CAL-MAINE FOODS INC

Our

and

results

of

are

subject

to

numerous

risks

and

uncertainties,

many

of

which

are

beyond

our

control. The following is a description of

the known factors that

may materially affect our

business, financial condition or

results

of operations. They should

be considered

carefully,

in addition to

the information set

forth elsewhere

in this Annual

Report on

Form

10-K,

under

Part

II.

Management’s

Discussion

and

Analysis

of

Condition

and

Results

of

Operations,

in

making

any

decisions

with

respect

to

our

securities. Additional

risks

or

that

are

not

currently known

to us, or

that we are

aware of

but currently

deem to be

immaterial or that

could apply to

any company could

also materially adversely affect our business, financial condition or results of operations.

INDUSTRY RISK FACTORS

Market prices of

wholesale shell eggs

are volatile,

and decreases

in these prices

can adversely impact

our revenues

and

profits.

Our operating results are significantly affected by wholesale shell egg market prices, which fluctuate widely and are outside our

control. As a

result, our

prior performance

should not

be presumed

to be

an accurate

indication of

future performance.

Under

certain circumstances,

small increases

in production,

or small

decreases in demand,

within the industry

might have a

large adverse

effect on shell egg prices. Low shell egg prices adversely affect our revenues and profits.

Market prices for wholesale shell

eggs have been volatile and

cyclical. Shell egg prices have

risen in the past

during periods of

high demand such as the initial outbreak of the COVID-19 pandemic and periods when high protein diets are popular. Shell egg

prices

have

also

risen

during

periods

of

constrained

supply,

such

as

during

of

highly

pathogenic

avian

(“HPAI”).

During

times

when

prices

are

high,

the

egg

has

typically

geared

up

to

produce

more

eggs,

by

increasing the number of layers, which historically has ultimately resulted in an oversupply of eggs, leading to a period of lower

prices.

As discussed

above in

Part I. Item 1. Business – Seasonality

, seasonal

fluctuations impact

prices. Therefore,

comparisons

of

our

sales

and

results

between

different

quarters

within

a

single

fiscal

year

are

not

necessarily

meaningful

comparisons.

A decline in consumer demand for shell eggs can negatively impact our business.

We believe high-protein diet trends, industry advertising campaigns, the improved nutritional reputation of eggs and an increase

in at-home consumption of eggs

during the COVID-19 pandemic, have

all contributed at one time

or another to increased shell

egg demand. However, it is possible that the demand

for shell eggs will decline in the

future. Adverse publicity relating to health

or safety

concerns and

changes in

the perception

of the

nutritional value

eggs, changes

in consumer

views regarding

consumption of animal-based

products, as well

as movement

away from high

protein diets,

could adversely

affect demand

for

shell eggs, which could have a material adverse effect on our future results of operations and financial condition.

Feed costs are volatile and increases in these costs can adversely impact our results of operations.

Feed costs are the

largest element of our

shell egg (farm) production

cost, ranging from 53%

to 63% of total

farm production cost

in the last five fiscal years.

Although feed ingredients,

primarily corn and soybean

meal, are available

from a number

of sources, we

do not have control

over

the prices

of the

ingredients we

purchase, which

are affected

by weather,

various global

and U.S.

supply and

demand factors,

transportation and

storage costs,

speculators, agricultural,

energy and

trade policies

in the

U.S. and

internationally,

and global

instability, including as

a result of the war in Ukraine,

the conflicts involving Israel and Iran and

attacks on shipping in the Red

Sea. For example, while

feed costs declined during

fiscal 2025, we saw

higher prices for corn

and soybean meal over

the last five

fiscal years as a

result of weather-related

shortfalls in production and

yields, ongoing supply chain

disruptions, and the Russia-

Ukraine war and its impact on the export markets. Our costs for corn and soybean meal are also affected by local basis prices.

Increases in feed costs unaccompanied by increases in

the selling price of eggs can have a

material adverse effect on the results

of our operations and

cash flow. Alternatively,

low feed costs can

encourage egg industry overproduction, possibly

resulting in

lower egg prices and lower revenue.

Agricultural risks, including

outbreaks of avian

diseases such as

HPAI,

have harmed and

in the future

could harm our

Our shell egg production activities

are subject to a variety

of agricultural risks. Unusual or

extreme weather conditions, disease

and pests can materially and

adversely affect the quality and quantity

of shell eggs we produce

and distribute. Outbreaks of avian

influenza among poultry occur periodically worldwide and have occurred sporadically in the U.S. Recent HPAI outbreaks in the

U.S. caused

significant depopulation

of U.S.

commercial table

egg layer

flocks, lower

supplies and

higher shell

egg

prices. During the third

and fourth quarters of

fiscal 2024, we experienced

HPAI outbreaks within our facilities located in

Kansas

and Texas,

which are now

fully operational. For

additional information, refer

to

Part II. Item 7. Management’s Discussion and

Analysis of Financial Condition and Results of Operations – HPAI

.

