What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-31 compared with 2022-03-31 · 134 added, 76 removed, 340 unchanged (38% of the section changed)

15 unchanged sentences

In making this assessment, management used the criteria set forth in Internal Control Over Financial Reporting — Guidance for Smaller Public Companies issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013).

Management has identified a control deficiency regarding the integration of two acquisitions in 2018 and as a result management has concluded our internal control over financial reporting was ineffective at December 31, 2021 at the reasonable assurance level.

Management of the Company believes that this deficiency is primarily due to the smaller size of the company’s accounting staff in relation to certain continued system integrations related to the 2018 acquisitions of certain assets of igourmet LLC and Mouth Foods, Inc.

To address this matter, we recently named a new Chief Financial Officer and also expect to retain additional qualified personnel and accounting and systems consultants to continue to remediate this control deficiency in the future.

Management previously identified a control deficiency regarding the integration of two acquisitions in 2018 and as a result management had previously concluded our internal control over financial reporting was ineffective at the reasonable assurance level.

To address this matter, we named a new Chief Financial Officer effective December 29, 2020 and also retained additional qualified personnel.

As a result, Management concluded that the Company’s internal control over financial reporting as of December 31, 2022 is effective at the reasonable assurance level.

Inherent Limitations over Internal Controls

13 unchanged sentences

Set forth below are the directors and executive officers of our Company, their respective names and ages, positions with our Company, principal occupations and business experiences during at least the past five years.

Chairman and Chief Executive Officer

Justin Wiernasz

Director of Strategic Acquisitions and Director

Chief Executive Officer and Director

David Polinsky

2 unchanged sentences

Chief Financial Officer

Bill Bennett, Chief Executive Officer and Director

William (Bill) Bennett has been a director and our CEO since February 28, 2023.

Prior thereto, Mr.

Bennett was most recently Vice President of eCommerce for The Kroger Co.

from 2020 until 2023.

In this role, he was responsible for the company’s $10 billion eCommerce business, leading cross-functional partners in marketing, merchandising, product management, supply chain, technology, and analytics to develop and lead a robust eCommerce go-to-market and growth strategy across the enterprise.

Bennett joined Kroger from Walmart where he served for seven years, from 2013 to 2020, in a variety of eCommerce and store leadership roles, including finance, merchandising, strategy, analytics, and product management.

Prior to Walmart, from 2011 to 2013, Mr.

Bennett led the pricing strategy team at S.C.

Johnson and served in a variety of leadership roles at General Mills from 2006 to 2011.

Bennett received a bachelor’s degree in Business Management with an emphasis in Finance from Brigham Young University and an MBA from the Fuqua School of Business at Duke University.

Sam Klepfish, Chairman

Klepfish has been a director since December 1, 2005.

From November 2007 to present Mr.

Klepfish is the CEO of Innovative Food Holdings and its subsidiaries.

From November 2007 to February 28, 2023 Mr.

Klepfish was the CEO of Innovative Food Holdings and its subsidiaries.

From March 2006 to November 2007 Mr.

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Klepfish was an asset manager for several investors in small-cap entities.

Justin Wiernasz, Director of Strategic Acquisitions

Wiernasz has been a director since November 1, 2013.

Effective on May 11, 2018, Mr.

Justin Wiernasz resigned his position of President of Innovative Food Holdings, Inc.

which he held since July 31, 2008 and assumed the position of Director of Strategic Acquisitions.

Prior thereto he was the Executive Vice President of Marketing and Sales and Chief Marketing Officer of our operating subsidiary, Food Innovations, Inc.

since May 2007 and the President of Food Innovations and our Chief Marketing Officer since December 2007.

Prior thereto, he was at USF, our largest customer, for 13 years.

From 2005 to 2007 he was the Vice President of Sales & Marketing, USF, Boston, and prior thereto, from 2003 to 2005 he was a National Sales Trainer at USF, Charleston SC, from 1996 to 2003 he was the District Sales Manager at USF, Western Massachusetts and from 1993 to 1996 he was Territory Manager, USF, Northampton, Easthampton & Amherst, MA.

Prior to that from 1989 to 1993 he was the owner and operator J.J.’s food and spirit, a 110 seat restaurant .

Joel Gold, Director

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in Philosophy from the University of Chicago in 1996.

Denver Smith, Director

Denver Smith has been a director since March 13, 2023.

Smith is the Co-Founder and a managing member of Carlson Ridge Capital, a hedge fund manager, which was founded in 2015.

He is also the Co-CIO of the firm and acts as the lead manager for the CRC Founders Fund, LP.

Additionally, Mr.

