|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM
For
the quarterly period ended
For the transition period from to .
Commission
File Number:
(Exact name of Registrant as specified in its charter)
|
|
|
|
|
(State or other jurisdiction of
incorporation or organization) |
(IRS Employer
Identification No.) |
|
|
|
|
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated filer ☐ | Accelerated filer ☐ |
|
|
Smaller reporting company
|
|
Emerging growth company
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Regulation 12b-2 of the Exchange Act): Yes ☐ No
State the number of shares outstanding of each
of the issuer’s classes of common stock, as of the latest practicable date:
INNOVATIVE FOOD HOLDINGS, INC.
TABLE OF CONTENTS TO FORM 10-Q
| Page | |||
| PART I. FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements | 3 | |
| Consolidated Balance Sheets | 3 | ||
| Consolidated Statements of Operations | 4 | ||
| Consolidated Statement of Stockholders’ Equity | 5 | ||
| Consolidated Statements of Cash Flows | 6 | ||
| Condensed Notes to the Consolidated Financial Statements | 7 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 35 | |
| Item 4. | Controls and Procedures | 35 | |
| PART II. OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 36 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 36 | |
| Item 3. | Defaults Upon Senior Securities | 36 | |
| Item 4. | Mine Safety Disclosures | 36 | |
| Item 5. | Other Information | 36 | |
| Item 6. | Exhibits | 37 | |
| Signatures | 38 | ||
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Innovative Food Holdings, Inc.
Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ |
|
$ |
|
||||
| Cash, restricted |
|
|
||||||
| Accounts receivable, net |
|
|
||||||
| Inventory, net |
|
|
||||||
| Other current assets |
|
|
||||||
| Current assets - discontinued operations |
|
|
||||||
| Total current assets |
|
|
||||||
| Property and equipment, net |
|
|
||||||
| Right of use assets - operating leases, net |
|
|
||||||
| Right of use assets - finance leases, net |
|
|
||||||
| Amortizable intangible assets, net |
|
|
||||||
| Indefinite intangible assets |
|
|
||||||
| Other noncurrent assets |
|
|
||||||
| Noncurrent assets – discontinued operations |
|
|
||||||
| Total assets | $ |
|
$ |
|
||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ |
|
$ |
|
||||
| Accrued separation costs - related parties, current portion |
|
|
||||||
| Accrued interest |
|
|
||||||
| Stock appreciation rights liability |
|
|
||||||
| Notes payable, current portion |
|
|
||||||
| Lease liability - operating leases, current |
|
|
||||||
| Lease liability - finance leases, current |
|
|
||||||
| Contingent liability, current |
|
|
||||||
| Current liabilities - discontinued operations |
|
|
||||||
| Total current liabilities |
|
|
||||||
| Note payable, net of discount |
|
|
||||||
| Accrued separation costs - related parties, non-current |
|
|
||||||
| Lease liability - operating leases, non-current |
|
|
||||||
| Lease liability - finance leases, non-current |
|
|
||||||
| Noncurrent liabilities – discontinued operations |
|
|
||||||
| Total liabilities |
|
|
||||||
| Commitments & Contingencies (see note 21) |
|
|
||||||
| Stockholders’ equity | ||||||||
|
Common stock: $
|
|
|
||||||
|
Common stock to be issued;
|
|
|
||||||
| Additional paid-in capital |
|
|
||||||
|
Treasury stock:
|
(
|
) |
(
|
) | ||||
| Accumulated deficit |
(
|
) |
(
|
) | ||||
| Total stockholders’ equity |
|
|
||||||
| Total liabilities and stockholders’ equity | $ |
|
$ |
|
||||
See condensed notes to these unaudited consolidated financial statements.
3
Innovative Food Holdings, Inc.
Consolidated Statements of Operations
(unaudited)
| For the Three | For the Three | For the Nine | For the Nine | |||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Cost of goods sold |
|
|
|
|
||||||||||||
| Gross margin |
|
|
|
|
||||||||||||
| Selling, general and administrative expenses |
|
|
|
|
||||||||||||
| Total operating expenses |
|
|
|
|
||||||||||||
| Operating income (loss) |
|
|
|
|
||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income (expense), net |
(
|
) |
|
(
|
) |
|
||||||||||
| Gain on sale of assets |
|
|
|
|
||||||||||||
| Gain on sale of subsidiary |
|
|
|
|
||||||||||||
| Other leasing income |
|
|
|
|
||||||||||||
| Total other income (expense) |
(
|
) |
|
(
|
) |
|
||||||||||
| Income before taxes |
|
|
|
|
||||||||||||
| - | ||||||||||||||||
| Income tax expense |
|
|
|
|
||||||||||||
| Income from continuing operations | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Income (loss) from discontinued operations | $ |
(
|
) | $ |
|
$ |
(
|
) | $ |
(
|
) | |||||
| Net income (loss) | $ |
(
|
) | $ |
|
$ |
(
|
) | $ |
|
||||||
| Income per share from continuing operations - basic | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Income per share from continuing operations - diluted | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Income (loss) per share from discontinued operations - basic | $ |
(
|
) | $ |
|
$ |
(
|
) | $ |
(
|
) | |||||
| Income (loss) per share from discontinued operations - diluted | $ |
(
|
) | $ |
|
$ |
(
|
) | $ |
(
|
) | |||||
| Weighted average shares outstanding - basic |
|
|
|
|
||||||||||||
| Weighted average shares outstanding - diluted |
|
|
|
|
||||||||||||
See condensed notes to these unaudited consolidated financial statements.
4
Innovative Food Holdings, Inc.
Consolidated Statements of Stockholders’ Equity
Three and Nine Months Ended September 30, 2025 and 2024
(unaudited)
| Common Stock |
Common Stock
to be issued |
Additional
Paid-in |
Treasury Stock | Accumulated | ||||||||||||||||||||||||||||||||
| Amount | Value | Amount | Value | Capital | Amount | Value | Deficit | Total | ||||||||||||||||||||||||||||
| Balance - June 30, 2024 |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||||||||
| Stock based compensation | - | - | - | - |
|
- | - | - |
|
|||||||||||||||||||||||||||
| Shares issued under stock based compensation |
|
|
- | - |
(
|
) | - | - | - | - | ||||||||||||||||||||||||||
| Net loss for the three months ended September 30, 2024 | - | - | - | - | - | - | - |
|
|
|||||||||||||||||||||||||||
| Balance - September 30, 2024 |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||||||||
| Balance - June 30, 2025 |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||||||||
| Stock based compensation | - | - | - | - |
|
- | - | - |
|
|||||||||||||||||||||||||||
| Shares issued under stock based compensation |
|
|
(
|
) |
(
|
) | - | - | - | - | - | |||||||||||||||||||||||||
| Net income for the three months ended September 30, 2025 | - | - | - | - | - | - | - |
(
|
) |
(
|
) | |||||||||||||||||||||||||
| Balance - September 30, 2025 |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2023 |
|
$ |
|
- | $ | - | $ |
|
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||||||||
| Shares returned to treasury from sale of subsidiary | - | - | - | - |
(
|
) |
|
(
|
) | - |
(
|
) | ||||||||||||||||||||||||
| Stock based compensation | - | - | - | - |
|
- | - | - |
|
|||||||||||||||||||||||||||
| Shares issued under stock based compensation |
|
|
- | - |
(
|
) | - | - | - | - | ||||||||||||||||||||||||||
| Shares issued for cashless exercise of options |
|
|
- | - |
(
|
) | - | - | - | - | ||||||||||||||||||||||||||
| Net loss for the nine months ended September 30, 2024 | - | - | - | - | - | - | - |
|
|
|||||||||||||||||||||||||||
| Balance - September 30, 2024 |
|
$ |
|
- | $ | - | $ |
|
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||||||||
| Balance - December 31, 2024 |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||||||||
| Shares issued in cashless conversion of options |
|
|
- | - |
(
|
) | - | - | - | - | ||||||||||||||||||||||||||
| Stock based compensation | - | - | - | - |
|
- | - | - |
|
|||||||||||||||||||||||||||
| Shares earned but not yet issued under stock based compensation | - | - |
|
|
(
|
) | - | - | - | - | ||||||||||||||||||||||||||
| Stock based compensation |
|
|
(
|
) |
(
|
) | - | - | - | - | - | |||||||||||||||||||||||||
| Net loss for the nine months ended September 30, 2025 | - | - | - | - | - | - | - |
(
|
) |
(
|
) | |||||||||||||||||||||||||
| Balance - September 30, 2025 |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||||||||
See condensed notes to these unaudited consolidated financial statements.
