INNOVATIVE FOOD HOLDINGS INC
For the period ended Mar 31, 2025. Filed May 15, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
IVFHStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001185185-24-001098
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001185185-25-000479
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 86 previous paragraphs and 48 current paragraphs.
32 unchanged; 2 reworded; 14 added; 52 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 38 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Financial Highlights For the fiscal quarter ended March 31, 2025, IVFH reported revenue of $19.5 million, a 26% increase compared to $15.5 million in 2024. Our organic revenue growth, which excludes the impact of divestitures and acquisitions, was an impressive 23% for the full quarter. Revenue growth was particularly strong in our national distribution, with total revenue increasing 133%. These results reflect our strategic efforts to enhance our market presence and expand our customer base.
Current report
Q1 Revenue Breakdown:
Current report
Cost of goods sold for the quarter increased 28.6% to $15.1 million compared to $11.7 million last year. Gross margin dropped by 157 basis points to 22.9%, mainly due to changes in our sales mix as we expanded our cheese business. Cheese products sold to retailers carry lower margins than our other offerings and accounted for 19% of Q1 2025 sales, versus 0% in Q1 2024. Excluding cheese, gross margins improved 282 bps. However, the cheese business is expected to improve with better volume costing and cutting efficiency. The margin decline was partially offset by lower shipping costs, which boosted 280 bps, representing 9.6% of revenue in Q1 2025 compared to 12.4% last year.
Current report
Operating Expenses
Current report
Cash Operating Expenses (Cash OpEx):
Current report
Total Cash OpEx increased: The total Cash OpEx increased by $835 thousand, reflecting growth in our national distribution channels and M&A activity in Q4 2024.
Current report
Non-Cash Operating Expenses (Non-Cash OpEx):
Current report
Non-Recurring Expenses:
Current report
Net (Loss) Income
Current report
During the first quarter of 2025, the company reported a net loss from continuing operations of $430 thousand, compared to a net income of $1.4 million in 2024, representing a decline of $1.9 million.
Current report
As of March 31, 2025, IVFH had current assets of $21.7 million, including cash and cash equivalents of $1.1 million, and current liabilities of $7.7 million. The company had net working capital of $14.0 million.
Current report
Cash Flow Analysis:
Current report
Future Capital Needs IVFH anticipates significant capital expenditure in the coming years to support its growth initiatives and operational improvements. Key areas of investment include:
Current report
The Company plans to finance these capital needs through a combination of internal cash flows, debt financing, and potential equity offerings. IVFH is committed to maintaining a strong balance sheet and ensuring sufficient liquidity to support its strategic initiatives
Removed paragraphs (52)
Previous report
Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023
Previous report
Revenue
Previous report
Revenue increased by $51,282, or approximately 0.3%, to $17.0 million for the three months ended September 30, 2024 from $17.0 million in the prior year. During the third quarter of 2024, our consumer e-commerce business experienced a decline of $704 thousand, representing a 38.6% decrease, as we intentionally continued to maintain the business operations on a shoestring, and completed the sale of the business. With the recent announcement and sale of our direct-to-consumer igourmet assets, we have a definitive timeline of when these headwinds will subside. Despite the declines from the direct-to-consumer e-commerce business, our Specialty Foodservice business has shown significant progress, growing by 5.5% and generating an additional $808 thousand in sales for the quarter. This growth was driven by accelerating growth in our airline caterer distribution business, material new growth in the broadline distributor partnerships, and continued growth in our Artisan Specialty Foods business in Chicago. While this growth was somewhat offset by the continued challenges associated with the transition of the technology platform of one of our largest customers, these negative year-over-year trends softened relative to the second quarter of 2024.
Previous report
We also saw a decrease in our logistics business, from $358,717 in the three months ended September 30, 2023 to $305,973 in the three months ended September 30, 2024. This decline was due to softness in demand from our existing customers, which resulted in less volume throughput for our logistics services. Though small, we continue to seek new opportunities to leverage our logistics services in order to better leverage existing fixed assets.