Smith advises the Aspen Family Trust on its asset allocation and strategic level decisions for various entities it owns.

He was previously a portfolio manager and the Chief Investment Officer for 73114 Investments, LLC, for a period of 9 years.

In 2015, he prompted and helped negotiate the sale of 73114 Investments parent company, a government contracting company, to a multi-billion dollar publicly traded REIT for over $150 million.

Smith serves on the Board of Trustees of Lifestyle Management Inc, a non-profit organization.

He graduated from the University of Oklahoma with a BBA in Finance and Economics.

He also earned an MBA from the University of Oklahoma.

Smith is a CFA Charterholder.

Richard Tang , CFO

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We believe that all of our directors are qualified for their positions and each brings a benefit to the board.

Kelpfish and Wiernasz, as our officers, are uniquely qualified to bring management’s perspective to the board’s deliberations.

Bennett, as an executive officer, is uniquely qualified to bring management’s perspective to the board’s deliberations.

Gold, with his lengthy career working for broker/dealers, bring a “Wall Street” perspective and Mr.

2 unchanged sentences

Pappas brings both his investment and corporate finance background and food industry experience to the board.

Klepfish, as a former executive officer continues to bring his knowledge of the food industry as well as detailed knowledge of the Company to the board.

Gramm and Smith bring extensive experience in business strategy and capital markets.

The Board of Directors currently has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee.

1 unchanged sentence

Gold, Cohn, Pappas and Schmulen and the members of the Audit Committee are Messrs.

Gold, Cohn and Schmulen with Mr.

Gold, Cohn, Gramm, Polinsky, and Schmulen with Mr.

Cohn designated as the Audit Committee Financial Expert.

2 unchanged sentences

Pappas’ appointment to the Board, as described in a Current Report on Form 8-K filed on January 30, 2020 (the “January 8-K”), the Company and Mr.

Pappas entered into a two year Agreement dated as of January 28, 2020 (the “Agreement”) which, among other things, provided that (i) the Company (x) will support the continued directorships of the New Directors (as defined in the Agreement) at the next two annual meetings and (y) after 18 months will appoint another nominee of JCP (as defined in the Agreement”) to the Board and support such nominee at the next annual meeting, provided that such nominee shall be subject to the approval (which shall not be unreasonably withheld) of the Nominating and Corporate Governance Committee of the Board and the Board after exercising their good faith customary due diligence process and fiduciary duties;

and (ii) JCP and the Company agreed to certain standstill provisions, as more fully described in the Agreement.

As of the date hereof, the New Directors referred to in the Agreement are Messrs.

Pappas entered into a two year Agreement dated as of January 28, 2020 (the “Pappas Agreement”) which, among other things, provided that (i) the Company (x) will support the continued directorships of the New Directors (as defined in the Pappas Agreement) at the next two annual meetings and (y) after 18 months will appoint another nominee of JCP (as defined in the Pappas Agreement”) to the Board and support such nominee at the next annual meeting, provided that such nominee shall be subject to the approval (which shall not be unreasonably withheld) of the Nominating and Corporate Governance Committee of the Board and the Board after exercising their good faith customary due diligence process and fiduciary duties;

and (ii) JCP and the Company agreed to certain standstill provisions, as more fully described in the Pappas Agreement.

As of the date hereof, the New Directors referred to in the Pappas Agreement are Messrs.

Pappas and Schmulen.

Effective November 28, 2022 the Company entered into a Board Observer Agreement with Denver J.

Smith (the “Smith Agreement”).

Smith is part of a Schedule 13D group (the “Group”) which holds approximately 8.3% of our outstanding common stock.

The Group had threatened a proxy contest, and to avoid expense and disruption associated with a proxy contest the company has signed the Smith Agreement with the Group.

The Smith Agreement provides, among other things, that for up to six (6) months, with certain minor limitations, Mr.

Smith will have observer status at all meetings held by our Board of Directors as well as meetings held by the various Committees of our Board of Directors.

In addition, the Smith Agreement provides for Mr.

Smith to become a member of our Board of Directors on or before the six (6) month anniversary of the Smith Agreement subject to fulfillment of the Board’s fiduciary responsibilities.

The Smith Agreement contains certain “standstill” provisions regarding proxy contests, Board membership and joining certain ownership groups.

The Smith Agreement is conditional upon the Group maintaining certain minimum ownership of our common stock as well as imposing duties of confidentiality and securities law compliance.

Effective March 13, 2023, our board determined to appoint Mr.

Smith to our board.