5
Innovative Food Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
| For the Nine | For the Nine | |||||||
| Months Ended | Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| Cash flows used in operating activities: | ||||||||
| Net income (loss) | $ |
(
|
) | $ |
|
|||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Gain on disposition of assets |
|
(
|
) | |||||
| Gain on sale of subsidiaries |
|
(
|
) | |||||
| Loss on sale of fixed assets |
|
|
||||||
| Depreciation and amortization |
|
|
||||||
| Amortization of right of use asset |
|
|
||||||
| Amortization of discount on notes payable |
|
|
||||||
| Stock based compensation |
|
|
||||||
| Gain on derecognition of note payable and accrued interest |
(
|
) |
|
|||||
| Changes in fair value of stock appreciation rights |
(
|
) |
|
|||||
| Inventory valuation adjustment associated with facility closure |
|
|
||||||
| Provision for credit losses |
|
|
||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net |
|
(
|
) | |||||
| Inventory |
|
(
|
) | |||||
| Other current assets |
(
|
) |
(
|
) | ||||
| Accounts payable and accrued liabilities |
(
|
) |
(
|
) | ||||
| Accrued separation costs - related parties |
(
|
) |
(
|
) | ||||
| Deferred revenue |
(
|
) |
(
|
) | ||||
| Operating lease liability |
(
|
) |
(
|
) | ||||
| Net cash used in operating activities |
(
|
) |
(
|
) | ||||
| Cash flows from investing activities: | ||||||||
| Acquisition of property and equipment |
(
|
) |
(
|
) | ||||
| Cash received from disposition of asset |
|
|
||||||
| Cash received from disposition of land and building, net of loan payoff |
|
|
||||||
| Cash received from disposition of intangible assets, net of costs |
|
|
||||||
| Net cash provided by (used in) investing activities |
(
|
) |
|
|||||
| Cash flows from financing activities: | ||||||||
| Principal payments on debt |
(
|
) |
(
|
) | ||||
| Principal payments financing leases |
(
|
) |
(
|
) | ||||
| Cash received from line of credit |
|
|
||||||
| Principal payments on line of credit |
(
|
) |
|
|||||
| Reimbursement from restricted cash for capital expenditures |
|
|
||||||
| Net cash used in financing activities |
|
(
|
) | |||||
| Decrease in cash and cash equivalents |
(
|
) |
(
|
) | ||||
| Cash and cash equivalents at beginning of period |
|
|
||||||
| Cash and cash equivalents at end of period - continuing operations | $ |
|
$ |
|
||||
| Cash and cash equivalents at end of period - discontinued operations | $ |
|
$ |
|
||||
| Cash and cash equivalents at end of period | $ |
|
$ |
|
||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ |
|
$ |
|
||||
| Taxes | $ |
|
$ |
|
||||
| Non-cash investing and financing activities: | ||||||||
| Reclassify fixed assets as held for sale | $ |
|
$ |
|
||||
| Principal and accrued interest paid from escrow to Maple Mark Bank | $ |
|
$ |
|
||||
| Issuance of common stock under compensation plans | $ |
|
$ |
|
||||
| Issuance of common stock from common stock to be issued | $ |
|
$ |
|
||||
| Issuance of stock for cashless exercise of options | $ |
|
$ |
|
||||
| Capitalized interest on financing lease | $ |
|
$ |
|
||||
See condensed notes to these unaudited consolidated financial statements.
6
INNOVATIVE FOOD HOLDINGS, INC.
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
1. NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim consolidated financial statements include those of Innovative Food Holdings, Inc. and all of its wholly-owned subsidiaries (collectively, “we,” “our,” “us” or the “Company”) and have been prepared in accordance with generally accepted accounting principles pursuant to Regulation S-X of the Securities and Exchange Commission and with the instructions to Form 10-Q. Certain information and footnote disclosures normally included in audited consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Accordingly, these interim financial statements should be read in conjunction with the Company’s audited financial statements and related notes as contained in Form 10-K for the year ended December 31, 2024. In the opinion of management, the interim unaudited consolidated financial statements reflect all adjustments, including normal recurring adjustments, necessary for fair presentation of the interim periods presented. The results of the operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results of operations to be expected for the full year.
Business Activity
We provide difficult-to-find specialty foods primarily to both Professional Chefs through our relationships with producers, growers, makers and distributors of these products worldwide. The distribution of these products primarily originates from our two warehouses and those of our drop ship partners, and is driven by our proprietary technology platform. In addition, we provide value-added services through our team of food specialists and Chef Advisors who offer customer support, menu ideas, and preparation guidance.
Restructuring
During the fourth quarter of 2023, we made the decision to focus more on our Business to Business (B2B) activities and less on our Direct to Consumer (“D2C”) products. Our subsidiaries GROW and Oasis were sold effective December 29, 2023; Haley Food Group, Inc. (“Haley”) was sold effective February 26, 2024, and the activities of P Innovations (“Plantbelly”) were abandoned; the igourmet platform and its D2C components were sold effective August 6, 2024. We continue to operate the B2B component, which remains part of our continuing operations. On October 8, 2024, we sold substantially all of the assets of Mouth. See Note 2.
Discontinued Operations
Reclassifications
Use of Estimates
The preparation of these unaudited consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate these estimates, including those related to revenue recognition and concentration of credit risk. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Accounts subject to estimate and judgements are allowances for credit losses, allowances for slow moving & obsolete inventory, income taxes, intangible assets, operating and finance right of use assets and liabilities, and equity-based instruments. Actual results may differ from these estimates under different assumptions or conditions.
7
Concentrations of Credit Risk
Financial instruments and related items, which
potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The
Company places its cash and temporary cash in investments with credit quality institutions. At times, such investments may be in excess
of applicable government mandated insurance limit. As of September 30, 2025 and December 31, 2024, the Company’s largest customer,
U.S. Foods, Inc. and its affiliates, accounted for approximately
The Company maintains cash balances in excess
of Federal Deposit Insurance Corporation limits. At September 30, 2025 and December 31, 2024, the total cash in excess of these limits
was $
Accounts Receivable
The Company provides an allowance for credit losses
equal to the estimated uncollectible amounts pursuant to the guidance of Accounting Standards Update (“ASU”) 2016-13,
Financial
Instruments
–
Credit Losses
(Topic 326) as codified in ASC 326,
Financial Instruments
–
Credit Losses
.
The Company utilizes a current and expected credit loss (CECL) impairment model. The Company’s estimate is based on historical collection
experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate
of the allowance for credit losses will change. Accounts receivable are presented net of an allowance for credit losses of $
Inventory
Inventory is valued at the lower of cost or net realizable value, and is determined by the average cost method. The Company adjusts inventory based upon bi-weekly cycle counts and upon the expiration date of food products. In addition, the Company records a provision for excess, obsolete, and slow-moving inventory. This provision reduces the carrying value of inventory to its net realizable value.
Leases
The Company accounts for leases in accordance with Financial Accounting Standards Board (“FASB”) ASC 842, Leases . The Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets (“ROU assets”) and short-term and long-term lease liabilities are included on the face of the consolidated balance sheet.
ROU assets represent the right of use to an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. For lease agreements with terms less than 12 months, the Company has elected the short-term lease measurement and recognition exemption, and it recognizes such lease payments on a straight-line basis over the lease term.
Revenue Recognition
The Company recognizes revenue upon product delivery. All of our products are shipped either same day or overnight or through longer shipping terms to the customer and the customer takes title to product and assumes risk and ownership of the product when it is delivered. Shipping charges to customers are included in revenues.
For revenue from product sales (i.e., specialty foodservice and e-commerce), the Company recognizes revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers . A five-step analysis must be met as outlined in Topic 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
8
Warehouse and logistics services revenues are primarily comprised of inventory management, order fulfilment and warehousing services. Warehouse and logistics services revenues are recognized at the point in time when the services are rendered to the customer.
Disaggregation of Revenue
The following table represents a disaggregation of revenue for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Digital Channels | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| National Distribution |
|
|
|
|
||||||||||||
| Local Distribution |
|
|
|
|
||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
Cost of Goods Sold
We have included in cost of goods sold all costs which are directly related to the generation of revenue. These costs include primarily the cost of food and raw materials, packing and handling, shipping, and delivery costs.
We have also included all payroll costs as cost of goods sold in our leasing and logistics services business.
Basic and Diluted Earnings Per Share
Basic net earnings per share is based on the weighted average number of shares outstanding during the period, while fully-diluted net earnings per share is based on the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding during the period using the treasury stock method. Potentially dilutive securities consist of options and warrants to purchase common stock and shares issuable under executive compensation plan. Basic and diluted net loss per share is computed based on the weighted average number of shares of common stock outstanding during the period.
The Company uses the treasury stock method to calculate the impact of outstanding stock options and warrants. Stock options and warrants for which the exercise price exceeds the average market price over the period have an anti-dilutive effect on earnings per common share and, accordingly, are excluded from the calculation.
| Three Months Ended | Nine Months Ended | |||||||||||||||
|
September 30,
2025 |
September 30,
2024 |
September 30,
2025 |
September 30,
2024 |
|||||||||||||
| Numerator: | ||||||||||||||||
| Income from continuing operations | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding - basic |
|
|
|
|
||||||||||||
| Dilutive effect of stock issuable under compensation plan |
|
|
|
|
||||||||||||
| Weighted average shares outstanding - diluted |
|
|
|
|
||||||||||||
| Income (loss) per share from continuing operations - diluted | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
Dilutive Shares at September 30, 2025:
Stock Options
None.
Restricted Stock Awards
At
September 30, 2025, there were
9
Stock-based Compensation
At
September 30, 2025, there were a total of
Computation of basic and diluted EPS:
There are no potentially issuable shares not included in basic earnings per share, and no difference between EPS and fully-diluted EPS for the three and nine months ended September 30, 2025.
Dilutive shares at September 30, 2024:
Stock Options
The following table summarizes the options outstanding and the related prices for the options to purchase shares of the Company’s common stock issued by the Company at September 30, 2024:
| Weighted average | ||||||||||
| Exercise Price | Number of Options | Remaining contractual life (years) | ||||||||
| $ |
|
|
|
|||||||
| $ |
|
|
|
|||||||
| $ |
|
|
|
|||||||
|
|
|
|||||||||
Restricted Stock Awards
At
September 30, 2024, there are
Stock-based Compensation
At
September 30, 2024, there were a total of
New Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses (DISE)” which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact ASU 2024-03 will have on its consolidated financial statements.
10
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as expensing of U.S. research expenditures and eligible capital expenditures, the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The impacts of the OBBBA are reflected in our results for the quarter ended September 30, 2025, and there was no impact to our income tax expense or effective income tax rate.
In July 2025, the FASB issued ASU 2025-05, which provides a practical expedient for estimating expected credit losses on short term receivables and contract assets from revenue transactions. The guidance permits a simplified loss rate approach based on historical write off experience and current conditions. The Company is evaluating the standard and its potential effect on the allowance for doubtful accounts and its consolidated financial statements.
2. DISCONTINUED OPERATIONS
During the fourth quarter of fiscal 2023, in connection with an analysis of the Company’s sales mix and profitability by service offering, management made the strategic decision to focus on the Company’s B2B service offering and to allocate fewer resources to and in some cases to sell certain of the Company’s subsidiaries involved in its D2C service offerings. Pursuant to this strategy, on December 29, 2023, the Company completed the sales of its Grow and Oasis subsidiaries; on February 26, 2024, the Company completed the sale of its Haley subsidiary (see Note 4), and the activities of P Innovations (“Plantbelly”) were abandoned; on October 8, 2024, the Company sold substantially all of the assets of Mouth.
During the third quarter of fiscal 2025, the Company committed to a strategic exit of its retail specialty cheese business, which served as the primary component of its national distribution platform. In connection with this decision, the Company also elected to discontinue its related logistics operations and specialty cheese cutting activities. As part of this exit, the Company is in the process of selling the associated Pennsylvania production and distribution facility.
Accordingly, the operating results and related assets and liabilities of the retail specialty cheese business, including igourmet, along with the Company’s logistics subsidiary (LII / IFP) and specialty cheese cutting operations, have been reclassified to discontinued operations for all periods presented.
The following information presents the major classes of line item of assets and liabilities included as part of discontinued operations in the consolidated balance sheets:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| Current assets - discontinued operations: | ||||||||
| Cash | $ |
|
$ |
|
||||
| Accounts receivable |
|
|
||||||
| Inventory |
|
|
||||||
| Assets held for sale |
|
|
||||||
| ROU assets – financing leases, net |
|
|
||||||
| Total current assets - discontinued operations | $ |
|
$ |
|
||||
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| Noncurrent assets - discontinued operations: | ||||||||
| ROU assets – financing leases, net | $ |
|
$ |
|
||||
| Property and equipment, net |
|
|
||||||
| Total noncurrent assets - discontinued operations | $ |
|
$ |
|
||||
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| Current liabilities - discontinued operations: | ||||||||
| Accounts payable and accrued liabilities | $ |
|
$ |
|
||||
| Deferred revenue |
|
|
||||||
| Accrued interest |
|
|
||||||
| Lease Liability |
|
|
||||||
| Notes payable, net |
|
|
||||||
| Total current liabilities - discontinued operations | $ |
|
$ |
|
||||
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| Noncurrent liabilities - discontinued operations: | ||||||||
| Notes payable, net | $ |
|
$ |
|
||||
| Total noncurrent liabilities - discontinued operations | $ |
|
$ |
|
||||
11
The following information presents the major classes of line items constituting the after-tax loss from discontinued operations in the consolidated statements of operations:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Revenue | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Cost of goods sold |
|
|
|
|
||||||||||||
| Gross margin |
(
|
) |
|
(
|
) |
|
||||||||||
| Selling, general, and administrative expenses |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| - | ||||||||||||||||
| Other (expense) income |
(
|
) |
|
(
|
) |
|
||||||||||
| Income (loss) from discontinued operations, net of tax | $ |
(
|
) | $ |
|
$ |
(
|
) | $ |
(
|
) | |||||
The following information presents the significant operating and investing noncash items in the discontinued operations of the statement of cash flows:
| Nine Months Ended | Nine Months Ended | |||||||
|
September 30,
2025 |
September 30,
2024 |
|||||||
| Operating activities: | ||||||||
| Adjustment to reconcile net loss to cash | ||||||||
| Net cash provided by (used in) operating activities | ||||||||
| Inventory valuation adjustment associated with facility closure | $ |
|
$ |
|
||||
| Depreciation and amortization | $ |
|
$ |
|
||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net | $ |
|
$ |
(
|
) | |||
| Inventory | $ |
|
$ |
(
|
) | |||
| Accounts payable and accrued liabilities | $ |
(
|
) | $ |
|
|||
| Investing activities: | ||||||||
| Acquisition of property and equipment | $ |
(
|
) | $ |
(
|
) | ||
3. SALE OF ASSETS
On
February 14, 2024, the Company sold its property located at 28411 Race Track Road, Bonita Springs, Florida, for net cash proceeds of
$
4. SALE OF SUBSIDIARY
On
February 26, 2024, the Company sold
5. ACCOUNTS RECEIVABLE
At September 30, 2025 and December 31, 2024, accounts receivable consists of:
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
| Accounts receivable from customers | $ |
|
$ |
|
||||
| Allowance for credit losses |
(
|
) |
(
|
) | ||||
| Accounts receivable, net | $ |
|
$ |
|
||||
During the three and nine months ended September
30, 2025, the Company charged the amount of $
12
6. INVENTORY
Inventory consists primarily of specialty food products. At September 30, 2025 and December 31, 2024, inventory consisted of the following:
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
| Finished goods inventory | $ |
|
$ |
|
||||
| Allowance for slow moving & obsolete inventory |
|
|
||||||
| Finished goods inventory, net | $ |
|
$ |
|
||||
7. PROPERTY AND EQUIPMENT
A summary of property and equipment at September 30, 2025 and December 31, 2024 is as follows:
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
| Land | $ |
|
$ |
|
||||
| Building |
|
|
||||||
| Computer and Office Equipment |
|
|
||||||
| Warehouse Equipment |
|
|
||||||
| Furniture and Fixtures |
|
|
||||||
| Vehicles |
|
|
||||||
| Total before accumulated depreciation |
|
|
||||||
| Less: accumulated depreciation |
(
|
) |
(
|
) | ||||
| Total | $ |
|
$ |
|
||||
Depreciation
expense for property and equipment amounted to $
9. RIGHT OF USE ( “ ROU ” ) ASSETS AND LEASE LIABILITIES – OPERATING LEASES
The
Company has operating leases for offices, warehouses, vehicles, and office equipment. The Company’s leases have remaining lease
terms of
The
Company’s lease expense for the three months ended September 30, 2025 and 2024 was entirely comprised of operating leases and amounted
to $
The
Company’s ROU asset amortization for the three months ended September 30, 2025 and 2024 was $
The
weighted-average discount rate for operating leases was
Right of use assets – operating leases are summarized below:
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
| Building | $ |
|
$ |
|
||||
| Vehicles |
|
|
||||||
| Warehouse equipment |
|
|
||||||
| Office equipment |
|
|
||||||
| Right of use assets, net | $ |
|
$ |
|
||||
13
Operating lease liabilities are summarized below:
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
| Building | $ |
|
$ |
|
||||
| Vehicles |
|
|
||||||
| Warehouse equipment |
|
|
||||||
| Office equipment |
|
|
||||||
| Lease liability | $ |
|
$ |
|
||||
| Less: current portion |
(
|
) |
(
|
) | ||||
| Lease liability, non-current | $ |
|
$ |
|
||||
Maturity analysis under these lease agreements are as follows:
| For the period ended September 30, 2026 | $ |
|
||
| For the period ended September 30, 2027 |
|
|||
| For the period ended September 30, 2028 |
|
|||
| For the period ended September 30, 2029 |
|
|||
| For the period ended September 30, 2030 |
|
|||
| Total | $ |
|
||
| Less: Present value discount |
(
|
) | ||
| Lease liability | $ |
|
10. RIGHT OF USE ASSETS – FINANCING LEASES
The Company has financing leases for vehicles and warehouse equipment. Right of use asset – financing leases are summarized below:
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
| Vehicles | $ |
|
$ |
|
||||
| Warehouse equipment |
|
|
||||||
| Total before accumulated depreciation |
|
|
||||||
| Less: accumulated depreciation |
(
|
) |
(
|
) | ||||
| Total | $ |
|
$ |
|
||||
Depreciation
expense related to right of use assets for the three months ended September 30, 2025 and 2024 was $
The weighted-average interest rate for financing
leases was
14
Financing lease liabilities are summarized below:
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
|
Financing lease obligation under a lease agreement for a truck dated March 31, 2020 in the original amount of $
|
$ |
|
$ |
|
||||
|
Financing lease obligation under a lease agreement for a truck dated August 23, 2019 in the original amount of $
|
$ |
|
$ |
|
||||
|
Financing lease obligation under a lease agreement for warehouse equipment dated September 12, 2024 in the original amount of $
|
$ |
|
|
|||||
| Total | $ |
|
$ |
|
||||
| Current portion | $ |
|
$ |
|
||||
| Long-term maturities |
|
|
||||||
| Total | $ |
|
$ |
|
||||
There was no accrued interest on financing leases at September 30, 2025 and December 31, 2024.