Previous report
See “Transactions with Major Customers” and the SEC mandated FR-60 disclosures following the “Liquidity and Capital Resources” section for a further discussion of the significant customer concentrations, loss of significant customer, critical accounting policies and estimates, and other factors that could affect future results.
Previous report
For the three months ended September 30, 2024, our cost of goods sold was $12.7 million, reflecting an increase of $0.3 million or approximately 2.5% from $12.4 million for the same period in 2023. The cost of goods sold comprised the following expenses for the three months ended September 30, 2024: $9.9 million for cost of goods; $2.7 million for shipping, delivery, handling, and purchase allowance expenses; and $0.1 million for logistics-related costs. Gross margins as a percentage of sales decreased during the current period to 25.2%, compared to 26.8% in the comparable period, representing a decline of 158 basis points, driven by our continued ramp down of the consumer e-commerce business, some one-time benefits in our Specialty Foodservice business last year, and margin investments to acquire new retail business customers. Although our margins have declined, they continue to stabilize as we transition away from the direct-to-consumer e-commerce business. In the three months ended September 30, 2024, we also benefited from a renegotiated contract with our shipping provider, which significantly reduced shipping expenses.
Previous report
Selling, General, and Administrative Expenses
Previous report
Selling, general, and administrative expenses (“SG&A”) decreased by $0.6 million, or 14.1%, to $3.6 million during the three months ended September 30, 2024 compared to $4.2 million for the three months ended September 30, 2023. SG&A as a percentage of sales decreased from 24.5% of sales during the three months ended September 30, 2023 to 21.0% of sales during the current period as we continued to thoughtfully reduce our expense structure. The decrease in SG&A was primarily due to a decrease in non-cash compensation of $0.3 million, a decrease advertising of $0.2 million, a decrease in payroll and related costs of $0.1 million, a decrease in amortization and depreciation of $0.1 million, and a decrease in office, facilities, and vehicles costs of $0.1 million. These decreases were partially offset by an increase in legal and professional fees of $0.2 million related to our acquisition and divestiture activity. Excluding non-cash compensation and non-recurring legal & transactional expenses, SG&A would have decreased by $0.5 million, or 11.0%, resulting in a 222 basis point reduction in SG&A as a percentage of sales compared to the comparable period.
Previous report
Interest expense, net
Previous report
Interest expense, net of interest income, decreased by $43,719, or approximately 16.8%, to $217,275 during the three months ended September 30, 2024, compared to $260,994 during the three months ended September 30, 2023. There was an increase in interest income in the amount of $11,403 due to higher cash balances during the period. There was also a decrease in interest expense accrued or paid on the Company’s commercial loans and notes payable in the amount of $32,314 due to lower principal balances, driven by the payoff of the Company’s loan associated with its Florida office building, which was sold in January 2024.
Previous report
Gain on Sale of Assets
Previous report
During the three months ended September 30, 2024, the Company sold certain intangible assets of igourmet for a gain in the amount of $834,463. There was no comparable transaction in the prior period.
Previous report
Other Leasing Income
Previous report
During the three months ended September 30, 2024, the Company recognized income in the amount of $1,900 in connection with the lease of space in our Mountaintop warehouse facility compared to $2,389 in the prior period.
Previous report
Net Income from Continuing Operations
Previous report
For the reasons above, the Company had net income from continuing operations for the three months ended September 30, 2024 of $1,332,983 compared to a net income from continuing operations of $123,544 during the three months ended September 30, 2023. The net income from continuing operations for the three months ended September 30, 2024 includes a net total of $98,702 in non-cash charges: non-cash compensation in the amount of $49,682, depreciation and amortization expense of $42,926, provision for doubtful accounts of $4,812, and amortization of the discount on notes payable term loans of $1,282. The net income from continuing operations for the three months ended September 30, 2023 includes a total of $542,805 in non-cash charges, consisting of non-cash compensation in the amount of $350,053, depreciation and amortization expense of $142,179, provision for doubtful accounts of $49,289, and amortization of the discount on notes payable of $1,284.