We

maintain controls

and procedures

designed to

reduce the

risk of

exposing our

flocks and

employees to

harmful diseases;

however, despite

these efforts, outbreaks

of avian diseases

can and do

still occur and

have adversely impacted,

and may in

the

future adversely impact, the health

of our flocks and could in the

future adversely impact the health

of our employees. Continued

or intensified spread of

HPAI could have a material adverse impact on

our financial results by

increasing government restrictions

on the sale and distribution of

our products and requiring us to

euthanize the affected layers. Negative publicity

from outbreaks

within our industry can

negatively impact customer perception. If

a substantial portion of

our layers or production

are

affected by any of these factors in any given quarter or year, our business, financial condition, and results of operations could be

materially and adversely affected.

Shell

eggs

and

shell

egg

are

susceptible to

microbial

contamination, and

we

may

be

to,

or

we

may

voluntarily, recall contaminated products.

Shell eggs

and shell

are vulnerable

to contamination by

pathogens such

as Salmonella

Enteritidis. The Company

maintains policies and procedures designed to comply with the complex

rules and regulations governing egg production, such as

The Final

Egg Rule

issued by

the FDA

“Prevention of

Salmonella Enteritidis

in Shell

Eggs During

Production, Storage,

and

Transportation,” and the FDA’s

Food Safety Modernization Act. Shipment of contaminated products, even if inadvertent, could

result in a

violation of law

and lead to

increased risk

of exposure to

product liability

claims, product

recalls and scrutiny

by federal

and

state

agencies.

We

have

little,

if

any,

control

over

proper

handling

once

the

product

has

been

shipped

or

delivered. In

purchased

from

other

could

contain

contaminants

that

might

be

inadvertently

redistributed by us. This has occurred in the past and we were

required to recall eggs redistributed to our customers. As such, we

might decide

or be

recall a

product if

we, our

customers or

regulators believe

it poses

a potential

health risk. Any

product recall

could result

in a

loss of

consumer confidence

in our

products, adversely

affect our

reputation with

existing and

potential customers and

have a material

adverse effect on

our business, results

of operations and

financial condition. We currently

maintain insurance

with respect

to certain

risks, including

product liability

insurance, business

interruption insurance,

product recall insurance and general liability insurance, but in many cases such insurance is

expensive, difficult to obtain and no

assurance can be

given that such

insurance can be

maintained in the

future on acceptable

terms, or in

sufficient amounts to

protect

us against losses

due to any such events, or at all.

Our

profitability

may

be

impacted

by

increases

in

other

input

costs

such

as

materials,

delivery

expenses, construction materials and equipment, including as a result of inflation and tariffs.

In addition to feed ingredient costs, other significant input costs include costs

of packaging materials and delivery expenses. Our

packing materials

increased during

the past

three fiscal

years due

to inflation

and higher

labor costs,

and during

also as a

result of supply

chain constraints initially caused

by the pandemic,

and these costs

may continue to increase.

We

also

experienced increases in delivery expenses during fiscal 2023 and 2022 due to increases in fuel and labor costs for

both our fleet

and contract trucking, and these

costs may continue to increase.

Changes in U.S. trade and

tariffs policies may cause higher costs

for construction materials, equipment, packaging and other

items. Increases in these costs are

largely outside of our control

and

could have a material adverse effect on our profitability and cash flow.

BUSINESS AND OPERATIONAL RISK FACTORS

Our acquisition growth strategy subjects us to various risks.

As discussed in

Part I. Item I. Business – Growth Strategy

, we plan to continue to pursue a growth strategy that includes,

in part,

selective acquisitions

of

other

businesses engaged

in

the production

and sale

of

shell

eggs, with

a priority

on

those that

will

facilitate our ability

to expand our

cage-free shell egg

production capabilities

in key locations

and markets.

We may over-estimate

or under-estimate the

demand for cage-free

eggs, which could

cause our acquisition

strategy to be

less-than-optimal for our

future

growth and profitability.

The number of existing businesses with

cage-free capacity that we may

be able to purchase is

limited,

as

most

of

shell

eggs

by

other

in

our

markets

does

not

meet

demands

or

legal

requirements to be designated as cage-free. Conversely, if we acquire cage-free production capacity, which is more expensive to

and

operate,

and

demands

or

legal

for

eggs

were

to

change,

the

resulting

lack

of

demand for cage-free eggs may result in higher costs and lower profitability.

Acquisitions require capital resources and

can divert management’s attention from our existing

business. Acquisitions also entail

an inherent risk that

we could become

subject to contingent

or other liabilities,

including liabilities arising

from events or

conduct

prior to

our acquisition

of a

business that

were unknown

to us

at the

time of

acquisition. We

could incur

significantly greater

expenditures in integrating an acquired business than we anticipated at the time of its purchase.

We cannot assure you that we:

●

will identify suitable acquisition candidates;

●

can consummate acquisitions on acceptable terms;

●

can successfully integrate an acquired business into our operations; or

●

can successfully manage the operations of an acquired business.

No

assurance can

be

given

that

businesses

we

acquire

in

the

future

will

contribute

positively

to

our

results

of

or

financial condition.

federal antitrust

laws require

regulatory approval

of acquisitions

that exceed

certain threshold

levels of significance, and we cannot guarantee that such approvals would be obtained.

The consideration we pay

in connection with any

acquisition affects our financial

results. If we pay

cash, we could be

to

use

a

portion

of

our

available cash

or

credit

facility

to

consummate

the

acquisition.

To

the

extent

we

issue

shares

of

our

Common Stock, existing

stockholders may be

diluted. In addition,

acquisitions may result

in additional debt.