Aggregate maturities of lease liabilities:
| For the period ended December 31, | ||||
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| Total | $ |
|
||
15
11. INTANGIBLE ASSETS
The Company acquired certain indefinite intangible assets pursuant to the acquisitions of Artisan and Golden Organics. These assets include trade names and customer lists.
Other Amortizable Intangible Assets
The following table represents the balances of other amortizable intangible assets as of September 30, 2025 and December 31, 2024:
|
September 30, 2025
(unaudited) |
||||||||||||
| Accumulated | ||||||||||||
| Cost | Amortization | Net | ||||||||||
| Total Customer lists | $ |
|
$ |
|
$ |
|
||||||
| December 31, 2024 | ||||||||||||
| Accumulated | ||||||||||||
| Gross | Amortization | Net | ||||||||||
| Total Customer lists | $ |
|
$ |
|
$ |
|
||||||
Total
amortization expense for the three months ended September 30, 2025 and 2024 was $
Remaining amortization expense for intangible assets as of September 30, 2025 is as follows:
| For the period ended December 31, | ||||
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| $ |
|
|||
16
Other Infinite Intangible Assets
Other non-amortizable intangible assets consist
of $
The Company acquired certain intangible assets pursuant to the acquisitions through Artisan. The following is the net book value of these assets:
|
September 30, 2025
(unaudited) |
||||||||||||
| Accumulated | ||||||||||||
| Gross | Amortization | Net | ||||||||||
| Total Indefinite Intangible Assets | $ |
|
$ |
|
$ |
|
||||||
| December 31, 2024 | ||||||||||||
| Accumulated | ||||||||||||
| Cost | Amortization | Net | ||||||||||
| Total Indefinite Intangible Assets | $ |
|
$ |
|
$ |
|
||||||
12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at September 30, 2025 and December 31, 2024 are as follows:
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
| Trade payables and accrued liabilities | $ |
|
$ |
|
||||
| Accrued payroll and commissions |
|
|
||||||
| Total | $ |
|
$ |
|
||||
13. ACCRUED SEPARATION COSTS – RELATED PARTIES
On
February 3, 2023, the Company entered into a Severance Note, an Agreement and General Release, and a Side Letter thereto (the “SK
Agreements”) with Sam Klepfish, its prior CEO and a previous board member. The SK Agreements provide, among other things, for Mr.
Kelpfish’s resignation from all positions with the Company and its subsidiaries on February 28, 2023, except that Mr. Klepfish
will remain a director and member of the board of the Company, confidentiality and non-disparagement conditions, nomination of Mr. Klepfish
for future election to the board of directors at least through the 2024 general meeting of shareholders based on certain minimum stock
ownership and Board Observer rights when Mr. Klepfish is no longer a director but maintains certain minimum agreed upon stock ownership.
The payment terms are $
17
On
February 28, 2023, the Company entered into a separation agreement (the “Wiernasz Separation Agreement”) with Justin Wiernasz,
a former director and previous Director of Strategic Acquisitions. Pursuant to the Wiernasz Separation Agreement, the Company agreed
to a payment of $
On
February 6, 2024, the Company entered into a separation agreement (the “Tang Separation Agreement”) with Richard Tang, its
former Chief Financial Officer, effective as of December 31, 2023. Pursuant to the Tang Separation Agreement, the Company has agreed
to pay to Mr. Tang, in equal installments over a five-month period, the gross sum of $
On October 4, 2025, the Company entered into a
separation agreement and general release (the “Bennett Separation Agreement”) with Bill Bennett, pursuant to which Mr. Benett
will resign from his position as the Chief Executive Officer of the Company, effective October 3, 2025. Pursuant to the Bennett Separation
Agreement, the Company shall (i) pay Mr. Benett a severance payments consisting of salary continuation through December 31, 2025, in the
total gross amount of $
During
the three months ended September 30, 2025 and 2024, the Company paid cash in the amount of $
During
the nine months ended September 30, 2025 and 2024, the Company made COBRA payments on behalf of Mr. Wiernasz in the amount of $
During
the three months ended September 30, 2025 and 2024, the Company made the following payments in connection with the Tang Separation Agreement:
The Company paid cash to Mr. Tang in the amount of $
During
the nine months ended September 30, 2025 and 2024, the Company made the following payments in connection with the Tang Separation Agreement:
The Company paid cash to Mr. Tang in the amount of $
The following table represents the amounts accrued, paid, and outstanding on these agreements as of September 30, 2025:
| Total |
Paid /
Issued |
Balance | Current | Non-current | ||||||||||||||||
| Mr. Klepfish: | ||||||||||||||||||||
| Cash – through March 6, 2026 | $ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
|
|||||||||
| Cash - upon agreement execution |
|
(
|
) |
|
|
|
||||||||||||||
| Stock - June 1, 2027 |
|
|
|
|
|
|||||||||||||||
| Stock - Issued in April 2023 |
|
(
|
) |
|
|
|
||||||||||||||
| COBRA - over eighteen months |
|
|
|
|
|
|||||||||||||||
| Total – Mr. Klepfish | $ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
|
|||||||||
| Mr. Wiernasz: | ||||||||||||||||||||
| Cash - three equal payments | $ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
|
|||||||||
| COBRA - over eighteen months |
|
(
|
) |
|
|
|
||||||||||||||
| Total - Mr. Wiernasz | $ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
|
|||||||||
| Mr. Tang: | ||||||||||||||||||||
| Cash – over seventeen weeks | $ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
|
|||||||||
| COBRA - over five months |
|
(
|
) |
|
|
|
||||||||||||||
| Total - Mr. Tang | $ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
|
|||||||||
| Mr. Bennett: | ||||||||||||||||||||
| Cash – installments through December 31, 2025 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Insurance – installments through September 30, 2026 |
|
|
|
|||||||||||||||||
| Total – Mr. Bennett | $ |
|
$ | $ |
|
$ |
|
$ |
|
|||||||||||
| Total Company | $ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
|
|||||||||
18
14. STOCK APPRECIATION RIGHTS LIABILITY
Effective May 15, 2023, the Company issued
The change in valuation of the Smallwood SARs is summarized in the table below:
| May 15, 2023 - fair value | $ |
|
||
| (Gain) Loss on revaluation |
|
|||
| December 31, 2023 -fair value | $ |
|
||
| (Gain) Loss on revaluation |
|
|||
| December 31, 2024 - fair value | $ |
|
||
| (Gain) Loss on revaluation |
|
|||
| March 31, 2025 - fair value | $ |
|
||
| (Gain) Loss on revaluation |
(
|
) | ||
| June 30, 2025 - fair value | $ |
|
||
| (Gain) Loss on revaluation |
(
|
) | ||
| September 30, 2025 - fair value | $ |
|
15. LINE OF CREDIT
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
|
On June 6, 2022, the Company entered into a revolving credit facility with MapleMark (the “MapleMark Revolver”) which expired on August 25, 2025. The amount available under the MapleMark Revolver was $
During the nine months ended September 30, 2025, the Company borrowed the amount of $ |
$ |
|
$ |
|
19
16. NOTES PAYABLE
|
September 30,
2025 |
December 31,
2024 |
|||||||
| (unaudited) | ||||||||
|
A note payable in the amount of $
|
$ |
|
$ |
|
||||
|
A note payable in the amount of $
|
$ |
|
$ |
|
||||
| Total | $ |
|
$ |
|
||||
| Current portion | $ |
|
$ |
|
||||
| Long-term maturities, net of discount |
|
|
||||||
| Total | $ |
|
$ |
|
||||
There was a total of $
Aggregate maturities of notes payable as of September 30, 2025 are as follows:
For the period ended December 31,
| 2025 |
|
|||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| Total | $ |
|
17. EQUITY
Common Stock
As
of September 30, 2025, total number of shares of common stock issued and outstanding was
For the nine months ended September 30, 2025:
On
January 9, 2025, the Company issued
On
January 13, 2025, the Company issued
On
March 14, 2025, the Company issued the following shares of common stock to its executive officers pursuant to executive compensation
plans:
On
June 2, 2025, the Company issued
20
On
June 3, 2025, the Company issued
On
July 3, 2025, the Company issued
For the nine months ended September 30, 2024:
On
May 30, 2024, the Company issued a net amount of
On
July 9, 2024, the Company issued a total of
Common Stock Received from Sale of Subsidiary
On
February 26, 2024, the Company sold
Share based executive compensation plans
CEO Stock Plan
On February 3, 2023, the Company entered into an employment agreement with Bill Bennett to become the Company’s CEO. On November 3, 2023, the Company recognized that the hiring of Mr. Bennett was protracted, and the original employment agreement calculated the number of shares of common stock to be granted in connection with the CEO Stock Plan on the basis of the number of shares of common stock outstanding as of October 2022, which did not take into consideration the number of shares that were issued to a departing executive and to certain other employees of the Company thereafter. Accordingly, the number of shares issuable to Mr. Bennett at each price target was adjusted, effective as of the original date of the plan. Pursuant to this agreement, Mr. Bennett was provided with an incentive compensation plan (the “CEO Stock Plan”) whereby Mr. Bennett would be granted shares of the Company’s common stock upon the common stock meeting certain price points at various 60-day volume weighted prices, as described below:
| Number of Shares Granted - Lower of: | ||||||||||
| Number of Shares Issued | Maximum | |||||||||
| and Outstanding on | Number of | |||||||||
| Stock Price Target | Grant Date Multiplied by: | Shares | ||||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
The
fair value of the CEO Stock Plan was determined via a Monte Carlo market-based performance stock awards model to be $
On
October 4, 2025, the Company entered into a separation agreement and general release with Mr. Bennett, pursuant to which Mr. Bennett
resigned from his position as the Chief Executive Officer of the Company effective October 1, 2025. See Note 22. During the three months
ended September 30, 2025, the Company charged the unamortized portion of the value of the CEO Stock Plan I the amount of $
On
January 31, 2025, the price target of $
21
On
July 30, 2024, the price target of $
On
May 28, 2024,
On
March 19, 2024,
On
November 7, 2023, the Company issued
There are no shares unvested under the CEO Stock Plan at September 30, 2025.