Previous report
Net Income from Discontinued Operations
Previous report
For the three months ended September 30, 2024, the Company had net income from discontinued operations in the amount of $1,847, a decrease in the amount of $9,342, or approximately 83.5%, compared to net income from discontinue operations in the amount of $11,189 for the three months ended September 30, 2023. Although we have sold the igourmet intangible assets, the business is not able to be reported in discontinued operations as it is part of our Innovative Gourmet entity that continues to operate and service B2B customers.
Previous report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous report
Revenue
Previous report
Revenue decreased by $2.8 million, or approximately 5.3%, to $49.4 million for the nine months ended September 30, 2024 from $52.2 million in the prior year. E-commerce was the primary driver of our year-over-year decline with revenue decreasing by 44.3% and $2.9 million. On the e-commerce business, as previously stated, we finalized the sale of the igourmet assets which will continue to be reported in continuing operations which will result in a revenue headwind of $7.4 million over the next 12 months. On the Specialty Foodservice business, our revenues have increased by 0.7%, as we return to positive growth on the year. As previously stated on earnings calls, we expect to deliver positive growth for the Specialty Foodservice business for the 2024 year.
Previous report
We continue to assess the potential of new revenue sources from new and growing broadline relationships, retail partnerships, airline caterer distribution growth, and other initiatives. We expect these new revenue sources to accelerate significantly in Q4.
Previous report
We continue to see declines in our logistics business (from $877,729 for the nine months ended September 30, 2023 to $763,441 for the nine months ended September 30, 2024) as our customers have faced demand softness on their side.
Previous report
See “Transactions with Major Customers” and the SEC mandated FR-60 disclosures following the “Liquidity and Capital Resources” section for a further discussion of the significant customer concentrations, loss of significant customer, critical accounting policies and estimates, and other factors that could affect future results.
Previous report
Our cost of goods sold for the nine months ended September 30, 2024 was $37.3 million, a decrease of $2.0 million, or approximately 5.2%, compared to cost of goods sold of $39.4 million for the nine months ended September 30, 2023. Cost of goods sold was made up of the following expenses for the nine months ended September 30, 2024: cost of goods of specialty, meat, game, cheese, seafood, poultry and other sales categories in the amount of $27.9 million; shipping, delivery, handling, and purchase allowance expenses in the amount of $9.0 million; and cost of goods associated with logistics of $0.4 million. Gross margins as a percentage of sales remained at 24.5% during the current period, which was no change from the comparable period, as we continued implementing our strategy to improve cost controls, better manage pricing, and focus more on product mix. After adjusting for the second quarter 2024 liquidation efforts, in the amount of $0.1 million, our YTD gross margins improved by 119 basis points versus comparable period. As we launch our new retail business, we expect margin compression in the fourth quarter of 2024 as we work to optimize our business model.
Previous report
Selling, General, and Administrative Expenses
Previous report
SG&A decreased by $1.3 million, or approximately 10.4%, to $11.5 million during the nine months ended September 30, 2024 compared to $12.8 million for the nine months ended September 30, 2023. The decrease in SG&A was primarily due to a decrease in payroll and related costs of $0.5 million; advertising costs of $0.5 million; office, facilities, and vehicles of $0.3 million; amortization and depreciation of $0.2 million; and computer and IT costs of $0.1 million. These decreases were partially offset by increases in professional and legal fees of $0.1 million, associated with divestiture and acquisition activity, and non-cash compensation of $0.2 million. SG&A as a percentage of sales decreased from 24.5% of sales during the three months ended September 30, 2023 to 23.2% of sales during the current period as we continued to thoughtfully reduce our expense structure.
Previous report
Separation Costs – Executive Officers
Previous report
During the nine months ended September 30, 2023, the Company entered into a separation agreement with its prior CEO and current board member with a total cost of $1,819,199, consisting of $1,251,199 in cash payments, $1,199 of COBRA health insurance payments, and stock grants with a value of $568,000. Also during the nine months ended September 30, 2023, the Company entered into a separation agreement with its prior Director of Strategic Acquisitions and board member consisting of cash payments of $100,000 and $26,451 of COBRA health insurance payments. The aggregate separation costs for the nine months ended September 30, 2023 was $1,945,650; there were no such costs during the current period.
Previous report
Interest Expense, Net
Previous report
Interest expense, net of interest income, decreased by $1,143, or approximately 0.2%, to $642,212 during the nine months ended September 30, 2024, compared to $643,355 during the nine months ended September 30, 2023. The decrease was due primarily to a lower principal balances on the Company’s commercial loans and notes payable. In addition, the Company’s interest income increased by 37,517 during the period to $42,735 compared to $5,218 in the prior period; the increase was due to an increase in cash balances.
Previous report
Gain on Sale of Assets
Previous report
During the nine months ended September 30, 2024, the Company sold its property located in Bonita Springs, Florida for a gain in the amount of $1,807,516. In addition, the Company sold certain intangible assets of igourmet for a gain in the amount of $834,463. There were no comparable transactions in the prior period.
Previous report
Gain on Sale of Subsidiary
Previous report
During the nine months ended September 30, 2024, the Company sold its subsidiary, Haley Group, Inc. (“Haley”); consideration for the sale was the return to the Company of 21,126 shares of the Company’s common stock with a market value at the time of the sale of $21,126. The Company recorded a gain on the sale of Haley in the amount of $21,126. There was no comparable transaction in the prior period.
Previous report
Other Leasing Income
Previous report
During the nine months ended September 30, 2024, the Company recognized income in the amount of $5,700 in connection with the lease of space in our Mountaintop warehouse facility compared to $6,189 in the prior period.
Previous report
Income Tax Expense
Previous report
During the nine months ended September 30, 2023, the Company paid federal income taxes in the amount of $15,834 in connection with an audit of the year ended December 31, 2017. There was no such charge during the current period.
Previous report
Net Income (Loss) from Continuing Operations
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Reworded paragraphs (2)
Previous wording
The Company provides an allowance for doubtful accounts 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 Accounts Standards Codification (“ASC”) 326,Financial Instruments–* Credit Losses*. Under ASC 326, the Company utilizes a current and expected credit loss (CECL) impairment model. ASU 2016-13 became effective for us on January 1, 2023. 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 doubtful accounts will change. Accounts receivable are presented net of an allowance for doubtful accounts of $87,149 and $46,477 at September 30, 2024 and December 31, 2023, respectively.
Current wording
The Company provides an allowance for doubtful accounts 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 Accounts Standards Codification (“ASC”) 326,Financial Instruments–Credit Losses. Under ASC 326, the Company utilizes a current and expected credit loss (CECL) impairment model. ASU 2016-13 became effective for us on January 1, 2023. 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 doubtful accounts will change. Accounts receivable are presented net of an allowance for doubtful accounts of $40,002 at March 31, 2025 and December 31, 2024.
Previous wording
The Company’s largest customer, U.S. Foods, Inc. and its affiliates, accounted for approximately 45% and 49% of total sales in the three months ended September 30, 2024 and 2023, respectively, and 47% and 48% of total sales in the nine months ended September 30, 2024 and 2023, respectively. In addition, Gate Gourmet, the leading global provider of airline catering solutions and provisioning services for airlines, represented 18% and 16% of total sales for the three months ended September 30, 2024 and 2023, respectively, and 18% and 16% of total sales for the nine months ended September 30, 2024 and 2023, respectively.
Current wording
The Company’s largest customer, U.S. Foods, Inc. and its affiliates, accounted for approximately 34% and 50% of total sales in the three months ended March 31, 2025 and 2024, respectively; Sam’s Club, a membership-based warehouse retailer and subsidiary of Walmart Inc. represented 19% and 0% of total sales, respectively; and Gate Gourmet, the leading global provider of airline catering solutions and provisioning services for airlines, represented 12% and 17% of total sales, respectively.