Our ability to

access

any additional capital

be needed

for an

acquisition may be

adversely impacted by

higher interest rates

and economic

uncertainty.

We

may

not

realize

the

anticipated

benefits

of

our

of

Echo

Lake

Foods

and

our

strategy

to

diversify

our

product mix to include more prepared foods.

As discussed

elsewhere in

this report,

we completed

our acquisition

of Echo

on June

2, 2025.

Although we

had

already diversified our business

with some prepared foods

product offerings, the

acquisition of Echo Lake

Foods represented a

significant expansion of

this strategy.

Accordingly, we

may experience unexpected

challenges in integrating

and managing the

business of

Foods. Integrating

Foods’ business

may be

more costly

or time

consuming than

we expect.

Even if

the business

of Echo

is successfully

integrated, we

may not

realize the

benefits we

expect from

the acquisition,

including the

synergies, cost

savings, reduction

in earnings

volatility,

margin expansion,

financial returns,

expanded customer

relationships, or sales

or growth opportunities.

Our experience managing

prepared foods businesses

is much more

limited than

our experience managing

our shell egg

and egg products

businesses, and our

strategy to diversity

our product mix

to include more

prepared foods may not produce the

favorable financial and other results

that we anticipate. For additional information

our

Foods, see

Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and

and

Part II. Item 8. Notes to Consolidated Financial Statements, Note 17 - Subsequent

Events

.

Global or

regional

health crises

including pandemics

or epidemics

could have

an adverse

impact on

and

The

effects

of

global

or

regional

pandemics

or

epidemics can

significantly

impact

our

Although

demand

for

our

products could

increase as

of restrictions

such as

travel bans

and restrictions,

quarantines, shelter-in-place

orders, and

business and government

shutdowns, which can

prompt more consumers

to eat at

home, these restrictions

could also significantly

increase our cost of doing

business due to labor shortages,

supply-chain disruptions, increased costs

and decreased availability of

packaging supplies or feed, and

increased medical and other costs.

We

experienced these impacts as a

result of the COVID-19

pandemic,

during

our

fiscal

years

and

The

pandemic

recovery

also

contributed

to

higher

inflation

and

rates,

which

persist

and

may

continue

to

persist.

The

impacts

of

health

crises

are

difficult

to

predict

and

depend

on

numerous factors

including the severity,

length and

geographic scope of

the outbreak, resurgences

of the

disease and

variants,

availability and

acceptance of

vaccines, and

governmental, business

and individuals’

responses.

A resurgence

of COVID-19

and/or variants, or any future major

public health crisis, would disrupt our

business and could have a material adverse

effect on

our financial results.

Our largest customers have accounted

for a significant portion of

our net sales volume. Accordingly, our business

may be

adversely affected by the loss of, reduced purchases by, or pricing pressure from, one or more

of our large customers.

Our customers, such as supermarkets, warehouse clubs and food distributors, have continued to consolidate and consolidation is

expected to continue.

These consolidations have

produced larger customers and

potential customers with

increased buying power

that are more

capable of operating with

reduced inventories, opposing price

increases, and demanding lower

pricing, increased

promotional programs and specifically

tailored products. Because of

these trends, our volume

growth could slow or

we may need

to lower prices or increase promotional spending for our products, any of which could adversely affect our financial results.

Our top three customers

accounted for an aggregate

of 49.2%, 49.0% and

50.1% of our net

sales dollars for fiscal

2025, 2024 and

2023, respectively.

Our largest

customer, Walmart

Inc. (including Sam's

Club), accounted for

33.6%, 34.0% and

34.2% of net

sales dollars for fiscal

2025, 2024 and 2023,

respectively. Although we have established long-term

relationships with most of

our

customers who continue to

purchase from us based

on our ability to

service their needs, they

are generally free to

acquire shell

eggs from other

sources. If, for any

reason, one or

more of our

large customers were

to purchase significantly

less of our

shell

eggs in the future, terminate their

purchases from us or demand significantly

lower pricing, and we were not

able to sell our shell

eggs to

new customers

at comparable

levels, it

would have

a material

adverse effect

on our

business, financial

condition, and

The recent high market prices

for eggs, primarily caused by the

HPAI-related

reduction in supply,

led to pressure from

customers to

change long-standing

market-based pricing

frameworks and/or

otherwise reduce

the price

of our

eggs. A

material change in

our sales arrangements

with key customers

could have a

material adverse effect

on our revenues,

gross

profits and

net income. Other

reactions to

high egg prices,

including by state

or federal government

agencies, may also

adversely impact our business.

Market prices for wholesale shell eggs have been volatile

and cyclical over time. Market prices for eggs

tend to increase during

and following outbreaks of

agricultural diseases in the

egg industry that reduce

the supply of eggs,

which has occurred during

the

current

HPAI

outbreak,

until

the

supply

and

demand

balance

is

restored.

Many

of

our

sales

arrangements

with

particularly for conventional eggs, are based on formulas that take into account, in varying ways, independently quoted regional

wholesale

market

prices

for

eggs.

The

recent

high

market

prices

for

eggs

have

led

to

pressure

from

to

change

longstanding market-based pricing frameworks and/or otherwise reduce the price of our

eggs. To remain competitive

and retain

our

and

gain

new

ones,

we

must

consider

our

and

the

and

of

competitors. A

material change

in our

sales arrangements

with key

customers could

have a

material adverse

effect on our

revenues

and gross profits.