COO Stock Plan
On April 14, 2023, the Company entered into an employment agreement with Brady Smallwood to become the Company’s COO, effective May 15, 2023. Pursuant to this agreement, Mr. Smallwood was provided with an incentive compensation plan (the “COO Stock Plan”) whereby Mr. Smallwood would be granted shares of the Company’s common stock upon the common stock meeting certain price points at various 60-day volume weighted prices, as described below:
| Number of Shares Granted - Lower of: | ||||||||||
| Number of Shares Issued | Maximum | |||||||||
| and Outstanding on | Number of | |||||||||
| Stock Price Target | Grant Date Multiplied by: | Shares | ||||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
The
fair value of the COO Stock Plan was determined via a Monte Carlo market-based performance stock awards model to be $
On
April 17, 2024,
On
July 25, 2024, the price target of $
On
January 14, 2025, the price target of $
At
September 30, 2025, a total of
22
CFO Stock Plan
On December 29, 2023, the Company entered into an employment agreement with Gary Schubert to become the Company’s CFO effective January 1, 2024. Pursuant to this agreement, Mr. Schubert was provided with an incentive compensation plan (the “CFO Stock Plan”) whereby Mr. Schubert would be granted shares of the Company’s common stock upon the common stock meeting certain price points at various 60-day volume weighted prices, as described below:
| Number of Shares Granted - Lower of: | ||||||||||
| Number of Shares Issued | Maximum | |||||||||
| and Outstanding on | Number of | |||||||||
| Stock Price Target | Grant Date Multiplied by: | Shares | ||||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
| $ |
|
|
% |
|
||||||
The
fair value of the CFO Stock Plan was determined via a Monte Carlo market-based performance stock awards model to be $
On
July 31, 2024, the price target of $
On
December 27, 2024, the price target of $
On July 3, 2025,
At
September 30, 2025, a total of
On October 3, 2025, the Company entered into an executive employment agreement (the “Schubert Agreement”) with Gary Schubert, pursuant to which Mr. Schubert shall resign from his current position of Chief Financial Officer of the Company and shall be appointed as the Chief Executive Officer of the Company and a member of the Company’s Board of Directors (the “Board”), effective October 3, 2025. See Note 22.
Stock Appreciation Rights
Effective
May 15, 2023, the Company issued
23
During
the three and nine months ended September 30, 2025, Smallwood SARs decreased in fair value in the amount $
The Smallwood SARs were valued using the Black-Scholes valuation model utilizing the following variables:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Volatility |
|
% |
|
% | ||||
| Dividends | $ |
|
$ |
|
||||
| Risk-free interest rates |
|
% |
|
% | ||||
| Remaining expected term (years) |
|
|
Options
Transactions involving stock options are summarized as follows:
On
January 9, 2025, the Company issued
On
January 13, 2025, the Company issued
|
Number of
Shares |
Weighted
Average Exercise Price |
|||||||
| Options outstanding at December 31, 2024 |
|
$ |
|
|||||
| Granted |
|
$ |
|
|||||
| Exercised |
(
|
) | $ |
|
||||
| Cancelled / Expired |
|
$ |
|
|||||
| Options outstanding at September 30, 2025 (unaudited) |
|
$ |
|
|||||
| Options exercisable at September 30, 2025 (unaudited) |
|
$ |
|
|||||
During
the three months ended September 30, 2025 and 2024, the Company charged the amount of $
18. SEGMENTS
The
Company’s Chief Operating Decision Maker (“CODM”) has determined that the Company operates in
During the three and nine months ended September 30, 2025, the Company’s CODM was a group consisting of our executive management team: Gary Schubert, CEO and Brady Smallwood, COO.
The CODM uses net income to monitor budget versus actual results. The CODM also uses revenue by category to monitor the growth of the business in each of our target markets.
24
The following table presents our segment results by sales channel:
| Nine Months | September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| Amount | % | Amount | % | $ Change | % Change | |||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| Digital Channels | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| National distribution | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Local distribution | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Total revenue | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Cost of sales | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Gross margin | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Cash OpEx: | ||||||||||||||||||||||||
| Payroll & related costs | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Computer and IT | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Office, facility, vehicles | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Insurance | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Travel & entertainment | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Advertising & marketing | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Banking and credit card processing | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Professional fees | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | |||||||||||||
| Non-cash OpEx: | ||||||||||||||||||||||||
| Credit loss expense | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Share based compensation | $ |
(
|
) |
-
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | ||||||||||
| Depreciation & amortization | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Taxes & fees | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| $ |
(
|
) |
-
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Non-Operating (Income) Expense: | ||||||||||||||||||||||||
| Interest expense | $ |
|
|
% | $ |
(
|
) |
-
|
% | $ |
|
|
% | |||||||||||
| (Gain) loss on sale of subsidiaries | $ |
|
|
% | $ |
(
|
) |
|
% | $ |
|
-
|
% | |||||||||||
| (Gain) loss on sale of assets | $ |
|
|
% | $ |
(
|
) |
-
|
% | $ |
|
-
|
% | |||||||||||
| Other (income) expense | $ |
(
|
) |
|
% | $ |
|
|
% | $ |
(
|
) | ||||||||||||
| Total other (income) expense | $ |
|
|
% | $ |
(
|
) |
-
|
% | $ |
|
-
|
% | |||||||||||
| Net income (loss) from continuing operations | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Other segment disclosures: | ||||||||||||||||||||||||
| Segment assets | $ |
|
$ |
|
||||||||||||||||||||
| Expenditures for segment assets | $ |
|
$ |
|
||||||||||||||||||||
25
| Three Months | September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| Amount | % | Amount | % | $ Change | % Change | |||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| Digital Channels | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| National distribution | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Local distribution | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Total revenue | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Cost of sales | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Gross margin | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Cash OpEx: | ||||||||||||||||||||||||
| Payroll & related costs | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Computer and IT | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Office, facility, vehicles | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Insurance | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Travel & entertainment | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Advertising & marketing | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Banking and credit card processing | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Professional fees | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | |||||||||||||
| Non-cash OpEx: | ||||||||||||||||||||||||
| Credit loss expense | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Share based compensation | $ |
(
|
) |
-
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | ||||||||||
| Depreciation & amortization | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||
| Taxes & fees | $ |
|
|
% | $ |
(
|
) |
-
|
% | $ |
|
-
|
% | |||||||||||
| $ |
(
|
) |
-
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Non-Operating (Income) Expense: | ||||||||||||||||||||||||
| Interest expense | $ |
|
|
% | $ |
(
|
) |
-
|
% | $ |
|
|
% | |||||||||||
| Other (income) expense | $ |
(
|
) |
|
% | $ |
|
|
% | $ |
(
|
) | ||||||||||||
| Total other (income) expense | $ |
|
|
% | $ |
(
|
) |
-
|
% | $ |
|
-
|
% | |||||||||||
| Net income (loss) from continuing operations | $ |
|
|
% | $ |
|
|
% | $ |
(
|
) |
-
|
% | |||||||||||
| Other segment disclosures: | ||||||||||||||||||||||||
| Segment assets | $ |
|
$ |
|
||||||||||||||||||||
| Expenditures for segment assets | $ |
|
$ |
|
||||||||||||||||||||
26
19. RELATED PARTY TRANSACTIONS
Payments to Prior Executive Officers under Separation Agreements
Nine months ended September 30, 2025:
During
the three and nine months ended September 30, 2025, the Company paid cash in the amount of $
Nine months ended September 30, 2024:
During
the three and nine months ended September 30, 2024, the Company paid cash in the amount of $
During
the three and nine months ended September 30, 2024, the Company made the following payments in connection with the Wiernasz Separation
Agreement: The Company made COBRA payments on behalf of Mr. Weirnasz in the amount of $
During
the three and nine months ended September 30, 2024, the Company made the following payments in connection with the Tang Separation Agreement:
The Company paid cash to Mr. Tang in the amount of $
20. MAJOR CUSTOMERS
During the three months ended September 30, 2025
and 2024, U.S. Foods, Inc. and its affiliates accounted for approximately
Discontinued operations: Sams Club accounted for
approximately
During the nine months ended September 30, 2025
and 2024, U.S. Foods, Inc. and its affiliates accounted for approximately
Discontinued Operations: Sams Club accounted for
approximately
21. COMMITMENTS AND CONTINGENCIES
Litigation
From time to time, the Company has become and may become involved in certain lawsuits and legal proceedings which arise in the ordinary course of business, or as the result of current or previous investments, or current or previous subsidiaries, or current or previous employees, or current or previous directors, or as a result of acquisitions and dispositions or other corporate activities. The Company intends to vigorously defend its positions. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our financial position or our business and the outcome of these matters cannot be ultimately predicted.
22. SUBSEQUENT EVENTS
Appointment of CEO
On October 3, 2025, Innovative Food Holdings, Inc., entered into an executive employment agreement (the “Schubert Agreement”) with Gary Schubert, pursuant to which Mr. Schubert resigned from his current position of Chief Financial Officer of the Company and was appointed as the Chief Executive Officer of the Company and a member of the Board, effective October 3, 2025.
Pursuant
to the Schubert Agreement, Mr. Schubert is entitled to (i) an annual base salary of $
27
Mr. Schubert’s employment with the Company shall terminate upon the first of the following: (i) December 31, 2028, provided that the Schubert Agreement will be automatically renewed for successive one-year terms unless the Board gives Mr. Schubert with a 90-day advance written notice of non-renewal; (ii) death; (iii) the termination due to disability upon not less than 30-day prior written notice by the Company to Mr. Schubert; (iv) the written notice by the Company to Mr. Schubert of a termination for cause; (v) the written notice by the Company to Mr. Schubert of an involuntary termination without cause; (vi) the written notice by Mr. Schubert to the Company of a resignation for good reason; and (vii) the not less than 30-day prior written notice by Mr. Schubert to the Company of a resignation without good reason.
There are no arrangements or understandings between the Company and Mr. Schubert pursuant to which Schubert was appointed and there is no family relationship between or among any director or executive officer of the Company or Mr. Schubert. There are no transactions, to which the Company is or was a participant and in which Mr. Schubert has a material interest subject to disclosure under Item 404(a) of Regulation S-K.
CEO Separation Agreement
On October 4, 2025, the Company entered into a separation agreement and general release (the “Bennett Separation Agreement”) with Bill Bennett, pursuant to which Mr. Benett will resign from his position as the Chief Executive Officer of the Company, effective October 3, 2025.
Pursuant
to the Separation Agreement, the Company shall (i) pay Mr. Benett a severance payment in installments for a total gross amount of $
Mr.
Bennett has agreed to provide consultancy services to the Company as a consultant and independent contractor from January 1, 2025 until
March 31, 2025 for $
Mr. Bennett also resigned as a member of the Board, effective October 3, 2025. Mr. Bennett’s resignation is not the result of any disagreement with the Company, the Board, or management, or any matter relating to the Company’s operations, policies or practices.
The foregoing descriptions of the Schubert Agreement and Separation Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Schubert Agreement and Separation Agreement, which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and are incorporated herein by reference.
Sale of Facility
The Company, through
its subsidiary Innovative Food Properties LLC, entered into an Agreement of Purchase and Sale, dated as of July 28, 2025 and amended on
September 11, 2025, September 29, 2025 and November 13, 2025 (the “Sale Agreement”), with Mountaintop Holdings LLC (“Mountaintop
Holdings”), pursuant to which the Company agreed to sell to Mountaintop Holdings the real property located at 220 Oak Hill Road
in Mountaintop, Pennsylvania, together with certain associated property. The total purchase price specified in the agreement is
,
which includes deposits already paid and held in escrow. The purchaser inspection and due diligence period has been completed and passed.
No gain or loss has been recorded as of the date of these financial statements. The sale of the properties under the Sale Agreement is
expected to occur on January 12, 2026. If the closing has not occurred by January 12, 2026, Mountaintop Holdings may request a t30-day
extension to such closing date by depositing $
28
Item 2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations
References in this report to “we,” “us,” “IVFH” or the “Company” refer to Innovative Food Holdings, Inc. and all of its wholly-owned subsidiaries.
FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with the consolidated financial statements and the related notes thereto, as well as all other related notes, and financial and operational references, appearing elsewhere in this document.
Certain information contained in this discussion and elsewhere in this report may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Private Securities Litigation Reform Act”), and is subject to the safe harbor created by that act. The safe harbor created by the Private Securities Litigation Reform Act will not apply to certain “forward-looking statements” because we issued “penny stock” (as defined in Section 3(a)(51) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 3(a)(51-1) under the Exchange Act) during the three year period preceding the date(s) on which those forward-looking statements were first made, except to the extent otherwise specifically provided by rule, regulation or order of the Securities and Exchange Commission (the “SEC”). We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements which may be deemed to have been made in this report or which are otherwise made by or on our behalf. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “explore,” “consider,” “anticipate,” “intend,” “could,” “estimate,” “plan,” “propose” or “continue” or the negative variations of those words or comparable terminology are intended to identify forward-looking statements. Factors that may affect our results include, but are not limited to, the risks and uncertainties associated with:
| ● | Our ability to raise capital necessary to sustain our anticipated operations and implement our business plan, | |
| ● | Our ability to implement our business plan, including sale and acquisition of certain operations, | |
| ● | The potential impact on future revenue and operations resulting from changes to our business plan, including our decision to exit certain business lines such as cheese and logistics. | |
| ● | Our ability to generate sufficient cash to pay our lenders and other creditors, | |
| ● | Our dependence on three major customers, | |
| ● | Our ability to employ and retain qualified management and employees, | |
| ● | Our dependence on the efforts and abilities of our current employees and executive officers, | |
| ● | Changes in government regulations that are applicable to our current or anticipated business, | |
| ● | Changes in the demand for our services and different food trends, | |
| ● | The imposition of tariffs or other trade restrictions that may increase costs or disrupt our supply chain, | |
| ● | The degree and nature of our competition, | |
| ● | The lack of diversification of our business plan, | |
| ● | The general volatility of the capital markets and the establishment of a market for our shares, and | |
| ● | Disruption in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future attacks, police and military activities overseas and other disruptive worldwide political and economic events, health pandemics, rising inflation and energy costs, and environmental weather conditions. |
We are also subject to other risks detailed from time to time in our other filings with the SEC and elsewhere in this report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
29
Critical Accounting Policy and Estimates
Use of Estimates in the Preparation of Financial Statements
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates include certain assumptions related to, among others, doubtful accounts receivable, inventory, valuation of stock-based services, operating right of use assets and liabilities, impairment of intangible assets, and income taxes. On an on-going basis, we evaluate these estimates, including those related to revenue recognition and concentration of credit risk. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Accounts subject to estimate and judgements are accounts receivable reserves, income taxes, intangible assets, contingent liabilities, and equity-based instruments. Actual results may differ from these estimates under different assumptions or conditions. We believe our estimates have not been materially inaccurate in past years, and our assumptions are not likely to change in the foreseeable future.
Provision for Credit Losses Receivable
The Company provides an allowance for credit losses equal to the estimated uncollectible amounts pursuant to the guidance of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326) as codified in ASC 326, Financial Instruments – Credit Losses. The Company utilizes a current and expected credit loss (CECL) impairment model. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for credit losses will change. Accounts receivable are presented net of an allowance for credit losses of $40,002 at September 30, 2025 and December 31, 2024.
Inventory
Inventory consists of food products and is valued at the lower of cost or net realizable value. Cost is determined using the average-cost method. The Company adjusts the inventory based upon bi-weekly cycle counts and upon the expiration date of food products. In addition, the Company records a provision for excess, obsolete, and slow-moving inventory. Adjustments to reduce inventory to net realizable value are recorded when necessary and included in cost of sales.
Impairment of Intangible Assets
Indefinite-lived intangible assets are not amortized but are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the assets might be impaired. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with accounting principles generally accepted in the United States of America. The estimated fair values approximate their carrying value because of the short-term maturity of these instruments or the stated interest rates are indicative of market interest rates. These fair values have historically varied due to the market price of the Company’s stock at the date of valuation.
Income Taxes
The Company uses the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. The measurement of deferred tax assets and liabilities is based on provisions of applicable tax law. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance based on the amount of tax benefits that, based on available evidence, is not expected to be realized.
30
Leases
The Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets (“ROU assets”) and short-term and long-term lease liabilities are included on the face of the condensed consolidated balance sheet.
ROU assets represent the right of use to an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. For lease agreements with terms less than 12 months, the Company has elected the short-term lease measurement and recognition exemption, and it recognizes such lease payments on a straight-line basis over the lease term.
Our Business Activities
We build dynamic scalable businesses by selling specialty foods that are difficult to find through traditional channels. Our expertise is forging close relationships with the producers, growers, makers and distributors of specialty products, then carefully selecting our suppliers based on their quality, uniqueness and reliability.
The IVFH team is adept at evaluating and certifying the food safety and supply chain capabilities of small batch producers who don’t typically sell through broad-based sales channels. We seek out the freshest, most unique, origin-specific gourmet cheese, meat, produce, and premium ingredients available, and distribute them directly from our robust network of vendors and warehouses within 24 – 72 hours of an order being placed. We also source, package, and brand a meaningful segment of these products ourselves, enabling us to better control the assortment, offer more flexibility and variety to our customers, and capture additional margin.
We leverage this unique, premium assortment to serve the needs of Professional Chefs in settings such as restaurants, hotels, country clubs, national chain accounts, casinos, hospitals and catering houses. We provide these premium customers with products that can’t typically be found through their broadline distributor’s warehouse assortment. We distribute these products directly to Professional Chefs in Chicago through our subsidiary, Artisan Specialty Foods, Inc., and nationally through our e-commerce businesses on Amazon.com and our own website. We also drop ship specialty foods to Professional Chefs nationally through the websites of broadline distributors, such as U.S. Foods, Inc. Lastly, we sell these food to large retailers for resale on their shelves to the end customer. Between this variety of sales channels, we are able to serve our Professional Chef customers wherever they are located.
We operate our airline catering distribution business out of our owned 28,000 square foot facility in the greater Chicago area. In addition, following the closing of our acquisition of Golden Organics, we now operate a warehouse in Denver, Colorado, measuring approximately 20,000 square feet. We also operated a 200,000 square foot facility in Mountain Top, Pennsylvania, which previously supported both our retail and airline catering operations. Subsequent to the date of these financial statements, we entered into a sale agreement for this Pennsylvania property. In connection with this transition, our airline catering operations have been relocated to the Chicago facility, and our retail business is being wound down.
Our facilities have the capabilities to pack and ship frozen, refrigerated, and ambient products, enabling us to offer a broad range of specialty foods. We maintain GFSI/SQF certifications, ensuring compatibility with the highest global standards for food handling and meeting the quality and food safety expectations of our premium customers. These warehouses are equipped to ship packages and pallets of all sizes via overnight carriers. We also utilize our own fleet of trucks to deliver directly to Professional Chef customers within our delivery footprint.
Our proprietary technology platform underpins our entire business, driving transparency and efficiency up and down the supply chain. Orders flow in real time, whether to our warehouses or to our vendor partners, to allow for fast handling and fulfillment. Our picking is enabled by efficient scan-based, handheld devices, ensuring order and inventory accuracy. Our warehouse management software optimizes pick routes for common items and order types, recommends a box size, and calculates the appropriate amount of packaging and ice required based on forecasted temperatures along the delivery route.
We have built a team consisting of passionate, committed, and food-obsessed people: our average tenure (outside of seasonal workers) across the Company is over five years. Our merchandising team has deep connections within the specialty food space around the globe. Our customer service and sales teams, as ex-chefs themselves, go beyond customer service to offer our Professional Chefs customer support, menu ideas, and preparation guidance.
RESULTS OF OPERATIONS
This discussion may contain forward-looking statements that involve risks and uncertainties. Our future results could differ materially from the forward-looking statements discussed in this report. This discussion should be read in conjunction with our consolidated financial statements, the notes thereto and other financial information included elsewhere in the report.
Financial Highlights for the fiscal quarter ended September 30, 2025: IVFH reported revenue of $16.4 million, a 3.5% increase compared to $15.9 million in 2024.
31
Three Months Ended September 30, 2025
Revenue Breakdown:
| ● | Digital Channels: Largely comprised of our distributor relationships and supported by our drop-ship model generated $8.9. million, or 54.1% of total revenue, in the current period, compared to $9.3 million in the prior year period, a decrease of approximately 4.5%. This decrease was primarily driven by continued headwinds in our legacy U.S. Food Platform drop-ship business, where increased competition in online marketplace channels has resulted in lower order volumes and pricing pressure. |
| ● | National Distribution: Revenue was $3.5 million, or 21.3% of total revenue, compared to $3.5 million in the prior year period. We expect this channel to continue to expand as we further develop over time broker relationships and deepen participation in airline menu programs. While overall airline related revenue grew approximately 3%, a portion of these sales shifted to channels outside of National Distribution during the period, given the reolocation of PA operations, reducing the amount recorded here. |
| ● | Local Distribution: Consists mainly of local sales team relationships and our local fleet delivering direct from warehouse. This category generated $4 million, or 21.6% of total revenue, which is a 33% increase from $3 million in 2024. The figure includes $1.6 million, up from $0 in Q3 2024, due to acquisitions of LoCo Foods and Golden Organics. |
Cost of goods sold for the three months ended September 30, 2025 increased 3.1% to $12.6 million compared to $12.2 million in the prior year period, which is generally consistent with the 3.5% increase in revenue. Gross margin decreased by 34 basis points to 23.5%, primarily due to changes in the overall sales mix. The improvement in gross margin from continuing operations is largely attributable to the discontinuation of our retail cheese business, which carried lower margins.
Operating Expenses
Cash Operating Expenses (Cash OpEx):
| ● | Payroll and related costs increased by $657 thousand to $2.65 million. This increase was primarily driven by higher headcount to support the local distribution business, including approximately $278 thousand related to the Denver acquisition completed in the fourth quarter of 2024. The period also included approximately $174 thousand in severance costs associated with the transition of the former CEO and approximately $78 thousand from wage and benefit inflation. |
| ● | Computer and IT costs remained near flat with a slight increase of $4 thousand to $87 thousand, reflecting stabilization of core IT spend; on a year-to-date basis, these costs are down approximately 4.4%. |
| ● | Office, facilities, and vehicle expenses increased by $359 thousand. The increase is attributed to costs associated with a new office location tied to our Q4 acquisitions ($158 thousand), and an increase to truck fleet expenses to support our expanding local distribution business in Chicago ($72 thousand). |
| ● | Advertising and Digital Marketing Costs: Increased by $20 thousand in Q3 2025 to $20 thousand as a result of spend related to our Amazon and Harvest platforms. We expect annual amounts to continue to remain lower, resulting from a full year’s cycle of the restructuring of marketing programs. |
| ● | Professional and legal fees decreased by $4 thousand to $354 thousand. The current period includes approximately $125 thousand of legal fees associated with the Company’s ongoing Nasdaq uplisting process. We are continuing to undertake a vendor review process aimed at identifying further cost reduction opportunities going forward.. |
Total Cash OpEx increased by $1.1 million, or 40 %. The increase was primarily driven by the Denver facility, which was not part of our operations in the prior-year period and accounted for approximately $500 thousand of the increase. The quarter also included approximately $72 thousand in higher fleet-related expenses, $174 thousand in severance, and approximately $78 thousand from wage and benefit inflation.
Non-Cash Operating Expenses (Non-Cash OpEx):
| ● | Share-Based Compensation: Decreased by $740 thousand a credit of ($691) thousand, due to revaluation of stock options and other equity-based incentives to attract and retain key personnel. |
| ● | Depreciation and amortization expense increased by $49 thousand to $72 thousand, reflecting an increase in PPE associated with Q4 acquisitions similar net book value of property, plant, and equipment compared to the prior year period. |
| ● | Credit Loss Expense: Increased by $28 thousand to $33 thousand, primarily due to changes in customer mix within our local delivery segment. |
32
Discontinued Operations
Retail Cheese Operations revenue was $3.4 million in the current period compared to $0.2 million in the prior year period. This activity reflects the sell through of remaining product associated with the wind down of our discontinued retail cheese operations. We expect only minimal sales in the fourth quarter as the remaining cheese inventory is sold, after which revenue from this business is not expected on a go forward basis.
The discontinued operations reported a net loss of $2.4 million in the current quarter. We continue to progress toward the sale of the Pennsylvania facility, which we anticipate will close in the fourth quarter. Upon completion of the sale, we expect a significant reduction in overhead costs associated with these operations.
Nine Months Ended September 30, 2025
Revenue Breakdown :
| ● | Digital Channels: Largely comprised of our distributor relationships and supported by our drop ship model, generated $26.3 million, or 53.3% of total revenue, compared to $27.8 million in the prior year period, a decrease of approximately 5.4%. The decrease was primarily driven by continued headwinds in our legacy U.S. Food Platform drop ship business, where increased competition within online marketplace channels has resulted in lower order volumes and pricing pressure. |
| ● | National Distribution revenue was $10.3 million, or 17.4 % of total revenue, compared to $9.5 million in the prior year period, an increase of approximately 8.1%. The increase was driven by higher volume within our airline catering relationships, including expanded demand from a key existing customer and additional sales through broker partnerships. We expect this category to continue to grow as broker channels mature, though order volumes may vary by period based on procurement and menu planning cycles. |
| ● | Local Distribution: Consists mainly of local sales team relationships and our local fleet delivering direct from warehouse. This category brought in $12.7 million, or 25.7% of total revenue, an increase of 54.8% from $8.2 million in 2024, supported by $5.3 million from the recent acquisitions of LoCo Foods and Golden Organics |
Cost of goods sold for the nine months ended September 30, 2025 was 37.2 million, an increase of 7.85% compared to 34.5 million in the prior year period. This is generally in line with the increase in sales of 8.26%. As a result, gross margin increased 29 basis points to 24.5%. The gross margin performance was driven by sales mix, including a 99 basis point increase in digital and a 57 basis point increase in airlines, partially offset by a 524 basis point decline in local. Local distribution in the current period includes both the Denver and Chicago facilities, whereas the prior year period included only Chicago. The Denver facility carries a different product mix than Chicago, which contributed to the change in local distribution margin.
Operating Expenses
Cash Operating Expenses (Cash OpEx):
| ● | Payroll and related costs increased by $1.41 million to $7.42 million. This increase was primarily driven by higher headcount associated with employees added through acquisitions completed in Q4 2024, which accounted for approximately $946 thousand of the increase, as well as approximately $174 thousand in CEO severance and $180 thousand related to wage and benefit inflation. |
| ● | Computer and IT Costs: Reduced by $13 thousand to $290 thousand, reflecting the Company’s efforts to streamline IT operations and reduce software and hardware expenses. |
| ● | Office, facilities, and vehicle expenses increased by $779 thousand. The increase is primarily due to new office locations costing $452 thousand as a result of the acquisition of Golden Organics and LoCo Foods. As part of this acquisition, LoCo Foods relocated from Fort Collins to Denver, consolidating offices. H1 results include $50 thousand in rent and utilities for the closed Fort Collins facility, which will not continue in subsequent quarters. Additionally, increased fleet costs at our Chicago hub accounted for $160 thousand. |
| ● | Advertising and Digital Marketing Costs: Increased by $23 thousand to $27 thousand, reflecting spend towards our Amazon and Harvest platforms. although We expect annual amounts to continue to remain lower, resulting from a full year’s cycle of the restructuring of marketing programs. |
| ● | Professional and legal fees increased by $92 thousand to $1.2 million, 222 thousand of which was attributable to transactional activities related to acquisitions, and other corporate actions which are not expected to recur. |
Total Cash Operating Expenses increased by $2.4 million. The increase was primarily driven by the new Denver facility, which was not included in the prior year financials and accounted for approximately $1.6 million of the increase. The quarter also included approximately $160 thousand in higher fleet costs, $174 thousand in CEO severance, and approximately $180 thousand from wage and benefit inflation.
Non-Cash Operating Expenses (Non-Cash OpEx):
| ● | Share-Based Compensation: Decreased by $1.5 million to ($715) thousand, primarily due to lower amortization expense associated with stock appreciation rights (SARs), reflecting a decline in the company’s stock price during the period. |
| ● | Depreciation and amortization expense increased by $135 thousand to $212 thousand, reflecting an increase in PPE associated with Q4 acquisitions similar net book value of property, plant, and equipment compared to the prior year period |
| ● | Credit Loss Expense: decreased by $2 thousand to $43 thousand, primarily due to changes in customer mix within our local delivery segment. |
33
Discontinued Operations
Retail Cheese Operations revenue was $10.7 million for the nine months ended September 30, 2025, compared to $0.2 million in the prior year period. Q3 revenue reflects the sell through of remaining product associated with the wind down of this business. The discontinued operations reported a net loss of $3.8 million for the nine month period. Sales are expected to substantially conclude in the fourth quarter as the remaining cheese inventory is sold, after which revenue from these operations is not expected on a go forward basis.
Net (Loss) Income
During the three months ended September 30, 2025, the company reported a net income from continuing operations of $651 thousand, compared to a net income of $861 thousand in 2024, representing a decrease of $210 thousand. During the nine months ended September 30, 2025, the company reported a net income from continuing operations of $1.7 million, compared to net income of $3.5 million in 2024, representing a decrease of $1.7 million.
Liquidity and Capital Resources at September 30, 2025
As of September 30, 2025, IVFH had current assets of $18.6 million and current liabilities of $13.6 million, including an $8.8 million note classified as current due to its expected repayment upon the sale of the related business. Although the note is not contractually due within one year, it is presented within current liabilities based on the expected timing of the sale transaction. Net working capital was $5 million.
We believe we have sufficient liquidity to fund operations for at least the next twelve months. With the shutdown of the Pennsylvania facility, operating cash flows are expected to improve as facility costs and lower margin product sales roll off. Upon the sale of the facility, we intend to use the proceeds to repay the associated note, which will reduce overhead and interest expense. We do not anticipate the need to raise additional capital. We are working on a new credit facility to provide working capital flexibility. Remaining severance obligations are not expected to be material, and staffing levels are being managed to align with current business needs.
Cash Flow Analysis:
| ● | Operating Activities: Used $687 thousand, primarily due to operations, offset by favorable changes in working capital components of $332 thousand. The significant changes in working capital included: |
| ● | Accounts receivable decreased by $2.8 million, primarily reflecting the collection of receivables related to discontinuing cheese business. |
| ● | Inventory decreased by $367 thousand, because of lowered cheese inventory balances associated with the wind down of the facility. |
| ● | Accounts payable and accrued liabilities decreased by $2.7 million, primarily due to paydowns of inventory purchases related to the elevated Q4 2024 cheese sales, which were settled in Q1 2025. In addition, the decrease reflects the payment of aged vendor payables associated with the acquired LoCo Foods business as well as signing down of vendor accounts associated with the cheese segment. |
| ● | Investing activities: Net cash used in investing activities was $174 thousand, primarily related to purchases of property and equipment. These investments included equipment for cheese cutting operations and warehouse improvements to support the consolidation of Loco Foods and Golden Organics, acquired in Q4 2024. As of the end of the quarter we sold approximately 54k worth of cheese cutting equipment. |
| ● | Financing Activities: Used $40 thousand, primarily from the principal payments on debt and reimbursements from restricted cash on the purchase of Capex equipment |
Transactions with Major Customers
Transactions with a major customer and related economic dependence information is set forth below and following our discussion of Liquidity and Capital Resources.
During the nine months ended September 30, 2025 and 2024, U.S. Foods, Inc. and its affiliates accounted for approximately 34% and 47% of total consolidated sales, respectively. Gate Gourmet accounted for approximately 15% and 18% of total consolidated sales, respectively.
Sams Club accounted for approximately 18% and 0% of total consolidated sales in 2025 and 2024, respectively. Sales to Sams Club related entirely to the discontinued Pennsylvania distribution operations and are not expected to continue in future periods
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
34
Inflation
In the opinion of management, inflation has had a material effect on the Company’s financial condition and results of its operations. The Company has seen the impact of inflation across its costs for fuel, shipping, cost of goods, and marketing. Balancing the management of these increases with the willingness of our customers to pay higher prices will continue to be a key focus for the Company this year. However, no assurance can be given that we will be successful and inflationary pressure on our profits will likely continue through 2025.
RISK FACTORS
The Company’s business and success is subject to numerous risk factors as detailed in its Annual Report on Form 10-K for the year ended December 31, 2024 and other of its Current Reports on Form 8-K, all of which reports are available at no cost at www.sec.gov .
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit pursuant to the requirements of the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, among other things, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.
(a) Evaluation of disclosure controls and procedures
Our Principal Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined as defined in Rule 13a-15(f) and 15d-(f) under the Exchange Act) as of the end of the period covered by this report, have determined that our disclosure controls and procedures were effective at September 30, 2025 at the reasonable assurance level. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).
(b) Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rules 13a-15(d) and 15d-15 that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company has become and may become involved in certain lawsuits and legal proceedings which arise in the ordinary course of business, or as the result of current or previous investments, or current or previous subsidiaries, or current or previous employees, or current or previous directors, or as a result of acquisitions and dispositions or other corporate activities. The Company intends to vigorously defend its positions. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our financial position or our business, and the outcome of these matters cannot be ultimately predicted.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Trading Arrangements
During the quarterly period ended September 30,
2025, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act)
36
Item 6. Exhibits
| * | Filed herewith. |
| ** | Furnished herewith. |
37
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SIGNATURE | TITLE | DATE | ||
| /s/ Gary Schubert | Chief Executive Officer and Director | November 14, 2025 | ||
| Gary Schubert | (Principal Executive, Financial and Accounting Officer) |
38