What changed in this filing

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Item 1. Financial Statements

2025-08-14 compared with 2025-05-15 · 1100 added, 998 removed, 400 unchanged (84% of the section changed)

Financial Statements

Innovative Food Holdings, Inc.

Consolidated Balance Sheets

Food Holdings, Inc.

Balance Sheets

Current assets

33 unchanged sentences

500,000,000 shares authorized;

56,831,090 and 56,009,032 shares issued, and 53,986,793 and 53,164,735 shares outstanding at March 31, 2025 and December 31, 2024, respectively

57,196,294 and 56,009,032 shares issued, and 54,351,997 and 53,164,735 shares outstanding at June 30, 2025 and December 31, 2024, respectively

Common stock to be issued;

798,891 and 738,032 shares at March 31, 2025 and December 31, 2024, respectively

433,687 and 738,032 shares at June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

Treasury stock:

2,644,297 shares outstanding at March 31, 2025 and December 31, 2024

2,644,297 shares outstanding at June 30, 2025 and December 31, 2024

( 1,141,372 )

Accumulated deficit

( 36,581,690 )

( 36,209,764 )

Total stockholders’ equity

Total liabilities and stockholders’ equity

See condensed notes to these unaudited consolidated

financial statements.

Innovative Food Holdings, Inc.

Consolidated Statements of Operations

condensed notes to these unaudited consolidated financial statements.

Food Holdings, Inc.

Statements of Operations

For the Three

7 unchanged sentences

Gain on sale of assets

Gain (loss) on sale of subsidiary

Gain on sale of subsidiary

Other leasing income

3 unchanged sentences

Net income (loss) from continuing operations

$ ( 430,436 )

Net income (loss) from discontinued operations

Net (loss) from discontinued operations

Consolidated net income (loss)

$ ( 430,436 )

Net income (loss) per share from continuing operations - basic

4 unchanged sentences

Weighted average shares outstanding - diluted

See condensed notes to these unaudited consolidated

financial statements.

Innovative Food Holdings, Inc.

Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2025 and 2024

Common Stock to

Treasury Stock

Balance - December 31, 2023

Shares returned to treasury from sale of subsidiary

condensed notes to these unaudited consolidated financial statements.

Food Holdings, Inc.

Statements of Stockholders’ Equity

and Six Months Ended June 30, 2025 and 2024

March 31, 2024

$ ( 1,141,372 )

$ ( 37,395,404 )

Fair value of shares under compensation plan

Net income for the three months ended March 31, 2024

Shares issued for cashless exercise of options

Net loss for the three

months ended June 30, 2024

- June 30, 2024

$ ( 1,141,372 )

$ ( 37,498,728 )

Balance - March 31, 2025

$ ( 1,141,372 )

$ ( 36,640,200 )

Fair value of shares under compensation plan

Shares issued under compensation

Net income for the three

months ended June 30, 2025

- June 30, 2025

$ ( 1,141,372 )

$ ( 36,581,690 )

Balance - December 31, 2023

Shares issued in cashless conversion of options

$ ( 1,141,370 )

$ ( 38,821,278 )

Shares returned to treasury

from sale of subsidiary

Fair value of shares under compensation plan

Shares earned under compensation plans

Shares issued under compensation plans

Net loss for the three months ended March 31, 2025

Balance - March 31, 2025

See condensed notes to these unaudited consolidated

financial statements.

Innovative Food Holdings, Inc.

Consolidated Statements of Cash Flows

For the Three

Shares issued for cashless exercise of options

Net loss for the six months

ended June 30, 2024

- June 30, 2024

$ ( 1,141,372 )

$ ( 37,498,728 )

Balance - December 31, 2024

$ ( 1,141,372 )

$ ( 36,209,764 )

Shares issued in cashless

conversion of options

Fair value of shares under compensation plan

Shares earned under compensation

Shares issued under compensation

Shares issued from shares

Net loss for the six months

ended June 30, 2025

- June 30, 2025

$ ( 1,141,372 )

$ ( 36,581,690 )

condensed notes to these unaudited consolidated financial statements.

Food Holdings, Inc.

Statements of Cash Flows

Cash flows used in operating activities:

34 unchanged sentences

( 1,536,279 )

( 1,130,119 )

Cash and cash equivalents at beginning of period

8 unchanged sentences

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

See condensed notes to these unaudited consolidated

financial statements.

INNOVATIVE FOOD HOLDINGS, INC.

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL

March 31, 2025

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING

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.

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 months ended

March 31, 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.

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.

Capitalized interest on financing lease

condensed notes to these unaudited consolidated financial statements.

FOOD HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

of Presentation

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.

results of the operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results of operations

to be expected for the full year.

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.

subsidiaries GROW and Oasis were sold effective December 29, 2023;

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.

1 unchanged sentence

and the igourmet platform and its D2C components were sold effective August

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.

The activities

of P Innovations (“Plantbelly”) were abandoned.

Discontinued Operations

Pursuant to the guidance of Accounts Standards

Codification (“ASC”) 205-20, Presentation of Financial Statements – Discontinued Operations, the accounts

of our discontinued entities GROW, Oasis, Haley, Plantbelly, and Mouth have been included in “Net loss from discontinued operations”

in our consolidated statements of operations.

Additionally, the assets and liabilities of these entities have been presented as discontinued

operations in our consolidated balance sheets.

On December 29, 2023, the Company completed the sales of its Grow and Oasis subsidiaries;

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.

The activities of P Innovations (“Plantbelly”) were abandoned.

to the guidance of Accounts Standards Codification (“ASC”) 205-20, Presentation of Financial Statements – Discontinued

Operations, the accounts of our discontinued entities GROW, Oasis, Haley, Plantbelly, and Mouth have been included in “Net

loss from discontinued operations” in our consolidated statements of operations.

Additionally, the assets and liabilities of these

entities have been presented as discontinued operations in our consolidated balance sheets.

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

and on October 8, 2024, the Company completed

the sale of substantially all of the assets of Mouth.

In addition, the operations of Plantbelly have been abandoned.

The only remaining

discontinued operations on the Company’s balance sheet at December 31, 2024 is cash in the amount of $ 49,315 held by Mouth.

and on October 8, 2024, the Company completed the sale of substantially all of the assets of Mouth.

In addition, the operations of

Plantbelly have been abandoned.

The only remaining discontinued operations on the Company’s balance sheet at December 31, 2024

is cash in the amount of $ 49,315 held by Mouth.

Reclassifications

Certain amounts presented in the financial statements

of the prior period have been reclassified to conform with the current period presentation of discontinued operations.

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 doubtful accounts, 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.

We believe our estimates have not been materially inaccurate in past years, and our assumptions are not likely to change

in the foreseeable future.

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.

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 March 31, 2025 and December 31, 2024, the Company’s largest customer, U.S.

and its affiliates, accounted

for approximately 14 % and 10 % of accounts receivable, respectively;

Sam’s Club, a membership-based

warehouse retailer and subsidiary of Walmart Inc.

represented 24 % and 34 % of accounts receivable, respectively;

and Gate Gourmet, the leading global

provider of airline catering solutions and provisioning services for airlines, represented 19 % and 15 % of accounts receivable, respectively.

The Company maintains cash balances in excess

of Federal Deposit Insurance Corporation limits.

At March 31, 2025 and December 31, 2024, the total cash in excess of these limits was

$ 0 and $ 1,016,918 , respectively.

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

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

Accounts receivable are presented net of an allowance for doubtful accounts of $ 40,002 at March 31, 2025 and December 31, 2024.

Inventory is valued at the lower of cost or market

and is determined by the first-in, first-out method.

The Company adjusts inventory based upon bi-weekly cycle counts and upon the expiration

date of food products.

In addition, the Company records an allowance for obsolete or slow moving inventory based upon historical loss

history and management’s judgment.

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.

Finance lease ROU assets are presented within other assets, and finance lease liabilities

are presented within current and long-term liabilities.

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

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.

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 and sales taxes collectible

from customers, if any, 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 .

amounts presented in the financial statements of the prior period have been reclassified to conform with the current period presentation

of discontinued operations.

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 doubtful accounts, 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.

We believe our estimates have not been materially inaccurate

in past years, and our assumptions are not likely to change in the foreseeable future.

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 June 30, 2025 and December 31, 2024, the Company’s largest customer, U.S.

and its affiliates,

accounted for approximately 17 % and 10 % of accounts receivable, respectively;

Sam’s Club, represented 14 % and 34 % of accounts receivable,

respectively;

and Gate Gourmet, the leading global provider of airline catering solutions and provisioning services for airlines, represented

27 % and 15 % of accounts receivable, respectively.

Company maintains cash balances in excess of Federal Deposit Insurance Corporation limits.

At June 30, 2025 and December 31, 2024, the

total cash in excess of these limits was $ 190,229 and $ 1,016,918 , respectively.

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 .

Under ASC 326, the Company utilizes a current and expected credit loss (CECL) impairment

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 June 30,

2025 and December 31, 2024.

is valued at the lower of cost or market and is determined by the first-in, first-out method.

The Company adjusts inventory based upon

bi-weekly cycle counts and upon the expiration date of food products.

In addition, the Company records an allowance for obsolete or slow

moving inventory based upon historical loss history and management’s judgment.

Company accounts for leases in accordance with Financial Accounting Standards Board (“FASB”) ASC 842, Leases .

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.

Finance lease ROU assets are presented within

other assets, and finance lease liabilities are presented within current and long-term liabilities.

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

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.

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.

charges to customers and sales taxes collectible from customers, if any, are included in revenues.

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.

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.

Deferred Revenue

Deferred revenue relates to a long-term lease

agreement under which the Company received a one-time upfront payment associated with the installation of a telecommunications tower on

a building owned by the Company.

This lease has a 50 -year term, and revenue is being recognized on a straight-line basis over the life

The following table represents the changes in

deferred revenue as reported on the Company’s consolidated balance sheets:

(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.

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.

and logistics services revenues are primarily comprised of inventory management, order fulfilment and warehousing services.

and logistics services revenues are recognized at the point in time when the services are rendered to the customer.

revenue relates to a long-term lease agreement under which the Company received a one-time upfront payment associated with the installation

of a telecommunications tower on a building owned by the Company.

This lease has a 50 -year term, and revenue is being recognized on a

straight-line basis over the life of the lease.

following table represents the changes in deferred revenue as reported on the Company’s consolidated balance sheets:

Balance as of December 31, 2023

Cash payments received

Net sales recognized

Net leasing income recognized

Balance as of March 31, 2024 (unaudited)

Cash payments received

Net leasing income recognized

Balance as of June 30, 2024 (unaudited)

Balance as of December 31, 2024

Cash payments received

Net sales recognized

Net leasing income recognized

Balance as of March 31, 2025 (unaudited)

Disaggregation of Revenue

The following table represents a disaggregation

of revenue for the three months ended March 31, 2025 and 2024:

Cash payments received

Net leasing income recognized

Balance as of June 30, 2025 (unaudited)

Disaggregation

following table represents a disaggregation of revenue for the three and six months ended June 30, 2025 and 2024:

Three Months Ended

Six Months Ended

Digital Channels

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Other Services

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

Basic and diluted net loss per share is computed based on the weighted average number of shares of common stock outstanding during

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.