Other

to

high

egg

prices

may

also

impact

our

On

26,

2025,

the

U.S.

Secretary

of

Agriculture announced a

$1 billion comprehensive

strategy to curb

HPAI, protect the U.S. poultry industry, and lower

egg prices.

The Secretary’s

five-pronged strategy

includes an

additional $500

million for

biosecurity measures,

$400 million

in financial

relief for affected farmers, and $100 million for vaccine research, actions to reduce regulatory burdens, and exploring temporary

egg import options.

In March 2025,

we received a

civil investigative demand

in connection with

a widely publicized

investigation

by the

Antitrust Division

of the

Department of

Justice (“DOJ”)

into the

causes behind

nationwide increases

in egg

prices. In

persistent

high

egg

prices

may

cause

some

consumers

to

fewer

eggs.

Persistent high-price

cycles

and

the

existence of the

DOJ investigation may

also increase attention

on the egg

industry,

and the Company

specifically, by

state and

federal government agencies, which may lead

to additional government investigations or

related activities. The potential impacts

of these reactions on our

business are unclear,

unpredictable and may divert our

resources and attention from our

core business

activities, and they may have an adverse effect that could be material.

Our business is highly competitive.

The production and sale of fresh shell eggs, which accounted for 94.3% to 95.3% of our net sales in our last three fiscal years, is

intensely competitive.

We

compete with

a large

competitors that

may prove

to be

more successful

than we

are in

producing, marketing and selling shell eggs. We cannot provide assurance that we will be able to compete successfully with any

or all of these companies. Increased competition could result in price reductions, greater

cyclicality, reduced margins and loss of

market share, which would negatively affect our business, results of operations, and financial condition. In

addition, our growth

strategy

includes

expansion

of

our

product

foods.

The

foods

is

intensely

competitive and includes

competition from

other prepared food

companies and

other suppliers of

prepared and convenience

foods

restaurants,

grocery

stores

and

convenience

stores,

many

of

which

have

more

experience

and

convenience foods businesses.

We

are

on

our

team,

and

the

loss

of

any

key

member

of

this

team

may

affect

the

implementation of our business plan in a timely manner.

Our success depends

largely upon

the continued service

of our senior

management team. The

loss or interruption

of service of

one or more of

our key executive officers

could adversely affect our

ability to manage our

operations effectively and/or pursue

our growth strategy.

We

have not entered into

any employment or non-compete

agreements with any of

our executive officers.

Competition could cause us to lose talented employees, and unplanned turnover could deplete institutional knowledge and result

in increased costs due to increased competition for employees.

Our

is

on

our

technology

systems

and

software,

and

failure

to

protect

against

or

effectively respond to cyber-attacks, security

breaches, or other incidents involving those systems, could adversely affect

day-to-day operations and decision making processes and have an adverse effect on our performance and reputation.

The efficient operation of our business depends on our information technology systems, which we rely on to effectively manage

our

data,

communications,

logistics,

accounting,

and

other

processes.

If

we

do

not

allocate

and

effectively manage the resources necessary

to build and sustain an

appropriate technology environment, our

business, reputation,

or financial results could be negatively impacted. In addition, our information technology systems may be vulnerable to damage

or

interruption

from

circumstances

beyond

our

control,

systems

failures,

natural

disasters,

terrorist

attacks,

viruses, ransomware, security breaches or cyber incidents. Cyber-attacks are becoming more sophisticated and

are increasing in

the number of attempts and frequency by groups and individuals with a wide range of motives. We have experienced and expect

to continue to experience attempted cyber-attacks of our information technology systems or networks.

We regularly engage

with third-party

service providers

as part

of our

operations to

provide a

high level

of service

to our

customers.

We have implemented certain practices and policies to minimize the potential risks associated with the exchange of

with contracted vendors.

Despite these practices

and policies, we

cannot guarantee that

information technology systems

of our

third-party service

providers will

prevent and

detect all

cybersecurity breaches

and incidents.

Although we

require third-party

service providers to

notify us upon

a potential breach

or incident, there

is a potential

risk that our

business, reputation, or

results could be negatively impacted by cybersecurity incidents at their businesses.

Additionally, future or past

business transactions

(such as acquisitions

or integrations) could

expose us

to additional cybersecurity

risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated systems

and technologies.

Furthermore, we

may discover

security issues

that were

not found

during due

diligence of

such acquired

or

integrated businesses, and

it may be

difficult to

integrate businesses into

our information technology

environment and security

Our information technology systems also subject us to numerous data privacy obligations. We may at times fail (or be perceived

to have failed) in our

efforts to comply with our

data privacy obligations. If we or

the third parties on which we

rely fail, or are

perceived to have failed, to address or comply with applicable data privacy obligations, we could face significant consequences,

including but

to government

enforcement actions

and litigation.

A security breach of

sensitive information

could result

in damage to

our reputation and our

relations with our customers

or employees. Any

such damage or interruption

could have a

material adverse effect on our business.

Technology

and related

business and

regulatory requirements

change rapidly.

Failure to

update or

replace legacy

systems

to

address

these

changes

could

result

in

increased

costs,

remediation

costs,

system

downtime,

third

party

litigation, regulatory actions or cyber security vulnerabilities which could have a material adverse effect on our business.

