What changed in this filing

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Item 1. Financial Statements

2025-11-14 compared with 2025-08-14 · 997 added, 929 removed, 571 unchanged (77% of the section changed)

Financial Statements

Food Holdings, Inc.

Balance Sheets

September 30,

Current assets

Cash and cash equivalents

Cash, restricted

Accounts receivable, net

1 unchanged sentence

Other current assets

Assets held for sale

Current assets - discontinued operations

4 unchanged sentences

Amortizable intangible assets, net

Tradenames and other unamortizable intangible assets

Indefinite intangible assets

Other noncurrent assets

Noncurrent assets – discontinued operations

LIABILITIES AND STOCKHOLDERS’ EQUITY

3 unchanged sentences

Accrued interest

Deferred revenue

Stock appreciation rights liability

3 unchanged sentences

Contingent liability, current

Current liabilities - discontinued operations

Total current liabilities

3 unchanged sentences

Lease liability - finance leases, non-current

Noncurrent liabilities – discontinued operations

Total liabilities

4 unchanged sentences

500,000,000 shares authorized;

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

57,279,246 and 56,009,032 shares issued, and 54,434,949 and 53,164,735 shares outstanding at September 30, 2025 and December 31, 2024, respectively

Common stock to be issued;

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

350,735 and 738,032 shares at September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

Treasury stock:

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

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

( 1,141,372 )

10 unchanged sentences

For the Three

September 30,

Cost of goods sold

3 unchanged sentences

Other income (expense):

Interest expense, net

Interest income (expense), net

Gain on sale of assets

2 unchanged sentences

Total other income (expense)

Net income (loss) before taxes

Income before taxes

Income tax expense

Net income (loss) from continuing operations

Net (loss) from discontinued operations

Consolidated net income (loss)

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

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

Net (loss) per share from discontinued operations - basic

Net (loss) per share from discontinued operations - diluted

Weighted average shares outstanding - basic

Weighted average shares outstanding - diluted

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

Shares issued for cashless exercise of options

Net loss for the three

months ended June 30, 2024

- June 30, 2024

$ ( 1,141,372 )

Income from continuing operations

Income (loss) from discontinued operations

$ ( 2,369,795 )

Balance - March 31, 2025

$ ( 3,821,096 )

$ ( 809,040 )

Fair value of shares under compensation plan

Shares issued under compensation

Net income for the three

months ended June 30, 2025

- June 30, 2025

Net income (loss)

$ ( 1,719,196 )

$ ( 2,091,122 )

Income per share from continuing operations - basic

Income per share from continuing operations - diluted

Income (loss) per share from discontinued operations - basic

Income (loss) per share from discontinued operations - diluted

Weighted average shares outstanding - basic

Weighted average shares outstanding - diluted

condensed notes to these unaudited consolidated financial statements.

Food Holdings, Inc.

Statements of Stockholders’ Equity

and Nine Months Ended September 30, 2025 and 2024

Treasury Stock

Balance - June 30, 2024

Stock based compensation

Shares issued under stock based compensation

Net loss for the three months ended September 30, 2024

Balance - September 30, 2024

Balance - June 30, 2025

Stock based compensation

Shares issued under stock based compensation

Net income for the three months ended September 30, 2025

Balance - September 30, 2025

Balance - December 31, 2023

$ ( 1,141,370 )

$ ( 38,821,278 )

Shares returned to treasury

from sale of subsidiary

Fair value of shares under compensation plan

Shares returned to treasury from sale of subsidiary

Stock based compensation

Shares issued under stock based compensation

Shares issued for cashless exercise of options

Net loss for the six months

ended June 30, 2024

- June 30, 2024

$ ( 1,141,372 )

$ ( 37,498,728 )

Net loss for the nine months ended September 30, 2024

Balance - September 30, 2024

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 )

Shares issued in cashless conversion of options

Stock based compensation

Shares earned but not yet issued under stock based compensation

Stock based compensation

Net loss for the nine months ended September 30, 2025

Balance - September 30, 2025

condensed notes to these unaudited consolidated financial statements.