Dilutive Shares at March 31, 2025:

Stock Options

Restricted Stock Awards

At March 31, 2025, there were 300,000 unvested

restricted stock awards remaining from grants in a prior year.

Those 300,000 restricted stock awards will vest as follows:

125,000 restricted

stock awards will vest contingent upon the attainment of a stock price of $2.00 per share for 20 straight trading days , and an additional

175,000 restricted stock awards will vest contingent upon the attainment of a stock price of $3.00 per share for 20 straight trading days .

The fair value of these RSUs at the date of the grants will be charged to operations upon vesting.

At March 31, 2025, none of these RSU

There was no charge to operations for these RSUs during the three months ended March 31, 2025.

of Goods Sold

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.

have also included all payroll costs as cost of goods sold in our leasing and logistics services business.

and Diluted Earnings Per Share

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.

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

Six Months Ended

Net income (loss) from continuing operations

$ ( 371,926 )

Weighted average shares outstanding - basic

Dilutive effect of stock issuable under compensation plan

Weighted average shares outstanding - diluted

Net income (loss) per share from continuing operations - diluted

Shares at June 30, 2025:

June 30, 2025, there were 300,000 unvested restricted stock awards remaining from grants in a prior year.

Those 300,000 restricted stock

awards will vest as follows:

125,000 restricted stock awards will vest contingent upon the attainment of a stock price of $2.00 per share

for 20 straight trading days , and an additional 175,000 restricted stock awards will vest contingent upon the attainment of a stock price

of $3.00 per share for 20 straight trading days .

The fair value of these RSUs at the date of the grants will be charged to operations

upon vesting.

At June 30, 2025, none of these RSU were vested.

There was no charge to operations for these RSUs during the three and

six months ended June 30, 2025.

Stock-based Compensation

At March 31, 2025, there were a total of 1,142,989

shares of common stock potentially issuable to the Company’s executive officers pursuant to compensation plans and contingent upon

the achievement of certain performance goals;

At June 30, 2025, there were a total of 433,687 shares

of common stock potentially issuable to the Company’s executive officers pursuant to compensation plans and contingent upon the

achievement of certain performance goals;

see Notes 14 and 17.

Of these, 798,8991 shares have vested and are included in fully-diluted

shares outstanding during the three months ended March 31, 2025;

344,098 have not vested, and are excluded from the calculation of fully-diluted

shares outstanding during the three months ended March 31, 2025.

During the three months ended March 31, 2025, the amount of $ 101,201

was charged to stock-based compensation.

of basic and diluted EPS:

recorded a net loss for the three months ended March 31, 2025, and all of potentially issuable shares are anti-dilutive.

There is no difference

between EPS and fully-diluted EPS for the three months ended March 31, 2025.

Dilutive shares at March 31,

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 March 31, 2024:

These shares have vested and are included in basic shares outstanding and

fully-diluted earnings per share for the three and six months ended June 30, 2025.

During the three and six months ended June 30, 2025,

the amount of $ 101,201 and $ 202,402 , respectively, was charged to stock-based compensation.

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 six months ended June 30, 2025.

shares at June 30, 2024:

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 June 30, 2024:

Weighted average

3 unchanged sentences

$ 1.75 130,000 2.00

$ 1.00 50,000 1.75

$ 1.25 130,000 2.25

$ 1.75 130,000 2.25

Restricted Stock Awards:

31, 2024, there are 300,000 unvested restricted stock awards remaining from grants in a prior year.

June 30, 2024, there are 300,000 unvested restricted stock awards remaining from grants in a prior year.

Those 300,000 restricted

5 unchanged sentences

grants will be charged to operations upon vesting.

At March 31, 2024, none of these RSU were vested.

At June 30, 2024, none of these RSU were vested.

There was no charge to operations

for these RSUs during the three months ended March 31, 2024.

Compensation:

31, 2024, there were a total of 3,910,534 shares of common stock potentially issuable to the Company’s executive officers

pursuant to compensation plans and contingent upon the achievement of certain performance goals;

see notes 16 and 17.

The following

table illustrates the computation of basic and diluted EPS:

For the three months ended March 31, 2024

(Denominator)

Income from continuing operations

Income available to common shareholders

Effect of dilutive securities

Executive compensation plan

$ 1,425,874.00

for these RSUs during the three and six months ended June 30, 2024.

Stock-based Compensation

At June 30, 2024, there were a total of 3,910,534 shares

of common stock potentially issuable to the Company’s executive officers pursuant to compensation plans and contingent upon the

achievement of certain performance goals;

see notes 17.

Of these, 1,415,544 shares have vested and are included in fully-diluted

shares outstanding during the six months ended June 30, 2024;

2,490,990 have not vested, and are excluded from the calculation

of fully-diluted shares outstanding during the six months ended June 30, 2024.

During the three and six months ended June 30, 2024, the

amounts of $ 105,269 and $ 208,504 , respectively, were charged to stock-based compensation.

New Accounting Pronouncements

7 unchanged sentences

permitted and can be applied on either a prospective or retroactive basis.

The Company does not believe the adoption of this guidance

will have a material effect on its Consolidated Financial Statements and segment disclosures.

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 Company has adopted this guidance.

The adoption of this

pronouncement did not have a material effect on the Company’s Consolidated Financial Statements and segment disclosures.

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;

it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning

after December 15, 2027.

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 does not believe the adoption of this guidance will have a material

effect on its Consolidated Financial Statements and segment disclosures.

The Company does not believe the adoption of this guidance will have a material effect on its Consolidated

Financial Statements and segment disclosures.

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 on October

8, 2024, the Company sold substantially all of the assets of Mouth.

In addition, the operations of Plantbelly were abandoned.

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:

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 on October 8, 2024, the Company sold substantially all of the assets of Mouth.

In addition, the

operations of Plantbelly were abandoned.

following information presents the major classes of line item of assets and liabilities included as part of discontinued operations in

the consolidated balance sheets:

Current assets - discontinued operations:

Total current assets - discontinued operations

The following information presents the major classes

of line items constituting the after-tax loss from discontinued operations in the consolidated statements of operations:

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

Six Months Ended

Cost of goods sold

2 unchanged sentences

Loss from discontinued operations, net of tax

There were no major classes of line items which

constituted significant operating and investing cash flow activities in the consolidated statements of cash flows relating to discontinued

were no major classes of line items which constituted significant operating and investing cash flow activities in the consolidated statements

of cash flows relating to discontinued operations.

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 $ 2,101,185 , net of the payoff of principal and interest in the amount

of $ 356,215 on Maple Mark Term Loan 2.

On February 14, 2024, the Company sold its property

located at 28411 Race Track Road, Bonita Springs, Florida, for net cash proceeds of $ 2,101,185 , net of the payoff of principal and interest

in the amount of $ 356,215 on Maple Mark Term Loan 2.

A gain in the amount of $ 1,807,516 was recorded on this transaction.

SALE OF SUBSIDIARY

On February 26, 2024, the Company sold 100 % of

the equity interests in Haley for the return of 21,126 shares of the Company’s common stock held by the buyer.

Haley had no assets

or liabilities at the time of the sale.

On February 26, 2024, the Company sold 100 % of the

equity interests in Haley for the return of 21,126 shares of the Company’s common stock held by the buyer.

Haley had no assets or

liabilities at the time of the sale.

The Company valued the 21,126 shares of common stock at the market price on the date of the acquisition

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ACCOUNTS RECEIVABLE

At March 31, 2025 and December 31, 2024, accounts

receivable consists of:

June 30, 2025 and December 31, 2024, accounts receivable consists of:

Accounts receivable from customers

1 unchanged sentence

Accounts receivable, net

During the three months ended March 31, 2025 and

2024, the Company charged the amount of $ 27,555 and $ 22,882 to provision for credit losses, respectively.

Inventory consists primarily of specialty food

At March 31, 2025 and December 31, 2024, inventory consisted of the following:

the three and six months ended June 30, 2025, the Company charged the amount of $ 755 and $ 28,310 to provision for credit losses, respectively.

During the three and six months ended June 30, 2024, the Company charged the amount of $ 12,973 and $ 35,855 to provision for credit losses,

respectively.

consists primarily of specialty food products.

At June 30, 2025 and December 31, 2024, inventory consisted of the following:

Finished goods inventory

2 unchanged sentences

PROPERTY AND EQUIPMENT

A summary of property and equipment at March 31, 2025 and December

31, 2024 is as follows:

summary of property and equipment at June 30, 2025 and December 31, 2024 is as follows:

Computer and Office Equipment

5 unchanged sentences

( 1,636,367 )

expense for property and equipment amounted to $ 88,594 and $ 53,366 for the three months ended June 30, 2025 and 2024, respectively, and

$ 175,318 and $ 125,525 for the six months ended June 30, 2025 and 2024, respectively.

Depreciation expense for property and equipment

amounted to $ 58,160 and $ 85,345 for the three months ended March 31, 2025 and 2024, respectively.

Depreciation expense for property and

equipment is recorded in selling, general & administrating expenses on the Company’s statement of operations.

During the three

months ended March 31, 2025 and 2024, the Company acquired property and equipment in the amount of $ 163,366 and $ 1,406 , respectively.

is recorded in selling, general & administrative expenses on the Company’s statement of operations.

During the six months ended

June 30, 2025 and 2024, the Company acquired property and equipment in the amount of $ 208,886 and $ 15,857 , respectively.

PROPERTY AND EQUIPMENT CLASSIFIED AS HELD FOR SALE

Assets held for sale include the net book value

of property and equipment the Company plans to sell within the next year.

Long lived assets that meet the criteria are held for sale and

reported at the lower of their carrying value or fair value less estimated cost to sell.

As of December 31, 2023, the Company classified

the land, building, leasehold improvements, and certain equipment located at 28411 Race Track Road, Bonita Springs, Florida, 34135 (the

“Race Track Road Property”) as held for sale.

On February 14, 2024, the Company finalized the sale of the Race Track Road

Property for cash in the amount of $ 2,455,000 .

The Company recorded a gain on the sale in the amount of $ 1,807,516 .

Proceeds of the sale

in the amount of $ 353,815 were used to pay the mortgage and accrued interest on the Race Track Road Property.

Total expenses related to

the sale were $ 165,755 , including a commission of $ 147,300 , state taxes of $ 17,185 , and closing fees of $ 1,270 .

As of December 31, 2024, the Company classified

the land and building located at 220 Oak Hill Road, Mountain Top, Pennsylvania, as held for sale.

The net book value of these assets consisted of

the following at March 31, 2025 and December 31, 2024:

held for sale include the net book value of property and equipment the Company plans to sell within the next year.

Long lived assets

that meet the criteria are held for sale and reported at the lower of their carrying value or fair value less estimated cost to sell.

of December 31, 2023, the Company classified the land, building, leasehold improvements, and certain equipment located at 28411 Race

Track Road, Bonita Springs, Florida, 34135 (the “Race Track Road Property”) as held for sale.

On February 14, 2024, the Company

finalized the sale of the Race Track Road Property for cash in the amount of $ 2,455,000 .

The Company recorded a gain on the sale in the

amount of $ 1,807,516 .

Proceeds of the sale in the amount of $ 353,815 were used to pay the mortgage and accrued interest on the Race Track

Road Property.

