL REPORT

DECEMBER 31, 2020

WITH INDEPENDENT AUDITORS’ REPORT

OLIVE BRANCH FOODS, LLC.

FOR THE YEAR ENDED DECEMBER 31, 2020

C O N T E N T S

DeVito & Co., LLC

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS’ REPORT

Board of Directors

Olive Branch Foods,

LLC 148 Allen Boulevard

Farmingdale, NY 11735

Report on the Financial Statements

We have audited the accompanying balance sheet of Olive Branch Foods, LLC as of December 31, 2020, and the related statement of income and members’ equity and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552

info@devitocpa.com . www.devitocpa.com

DeVito & Co., LLC

CERTIFIED PUBLIC ACCOUNTANTS

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Olive Branch Foods, LLC as of December 31, 2020, and the results of its operations and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

DeVito & Co., LLC

Florham Park, NJ

March 7, 2022