1 unchanged sentence

Statements of Cash Flows

September 30,

Cash flows used in operating activities:

4 unchanged sentences

( 2,641,979 )

(Gain) Loss on sale of subsidiaries

Gain on sale of subsidiaries

Loss on sale of fixed assets

Depreciation and amortization

2 unchanged sentences

Stock based compensation

Value of stock appreciation rights

Gain on derecognition of note payable and accrued interest

Changes in fair value of stock appreciation rights

( 1,077,098 )

Inventory valuation adjustment associated with facility closure

Provision for credit losses

1 unchanged sentence

Accounts receivable, net

Inventory and other current assets, net

Other current assets

Accounts payable and accrued liabilities

8 unchanged sentences

Acquisition of property and equipment

Cash received from disposition of asset, net of loan payoff

Cash received from disposition of asset

Cash received from disposition of land and building, net of loan payoff

Cash received from disposition of intangible assets, net of costs

Net cash provided by (used in) investing activities

4 unchanged sentences

Principal payments on line of credit

Reimbursement from restricted cash for capital expenditures

Net cash used in financing activities

Decrease in cash and cash equivalents

( 1,536,279 )

Cash and cash equivalents at beginning of period

28 unchanged sentences

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

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

to be expected for the full year.

10 unchanged sentences

Haley Food Group, Inc.

(“Haley”) was sold effective February 26, 2024;

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.

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

(“Haley”) was sold effective February 26, 2024, and the activities of P Innovations (“Plantbelly”) were abandoned;

the igourmet platform and its D2C components were sold effective August 6, 2024.

We continue to operate the B2B component, which remains

part of our continuing operations.

On October 8, 2024, we sold substantially all of the assets of Mouth.

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 “ 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 4) and the activities of P Innovations (“Plantbelly”)

were abandoned;

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.

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.

the third quarter of fiscal 2025, the Company committed to a strategic exit of its retail specialty cheese business, which served as the

primary component of its national distribution platform.

Accordingly, results for this business for all prior periods presented have been

retrospectively reclassified to discontinued operations in accordance with ASC 205-20.

In connection with this decision, the Company also

elected to discontinue its related logistics operations and specialty cheese cutting activities .

Reclassifications

1 unchanged sentence

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.

The preparation of these unaudited consolidated

financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and

expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis, we evaluate these estimates, including those

related to revenue recognition and concentration of credit risk.

We base our estimates on historical experience and on various other assumptions

that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying

values of assets and liabilities that are not readily apparent from other sources.

Accounts subject to estimate and judgements are allowances

for credit losses, allowances for slow moving & obsolete inventory, income taxes, intangible assets, operating and finance right of

use assets and liabilities, and equity-based instruments.

Actual results may differ from these estimates under different assumptions or

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

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 September 30, 2025 and December 31, 2024, the Company’s largest customer,

and its affiliates, accounted for approximately 16 % and 11 % of accounts receivable, respectively;

Sam’s Club, represented

1 % and 23 % 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.

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

services for airlines, represented 23 % and 21 % of accounts receivable, respectively.

The Company maintains cash balances in excess

of Federal Deposit Insurance Corporation limits.

At September 30, 2025 and December 31, 2024, the total cash in excess of these limits

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

The Company provides an allowance for credit losses

equal to the estimated uncollectible amounts pursuant to the guidance of Accounting Standards Update (“ASU”) 2016-13, Financial

Instruments – Credit Losses (Topic 326) as codified in ASC 326, Financial Instruments – Credit Losses .

The Company utilizes a current and expected credit loss (CECL) impairment model.

The Company’s estimate is based on historical collection

experience and a review of the current status of trade accounts receivable.

It is reasonably possible that the Company’s estimate

of the allowance for credit losses will change.

Accounts receivable are presented net of an allowance for credit losses of $ 40,002 at

September 30, 2025 and December 31, 2024.

Inventory is valued at the lower of cost or

net realizable value, and is determined by the average cost method.

The Company adjusts inventory based upon bi-weekly cycle counts

and upon the expiration date of food products.

In addition, the Company records a provision for excess, obsolete, and slow-moving

This provision reduces the carrying value of inventory to its net realizable value.