Code of Ethics

10 unchanged sentences

Justin Wiernasz

Director of Strategic Acquisitions

Chief Financial Officer (d)

Principal Accounting Officer (e)

John McDonald,

Principal Accounting Officer (f)

Director of Strategic Acquisitions (g)

Chief Financial Officer

Principal Accounting Officer

(a) Consists of the portion of restricted stock awards which were recognized as a period cost during the year for services as an executive officer.

(b) Consists of cash payments for health care benefits.

Tang’s employment with the Company was effective December 29, 2020.

Vila assumed the role of Principal Accounting Officer effective November 12, 2020 through April 15, 2021.

McDonald’s employment with the Company ended effective November 18, 2020.

(g) Consists of option awards which were recognized as a period cost during the year for services as an executive officer.

(b) Consists of cash payments for health care benefits in the amount of $3,525 and restricted stock awards in the amount of $95,414 recognized as a period cost during the year for services as an executive officer and utilized to pay withholding taxes on behalf of Mr.

(d) Consists of a cash bonus paid during the year for services performed in the previous year.

(e) Consists of option awards which were recognized as a period cost during the year for services as an executive officer.

Klepfish resigned from his position as Chief Executive Officer on February 28, 2023.

Wiernasz resigned from his position as Director of Strategic Acquisitions on March 1, 2023.

Outstanding Equity Awards at Fiscal Year-End as of December 31, 2022

17 unchanged sentences

Incentive Plan

Justin Wiernasz

Justin Wiernasz (b)

David Polinsky

1 unchanged sentence

Jefferson Gramm

(a) Represents the amount charged to operations during the year ended December 31, 2021 for 90,000 shares of the Company’s common stock with a fair value of $45,000;

55,545 shares of the Company’s common stock with a fair value of $18,515 vesting over a three-year period;

and 64,240 shares of the Company’s common stock with a fair value of $30,000 vesting over a three-year period.

(b) Represents the amount charged to operations during the year ended December 31, 2021 for the following:

(i) five-year options to purchase 90,000 shares of the Company’s common stock at a price of $0.62 per share, vesting over three years;

(ii) five-year options to purchase 135,000 shares of the Company’s common stock at a price of $0.85 per share, vesting over three years;

and (iii) five-year options to purchase 225,000 shares of the Company’s common stock at a price of $1.20 per share, vesting over three years.

(c) Represents the amount charged to operations during the year ended December 31, 2021 for two-year options to purchase 50,000 shares of the Company’s common stock at a price of $1.20 per share, vesting over one year.

(d) Represents the amount charged to operations during the year ended December 31, 2021 for one-year options to purchase 50,000 shares of the Company’s common stock at a price of $1.20 per share, vesting over one year.

(a) Represents the amount charged to operations during the year ended December 31, 2022 for 90,634 shares of the Company’s common stock with a fair value of $30,000 granted on January 1, 2021 and vesting over a three-year period, and 64,240 shares of the Company’s common stock with a fair value of $30,000 granted on January 1, 2020 and vesting over a three-year period.

Wiernasz resigned his position as a director of the Company on March 1, 2023.

(c) Represents the amount charged to operations during the year ended December 31, 2021 for one-year options to purchase 50,000 shares of the Company’s common stock at a price of $1.20 per share, vesting over one year.

Employment Agreements

Our subsidiary, Food Innovations, has employment agreements with certain officers and certain employees.

The employment agreements provide for salaries and benefits, including stock grants and extend up to five years.

The employment agreements provide for salaries and benefits, including stock grants and extend up to three years.

In addition to salary and benefit provisions, the agreements include defined commitments should the employer terminate the employee with or without cause.

On February 3, 2023, we entered into an Executive Employment Agreement with Robert William Bennett (the “RWB Agreement”).

The RWB Agreement provides, among other things, for Mr.

Bennett to become our Company’s Chief Executive Officer;

Bennett, and one designee, to be nominated to the Company’s Board of Directors during his tenure as CEO;

employment at-will with an initial term of employment from February 28, 2023 through December 31, 2025 with 12 months of Base Salary as severance payments if terminated without cause or resignation with Good Reason;

an annual Base Salary of $375,000 with at least 3% annual increases with additional annual increases of 20% if certain cash flow metrics are met;

a $50,000 signing bonus;

an additional Bonus, triggered based on certain conditions being met, of up to $300,000 payable over time;

annual incentive bonus equal to at least 50% of Base Salary;

reimbursement of legal fees up to $10,000;

and participation in the Company’s benefit plans.

Bennett is also subject to the Company’s clawback policies and certain restrictive covenants including confidentiality, non-compete and non-solicitation.

In addition, Mr.