Total expenses related to the sale were $ 165,755 , including a commission of $ 147,300 , state taxes of $ 17,185 , and closing

fees of $ 1,270 .

As of June 30, 2025 and December 31, 2024, the Company classified the

land and building located at 220 Oak Hill Road, Mountain Top, Pennsylvania, as held for sale.

net book value of these assets consisted of the following at June 30, 2025 and December 31, 2024:

Furniture, fixtures, and equipment

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 1 year to 3 years, some of which

include options to extend.

The Company’s lease expense for the three

months ended March 31, 2025 and 2024 was entirely comprised of operating leases and amounted to $ 70,866 and $ 8,165 , respectively.

The Company’s ROU asset amortization for

the three months ended March 31, 2025 and 2024 was $ 61,469 and $ 4,175 , respectively.

The difference between the lease expense and the

associated ROU asset amortization consists of interest.

The weighted-average discount rate for operating

leases was 7.00 % at March 31, 2025 and December 31, 2024.

The weighted-average remaining lease term of operating leases was 2.63 and 2.85

years at March 31, 2025 and December 31, 2024, respectively.

Right of use assets – operating leases are

summarized below:

RIGHT OF USE ( “ ROU ” ) ASSETS AND LEASE LIABILITIES – OPERATING LEASES

Company has operating leases for offices, warehouses, vehicles, and office equipment.

The Company’s leases have remaining lease

terms of 1 year to 3 years, some of which include options to extend.

Company’s lease expense for the three months ended June 30, 2025 and 2024 was entirely comprised of operating leases and amounted

to $ 71,566 and $ 4,633 , respectively.

The Company’s lease expense for the six months ended June 30, 2025 and 2024 was entirely comprised

of operating leases and amounted to $ 142,432 and $ 9,266 , respectively.

The Company’s ROU asset amortization for the three months ended

June 30, 2025 and 2024 was $ 61,469 and $ 4,175 , respectively.

The Company’s ROU asset amortization for the six months ended June

30, 2025 and 2024 was $ 123,972 and $ 8,421 , respectively.

The difference between the lease expense and the associated ROU asset amortization

consists of interest.

weighted-average discount rate for operating leases was 7.00 % at June 30, 2025 and December 31, 2024.

The weighted-average remaining

lease term of operating leases was 2.40 and 2.85 years at June 30, 2025 and December 31, 2024, respectively.

of use assets – operating leases are summarized below:

Warehouse equipment

1 unchanged sentence

Right of use assets, net

Operating lease liabilities are summarized below:

lease liabilities are summarized below:

Warehouse equipment

3 unchanged sentences

Lease liability, non-current

Maturity analysis under these lease agreements are as follows:

For the period ended March 31, 2026

For the period ended March 31, 2027

For the period ended March 31, 2028

For the period ended March 31, 2029

For the period ended March 31, 2030

analysis under these lease agreements are as follows:

For the period ended June 30, 2026

For the period ended June 30, 2027

For the period ended June 30, 2028

For the period ended June 30, 2029

For the period ended June 30, 2030

Present value discount

1 unchanged sentence

RIGHT OF USE ASSETS – FINANCING LEASES

The Company has financing leases for vehicles

and warehouse equipment.

Company has financing leases for vehicles and warehouse equipment.

Right of use asset – financing leases are summarized below:

2 unchanged sentences

accumulated depreciation

Depreciation expense related to right of use assets

for the three months ended March 31, 2025 and 2024 was $ 29,883 and $ 24,915 , respectively.

The weighted-average interest rate for financing

leases was 5.78 % at March 31, 2025 and 5.83 % at December 31, 2024.

The weighted-average remaining lease term of financing leases was

2.40 and 2.80 years at March 31, 2025 and December 31, 2024, respectively.

Financing lease liabilities are summarized below:

expense related to right of use assets for the three months ended June 30, 2025 and 2024 was $ 29,883 and $ 4,061 , respectively.

expense related to right of use assets for the six months ended June 30, 2025 and 2024 was $ 59,766 and $ 28,976 , respectively.

weighted-average interest rate for financing leases was 5.78 % at June 30, 2025 and 5.83 % at December 31, 2024.

The weighted-average

remaining lease term of financing leases was 2.57 and 2.80 years at June 30, 2025 and December 31, 2024, respectively.

lease liabilities are summarized below:

2025 December 31,

Financing lease obligation under a lease agreement for warehouse furniture and equipment truck dated October 14, 2020 in the original amount of $ 514,173 payable in sixty monthly installments of $9,942 including interest at the rate of 6.01 %.

During the three months ended March 31, 2025, the Company made principal and interest payments on this lease obligation in the amount of $ 28,658 and $ 1,167 , respectively.

During the three months ended June 30, 2025, the Company made principal and interest payments on this lease obligation in the amount of $ 29,091 and $ 735 , respectively;

during the six months ended June 30, 2025, the Company made principal and interest payments on this lease obligation in the amount of $ 57,748 and $ 1,903 , respectively.

$ 29,530 $ 87,278

Financing lease obligation under a lease agreement for a truck dated March 31, 2020 in the original amount of $ 152,548 payable in eighty-four monthly installments of $2,188 including interest at the rate of 5.44 %.

During the three months ended March 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $ 5,862 and $ 702 , respectively.

Financing lease obligation under a lease agreement for a truck dated

March 31, 2020 in the original amount of $ 152,548 payable in eighty-four monthly installments of $2,188 including interest at the rate

During the three months ended June 30, 2025, the Company made principal and interest payments on this lease obligation in the

amounts of $ 5,942 and $ 622 , respectively;

during the six months ended June 30, 2025, the Company made principal and interest payments

on this lease obligation in the amounts of $ 11,804 and $ 1,324 , respectively.

During the three months ended June 30, 2024, the Company

made principal and interest payments on this lease obligation in the amount of $ 27,399 and $ 2,427 , respectively;

during the six months

ended June 30, 2024, the Company made principal and interest payments on this lease obligation in the amount of $ 54,385 and $ 5,261 ,

respectively.

$ 41,745 $ 53,549

Financing lease obligation under a lease agreement for a truck dated August 23, 2019 in the original amount of $ 80,413 payable in eighty-four monthly installments of $1,148 including interest at the rate of 5.0 %.

During the three months ended March 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $ 3,196 and $ 248 , respectively.

Financing lease obligation under a lease agreement for a truck dated

August 23, 2019 in the original amount of $ 80,413 payable in eighty-four monthly installments of $1,148 including interest at the rate

During the three months ended June 30, 2025, the Company made principal and interest payments on this lease obligation in the

amounts of $ 3,236 and $ 208 , respectively;

during the six months ended June 30, 2025, the Company made principal and interest payments

on this lease obligation in the amounts of $ 6,431 and $ 457 , respectively.

During the three months ended June 30, 2024, the Company made

principal and interest payments on this lease obligation in the amounts of $ 3,078 and $ 366 , respectively;

during the six months ended

June 30, 2024, the Company made principal and interest payments on this lease obligation in the amount of $ 6,120 and $ 770 , respectively.

$ 14,498 $ 20,929

1 unchanged sentence

The amount of the monthly payments is based upon the amount of supplies and materials the Company purchases from the lessor each month.

During the three months ended March 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $ 1,580 and $ 2,154 , respectively.

During the three months ended June 30, 2025, the Company made principal and interest payments on this lease obligation in the amount of $ 0 and capitalized interest in the amount of $ 1,130 .

During the six months ended June 30, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $ 50,830 and $ 1,579 , respectively, and capitalized interest in the amount of $ 1,130 .

$ 75,932 $ 125,632

3 unchanged sentences

Total $ 161,705 $ 287,388

There was no accrued interest on financing leases

at three months ended March 31, 2025 and December 31, 2024.

Aggregate maturities of lease liabilities:

For the twelve months ended March 31,

was no accrued interest on financing leases at June 30, 2025 and December 31, 2024.

maturities of lease liabilities:

For the period ended December 31,

INTANGIBLE ASSETS

The Company acquired certain intangible assets

pursuant to the acquisitions of Artisan Specialty Foods, Inc.

(“Artisan”), igourmet, and Mouth.

These assets include non-compete

agreements, customer relationships, trade names, internally developed technology, and goodwill.

The Company has also capitalized the development

of its website.

Other Amortizable Intangible Assets

On August 6, 2024, the Company signed an agreement

to sell intangible assets of its consumer e-commerce business igourmet, generally consisting of customer lists, domains, and trademarks

for cash of $ 700,000 .

The purchase price was $ 947,650 , consisting of the following:

The Company received cash of $ 617,000 .

The buyer also

assumed liabilities of $ 330,650 .

The intangible assets sold were fully amortized on the Company’s balance sheet, and the Company

recognized a gain on the sale of $ 834,463 , net of acquisition costs in the amount of $ 113,187 .

On October 14, 2024, the Company acquired certain

assets of Goldan Organics, Inc.

(the “GO Transaction”).

Pursuant to the GO Transaction, the Company recorded an

intangible asset in the amount of $ 198,593 representing the client base of Golden Organics.

On December 19, 2024, the Company acquired,

through its subsidiary Golden Organics, Inc., certain assets of LoCo Food Distribution, LLC , Inc.

(the “LoCo Transaction”).

Pursuant to the LoCo Transaction, the Company recorded an intangible asset in the amount of $ 232,972 representing a customer

The total amount of intangible assets obtained in the GO and LOCO transactions was $ 431,565 .

This amount is being amortized over

a period of 60 months .

March 31, 2025

Total Trade Names

Company acquired certain intangible assets pursuant to the acquisitions of Artisan Specialty Foods, Inc.

(“Artisan”), igourmet,

These assets include non-compete agreements, customer relationships, trade names, internally developed technology, and goodwill.

The Company has also capitalized the development of its website.

Amortizable Intangible Assets

The following table represents the balances of other amortizable intangible

assets as of June 30, 2025 and December 31, 2024:

June 30, 2025

Total Customer lists

December 31, 2024

Total Trade Names

Total amortization expense for the three months

ended March 31, 2025 and 2024 was $ 21,578 and $ 0 , respectively.

Other Non-Amortizable Intangible Assets

Other non-amortizable intangible assets consist

of $ 217,000 of trade names held by Artisan.

The Company followed the guidance of ASC 360, Property, Plant, and Equipment , in assessing

these assets for impairment.

ASC 360 states that impairment testing should be completed whenever events or changes in circumstances indicate

the asset’s carrying value may not be recoverable.

In management’s judgment, there are no indications that the carrying value

of these trade names may not be recoverable, and it determined that impairment testing was not required.

The Company acquired certain intangible assets

pursuant to the acquisitions through Artisan.

The following is the net book value of these assets:

March 31, 2025

Total Customer lists

amortization expense for the three months ended June 30, 2025 and 2024 was $ 21,578 and $ 0 , respectively.

Total amortization expense for

the six months ended June 30, 2025 and 2024 was $ 43,156 and $ 0 , respectively.

Remaining amortization expense for intangible assets as of June 30, 2025

is as follows :

For the period ended December 31,

Non-Amortizable Intangible Assets

non-amortizable intangible assets consist of $ 217,000 of trade names held by Artisan.