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

2 unchanged sentences

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

16 unchanged sentences

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.

charges to customers 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

10 unchanged sentences

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 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 leasing income recognized

Balance as of March 31, 2025 (unaudited)

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:

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Digital Channels

1 unchanged sentence

Local Distribution

Direct-to-Consumer

Other Services

of Goods Sold

16 unchanged sentences

Three Months Ended

Six Months Ended

Net income (loss) from continuing operations

$ ( 371,926 )

Nine Months Ended

September 30,

Income from continuing operations

Weighted average shares outstanding - basic

1 unchanged sentence

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.

Income (loss) per share from continuing operations - diluted

Shares at September 30, 2025:

September 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 September 30, 2025, none of these RSU were vested.

There was no charge to operations for these RSUs during

the three and nine months ended September 30, 2025.

September 30, 2025, there were a total of 350,735 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.

These shares have

vested and are included in basic shares outstanding and fully-diluted earnings per share for the three and nine months ended September

During the three and nine months ended September 30, 2025, the amount of $ 158,713 and $ 361,115 , respectively, was charged to

stock-based compensation.

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.

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:

of basic and diluted EPS:

are no potentially issuable shares not included in basic earnings per share, and no difference between EPS and fully-diluted EPS for

the three and nine months ended September 30, 2025.

shares at September 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:

stock issued by the Company at September 30, 2024:

Weighted average

3 unchanged sentences

$ 1.75 130,000 1.75

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

September 30, 2024, there are 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, 2024, none of these RSU were vested.

There was no charge to operations

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

In November 2023, the FASB issued ASU No.

“Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

The amendments improve reportable segment

disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The ASU is effective for annual reporting

periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 with early adoption

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

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.

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 September 30, 2024, none of these RSU were vested.

There was no charge to operations for these RSUs during

the three and nine months ended September 30, 2024.

September 30, 2024, there were a total of 2,494,990 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, 644,320

shares have vested and are included in fully-diluted shares outstanding during the nine months ended September 30, 2024;

2,490,990 have

not vested, and are excluded from the calculation of fully-diluted shares outstanding during the nine months ended September 30, 2024.

During the three and nine months ended September 30, 2024, the amounts of $ 105,269 and $ 313,773 , respectively, were charged to stock-based

compensation.

Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03,

“Disaggregation of Income Statement Expenses (DISE)” which requires disaggregated disclosure of income statement expenses

for public business entities.

The ASU does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation

of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

ASU 2024-03 is

effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

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.

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 is currently evaluating the impact ASU 2024-03 will have on its consolidated

financial statements.

On July 4, 2025, the One Big Beautiful Bill Act

(“OBBBA”) was enacted in the U.S.

The OBBBA includes significant provisions, such as expensing of U.S.

research expenditures

and eligible capital expenditures, the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications

to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The impacts of the

OBBBA are reflected in our results for the quarter ended September 30, 2025, and there was no impact to our income tax expense or effective

income tax rate.

In July 2025, the FASB issued ASU 2025-05, which

provides a practical expedient for estimating expected credit losses on short term receivables and contract assets from revenue transactions.

The guidance permits a simplified loss rate approach based on historical write off experience and current conditions.

The Company is evaluating

the standard and its potential effect on the allowance for doubtful accounts and its consolidated financial statements.

DISCONTINUED OPERATIONS

5 unchanged sentences

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.

its Haley subsidiary (see Note 4), and the activities of P Innovations (“Plantbelly”) were abandoned;

on October 8, 2024,

the Company sold substantially all of the assets of Mouth.

the third quarter of fiscal 2025, the Company committed to a strategic exit of its retail specialty cheese business, which served as

the primary component of its national distribution platform.

In connection with this decision, the Company also elected to discontinue

its related logistics operations and specialty cheese cutting activities.

As part of this exit, the Company is in the process of selling

the associated Pennsylvania production and distribution facility.

the operating results and related assets and liabilities of the retail specialty cheese business, including igourmet, along with the

Company’s logistics subsidiary (LII / IFP) and specialty cheese cutting operations, have been reclassified to discontinued operations

for all periods presented.