Bennett is eligible for stock grants based upon the market price of the Company’s common stock meeting certain price points at various 60-day volume weighted prices, as described in the chart below:

Stock Threshold Target

Number of Shares Granted

The lower of (x) the number of Shares (rounded down to the nearest whole Share) representing 2.00% of the total number of issued and outstanding Shares on the Grant Date of this Value Achievement Award or (y) 943,531

The lower of (x) the number of Shares (rounded down to the nearest whole Share) representing 1.50% of the total number of issued and outstanding Shares on the Grant Date of this Value Achievement Award or (y) 707,649

The lower of (x) the number of Shares (rounded down to the nearest whole Share) representing 1.00% of the total number of issued and outstanding Shares on the Grant Date of this Value Achievement Award or (y) 471,766

The lower of (x) the number of Shares (rounded down to the nearest whole Share) representing 0.75% of the total number of issued and outstanding Shares on the Grant Date of this Value Achievement Award or (y) 353,824

The lower of (x) the number of Shares (rounded down to the nearest whole Share) representing 0.50% of the total number of issued and outstanding Shares on the Grant Date of this Value Achievement Award or (y) 235,883

Effective March 29, 2017, we entered into an employment agreement with Mr.

7 unchanged sentences

The agreement also contains change of control, confidentiality, non-compete and non-solicitation provisions.

Klepfish resigned his position as CEO on February 28, 2023.

JUSTIN WIERNASZ

9 unchanged sentences

The agreement also contains change of control, confidentiality, non-compete and non-solicitation provisions.

Wiernasz resigned his position as Director of Strategic Acquisitions on March 1, 2023.

Effective December 29, 2020, we entered into a letter agreement with Mr.

14 unchanged sentences

Except as otherwise indicated, the beneficial owner exercises sole voting power and sole investment power with respect to such shares.

All numbers have been adjusted to reflect the 1-for-50 reverse split that was effective June 13, 2012.

Name and Address of Beneficial Owners

7 unchanged sentences

Mark Schmulen (Director)

Sam Klepfish (Officer, Director)

Justin Wiernasz (Officer, Director)

Sam Klepfish (Director)

Bill Bennett (Officer, Director)

Smith (Director)

Richard Tang (Officer)

9 unchanged sentences

Pappas is the managing member of JCP Management and sole member of JCP Holdings.

Also includes options to purchase 50,000 shares of common stock.

The address of Mr.

Pappas, JCP Partnership and JCP Management, LLC is 1177 West Loop South, Suite 1320, Houston, TX 77027.

Information gathered from a Form 4 filed with the Securities and Exchange Commission on August 30, 2021.

Information gathered from a Form 4 filed with the Securities and Exchange Commission on February 15, 2023.

Includes 3,125,000 shares which are held indirectly through SV Asset Management LLC.

6 unchanged sentences

Includes options to purchase 50,000 shares of common stock.

Information gathered from a Form 4 filed with the Securities and Exchange Commission on January 28, 2022.

Includes options to purchase 25,000 shares of common stock exercisable at May 1, 2022.

Information gathered from a Form 4 filed with the Securities and Exchange Commission on February 10, 2023.

Includes options to purchase 450,000 shares of common stock.

1 unchanged sentence

Gold’s spouse.

Does not include an additional 221,694 earned shares which are accrued but not issued.

Shares held by PetBox LLC, an entity affiliated with, and controlled by, Mr.

Includes options to purchase 50,000 shares of common stock.

Includes options to purchase 450,000 shares of common stock exercisable at May 1, 2022.

Also, includes 16,250 shares of common stock owned by Mr.

Klepfish's spouse, ownership of which is disclaimed by Mr.

Includes options to purchase 450,000 shares of common stock exercisable at May 1, 2022.

Includes options to purchase 62,500 shares of common stock exercisable at May 1, 2022.

Pursuant to a Schedule 13G/A filed on February 3, 2022 with the Securities Exchange Commission, the address of The Address of Insight Wealth Management is 1175 Peachtree St NE Suite 350, Atlanta, GA 30361.

Does not include an additional 861,458 earned shares which are accrued but not issued.

Includes 104,910 shares of common stock owned by Mr.

Bennett's spouse, ownership of which is disclaimed by Mr.

Consists of 674,671 shares owned directly by Mr.

Smith and 3,153,400 shares owned by various funds and for which he provides investment advice.

Does not include the shares described in footnote 10.

Includes options to purchase 100,000 shares of common stock.

Pursuant to a Schedule 13G/A filed on February 15, 2023 with the Securities Exchange Commission, the address of Inlight Wealth Management is 1175 Peachtree St NE Suite 350, Atlanta, GA 30361.

Amount consists of 2,127,099 shares with sole voting and dispositive power, and 1,619,958 shares with shared dispositive power.