The Company followed the guidance of ASC 360, Property,

Plant, and Equipment , in assessing these assets for impairment.

ASC 360 states that impairment testing should be completed whenever

events or changes in circumstances indicate the asset’s carrying value may not be recoverable.

In management’s judgment,

there are no indications that the carrying value of these trade names may not be recoverable, and it determined that impairment testing

was not required.

Company acquired certain intangible assets pursuant to the acquisitions through Artisan.

The following is the net book value of these

June 30, 2025

Total Trade names

2 unchanged sentences

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at March

31, 2025 and December 31, 2024 are as follows:

payable and accrued liabilities at June 30, 2025 and December 31, 2024 are as follows:

Trade payables and accrued liabilities

Accrued payroll and commissions

ACCRUED SEPARATION COSTS – RELATED

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 current board member.

ACCRUED SEPARATION COSTS – RELATED PARTIES

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 current 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.

Kelpfish’s resignation from all positions with the Company and its subsidiaries on February 28, 2023, except that Mr.

will remain a director and member of the board of the Company, confidentiality and non-disparagement conditions, nomination of Mr.

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 $ 250,000 upon effectiveness

and an additional $ 1,000,000 payable in weekly payments of $ 6,410.26 from March 8, 2023 through March 6, 2026.

The $250,000 was paid into

an escrow account with the requirement that they are released to Mr.

Klepfish on his separation date.

The $1,000,000 portion is in the

form of an unsecured, non-interest bearing note payable to Mr.

The SK Agreements also call for the delivery of 400,000 shares

of the Company’s common stock valued at $ 168,000 based upon the closing price of the Company’s common stock on Mr.

separation date of February 28, 2023;

in addition, for delivery on June 1, 2027 of additional shares of the Company’s common stock

equal to the greater of (i) the number of shares with an aggregate fair market value of $ 400,000 on such date, or (ii) 266,666 shares.

The Company also agreed to pay a total of $ 1,199 of the Consolidated Omnibus Reconciliation Act (“COBRA”) insurance costs

on behalf of Mr.

The payment terms are $ 250,000 upon effectiveness and an additional $ 1,000,000 payable in weekly payments of $ 6,410.26 from March 8,

2023 through March 6, 2026.

The $250,000 was paid into an escrow account with the requirement that they are released to Mr.

on his separation date.

The $1,000,000 portion is in the form of an unsecured, non-interest bearing note payable to Mr.

SK Agreements also call for the delivery of 400,000 shares of the Company’s common stock valued at $ 168,000 based upon the closing

price of the Company’s common stock on Mr.

Klepfish’s separation date of February 28, 2023;

in addition, for delivery on

June 1, 2027 of additional shares of the Company’s common stock equal to the greater of (i) the number of shares with an aggregate

fair market value of $ 400,000 on such date, or (ii) 266,666 shares.

The Company also agreed to pay a total of $ 1,199 of the Consolidated

Omnibus Reconciliation Act (“COBRA”) insurance costs on behalf of Mr.

Klepfish over eighteen months.

The total amount accrued in connection with the SK Agreements was $ 1,819,199 .

On February 28, 2023, the Company entered into

a separation agreement (the “Wiernasz Separation Agreement”) with Justin Wiernasz, a director and previous Director of Strategic

Acquisitions.

Pursuant to the Wiernasz Separation Agreement, the Company agreed to a payment of $ 100,000 in cash as follows:

$ 33,333 upon

execution of the agreement, $ 33,333 on March 15, 2023, and $ 33,334 on April 15, 2023.

The Company also agreed to make the COBRA insurance

payments on behalf of Mr.

Wiernasz in the amount of $ 2,548 per month for twelve months with a maximum of $ 26,451 .

The total amount accrued

in connection with the Wiernasz Separation Agreement was $ 126,451 .

On February 6, 2024, the Company entered into

a separation agreement (the “Tang Separation Agreement”) with Richard Tang, its Chief Financial Officer, effective as of December

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 $ 113,918 .

in connection with the SK Agreements was $ 1,819,199 .

February 28, 2023, the Company entered into a separation agreement (the “Wiernasz Separation Agreement”) with Justin Wiernasz,

a director and previous Director of Strategic Acquisitions.

Pursuant to the Wiernasz Separation Agreement, the Company agreed to a payment

of $ 100,000 in cash as follows:

$ 33,333 upon execution of the agreement, $ 33,333 on March 15, 2023, and $ 33,334 on April 15, 2023.

Company also agreed to make the COBRA insurance payments on behalf of Mr.

Wiernasz in the amount of $ 2,548 per month for twelve months

with a maximum of $ 26,451 .

The total amount accrued in connection with the Wiernasz Separation Agreement was $ 126,451 .

February 6, 2024, the Company entered into a separation agreement (the “Tang Separation Agreement”) with Richard Tang, its

Chief Financial Officer, effective as of December 31, 2023.

Pursuant to the Tang Separation Agreement, the Company has agreed to pay

Tang, in equal installments over a five-month period, the gross sum of $ 113,918 .

In addition, Mr.

Tang may submit for reimbursement up to $ 4,000 of legal expenses connected with the

review of the Tang Separation Agreement.

The severance payment will be made in the following installments:

(i) $ 25,890 to be paid the

week of March 4, 2024;

(ii) $ 5,178 to be paid each successive week for seventeen weeks beginning the week of March 11, 2024, until the

severance payment is completed.

In addition, if Tang timely elects to continue his group health insurance benefits under COBRA, the Company

will reimburse Tang’s group health insurance premiums for the lesser of:

(a) the period of time Employee is eligible to continue

his group health insurance benefits under COBRA and (b) the five-month period immediately following the separation date.

Reimbursements

will be paid within thirty days of when Mr.

Tang submits a request for reimbursement and supporting documentation.

During the three months ended March 31, 2025 and

2024, the Company paid cash in the amount of $ 83,333 and $ 83,333 , respectively, to Mr.

Tang may submit for reimbursement

up to $ 4,000 of legal expenses connected with the review of the Tang Separation Agreement.

The severance payment will be made in the

following installments:

(i) $ 25,890 to be paid the week of March 4, 2024;

(ii) $ 5,178 to be paid each successive week for seventeen weeks

beginning the week of March 11, 2024, until the severance payment is completed.

In addition, if Tang timely elects to continue his group

health insurance benefits under COBRA, the Company will reimburse Tang’s group health insurance premiums for the lesser of:

the period of time Employee is eligible to continue his group health insurance benefits under COBRA and (b) the five-month period immediately

following the separation date.

Reimbursements will be paid within thirty days of when Mr.

Tang submits a request for reimbursement and

supporting documentation.

the three months ended June 30, 2025 and 2024, the Company paid cash in the amount of $ 83,333 and $ 83,333 , respectively, to Mr.

in connection with the SK Agreements.

During the six months ended June 30, 2025 and 2024, the Company paid cash in the amount of $ 166,666

and $ 166,667 , respectively, to Mr.

Klepfish in connection with the SK Agreements.

During the three months ended March 31, 2025 and

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 $ 0 and $ 967 , respectively.

During the three months ended March 31, 2025 and

2024, the Company made the following payments in connection with the Tang Separation Agreement:

the three months ended June 30, 2025 and 2024, the Company made the following payments in connection with the Tang Separation Agreement:

The Company paid cash to Mr.

amount of $ 0 and $ 41,125 , respectively;

Tang in the amount of $ 0 and $ 37,315 , respectively;

and COBRA payments on behalf of Mr.

Tang in the amount

of $ 0 and $ 8,654 , respectively.

the six months ended June 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 $ 0 and $ 108,740 , respectively;

The following table represents the amounts accrued,

paid, and outstanding on these agreements as of March 31, 2025:

and COBRA payments on behalf of Mr.

Tang in the amount

of $ 0 and $ 11,539 , respectively.

following table represents the amounts accrued, paid, and outstanding on these agreements as of June 30, 2025:

Cash – through March 6, 2026

16 unchanged sentences

STOCK APPRECIATION RIGHTS LIABILITY

Effective May 15, 2023, the Company issued 1,500,000

stock appreciation rights (the “Smallwood SARs”) to Brady Smallwood, its Chief Operating Officer (“COO”).

The Smallwood SARs were valued utilizing the Black-Scholes valuation model, and had an aggregate fair value of $ 9,794 upon issuance;

May 15, 2023, the Company issued 1,500,000 stock appreciation rights (the “Smallwood SARs”) to Brady Smallwood, its Chief

Operating Officer (“COO”).

The Smallwood SARs were valued utilizing the Black-Scholes valuation model, and had

an aggregate fair value of $ 9,794 upon issuance;

this amount was charged to operations and credited to stock appreciation rights liability.

The Smallwood SARs are revalued each quarter,

and any gain or loss in the fair value is charged to non-cash compensation expense.

The change in valuation of the Smallwood SARs

is summarized in the table below:

The Smallwood SARs are revalued each quarter, and any gain or loss in the fair value is charged to non-cash compensation expense.

change in valuation of the Smallwood SARs is summarized in the table below:

May 15, 2023 - fair value

5 unchanged sentences

March 31, 2025 - fair value

(Gain) Loss on revaluation

June 30, 2025 - fair value

LINE OF CREDIT

4 unchanged sentences

Amounts due under the MapleMark Revolver bear interest at the greater of (a) the Base Rate (the rate of interest per annum quoted in the “Money Rates” section of The Wall Street Journal from time to time and designated as the “Prime Rate”) plus 0.25% per annum and (b) 5.50% per annum .

At March 31, 2025, the interest rate was 7.75 %.

During the three months ended March 31, 2025, the Company borrowed the amount of $ 500,000 under the MapleMark Revolver, and repaid the amount of $ 500,000 .

During the three months ended March 31, 2025, the Company paid interest in the amount of $ 1,804 on the MapleMark Revolver.

At June 30, 2025, the interest rate was 7.75 %.

During the six months ended June 30, 2025, the Company borrowed the

amount of $ 500,000 under the MapleMark Revolver, and repaid the amount of $ 500,000 .

During the three and six months ended June 30, 2025,

the Company paid interest in the amount of $ 1,804 on the MapleMark Revolver.

During the six months ended June 30, 2024, the Company did

not draw on the MapleMark Revolver and no interest was incurred.

NOTES PAYABLE

5 unchanged sentences

Amounts outstanding under the Maple Mark Term Loan 3 will bear interest at the rate equal to the lesser of (a) the maximum lawful rate, or (b) the greater of (i) WSJP (the “Prime Rate” as published by The Wall Street Journal) plus 1.25% per annum or (ii) 4.50% per annum.

At March 31, 2025, the interest rate was 9.50 %.

At June 30, 2025, the interest rate was 9.50 %.

The MapleMark Term Loan 3 matures on June 13, 2048.

4 unchanged sentences

The obligations under the Term Loan Agreements are guaranteed by the Company and Innovative Food Properties LLC and are secured by mortgages on their real estate located in Florida, Illinois, and Pennsylvania and substantially all of their assets, in each case, subject to certain exceptions and permitted liens.

The Company created a discount on the MapleMark Term Loan 3 for costs in the amount of $ 385,803 which will be amortized over the life of the loan.

During the three months ended March 31, 2025, the Company amortized $ 1,284 of these costs to interest expense.

During the three months ended March 31, 2025, the Company made principal payments and interest payments in the amount of $ 30,403 and $ 197,087 , respectively, on this loan.

At March 31, 2025, accrued interest on this note was $ 72,273 .

The Company created a discount on the MapleMark Term Loan 3 for costs

in the amount of $ 385,803 which will be amortized over the life of the loan.

During the three and six months ended June 30, 2025, the

Company amortized $ 1,284 and $ 2,568 of these costs to interest expense.

During the three months ended June 30, 2025, the Company made

principal and interest payments in the amount of $ 27,620 and $ 198,022 , respectively.

During the six months ended June 30, 2025, the Company

made principal and interest payments in the amount of $ 58,023 and $ 392,209 , respectively.

At June 30, 2025, accrued interest on this note

was $ 64,437 .

During the three and six months ended June 30, 2024, the Company amortized $ 1,284 and $ 2,568 of discount costs,

respectively, to interest expense.

During the three and six months ended June 30, 2024, the Company made principal payments and interest

payments in the amount of $ 20,839 and $ 43,548 , respectively, on this loan.

At June 30, 2024, accrued interest on this note was $ 72,655 .

$ 8,837,089 $ 8,895,112

A note payable in the amount of $ 20,000 .

The note was due in January 2006 and the Company is currently accruing interest on this note at 1.9 %.

During the three months ended March 31, 2025, the Company accrued interest in the amount of $ 96 on this note.

At March 31, 2025, accrued interest on this note was $ 18,962 .

The note was due in January

2006 and the Company is currently accruing interest on this note at 1.9 %.

During the three and six months ended June 30, 2025, the Company

accrued interest in the amount of $ 96 and $ 192 , respectively, on this note.

At June 30, 2025, accrued interest on this note was $ 19,058 .

During the three and six months ended June 30, 2024, the Company accrued interest in the amount of $ 96 and $ 192 , respectively, on

At June 30, 2024, accrued interest on this note was $ 18,674 .

$ 20,000 $ 20,000

1 unchanged sentence

The GO Note is payable in 60 equal monthly instalments of $6,766 and bears interest at the rate of 6.0 %.

During the three months ended March 31, 2025, the Company made principal and interest payments on the GO note in the amount of $ 15,201 and $ 3,295 , respectively.

During the three months ended June 30, 2025, the Company made principal and interest payments on the GO note in the amount of $ 15,430 and $ 4,870 , respectively.

During the six months ended June 30, 2025, the Company made principal and interest payments on the GO note in the amount of $ 30,631 and $ 9,969 , respectively.

$ 314,353 $ 344,984

5 unchanged sentences

Total $ 8,796,640 $ 8,882,726

There was a total of $ 91,235 and $ 91,347 accrued

interest on notes payable at March 31, 2025 and December 31, 2024, respectively.

Aggregate maturities of notes payable as of March 31, 2025 are as follows:

For the period ended December 31,

As of March 31, 2025, total number of shares of common

stock issued and outstanding was 56,831,090 and 53,986,793 , respectively.

As of December 31, 2024, total number of shares of common stock

issued and outstanding was 56,009,032 and 53,164,735 , respectively.

At March 31, 2025 and December 31, 2024, a total of 2,844,297 shares

of common stock, respectively, were deemed issued but not outstanding.

At March 31, 2025 and December 31, 2024, an additional 798,091

and 738,032 shares, respectively, were classified as common stock to be issued.

These shares represent shares of common stock vested under

the Company’s executive stock compensation plans, and are in the process of being administratively issued.

For the three months ended March 31, 2025:

On January 9, 2025, the Company issued 60,000 shares

of common stock pursuant to the cashless exercise of options held by an ex-employee to purchase 130,000 shares of common

stock at a price of $ 1.25 per share and an additional 130,000 shares of common stock at a price of $ 1.75 per share.

There was no gain or loss recorded on this transaction.

On January 13, 2025, the Company issued 24,026 shares

of common stock pursuant to the cashless exercise of options held by an ex-employee to purchase 50,000 shares of common

stock at a price of $ 1.00 per share.

was a total of $ 83,495 and $ 91,347 accrued interest on notes payable at June 30, 2025 and December 31, 2024, respectively.

maturities of notes payable as of June 30, 2025 are as follows:

the period ended December 31,

of June 30, 2025, total number of shares of common stock issued and outstanding was 57,196,294 and 54,351,997 , respectively.

As of December

31, 2024, total number of shares of common stock issued and outstanding was 56,009,032 and 53,164,735 , respectively.

At June 30, 2025

and December 31, 2024, a total of 2,844,297 shares of common stock were deemed issued but not outstanding.

At June 30, 2025 and December

31, 2024, an additional 433,687 and 738,032 shares, respectively, were classified as common stock to be issued.

These shares represent

shares of common stock vested under the Company’s executive stock compensation plans, and are in the process of being administratively

the six months ended June 30, 2025:

January 9, 2025, the Company issued 60,000 shares of common stock pursuant to the cashless exercise of options held by

an ex-employee to purchase 130,000 shares of common stock at a price of $ 1.25 per share and an additional 130,000 shares

of common stock at a price of $ 1.75 per share.

There was no gain or loss recorded on this transaction.

On March 14, 2025, the Company issued the following

shares of common stock to its executive officers pursuant to executive compensation plans:

530,665 shares were issued to its

January 13, 2025, the Company issued 24,026 shares of common stock pursuant to the cashless exercise of options held by

an ex-employee to purchase 50,000 shares of common stock at a price of $ 1.00 per share.

There was no gain or loss recorded

on this transaction.

March 14, 2025, the Company issued the following shares of common stock to its executive officers pursuant to executive compensation

530,665 shares were issued to its CEO;

133,632 shares were issued to its COO;

and 73,735 shares were issued to its CFO.

These shares were classified

as shares to be issued on the Company’s balance sheet at December 31, 2024.

and 73,735 shares

were issued to its CFO.

These shares were classified as shares to be issued on the Company’s balance sheet at December 31, 2024.

There was no gain or loss recorded on this transaction.

For the three months ended March 31, 2024:

Common Stock Received from Sale of Subsidiary

On February 26, 2024, the Company sold 100 % of the equity interests

in Haley for the return of 21,126 shares of the Company’s common stock held by the buyer.

June 2, 2025, the Company issued 273,026 shares of common stock to its CEO pursuant to an executive compensation plan.

There was no gain

or loss recorded on this transaction.

June 3, 2025, the Company issued 92,168 shares of common stock to its CFO pursuant to an executive compensation plan.

There was no gain

or loss recorded on this transaction.

the six months ended June 30, 2024:

May 30, 2024, the Company issued a net amount of 24,138 shares of common stock pursuant to the cashless exercise of 50,000 options

at an exercise price of $ 0.60 per shares.

There was no gain or loss on this transaction because the shares were issued at the fair

value of $ 1.16 per share.

Stock Received from Sale of Subsidiary

February 26, 2024, the Company sold 100 % of the equity interests in Haley for the return of 21,126 shares of the Company’s

common stock held by the buyer.

(see note 3).

The Company Haley

had no assets or liabilities at the time of the sale;

the Company valued the 21,126 shares of common stock at the market price

on the date of the acquisition of $ 1.00 per sale and recorded a gain in the amount of $ 21,126 on this transaction.

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

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.

The Company Haley had no assets or liabilities at the time of the sale;

the Company valued

the 21,126 shares of common stock at the market price on the date of the acquisition of $ 1.00 per sale and recorded a

gain in the amount of $ 21,126 on this transaction.

based executive compensation plans

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

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

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

and Outstanding on

Stock Price Target

Grant Date Multiplied by:

The value of the CEO Stock Plan was

determined via a Monte Carlo market-based performance stock awards model to be $ 660,541 .

This amount will be recorded as a charge to

additional paid-in capital on a straight-line basis over 34 months.

During the three months ended March 31, 2025 and 2024, the

amount of $ 58,283 was charged to operations pursuant to the CEO Stock Plan.

On November 7, 2023, the Company issued 678,302

shares of common stock, net of 296,831 shares withheld for income tax purposes, to its Chief Executive Officer pursuant the achievement

of the $ 0.60 price target in the CEO Stock Plan.

On March 19, 2024, 731,350 shares of common stock

vested pursuant to the achievement of the $ 0.80 price target.

These shares were issued on July 9, 2024.

On May 28, 2024, 487,567 shares of common stock

vested pursuant to the achievement of the $ 1.00 price target.

These shares were issued on July 9, 2024.

On July 30, 2024, the price target of $ 1.20 per

share under the CEO Stock Plan was achieved and 365,675 shares of common stock vested;

on October 7, 2024, the price target of $ 1.40 per

share under the CEO Stock Plan was achieved and 365,675 shares of common stock vested;

on December 16, 2024, the price target of $ 1.60

per share under the CEO Stock Plan was achieved and 243,783 shares of common stock vested.

The total number of shares vested at for achievement

of the $ 1.20 , $ 1.40 , and $ 1.60 price targets was 975,133 .

On February 6, 2025, a total of 530,665 shares of common stock were issued in

satisfaction of this obligation, net of 444,468 shares withheld for taxes.

On January 31, 2025, the price target of $ 1.80

per share under the CEO Stock Plan was achieved and 243,783 shares of common stock vested, and on March 3, 2025, the price target of $ 2.00

per share under the CEO Stock Plan was achieved and 243,783 shares of common stock vested.

The total number of shares vested for achievement

of the $1.80 and $2.00 price targets was 487,566 ;

these share are classified as common stock issuable on the Company’s balance sheet

at March 31, 2025.

There are no shares unvested under the CEO Stock

Plan at March 31, 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.

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:

of Shares Granted - Lower of:

Shares Issued

and Outstanding

Date Multiplied by:

The fair value of the CEO Stock Plan was determined via a Monte Carlo

market-based performance stock awards model to be $ 660,541 .

This amount will be recorded as a charge to compensation expense and additional

paid-in capital on a straight-line basis over 34 months.

During the three and six months ended June 30, 2025, the amount of $ 58,283 and

$ 116,566 , respectively, were charged to operations pursuant to the CEO Stock Plan.

During the three months and six months ended June 30,

2024, the amounts of $ 58,283 and $ 116,566 , respectively, were charged to operations pursuant to the CEO Stock Plan.

November 7, 2023, the Company issued 678,302 shares of common stock, net of 296,831 shares withheld for income tax purposes, to its Chief

Executive Officer pursuant the achievement of the $ 0.60 price target in the CEO Stock Plan.

March 19, 2024, 731,350 shares of common stock vested pursuant to the achievement of the $ 0.80 price target.

These shares were issued

on July 9, 2024.

May 28, 2024, 487,567 shares of common stock vested pursuant to the achievement of the $ 1.00 price target.

These shares were issued on

July 9, 2024.

July 30, 2024, the price target of $ 1.20 per share under the CEO Stock Plan was achieved and 365,675 shares of common stock vested;

October 7, 2024, the price target of $ 1.40 per share under the CEO Stock Plan was achieved and 365,675 shares of common stock vested;

on December 16, 2024, the price target of $ 1.60 per share under the CEO Stock Plan was achieved and 243,783 shares of common stock vested.

The total number of shares vested at for achievement of the $ 1.20 , $ 1.40 , and $ 1.60 price targets was 975,133 .

On February 6, 2025, a

total of 530,665 shares of common stock were issued in satisfaction of this obligation, net of 444,468 shares withheld for taxes.

January 31, 2025, the price target of $ 1.80 per share under the CEO Stock Plan was achieved and 243,783 shares of common stock vested,

and on March 3, 2025, the price target of $ 2.00 per share under the CEO Stock Plan was achieved and 243,783 shares of common stock vested.

The total number of shares vested for achievement of the $ 1.80 and $ 2.00 price targets was 487,566 .

On June 2, 2025, 273,036 shares of

common stock were issued in partial satisfaction of this obligation;

an additional 214,530 shares are classified as common stock to be issued

on the Company’s balance sheet at June 30, 2025.

are no shares unvested under the CEO Stock Plan at June 30, 2025.

April 14, 2023, the Company entered into an employment agreement with Brady Smallwood to become the Company’s COO, effective May

Pursuant to this agreement, Mr.

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

Number of Shares Granted - Lower of:

Number of Shares Issued

and Outstanding on

Stock Price Target

Grant Date Multiplied by:

The value of the COO Stock Plan was

determined via a Monte Carlo market-based performance stock awards model to be $ 199,951 .

This amount will be recorded as a charge to

additional paid-in capital on a straight-line basis over 31.5 months.

During the three months ended March 31, 2025 and 2024, the

amount of $ 19,043 was charged to operations pursuant to the COO Stock Plan.

On April 17, 2024, 196,627 shares of common stock

vested pursuant to the achievement of the $ 0.87 price target.

These shares were issued on July 9, 2024.

On July 25, 2024, the price target of $ 1.16 per

share under the COO Stock Plan was achieved and 147,470 shares of common stock vested pursuant to this plan;

on November 13, 2024, the

price target of $ 1.45 per share under the COO Stock Plan was achieved, and 98,313 shares of common stock vested.

On March 14, 2025, 133,632

shares of common stock were issued in satisfaction of these obligations, net of 112,151 shares withheld for taxes.

On January 14, 2025, the price target of $ 1.74 per share under the

COO Stock Plan was achieved and 73,735 shares of common stock vested;

and on March 7, 2025, the price target of $ 2.03 per share under

the COO Stock Plan was achieved, and 73,735 shares of common stock vested.

The total number of shares vested for achievement of the $1.74,

and $2.03 price targets was 147,470;

these shares are classified as common stock issuable on the Company’s balance sheet at March

At March 31, 2025, a total of 147,471 shares of

common stock remain unvested under the COO Stock Plan.

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.

Smallwood was provided with an incentive compensation plan (the “COO Stock Plan”)

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:

of Shares Granted - Lower of:

Shares Issued

and Outstanding

Date Multiplied by:

The fair value of the COO Stock Plan was determined via a Monte Carlo

market-based performance stock awards model to be $ 199,951 .

This amount will be recorded as a charge to compensation expense and additional

paid-in capital on a straight-line basis over 31.5 months.

During the three and six months ended June 30, 2025, the amount of $ 19,043

and $ 38,086 , respectively, was charged to operations pursuant to the COO Stock Plan.

During the three and six months ended June 30, 2024,

the amounts of $ 19,043 and $ 38,086 , respectively, were charged to operations pursuant to the COO Stock Plan.

April 17, 2024, 196,627 shares of common stock vested pursuant to the achievement of the $ 0.87 price target.

These shares were issued

on July 9, 2024.

July 25, 2024, the price target of $ 1.16 per share under the COO Stock Plan was achieved and 147,470 shares of common stock vested pursuant

to this plan;

on November 13, 2024, the price target of $ 1.45 per share under the COO Stock Plan was achieved, and 98,313 shares of common

stock vested.

On March 14, 2025, 133,632 shares of common stock were issued in satisfaction of these obligations, net of 112,151 shares

withheld for taxes.

January 14, 2025, the price target of $ 1.74 per share under the COO Stock Plan was achieved and 73,735 shares of common stock vested;

and on March 7, 2025, the price target of $ 2.03 per share under the COO Stock Plan was achieved, and 73,735 shares of common stock vested.

The total number of shares vested for achievement of the $ 1.74 and $ 2.03 price targets was 147,470 .

June 30, 2025, a total of 147,470 shares of common stock remain unvested under the COO Stock Plan.

December 29, 2023, the Company entered into an employment agreement with Gary Schubert to become the Company’s CFO effective January

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

Number of Shares Granted - Lower of:

Number of Shares Issued

and Outstanding on

Stock Price Target

Grant Date Multiplied by:

The value of the CFO Stock Plan was

determined via a Monte Carlo market-based performance stock awards model to be $ 238,747 at inception (see “Stock Plan

Valuation” section below).

This amount will be amortized over the 30-month life of the plan beginning January 1, 2024.

the three months ended March 31, 2025 and 2024, the amount of $ 23,875 was charged to operations pursuant to the CFO Stock Plan.

On July 31, 2024, the price target of $1.23 per

share under the CFO Stock Plan was achieved and 131,085 shares of common stock vested pursuant to this plan.

On February 6, 2025, 73,735

shares of common stock were issued in satisfaction of this obligation, net of 57,350 shares withheld for taxes.

On December 27, 2024, the price target of $1.63

per share under the CFO Stock Plan was achieved and 98,313 shares of common stock vested;

Schubert was provided with an incentive compensation plan (the “CFO Stock Plan”)

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:

of Shares Granted - Lower of:

Shares Issued

and Outstanding

Date Multiplied by:

The fair value of the CFO Stock Plan was determined via a Monte Carlo

market-based performance stock awards model to be $ 238,747 at inception (see “Stock Plan Valuation” section below).

will be recorded as a charge to compensation expense and additional paid-in capital on a straight-line basis over the 30-month life of

the plan beginning January 1, 2024.

During the three and six months ended June 30, 2025, the amount of $ 23,875 and $ 47,750 , respectively,

was charged to operations pursuant to the CFO Stock Plan.

During the three and six months ended June 30, 2024, the amounts of $ 23,875 and

$ 47,750 , respectively, were charged to operations pursuant to the CFO Stock Plan.

July 31, 2024, the price target of $ 1.23 per share under the CFO Stock Plan was achieved and 131,085 shares of common stock vested pursuant

to this plan.

On February 6, 2025, 73,735 shares of common stock were issued in satisfaction of this obligation, net of 57,350 shares

withheld for taxes.

On December 27, 2024, the price target of $ 1.63 per

share under the CFO Stock Plan was achieved and 98,313 shares of common stock vested;

and on March 10, 2025, the price target of $ 2.04

2 unchanged sentences

of the $ 1.63 and $ 2.04 price targets was 163,855 ;

these share are classified as common stock issuable on the Company’s balance sheet

at March 31, 2025.

At March 31, 2025, a total of 196,627 shares of common stock remain

unvested under the CFO Stock Plan.

Stock Appreciation Rights

Effective May 15, 2023, the Company issued 1,500,000

stock appreciation rights (the “Smallwood SARs”) to Brady Smallwood, its COO.

The Smallwood SARs vest upon issuance, and expire

on December 31, 2026;

on June 3, 2025, 92,168 of these shares were issued;

the remaining 71,687 shares are

classified as common stock to be issued on the Company’s balance sheet at June 30, 2025.

June 30, 2025, a total of 196,627 shares of common stock remain unvested under the CFO Stock Plan.

Appreciation Rights

Effective May 15, 2023, the Company issued 1,500,000 stock appreciation

rights (the “Smallwood SARs”) to Brady Smallwood, its COO.

The Smallwood SARs vest upon issuance, and expire on December 31,

750,000 of the Smallwood SARs are priced at $ 1.50 per share, and 750,000 are priced at $ 2.00 per share.

Company’s intention to settle the Smallwood SARs in cash if the stock price exceeds the $ 1.50 and $ 2.00 per share price prior to

the expiration date.

The Smallwood SARs were valued utilizing the Black-Scholes valuation model, and had an aggregate fair value of $ 9,794

upon issuance;

It is the Company’s

intention to settle the Smallwood SARs in cash if the stock price exceeds the $ 1.50 and $ 2.00 per share price prior to the expiration

The Smallwood SARs were valued utilizing the Black-Scholes valuation model, and had an aggregate fair value of $ 9,794 upon issuance;

this amount was charged to operations and credited to stock appreciation rights liability.

The Smallwood SARs are revalued

each quarter, and any gain or loss in the fair value is charged to non-cash compensation expense.

At March 31, 2025, the Smallwood SARs

had a fair value of $ 1,413,746 ;

the increase in fair value in the amount of $ 60,595 during the three months ended March 31, 2025 was charged

to non-cash compensation.

The Smallwood SARs were valued using the Black-Scholes

valuation model utilizing the following variables:

March 31, December 31,

Volatility 135.88 % 86.58

Dividends $ - $ 0

The Smallwood SARs are revalued each quarter,

and any gain or loss in the fair value is charged to non-cash compensation expense.

At June 30, 2025, the Smallwood SARs had a fair value

of $ 1,125,887 ;

the increase in fair value in the amount of $ 60,595 and decrease in the amount of $ 227,263 during the three and six months

ended June 30, 2025, respectively, was charged to non-cash compensation.

During the three and six months ended June 30, 2024, the increase

in fair value in the amount $ 412,850 and $ 531,478 , respectively, was charged to non-cash compensation.

Smallwood SARs were valued using the Black-Scholes valuation model utilizing the following variables:

135.88 - 205.63

86.58 - 131.55

Risk-free interest rates

Remaining expected term (years)

Transactions involving stock options are summarized as follows:

On January 9, 2025, the Company issued 60,000 shares

of common stock pursuant to the cashless exercise of options held by an ex-employee to purchase 130,000 shares of common

stock at a price of $ 1.25 per share and an additional 130,000 shares of common stock at a price of $ 1.75 per share.

There was no gain or loss recorded on this transaction.

On January 13, 2025, the Company issued 24,026 shares

of common stock pursuant to the cashless exercise of options held by an ex-employee to purchase 50,000 shares of common

stock at a price of $ 1.00 per share.

involving stock options are summarized as follows:

January 9, 2025, the Company issued 60,000 shares of common stock pursuant to the cashless exercise of options held by

an ex-employee to purchase 130,000 shares of common stock at a price of $ 1.25 per share and an additional 130,000 shares

of common stock at a price of $ 1.75 per share.

There was no gain or loss recorded on this transaction.

January 13, 2025, the Company issued 24,026 shares of common stock pursuant to the cashless exercise of options held by

an ex-employee to purchase 50,000 shares of common stock at a price of $ 1.00 per share.

There was no gain or loss recorded

on this transaction.

Options outstanding at December 31, 2024

Cancelled / Expired

Options outstanding at March 31, 2025 (unaudited)

Options exercisable at March 31, 2025 (unaudited)

Aggregate intrinsic value of options outstanding

and exercisable at March 31, 2025 was $ 0 .

Aggregate intrinsic value represents the difference between the Company’s closing stock

price on the last trading day of the fiscal period, which was $ 1.87 at March 31, 2025 and the exercise price multiplied by the number

of options outstanding.

During the three months ended March 31, 2025 and

2024, the Company charged the amount of $ 0 and $ 2,034 , respectively, to operations for the vesting of stock options.

The CODM has determined that the Company operates

in one reportable segment:

Options outstanding at June 30, 2025 (unaudited)

Options exercisable at June 30, 2025 (unaudited)

the three months ended June 30, 2025 and 2024, the Company charged the amount of $ 0 and $ 2,034 , respectively, to operations for the vesting

of stock options.

During the six months ended June 30, 2025 and 2024, the Company charged the amount of $ 0 and $ 4,068 , respectively,

to operations for the vesting of stock options.

The CODM has determined that the Company operates in one reportable

the delivery of specialty foods.

This determination was made based upon the characteristics of our business

and the information used by the CODM in order monitor the business and allocate resources.

This determination was made based upon the characteristics of our business and the information

used by the CODM in order monitor the business and allocate resources.

The single segment utilizes multiple sales channels.

The analysis of the Company’s segments is

8 unchanged sentences

The CODM also uses revenue by category to monitor the growth of the business in each of our target markets.

following table presents our segment results:

The following table presents our segment results by sales channel:

Digital Channels

$ ( 609,221 )

National distribution

$ 3,751,072 )

Local distribution

Direct to consumer

$ ( 1,234,866 )

Other services

4 unchanged sentences

Office, facility, vehicles

$ ( 147,300 )

Travel & entertainment

6 unchanged sentences

Depreciation & amortization

$ ( 105,784 )

Non-Operating (Income) Expense:

2 unchanged sentences

(Gain) loss on sale of assets

$ ( 1,807,516 )

Other (income) expense

Total other (income) expense

$ ( 1,615,092 )

Net income (loss) from continuing operations

$ ( 430,436 )

$ ( 1,871,622 )

Other segment disclosures:

1 unchanged sentence

Expenditures for segment assets

Digital Channels

National distribution

Local distribution

Direct to consumer

Other services

Total revenue

Cost of sales

Payroll & related costs

Computer and IT

Office, facility, vehicles

Travel & entertainment

Advertising & marketing

Banking and credit card processing

Professional fees

Non-cash OpEx:

Bad debt expense

Share based compensation

Depreciation & amortization

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

RELATED PARTY TRANSACTIONS

to Prior Executive Officers under Separation Agreements

months ended March 31, 2025:

Company paid cash in the amount of $ 83,333 to Mr.

Payments to Prior Executive Officers under

Separation Agreements

Six months ended June 30, 2025:

The Company paid cash in the amount of $ 166,666

Klepfish, its prior CEO, in connection with the SK Agreements.

months ended March 31, 2024:

Company paid cash in the amount of $ 83,333 to Mr.

Company made Cobra payments on behalf of Mr.

Weirnasz, its prior Director of Strategic Acquisitions and previous board member, in the

amount of $ 967 .

Company made cash payments to Mr.

Six months ended June 30, 2024:

The Company paid cash in the amount of $ 166,667 to

The Company made Cobra

payments on behalf of Mr.

Weirnasz, its prior Director of Strategic Acquisitions and previous board member, in the amount of $ 967 .

The Company made cash

payments to Mr.

Tang, its prior CFO, in the amount of $ 108,740 , and made Cobra payments on behalf of Mr.

amount of $ 2,885 .

Tang in the amount of $ 11,539 .

MAJOR CUSTOMERS

the three months ended March 31, 2025 and 2024, the Company’s largest customer, U.S.

and its affiliates, accounted

for approximately 34 % and 49 % of total sales, respectively;

Sam’s Club, a membership-based warehouse retailer and subsidiary of

represented 19 % and 0 % of total sales, respectively;

During the three months ended June 30, 2025 and 2024, the Company’s

largest customer, U.S.

and its affiliates, accounted for approximately 34 % and 48 % of total sales, respectively;

Club, 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 15 % and 18 % of total sales, respectively.

During the six months ended June 30, 2025 and 2024, the Company’s

largest customer, U.S.

and its affiliates, accounted for approximately 34 % and 49 % of total sales, respectively;

Club, 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 14 % and 18 % of total sales, respectively.

COMMITMENTS AND CONTINGENCIES

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

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.

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.

SUBSEQUENT EVENTS

On May 1, 2025, the Company agreed to a settlement

in the amount of $ 210,000 in connection with a contractual dispute with High-Impact Analytics, LLC.

This amount has been charged to operations

and accrued on the Company’s balance sheet at March 31, 2025.

Management ’ s

Discussion and Analysis of Financial Condition and Results of Operations

in this report to “we,” “us,” “IVFH” or the “Company” refer to Innovative Food Holdings,

and all of its wholly-owned subsidiaries.

FORWARD-LOOKING

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.

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

On July 3, 2025, a total of 82,952 shares of common

stock were issued to the Company’s COO pursuant to the COO Stock Plan.

These shares were classified as Common Stock to be Issued

on the Company’s balance sheet at June 30, 2025.

On July 28, 2025, the Company’s Board of

Directors approved a definitive plan to exit and sell its Pennsylvania facility, which housed four functional components:

(1) cheese operations,

(2) logistics consulting, (3) IFP (overhead functions), and (4) airline foods operations.

The cheese, logistics, and IFP functions will

be fully shut down, while the airline foods operation will be relocated to the Company’s existing Broadview, IL location.

The Company previously classified the PA facility

as held-for-sale in accordance with ASC 360-10 in Q1 2025.

The definitive sale agreement is expected to be executed in Q3 2025.

Implementation

of the plan is expected to begin in Q3 2025 and be completed by the end of Q4 2025.

The Company currently estimates net proceeds from

the sale to be approximately $ 9,725,000 , which it intends to use to pay down the associated property note of approximately $ 8,600,000 ,

pre-payment penalty of approximately $ 265,000 , and estimated closing cost and related expenses of approximately $ 730,000 .

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

Factors that may affect our results include, but are not limited to, the risks and uncertainties associated

ability to raise capital necessary to sustain our anticipated operations and implement our business plan,

ability to implement our business plan, including sale and acquisition of certain operations,

ability to generate sufficient cash to pay our lenders and other creditors,

dependence on three major customers,

ability to employ and retain qualified management and employees,

dependence on the efforts and abilities of our current employees and executive officers,

in government regulations that are applicable to our current or anticipated business,

in the demand for our services and different food trends,

imposition of tariffs or other trade restrictions that may increase costs or disrupt our supply chain,

degree and nature of our competition,

lack of diversification of our business plan,

general volatility of the capital markets and the establishment of a market for our shares, and

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.

are also subject to other risks detailed from time to time in our other filings with the SEC and elsewhere in this report.

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.

Accounting Policy and Estimates

of Estimates in the Preparation of Financial Statements

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, valuation of stock-based services, operating right of use assets and liabilities, and

income taxes.

On an on-going basis, we evaluate these estimates, including those related to revenue recognition and concentration of

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.

for Doubtful Accounts Receivable

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.

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.

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

Critical Accounting Policy and Estimates

Use of Estimates in the Preparation of Financial

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, valuation of stock-based services, operating right of use assets and liabilities, 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 Doubtful Accounts Receivable

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.

Value of Financial Instruments

Company measures its financial assets and liabilities in accordance with accounting principles generally accepted in the United States

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.

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

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.

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.

Finance lease ROU assets are presented

within other assets, and finance lease liabilities are presented within accrued liabilities.

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

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.

Business Activities

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 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.

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

These fair values have historically varied due to the market price of the Company’s stock at the date of valuation.

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.

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.

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.

Finance lease ROU assets are presented within other assets, and finance

lease liabilities are presented within accrued liabilities.

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

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.

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

The IVFH team is adept at evaluating and certifying

18 unchanged sentences

Chef customers wherever they are located.

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.

proprietary technology platform underpins our entire business, driving transparency and efficiency up and down the supply chain.

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.

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.

service and sales teams, as ex-chefs themselves, go beyond customer service to offer our Professional Chefs customer support, menu ideas,

and preparation guidance.

OF OPERATIONS

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

4 unchanged sentences

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.

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 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.

Q1 Revenue Breakdown:

which excludes the impact of divestitures and acquisitions, was 23.6% for the full quarter.

Three Months Ended June 30, 2025

Revenue Breakdown:

Digital Channels:

Largely made up of our Distributor Relationships and supported by our Drop Ship model.

This category contributed $8.3 million,

which is 42.5% of our total revenue.

This represents a decrease of 7% from $8.9 million in 2024, primarily due to continued headwinds

in our legacy drop ship business.

Distribution:

Captures our growing partnerships with airline caterers and our new national retail customer.

This category generated $6.6

million, or 33.6% of total revenue, marking a 133% increase from $2.8 million in 2024.

These sales are generally delivered to the customer

through 3PL carriers or FedEx.

This category contributed $9 million, which is 42.7% of our total revenue.

This represents a decrease of 4.9% from $9.5 million in 2024, primarily due to continued headwinds in our legacy drop ship business.

National Distribution:

Captures our growing partnerships with airline caterers and our national retail customer.

This category generated $7.6 million, or 36.1% of total revenue, marking a 144.1% increase from $3.1 million in 2024.

These sales are generally delivered to the customer through 3PL carriers or FedEx.

Airline caterers generated $3.9 million in revenue, a 26.1% increase compared to 2024, while our cheese conversion operations for the national retail customer contributed $3.7 million.

Local Distribution:

Consists mainly of local sales team relationships

and our local fleet delivering direct from warehouse.

This category brought in $4.4 million, or 22.7% of total revenue, an increase of

88% from $2.3 million in 2024, supported by $2.0 million from the recent acquisitions of LoCo Foods and Golden Organics.

Consists mainly of local sales team relationships and our local fleet delivering direct from warehouse.

This category generated $4.2 million, or 20.1% of total revenue, which is a 50% increase from $2.8 million in 2024.

The figure includes $1.7 million, up from $0 in Q2 2024, due to acquisitions of LoCo Foods and Golden Organics.

Direct-to-Consumer:

however, will continue to impact revenue

throughout much of 2025 due to the historical revenues generated by igourmet.com through Q3 2024.

In Q1 2025, Direct-to-Consumer revenue

declined by 100%, compared to $1.2 million in Q1 2024.

however, will continue to impact revenue throughout much of 2025 due to the historical revenues generated by igourmet.com through Q3 2024.

In Q2 2025, Direct-to-Consumer revenue declined by 100%, compared to $0.9 million in Q2 2024.

Other Services:

Consists of numerous activities, mainly monetizing

the excess space in Pennsylvania.

This category contributed $253k, or 1.3% of total revenue, an increase of 22% from $208k in 2024.

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.

Operating Expenses (Cash OpEx):

Consisting of numerous activities, mainly monetizing the excess space in Pennsylvania.

This category contributed $201k, or 1% of total revenue, a decrease of 19.5% from $249k in 2024.

Our largest customer in this space recently notified us that, due to economic conditions in the solar industry, they will be exiting the logistics service agreement in September.

This customer made up 99% of Other Services revenue.

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.

improvement was primarily attributable to lower shipping costs, which contributed a 34 basis point increase in total margin.

costs represented 10.3% of revenue in Q2 2025, compared to 10.7% in the prior-year period.

Operating Expenses

Cash Operating Expenses (Cash OpEx):

Payroll and related costs increased by $658 thousand to $3 million.

This increase was mainly due to higher headcount to support the national distribution business, totaling $282 thousand, and additional employees brought on through acquisitions completed in Q4 2024, which accounted for $359 thousand.

These increases were partially offset by a $64 thousand reduction in benefits expense, a $45 thousand decrease in payroll taxes resulting from the use of contract labor in the cheese business, and a $120 thousand decline in bonus accruals compared to the prior-year period

Computer and IT Costs:

Increased by $12 thousand to $102 thousand, reflecting the onboarding of LoCo Foods and Golden Organics and the timing of annual software renewals.

Core IT spend remained stable as the Company continues to streamline operations.

Office, facilities, and vehicle expenses increased by $335 thousand.

The increase is attributed to costs associated with our cheese operations in Pennsylvania ($102 thousand), a new office location tied to our Q4 acquisitions ($100 thousand), and a larger truck fleet to support our expanding local distribution business ($40 thousand).

Advertising and Digital Marketing Costs:

Totaled $4 thousand in both Q2 2024 and 2025, resulting from a full year's cycle of the restructuring of marketing programs and a strategic shift away from direct-to-consumer advertising.

Professional and legal fees decreased by $10 thousand to $312

We are currently undertaking a vendor review process aimed at identifying further cost reduction opportunities going

Total Cash OpEx increased:

The total Cash OpEx

increased by $1 million, or 19.8%, reflecting growth in our national distribution channels and M&A activity in Q4 2024.

Non-Cash Operating Expenses (Non-Cash OpEx):

Share-Based Compensation:

Decreased by $705 thousand a credit of ($187) thousand, due to revaluation of stock options and other equity-based incentives to attract and retain key personnel.

Depreciation and amortization expense increased by $57 thousand to $110 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.

Bad Debt Expense:

decreased by $12 thousand to $1 thousand, primarily due to changes in customer mix within our local delivery segment.

Six Months Ended June 30, 2025

Revenue Breakdown:

Digital Channels:

Largely made up of our Distributor Relationships and supported by our Drop Ship model.

This category contributed $17.4 million, which is 42.7% of our total revenue.

This represents a decrease of 5.8% from $18.4 million in 2024, primarily due to continued headwinds in our legacy drop ship business.

National Distribution:

Captures our growing partnerships with airline caterers and our national retail customer.

This category generated $14.2 million, or 34.9% of total revenue, marking a 139.1% increase from $5.9 million in 2024.

These sales are generally delivered to the customer through 3PL carriers or FedEx.

Airline caterers generated $6.8 million in revenue, a 14.8% increase compared to 2024, while our cheese conversion operations for the national retail customer contributed $7.4 million.

Local Distribution:

Consists mainly of local sales team relationships and our local fleet delivering direct from warehouse.

This category brought in $8.7 million, or 21.3% of total revenue, an increase of 67.4% from $5.2 million in 2024, supported by $3.7 million from the recent acquisitions of LoCo Foods and Golden Organics.

Direct-to-Consumer:

however, will continue to impact revenue throughout much of 2025 due to the historical revenues generated by igourmet.com through Q3 2024.

In H2 2025, Direct-to-Consumer revenue declined by 100%, compared to $2.1 million in Q1 2024.

Other Services:

Consisting of numerous activities, mainly monetizing the excess space in Pennsylvania.

This category contributed $453k, or 1.1% of total revenue, a decrease of 1% from $457k in 2024.

Our largest customer in this space recently notified us that, due to economic conditions in the solar industry, they will be exiting the logistics service agreement in September.

This customer made up 99% of Other Services revenue.

Cost of goods sold for the first half of

2025 increased 30.3% to $31.7 million, compared to $24.4 million in the prior-year period.

Gross margin declined by 228 basis points

to 21.9%, primarily due to the expansion of our cheese business.

Cheese products, which carry lower margins than our core offerings,

represented 18.1% of total sales in H1 2025, compared to 0% in H1 2024.

Excluding cheese sales, gross margin increased 118 basis

This increase was driven by decreased platform fees, which improved margins by approximately 133 basis points, and lower

shipping costs, which improved margins by 84 basis points.

This impact was partially offset by higher product and fulfilment costs,

which lowered margins by 99 basis points.

Operating Expenses

Cash Operating Expenses (Cash OpEx):

Payroll and related costs increased by $1 million to $5.8 million.

This increase was mainly due to higher headcount to support national distribution business, amounting to $557 thousand, and employees added through acquisitions completed in Q4 2024, which amounted to $667 thousand.

These increases were partially offset by reduced benefits expense of $100 thousand, reduced payroll taxes of $70 thousand, and bonus accrual reduced by $91 thousand compared to the prior year period.

and IT Costs:

Reduced by $37 thousand to $101 thousand, reflecting the Company’s efforts to streamline IT operations and reduce

software and hardware expenses.

expenses increased by $259 thousand.

The increase is attributed to new office locations costing $139 thousand and larger truck fleet

costs of $65k 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.

By consolidating offices, Q1 results reflect $50 thousand in rent and utilities related

to the closed facility that will not continue in subsequent quarters.

Additionally, additional building-related costs at our cheese distribution

facility amount to $56 thousand.

These costs are anticipated to continue in subsequent quarters.

● Advertising

and Digital Marketing Costs:

Significant reduction of $166 thousand to $5 thousand, resulting from the restructuring of marketing programs

and a strategic shift away from direct-to-consumer advertising.

● Professional

and legal fees increased by $472 thousand to $762 thousand, with approximately $288 thousand attributable to various legal and transactional

activities related to acquisitions, contractual dispute settlement, and other corporate actions which are not expected to recur.

These increases were partially offset by reduced benefits expense of $141 thousand, reduced payroll taxes of $199 thousand..

Computer and IT Costs:

Reduced by $25 thousand to $204 thousand, reflecting the Company’s efforts to streamline IT operations and reduce software and hardware expenses.

Office, facilities, and vehicle expenses increased by $595 thousand.

The increase is primarily due to new office locations costing $280 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, building-related costs at our cheese distribution facility totaled $167 thousand, and increased fleet costs at our Chicago hub accounted for $88 thousand.

Advertising and Digital Marketing Costs:

Significant reduction of $19 thousand to $8 thousand, resulting from the restructuring of marketing programs and a strategic shift away from direct-to-consumer advertising.

P rofessional and legal fees increased by $ 104 thousand to $ 865 thousand attributable to transactional activities related to acquisitions, and other corporate actions which are not expected to recur .

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.

Operating Expenses (Non-Cash OpEx):

● Share-Based

Compensation:

Decreased by $60 thousand to $161 thousand, due to revaluation of stock options and other equity-based incentives to attract

and retain key personnel.

● Depreciation and amortization expense decreased by $2 thousand

to $108 thousand, reflecting a similar net book value of property, plant, and equipment compared to the prior year period.

Debt Expense:

Increased by $4 thousand to $27 thousand, as a result of customer shut downs in our local distribution sector.

of Intangible Assets:

No impairment costs in 2025 or 2024.

Non-Recurring

on Sale of Assets:

No transactions in Q1 2025 and $1.8 million in 2024, from the sale of the headquarters building

on Sale of Subsidiaries:

No transactions in Q1 2025 and $21 thousand from the sale of Haley Group, Inc.

The total Cash OpEx

increased by $1.8 million, reflecting growth in our national distribution channels and M&A activity in Q4 2024.

Non-Cash Operating Expenses (Non-Cash OpEx):

Share-Based Compensation:

Decreased by $765 thousand to ($24) 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 $55 thousand to $218 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

Bad Debt Expense:

decreased by $8 thousand to $28 thousand, primarily due to changes in customer mix within our local delivery segment.

Non-Recurring Expenses:

Gain on Sale of Assets:

No transactions in Q2 2025 or Q2 2024.

Gain on Sale of Subsidiaries:

No transactions in Q2 2025 or Q2 2024.

Legal Settlement Expense:

$210 thousand in Q1 2025 related to the resolution of a vendor dispute.

No comparable

expense in Q1 2024.

Net (Loss) Income

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.

and Capital Resources at March 31, 2025

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.

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

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.

Liquidity and Capital Resources at June 30,

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.

Flow Analysis:

Used $1.0 million, primarily due to changes in working capital components.

Cash Flow Analysis:

Operating Activities:

Used $402 thousand, primarily due to changes in working capital components.

The significant changes in working capital included:

Accounts receivable decreased by $1.5 million, primarily reflecting the collection of receivables related to elevated cheese sales in Q4 2024.

Cheese sales totalled approximately $5.4 million in Q4 compared to $3.8 million in Q1 2025, as the company completed the Q4 initial pipeline fill.

The higher Q4 sales drove an increase in accounts receivable at year-end, and the subsequent collection of these balances contributed to the decrease in Q1 2025.

There has been no material change in collection performance during the period.

● Inventory increased by

$617 thousand, primarily to support anticipated demand from new retail and airline customers and to replenish depleted inventory

levels associated with the newly acquired LoCo Foods distribution business.

This increase is consistent with the Company’s

overall sales growth, as revenues increased approximately 26% year-over-year, and higher inventory levels were expected to support

this expanded sales volume.

payable and accrued liabilities decreased by $1.8 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 LocoFoods business.

Accounts receivable decreased by $2.1 million, primarily reflecting the collection of receivables related to elevated cheese sales in Q4 2024 and a reduction of aged receivables of $381 thousand.

Cheese sales totaled approximately $5.4 million in Q4 compared to $3.7 million in Q2 2025, as the company completed the Q4 initial pipeline fill.

The higher Q4 sales drove an increase in accounts receivable at year-end, and the subsequent collection of these balances contributed to the decrease in H1 2025.

Inventory decreased by $390 thousand, as a result of lowered cheese inventory balances compared to Q4 2024.

Accounts payable and accrued liabilities decreased by $2.5 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.

Investing activities:

Net cash used in investing activities was $208 thousand, primarily related to purchases of property and equipment.

investments included equipment for cheese cutting operations and warehouse improvements to support the consolidation of Loco Foods and

Golden Organics, acquired in Q4 2024.

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.

Financing Activities:

Used $215 thousand, primarily from the principal payments on debt.

Capital Needs IVFH anticipates significant capital expenditure in the coming years to support its growth initiatives and operational

improvements.

Key areas of investment include:

of Distribution Facilities:

Upgrading and expanding warehouse and distribution facilities to accommodate increased demand and improve

operational efficiency.

Enhancing the company’s digital platforms and IT infrastructure to support e-commerce growth and improve customer

Investing in new product lines and innovations to meet changing customer preferences and expand market share.

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

with Major Customers

with a major customer and related economic dependence information is set forth below and following our discussion of Liquidity and Capital

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.

The Company’s largest customer, U.S.

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.

and its affiliates,

accounted for approximately 34% and 48% of total sales in the three months ended June 30, 2025 and 2024, respectively;

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 12% and

17% of total sales, respectively.

Sheet Arrangements

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.

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.

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 .

Quantitative and Qualitative Disclosures About Market Risk

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.

and Gate Gourmet, the leading global provider of airline catering solutions and provisioning

services for airlines, represented 15% and 18% of total sales, respectively.

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.

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.

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 .

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.

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-Q

Item 1. Financial Statements