Labor shortages or increases in labor costs could adversely impact our business and results of operations.

Our

success

is

upon

recruiting,

motivating,

and

retaining

staff

to

operate

our

farms.

Approximately

79%

of

our

employees are

paid at

hourly rates,

often in

entry-level positions.

While all

our employees

at rates

above the

federal

minimum wage requirements, any significant increase

in local, state or federal

minimum wage requirements could increase our

labor costs. In

addition, any regulatory

changes requiring us to

provide additional employee benefits

or mandating increases

in

other employee-related costs, such

as unemployment insurance or

workers compensation, would increase our

costs. A shortage

in

the

labor

pool,

which

may

be

caused

by

competition

from

other

employers,

the

remote

locations

of

many

of

our

farms,

decreased labor

participation rates

or changes

in government-provided

support or

immigration laws

or policies,

particularly in

times of lower unemployment, could adversely affect

our business and results of operations. A

shortage of labor available to us

could cause our farms to operate with

reduced staff, which could negatively impact

our production capacity and efficiencies. In

fiscal 2022, our

labor costs increased

primarily due to

the COVID-19 pandemic

and its effects,

which caused us

to increase wages

in response to

labor shortages.

In fiscal 2024

and 2025, labor

wages continued to

rise due to

inflation and low

unemployment.

Accordingly, any significant labor shortages or increases in our labor costs could have a material adverse effect on our results of

LEGAL AND REGULATORY

Pressure from animal rights groups regarding the treatment

of animals may subject

us to additional costs to

conform our

practices

to

comply

with

developing

or

subject

us

to

marketing

costs

to

defend

challenges

to

our

current

practices and protect our image with our customers. In particular,

changes in customer preferences and state legislation

have accelerated an increase in demand for cage-free eggs, which increases uncertainty in our business

and increases our

costs.

We and many of our customers face

pressure from animal rights

groups, such as People

for the Ethical Treatment of

Animals and

the Humane Society of the United States, to require companies that supply food products

to operate their businesses in a manner

that

treats

animals

in

conformity

with

certain

developed

or

by

these

groups.

In

general,

we

may

incur

additional costs to conform

our practices to address

these standards or to

defend our existing practices

and protect our image

with

our customers. The

standards promoted by

these groups change

over time, but

typically require minimum

cage space for

hens,

among other requirements, and some of these groups have led successful legislative efforts to

ban any form of caged housing in

various states.

As

discussed

in

Part I. Item 1. Business - Government Regulation

,

ten

states

have

passed

minimum

space

and/or

requirements for

hens, and

other states

are considering

such requirements.

a significant

our customers

have announced goals to either exclusively offer cage-free eggs or significantly increase the

volume of cage-free egg sales in the

future, subject in most cases to availability of

supply, affordability and consumer demand, among other contingencies. While we

anticipate that

our retail

and foodservice

customers will

continue to transition

to selling

cage-free eggs

given publicly

stated goals,

no assurance

that this

transition will

take place

or take

place according

to the

timeline of

current cage-free

goals. For

example, customers may accelerate their transition to

stocking cage-free eggs, which may challenge

our ability to meet the cage-

free volume needs

of those customers

and result in

a loss of

shell egg sales.

Similarly,

customers who commit

to stock greater

proportional quantities of cage-free eggs

are under no obligation to

continue to do so, which

may result in an oversupply

of cage-

free eggs and

result in lower

specialty egg prices,

which could reduce

the return on

our capital investment

in cage-free production.

In

addition, on

July

9,

2025, the

DOJ filed

a

lawsuit

against the

State of

California alleging

that

California’s

cage-free laws

“impose burdensome red tape on the production of eggs and poultry products nationally in

violation of the Supremacy Clause of

the U.S. Constitution” and lead to higher egg prices for U.S. consumers.

The outcome of this litigation could further complicate

and the cage-free egg landscape and affect our ability to successfully navigate these issues.

Changing

our

infrastructure

and

to

conform

to

consumer

preferences,

demands,

laws

and

challenges to these

laws. has resulted

and will continue

to result in

additional costs, including

capital and operating

cost increases.

The USDA reported that the estimated U.S. cage-free flock was 129.2 million hens as of May 31, 2025, which

is approximately

44.9% of the total U.S. table egg layer hen population. According to the USDA Agricultural Marketing Service, as of December

221.4

million

hens,

or

about

73%

of

the

U.S.

non-organic

laying

flock

would

have

to

be

in

production to meet projected cage-free commitments from the retailers, foodservice providers and food manufacturers that have

stated goals to transition to cage-free eggs.

In response

to our

customers’ announced goals

and increased

legal requirements for

cage-free eggs, we

have increased

capital

expenditures

to

our

capacity.

We

are

also

enhancing

our

focus

on

when

considering acquisition

opportunities. Our

customers typically

do not

commit to

long-term purchases

of specific

quantities or

type of eggs with

us, and as a

result, we cannot predict

with any certainty which

types of eggs they

will require us to

supply in

future

periods.