The issuer retains sole voting power for 1,619,958 shares.

Pursuant to a Schedule 13D/A filed on January 20, 2022 with the Securities and Exchange Commission, Mr.

Denver Smith is part of a group which reports beneficially owning an aggregate of 2,710,930, although Mr.

Denver Smith only has sole voting and dispositive power over 674,471 of such shares.

Smith’s address is 350 S Race Street, Denver, Colorado 80209.

Pursuant to a Schedule 13D/A filed on February 21, 2023 with the Securities and Exchange Commission, for a group of investors which includes Mr.

Denver Smith (see footnote8).

Smith disclaims beneficial interest over 89,464 shares owned by certain members of the group for which he has no voting power.

The group uses an address at 52 Carlson Drive, Milford, CT, 06460.

Consists of 22,676,594 shares of common stock held by officers and directors.

Also includes options to purchase 2,037,500 shares of common stock exercisable at May 1, 2022.

Also includes options to purchase 1,950,000 shares of common stock exercisable at March 3, 2023.

Certain Relationships and Related Transactions, and Director Independence

We are not currently subject to the requirements of any stock exchange or national securities association with respect to having a majority of “independent directors”.

Gold, Cohn, Polinsky, Pappas, Schmulen, and Gramm are “independent” and only Messrs.

Klepfish and Wiernasz, by virtue of being our Officers, are not independent.

Klepfish and Mr.

Wiernasz do not participate in board discussions concerning their compensation.

Gold, Cohn, Polinsky, Pappas, Schmulen, Gramm and Smith are “independent” and only Messrs.

Bennett, by virtue of being an Officer, and Klepfish, by virtue of being a former Officer, are not independent.

Bennett does not participate in board discussions concerning his compensation.

Principal Accountant Fees and Services

The Company engaged Assurance Dimensions, Inc.

as our independent registered public accounting firm effective November 10, 2022.

Total engagement fees of Assurance Dimensions, Inc.

covering the years ended December 31, 2022 and 2023 are $210,000.

The Company engaged Liggett & Webb P.A.

(“LW”) as our independent registered public accounting firm since November 9, 2012.

During the year ended December 31, 2021 and 2020, LW billed us audit fees of approximately $144,000 and $144,000, respectively.

(“LW”) as our independent registered public accounting from November 9, 2012 through November 9, 2022.

During the years ended December 31, 2022 and 2021, LW billed us audit fees of approximately $174,000 and $144,000, respectively.

Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by LW that are reasonably related to the performance of the audit or review of our consolidated financial statements including our quarterly interim reviews on Form 10-Q and are reported under Audit Fees above.

The aggregate fees billed in each of the last two fiscal years for assurance and related services by Assurance Dimensions and by LW that are reasonably related to the performance of the audit or review of our consolidated financial statements including our quarterly interim reviews on Form 10-Q and are reported under Audit Fees above.

LW tax fees were $0 and $0 for the years ended December 31, 2022 and 2021, respectively.

All Other Fees

Assurance Dimension, Inc.

has not billed us any other fees since their engagement on November 10, 2022.

LW has not billed any other fees since their engagement on November 9, 2012.

30 unchanged sentences

*(incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 31, 2021).

Loan Agreement dated as of June 6, 2022 between the Registrant, Innovative Food Properties, LLC and MapleMark Bank (FL, IL) (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 14, 2022).

Loan Agreement dated as of June 6, 2022 between the Registrant, Innovative Food Properties, LLC and MapleMark Bank (PA) (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 14, 2022).

Loan Agreement dated as of June 6, 2022 between the Registrant and MapleMark Bank (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 14, 2022).

Board Observer Agreement dated as of November 28, 2022 between the Registrant and Denver J.

Smith (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 29, 2022).

Code of Ethics (incorporated by reference to exhibit 14 of the Company’s Form 10-KSB/A for the year ended December 31, 2006, filed with the Securities and Exchange Commission on July 31, 2008)

15 unchanged sentences

INNOVATIVE FOOD HOLDINGS, INC.

/s/ Sam Klepfish

Sam Klepfish,

/s/ Robert William Bennett

Robert William Bennett

Chief Executive Officer and Director

1 unchanged sentence

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Sam Klepfish

CEO and Director

/s/ Robert William Bennett

Chief Executive Officer and Director

March 31, 2023

(Chief Executive Officer)

Robert William Bennett

(Principal Executive Officer)

/s/ Richard Tang

16 unchanged sentences

Mark Schmulen

/s/ Justin Wiernasz

/s/ Sam Klepfish

March 31, 2023

Justin Wiernasz

/s/ Denver J.

March 31, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures