INNOVATIVE FOOD HOLDINGS INC

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 $40,002 at March 31, 2025 and December 31, 2024.

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 $40,000 at June 30, 2025 and December 31, 2024.

Previous wording

We operate our new retail business, as well as our airline catering distribution business, out of our 200,000 square foot facility in Mountain Top, Pennsylvania,. We also operate warehouse activities in our owned 28,000 square foot facility in the greater Chicago area. Once our acquisition of Golden Organics closes, we will have another warehouse, operating out of Denver, CO, measuring approximately 20,000 square feet. We have the capabilities to pack and ship frozen, refrigerated, and ambient products, enabling us to sell a broad range of specialty foods. We also have GFSI/SQF certifications, allowing compatibility with the highest standards of food handling supply chains in the world, and the quality and food safety that our premium customers expect from us. These warehouses have the ability to ship packages and pallets of all sizes through overnight shipping. We also leverage our own fleet of trucks to deliver directly to our Professional Chef customers within our reach.

Current wording

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.

Previous wording

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 wording

Financial Highlights for the fiscal quarter ended June 30, 2025: IVFH reported revenue of $21.1 million, a 26.9% increase compared to $16.6 million in 2024. Our organic revenue growth, which excludes the impact of divestitures and acquisitions, was 23.6% for the full quarter.

Previous wording

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 wording

Cost of goods sold for the three months ended June 30, 2025 increased 31.9% to $16.7 million compared to $12.6 million last year. Gross margin dropped by 294 basis points to 21%, 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 17.5% of Q2 2025 sales, versus 0% in Q2 2024. Excluding cheese, gross margins increased 66 bps. The margin improvement was primarily attributable to lower shipping costs, which contributed a 34 basis point increase in total margin. Shipping costs represented 10.3% of revenue in Q2 2025, compared to 10.7% in the prior-year period.

Previous wording

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 wording

Total Cash OpEx increased: The total Cash OpEx increased by $1.8 million, reflecting growth in our national distribution channels and M&A activity in Q4 2024.

Previous wording

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 wording

During the three months ended June 30, 2025, the company reported a net income from continuing operations of $59 thousand, compared to a net loss of $60 thousand in 2024, representing an increase of $119 thousand. During the six months ended June 30, 2025, the company reported a net loss from continuing operations of $371 thousand, compared to net income of $1.3 million in 2024, representing a decrease of $1.7 million.

Previous wording

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 wording

As of June 30, 2025, IVFH had current assets of $20.7 million, including cash and cash equivalents of $1.5 million, and current liabilities of $6.5 million. The company had net working capital of $14.3 million.

Previous 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.

Current wording

The Company’s largest customer, U.S. Foods, Inc. and its affiliates, accounted for approximately 34% and 48% of total sales in the three months ended June 30, 2025 and 2024, respectively; Sam’s Club, represented 17% and 0% of total sales, respectively; and Gate Gourmet, the leading global provider of airline catering solutions and provisioning services for airlines, represented 15% and 18% of total sales, respectively.