The

of

eggs

is

more

costly

than

the

of

eggs,

and

these

higher

production costs contribute to the

prices of cage-free eggs,

which historically have typically

been higher than conventional

egg

prices. Many

consumers prefer

to buy

less expensive

eggs. These

consumer preferences,

in addition

to the

landscape,

may

in

turn

influence

our

customers’

future

needs

for

and

eggs.

Due

to

these

uncertainties, we may over-estimate future demand for cage-free eggs, which could increase our costs unnecessarily,

or we may

under-estimate future demand for

cage-free eggs, which could harm

us competitively.

If our competitors obtain non-cancelable

long-term contracts to provide cage-free

eggs to our existing or

potential customers, then there may

be decreased demand for our

eggs

due

to

these

lost

sales.

If

we

and

our

competitors increase

and

no

commensurate increase in

demand for cage-free

eggs, this overproduction

could lead to

an oversupply of

cage-free eggs, reducing

the sales price for specialty eggs and our return on capital investments in cage-free production.

Failure

to

comply

with

governmental

environmental

could

harm

our

operating results,

financial condition,

and reputation. Further,

we may

incur significant

costs to

comply with

any such

regulations.

We are subject to federal,

state and local

regulations relating to

grading, quality control,

labeling, sanitary control,

waste disposal,

areas of

our business.

As a

fully-integrated shell

egg producer,

our shell

egg facilities

are subject

to regulation

and

inspection by the USDA, OSHA, EPA and FDA, as well as state and local health and agricultural agencies, among others. All of

our shell egg production

and feed mill

facilities are subject

to FDA, EPA and OSHA regulation

and inspections. In

addition, rules

are often proposed that, if adopted as proposed, could increase our costs.

Our operations and facilities are subject to various federal, state and local environmental, health, and safety

laws and regulations

governing, among

other

things, the

generation, storage,

handling, use,

transportation, disposal,

and remediation

of

hazardous

materials. Under these laws and regulations, we are required to obtain permits from governmental authorities, including, but not

limited to wastewater discharge permits and manure and litter land applications.

If we

fail to

comply with

applicable laws or

regulations, or fail

to obtain necessary

permits, we could

be subject

to significant

fines and penalties or other sanctions, our reputation could be harmed, and our

operating results and financial condition could be

materially adversely

affected.

because these

regulations are

becoming increasingly

more stringent,

it is

possible that we will be required to incur significant costs for compliance with such laws and regulations in the future.

Climate change and legal or regulatory responses may have an adverse impact on our business and results of operations.

Extreme weather

events, such

as derechos,

wildfires, drought,

tornadoes, hurricanes,

storms, floods

or other

natural disasters

could materially and adversely affect our operating results and financial condition. In fact, derechos, fires, floods, tornadoes and

hurricanes have affected our facilities or the facilities of other egg producers in the past. Increased

global temperatures and more

frequent occurrences

of extreme

weather events,

which may

be exacerbated

by climate

change, may

cause crop

and livestock

areas to

become unsuitable,

including due

to water

scarcity or

high or

unpredictable temperatures,

which may

much

greater stress on food systems and more pronounced food insecurity globally. Lower global crop production, including corn and

soybean meal, which

are the primary

feed ingredients that

support the health

of our animals,

may result in

significantly higher

prices for these commodity inputs, impact

our ability to source the commodities

we use to feed our flocks, and

our ability to

maintain or grow

our operations. Climate

change may increasingly

expose workers and

animals to high

heat and

humidity

stressors

that

impact

poultry

and

our

costs.

Increased

greenhouse

gas

emissions

may

also

negatively impact air quality, soil quality and water quality, which may hamper

our ability to support our operations,

in higher water- and soil-stressed regions.

Increasing frequency

of severe

weather events,

whether tied

to climate

change or

any other

cause, may

our

raise poultry

and produce

eggs profitably

or to

operate our

transportation and

logistics supply

chains. Regulatory

and market

pricing may

drive the

fossil-based fuels

higher,

which could

our ability

to

source commodities necessary

to operate

our farms or

plants and

our current

fleet of

vehicles. These

changes may

cause us

to

change, significantly, our day-to-day business operations and our strategy. Climate change and extreme weather events

may also

impact demand for

our products given

evolution of consumer

food preferences. Even

if we take

measures to position

in anticipation

of such

changes, future

compliance with

legal or

regulatory requirements

may require

significant management

time, oversight and enterprise expense. We may also incur significant expense tied to regulatory fines if laws and regulations are

interpreted and applied in a manner

that is inconsistent with our business practices.

We

can make no assurances that our

efforts

to prepare

for these

adverse events

will be

in line

with future

market and

regulatory expectations

and our

access to

capital to

support our business may also be adversely impacted.

Current and

future

litigation and

other legal

matters could

expose us

to significant

liabilities and

adversely affect

our

business reputation.

We

and

certain

of

our

subsidiaries

are

involved

in

various

legal

proceedings

and

other

legal

matters. Litigation, government

investigations and

other legal matters

are inherently

unpredictable, and although

we believe we

have meaningful

defenses in these

matters, we may incur liabilities due

to adverse judgments or penalties or

we may enter into settlements of

claims, which could

have a material

adverse effect on

our results of

operations, cash flow

and financial condition.

For a discussion

of our ongoing

legal proceedings see

Part I. Item 3. Legal Proceedings

below and Part

II. Item 8.

Notes to the

Note 16 – Commitments and Contingencies

.

Such lawsuits,

investigations and other

legal matters are

expensive to respond

to

and

defend,

divert

attention,

and

may

result

in

adverse

judgments,

penalties

or

settlements. Legal

proceedings may expose us to negative publicity,

which could adversely affect our business reputation and customer preference

for our products and brands.

FINANCIAL AND ECONOMIC RISK FACTORS

Weak or unstable economic conditions, including continued high inflation

and interest rates, could negatively impact our

Weak

or unstable economic conditions,

including continued high inflation

and interest rates, may

adversely affect our

by:

●

Limiting our access to capital markets or increasing the cost of capital we may need to grow or operate our business;

●

Changing consumer spending and habits and demand for eggs, particularly higher-priced eggs;

●

Restricting the supply of energy sources or increasing our cost to procure energy; or

●

Reducing the availability

packaging material, and

other raw materials,

or increasing the

cost of these

items.

Deterioration of economic conditions could also negatively impact:

●

The financial condition of our suppliers, which may make it more difficult for them to supply raw materials;

●

The financial condition of our customers, which may decrease demand for eggs or increase our bad debt expense; or

●

The financial condition of our insurers, which

could increase our cost to obtain insurance,

and/or make it difficult for or

insurers to meet their obligations in the event we experience a loss due to an insured peril.

to

the

U.S.

Bureau

of

Labor

Statistics,

from

May

to

May

2022,

the

Consumer

Price Index for

All

Urban

Consumers (“CPI-U”) increased 8.5 percent, the largest 12-month

increase since the period ending December 1981. The

CPI-U

increased 4.1%, 3.3%, and 2.4% annually from May 2022 to May 2025. Inflationary costs have increased our input costs, and if

we are unable to pass these costs through to the customer it could have an adverse effect on our business.

We

hold significant

cash balances

in deposit

accounts with

deposits in

excess of

the amounts

insured by

the Federal

Deposit

Insurance Corporation

(“FDIC”). In

the event

of a bank

failure at

an institution where

we maintain deposits

in excess of

the FDIC-

insured amount, we may lose such excess deposits.

The

loss

of

any

registered

trademark

or

other

intellectual

property

could

enable

other

to

compete

more

effectively with us.

We

utilize intellectual

property in

our business. For

example, we

own the

trademarks

Farmhouse Eggs®

,

4Grain®, Sunups®

,

and

. We

produce and market

Best®

and

Land O’ Lakes

® under license agreements

with EB. We

have invested a

significant amount of

money in establishing

and promoting our

trademarked brands. The loss

or expiration of

any

intellectual property

could enable

our competitors

to compete

more effectively

with us

by allowing

them to

make and

sell products

substantially

similar

to

those

we

offer. This

could

negatively

impact

our

ability

to

produce

and

sell

those

thereby

adversely affecting our operations.

Impairment in the

carrying value of

goodwill or other

assets could negatively

affect our results of

operations or net

worth.

the

excess

of

the

cost

of

acquisitions

over

the

fair

value

of

the

net

assets

acquired. Goodwill

is

reviewed

at

least

annually

for

by

assessing

qualitative

factors

to

determine

whether

the

existence of events or circumstances leads to a determination that it is

more likely than not that the fair value of a reporting unit

is less than

its carrying amount. As

of May 31,

2025, we had

$46.8 million of goodwill. While

we believe the

current carrying

value of this goodwill is

not impaired, future goodwill impairment

charges could adversely affect our results of

operations in any

particular period and our net worth.

Events beyond our control such as extreme weather and natural disasters could negatively impact our business.

Fire, bioterrorism,

pandemics, extreme

weather or

natural disasters,

including droughts,

floods, excessive

cold or

heat, water

rights restrictions, hurricanes or other

storms, could impair the health

or growth of our flocks, decrease

production or availability

or interfere with

our operations due

to power outages,

fuel shortages, discharges

from overtopped or

breached

wastewater treatment lagoons, damage to our production

and processing facilities, labor shortages or disruption

of transportation

channels, among other things. Any of these factors could have a material adverse effect on our financial results.

RISK FACTORS RELATING

TO OUR COMMON STOCK

Provisions of our certificate

of incorporation, bylaws,

and Delaware law may

make an acquisition

of us or a

change in our

management more difficult.

Certain provisions of

our certificate of incorporation

and bylaws could

discourage, delay or

prevent a merger, acquisition or

other

change in control that stockholders may consider favorable, including transactions in which an investor might otherwise receive

a premium for its shares. These

provisions also could limit the price

that investors might be willing

to pay in the future for

shares

of our Common Stock, thereby depressing the

market price of our Common Stock. Stockholders

who wish to participate in these

transactions may

not have

the opportunity

to do

so. Furthermore,

these provisions

could prevent

or frustrate

attempts by

our

stockholders to replace or remove our management. These provisions:

●

provide for the

division of the

Board into three

classes as nearly

equal in size as

practicable with staggered three-year

terms and limit the removal of directors and the filling of vacancies;

●

authorize our Board to set the

terms of and issue preferred stock, without

stockholder approval, that could be issued to

persons friendly to management

or could operate as

a “poison pill” to

dilute the stock ownership

of a potential hostile

acquirer to prevent an acquisition that is not approved by our Board;

●

prohibit stockholder action by written consent;

●

●

establish advance notice requirements

for stockholder nominations

to our Board or

for stockholder proposals that

can be

acted on at stockholder meetings; and

●

require the approval of the

holders of at least 66-2/3%

of the voting power of all

then outstanding shares of capital

stock

of the Company entitled

to vote generally in

the election of directors,

voting together as a

single class, in order

to amend

our certificate of incorporation and bylaws.

we are

governed by

the provisions

of Section

203 of

the Delaware

General Corporation

Law,

which may,

unless

certain criteria are

met, prohibit large stockholders,

in particular those

owning 15% or

more of our

outstanding voting stock,

from

merging or combining with us for a prescribed period of time.

The loss of controlled company status could disrupt our business.

Until April 14,

2025, our Company

was controlled

by members of

the family

of our founder,

Fred R. Adams,

Jr. since its founding

and since it became a public company.

As described in Part II. Item 8. Notes

to the Consolidated Financial Statements, Note 11

– Equity,

on April

14, 2025,

ceased to

be a

“controlled company”

rules of

The Nasdaq

Stock Market

when all

of the

outstanding shares

of Class

Stock, all

of which

were controlled

by the

family,

were converted

to

Common Stock.

Immediately prior thereto,

members of

the family-controlled shares

of Class

Common

Stock that

resulted in

voting power

of 53.2%.

After the

conversion of

the subsequent

sale by

family members in a registered

public offering of 2,978,740

shares of Common Stock on

April 17, 2025, and as

reported on an

amendment to Schedule 13D, the

family beneficially owned approximately 6.1% of

our outstanding Common Stock. Adolphus

B. Baker,

Board Chair and a

family member, has

indicated that he is

willing to serve as

executive Board Chair at

least through

our 2027 annual meeting

of stockholders. The effect of

the loss of controlled

company status on the

trading price of our

Common

on our

business is

uncertain, including

our ability

to retain

and hire

key personnel

and maintain

relationships with

customers and suppliers,

and on our

operating results. In

addition, our business

may be more

likely to be

disrupted by persons

seeking to influence or

effect a change

of control, change

of management or

change in governance of

our Company.

Any such

disruptions to our business could have a material adverse effect on our operations and financial results.

The price of

our Common Stock

may be affected

by the availability

of shares

for sale in

the market, and

investors may

experience significant dilution

as a result of

future issuances of our

securities, which could

materially and adversely

affect

the market price of our Common Stock.

The sale or availability for

sale of substantial amounts of

our Common Stock could adversely

impact the price of our

Common

Stock. Our Fourth Amended and Restated Certificate of Incorporation authorizes

us to issue 120,000,000 shares of our Common

Stock

and

10,000,000

shares

of

preferred

stock.

As

of

July

22,

2025,

there

were

48,497,477

shares

of

our

Common

Stock

outstanding and

no shares

of preferred

stock outstanding.

Accordingly,

a substantial

Stock

remain authorized for issuance and could become available for sale in the market. Our Fourth

Amended and Restated Certificate

of Incorporation authorizes our

Board to set the

terms of and issue

preferred stock, without stockholder

approval, and such shares

if

issued

could

dilute

the

voting

and

interests

of

holders

of

Common

Stock.

In

2,791,854

shares

of

our

Common

Stock

held

by

the

family

of

our

late

founder

remain

subject

to

the

registration

rights

provided

by

the

Agreement

Regarding Conversion, dated February 25, 2025, by and among the Company, DLNL, LLC and such family members. Also, we

may be obligated to

issue additional shares of

our Common Stock in

connection with employee benefit

plans (including equity

incentive plans or under our KSOP).

In

the

future,

we

may

decide

to

raise

capital

through

of

our

Common

Stock,

preferred

stock,

convertible into or exchangeable for our Common Stock of preferred stock, or rights

to acquire those securities or our Common

Stock or

preferred stock.

We

may also

issue such

securities as

consideration in

an acquisition. The

issuance of

such securities

could result in dilution of existing stockholders’

equity interests in us. Issuances of

substantial amounts of our Common Stock

or

preferred stock, or

the perception that

such issuances could

occur, may adversely affect prevailing

market prices for

Stock.

The price of our Common Stock may fluctuate significantly.

The market price of our Common Stock

has fluctuated significantly and may continue to

do so for various reasons including, but

not limited to, the following, many of which are beyond our control:

●

●

●

changes in recommendations by research analysts who track our Common Stock or the stock of other companies in our

industry, or a decision by such an analyst to reduce or cease coverage regarding our Common Stock;

●

changes in

general conditions

in the

U.S. and

global economy, financial

markets or

our industry, including

those resulting

from changes in trade and tariff

policies, changes in fuel prices

or fuel shortages, war, incidents of terrorism,

pandemics

or responses to such events;

●

changes

in

the

landscape

for

our

any

changes

resulting

from

consolidation

whether or not involving us;

●

our liquidity position;

●

future sales of our Common Stock;

●

any changes in our dividend policy or share repurchase program; and

●

the other risks described in this Risk Factors section.

The

actual

timing,

number

and

value

of

shares

under

our

share

program

will

be

by

including but

to, the

market price

of our

Common

Stock and general market and economic conditions. The share repurchase program may be suspended, modified or discontinued

at any time without prior notice.

UNRESOLVED STAFF

COMMENTS