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

the consolidated balance sheets:

September 30,

Current assets - discontinued operations:

Accounts receivable

Assets held for sale

ROU assets – financing leases, net

Total current assets - discontinued operations

September 30,

Noncurrent assets - discontinued operations:

ROU assets – financing leases, net

Property and equipment, net

Total noncurrent assets - discontinued operations

September 30,

Current liabilities - discontinued operations:

Accounts payable and accrued liabilities

Deferred revenue

Accrued interest

Lease Liability

Notes payable, net

Total current liabilities - discontinued operations

September 30,

Noncurrent liabilities - discontinued operations:

Notes payable, net

Total noncurrent liabilities - discontinued operations

following information presents the major classes of line items constituting the after-tax loss from discontinued operations in the consolidated

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of goods sold

( 1,494,296 )

Selling, general, and administrative expenses

Interest income

Loss from discontinued operations, net of tax

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.

( 2,356,393 )

( 2,073,222 )

Other (expense) income

Income (loss) from discontinued operations, net of tax

$ ( 2,369,795 )

$ ( 3,821,096 )

$ ( 809,040 )

The following information presents the significant

operating and investing noncash items in the discontinued operations of the statement of cash flows:

Nine Months Ended

September 30,

Operating activities:

Adjustment to reconcile net loss to cash

Net cash provided by (used in) operating activities

Inventory valuation adjustment associated with facility closure

Depreciation and amortization

Changes in assets and liabilities:

Accounts receivable, net

Accounts payable and accrued liabilities

Investing activities:

Acquisition of property and equipment

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.

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

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.

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.

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

ACCOUNTS RECEIVABLE

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

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

September 30,

Accounts receivable from customers

1 unchanged sentence

Accounts receivable, net

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.

During the three and nine months ended September

30, 2025, the Company charged the amount of $ 33,521 and $ 61,831 to provision for credit losses, respectively.

During the three and nine

months ended September 30, 2024, the Company charged the amount of $ 4,812 and $ 40,667 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:

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

September 30,

Finished goods inventory

2 unchanged sentences

PROPERTY AND EQUIPMENT

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

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

September 30,

Computer and Office Equipment

5 unchanged sentences

( 1,482,622 )

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.

expense for property and equipment amounted to $ 50,171 and $ 22,636 for the three months ended September 30, 2025 and 2024, respectively,

and $ 147,480 and $ 76,765 for the nine months ended September 30, 2025 and 2024, respectively.

Depreciation expense for property and equipment

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

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

During the nine months

ended September 30, 2025 and 2024, the Company acquired property and equipment in the amount of $ 229,278 and $ 309,262 , respectively.

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

2 unchanged sentences

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

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

to $ 69,857 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 Company’s lease expense for the nine months ended September 30, 2025 and 2024 was entirely

comprised of operating leases and amounted to $ 212,239 and $ 9,266 , respectively.

Company’s ROU asset amortization for the three months ended September 30, 2025 and 2024 was $ 60,454 and $ 4,175 , respectively.

Company’s ROU asset amortization for the nine months ended September 30, 2025 and 2024 was $ 184,426 and $ 12,740 , 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 September 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.

lease term of operating leases was 2.17 and 2.85 years at September 30, 2025 and December 31, 2024, respectively.

of use assets – operating leases are summarized below:

September 30,

Warehouse equipment

2 unchanged sentences

lease liabilities are summarized below:

September 30,

Warehouse equipment

4 unchanged sentences

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

For the period ended September 30, 2026

For the period ended September 30, 2027

For the period ended September 30, 2028

For the period ended September 30, 2029

For the period ended September 30, 2030

Present value discount

3 unchanged sentences

Right of use asset – financing leases are summarized below:

September 30,

Warehouse equipment

1 unchanged sentence

accumulated depreciation

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.

expense related to right of use assets for the three months ended September 30, 2025 and 2024 was $ 5,954 and $ 5,954 , respectively.

expense related to right of use assets for the nine months ended September 30, 2025 and 2024 was $ 17,862 and $ 17,862 , respectively.

The weighted-average interest rate for financing

leases was 5.44 % at September 30, 2025 and 5.83 % at December 31, 2024.

The weighted-average remaining lease term of financing leases

was 2.82 and 2.80 years at September 30, 2025 and December 31, 2024, respectively.

lease liabilities are summarized below:

September 30,

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 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

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.

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 September 30, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $ 5,942 and $ 622 , respectively;

during the nine months ended September 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 September 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 nine months ended September 30, 2024, the Company made principal and interest payments on this lease obligation in the amount of $ 54,385 and $ 5,261 , respectively.

$ 35,721 $ 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

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.

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 September 30, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $ 3,236 and $ 208 , respectively;

during the nine months ended September 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 September 30, 2024, the Company made principal and interest payments on this lease obligation in the amounts of $ 3,078 and $ 366 , respectively;

during the nine months ended September 30, 2024, the Company made principal and interest payments on this lease obligation in the amount of $ 6,120 and $ 770 , respectively.

$ 11,221 $ 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 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 .

During the three months ended September 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 nine months ended September 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 .

$ 63,078 125,632

3 unchanged sentences

Total $ 110,020 $ 200,110

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

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

maturities of lease liabilities:

1 unchanged sentence

INTANGIBLE ASSETS

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.

The Company acquired certain indefinite intangible

assets pursuant to the acquisitions of Artisan and Golden Organics.

These assets include trade names and customer lists.

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

following table represents the balances of other amortizable intangible assets as of September 30, 2025 and December 31, 2024:

September 30, 2025

Total Customer lists

1 unchanged sentence

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 :

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

Total amortization expense

for the nine months ended September 30, 2025 and 2024 was $ 64,735 and $ 0 , respectively.

amortization expense for intangible assets as of September 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.

Other Infinite Intangible Assets

Other non-amortizable intangible assets consist

of $ 217,000 of indefinite intangible assets held by Artisan.

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

September 30, 2025

Total Indefinite Intangible Assets

December 31, 2024

Total Trade names

Total Indefinite Intangible Assets

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

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

September 30,

Trade payables and accrued liabilities

2 unchanged sentences

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.

Agreements”) with Sam Klepfish, its prior CEO and a previous board member.

The SK Agreements provide, among other things, for Mr.

6 unchanged sentences

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 .

The $250,000 was paid into an escrow account, and was released to Mr.

Klepfish on his separation date.

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

The SK Agreements also called 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, which were delivered to Mr.

Klepfish on April 26, 2023;

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

The total amount initially accrued 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:

a former 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

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 .

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 initially accrued in connection with the Wiernasz Separation Agreement was

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

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

Pursuant to the Tang Separation Agreement, the Company has agreed

to pay to Mr.

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

Tang was reimbursed the

amount of $ 4,000 for legal expenses connected with the review of the Tang Separation Agreement.

The severance payment were 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.

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

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

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

In addition, the Company reimbursed Tang’s group health

insurance premiums under COBRA in the amount of $ 14,495 .

On October 4, 2025, the Company entered into a

separation agreement and general release (the “Bennett Separation Agreement”) with Bill Bennett, pursuant to which Mr.

will resign from his position as the Chief Executive Officer of the Company, effective October 3, 2025.

Pursuant to the Bennett Separation

Agreement, the Company shall (i) pay Mr.

Benett a severance payments consisting of salary continuation through December 31, 2025, in the

total gross amount of $ 115,501 , payable in installments on the Company’s regular payroll dates;

and (ii) reimbursement of Mr.

group health insurance premiums for the period from November 1, 2025 through September 30, 2026 in the total gross amount of $ 31,515 .

At September 30, 2025, the Company had not made any payments under the Bennett Separation Agreement.

the three months ended September 30, 2025 and 2024, the Company paid cash in the amount of $ 55,556 and $ 83,333 , respectively, to Mr.

Klepfish in connection with the SK Agreements.

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

During the nine months ended September 30, 2025 and 2024, the Company paid cash in the

amount of $ 222,222 and $ 250,000 , respectively, to Mr.

Klepfish in connection with the SK Agreements.

the nine months ended September 30, 2025 and 2024, the Company made COBRA payments on behalf of Mr.

Wiernasz in the amount of $ 0 and

$ 967 , respectively.

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

The Company paid cash to Mr.

3 unchanged sentences

of $ 0 and $ 2,956 , respectively.

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

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

The Company paid cash to Mr.

3 unchanged sentences

of $ 0 and $ 14,495 , respectively.

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

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

Cash – through March 6, 2026

13 unchanged sentences

$ ( 128,413 )

Cash – installments through December 31, 2025

Insurance – installments through September 30, 2026

Total Company

1 unchanged sentence

STOCK APPRECIATION RIGHTS LIABILITY

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;

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;

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 Smallwood SARs are revalued each quarter,

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

See Note 17 for calculation method and significant

assumptions used in the valuation model.

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

8 unchanged sentences

June 30, 2025 - fair value

(Gain) Loss on revaluation

September 30, 2025 - fair value

LINE OF CREDIT

September 30,

2025 December 31,

On June 6, 2022, the Company entered into a revolving credit facility with MapleMark (the “MapleMark Revolver”) with a maturity date of August 25, 2025.

The amount available under the MapleMark Revolver is $ 1,500,000 .

Principal and interest payments due under the MapleMark Revolver are payable monthly.

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 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.

On June 6, 2022, the Company entered into a revolving credit facility with MapleMark (the “MapleMark Revolver”) which expired on August 25, 2025.

The amount available under the MapleMark Revolver was $ 1,500,000 .

Principal and interest payments due under the MapleMark Revolver were payable monthly.

Amounts due under the MapleMark Revolver bore 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.

During the nine months ended September 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 nine months ended September 30, 2025, the Company paid interest in the amount of $ 0 and $ 1,804 on the MapleMark Revolver, respectively.

During the nine months ended September 30, 2024, the Company did not draw on the MapleMark Revolved and no interest was incurred.

NOTES PAYABLE

September 30,

2025 December 31,

On June 6, 2022, the Company entered into a term loan agreement with MapleMark (the “MapleMark Term Loan 1”) for the original amount of $ 5,324,733 .

On June 13, 2023, the Company entered into a term loan with MapleMark Bank (the “MapleMark Term Loan 3”) in the amount of $ 9,057,840 .

Principal and interest due on the MapleMark Term Loan 1 in the amounts of $ 5,324,733 and $ 61,715 , respectively, were paid with proceeds of the MapleMark Term Loan 3.

The MapleMark Term Loan 3 is payable in monthly installments of $ 80,025 commencing July 1, 2023 and continuing through June 13, 2048 .

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

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

The MapleMark Term Loan 3 contains negative covenants that, subject to certain exceptions, limits the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make restricted payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates.

The MapleMark Term Loan 3 also provides that the Company and its subsidiaries on a consolidated basis, meet a Fixed Charge Coverage Ratio as described in detail in the MapleMark Term Loan 3.

The MapleMark Term Loan 3 contains events of default that are customary for a facility of this nature, including (subject in certain cases to grace periods and thresholds) nonpayment of principal, nonpayment of interest, fees or other amounts, material inaccuracy of representations and warranties, violation of covenants, cross-default to certain other existing indebtedness, bankruptcy or insolvency events, and certain judgment defaults as specified in the Term Loan Agreements.

If an event of default occurs, the maturity of the amounts owed under the Term Loan Agreements may be accelerated.

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 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 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

The note was due in January 2006 and the Company accrued interest on this note at 1.9 % through September 30, 2025.

During the three and nine months ended September 30, 2025, the Company accrued interest in the amount of $ 96 and $ 288 , respectively, on this note.

During the three and nine months ended September 30, 2024, the Company accrued interest in the amount of $ 96 and $ 288 , respectively, on this note.

At December 31, 2024, accrued interest on this note was $18,860.

At September 30, 2025, this note had been outstanding without any claim or correspondence for an extended duration.

After consideration of all available information, the Company concluded that the obligation is no longer required to be recognized.

Accordingly, the liability was derecognized and a gain in the amount of $ 39,154 was recorded during the three months ended September 30, 2025.

A note payable in the amount of $ 350,000 issued in connection with the GO Acquisition (the GO Note”).

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 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.

During the three and nine months ended September 30, 2025, the Company made interest payments on the GO note in the amount of $ 4,637 and $ 14,606 , respectively.

During the three and nine months ended September 30, 2025, the Company made principal payments on the GO note in the amount of $ 15,200 and $ 46,292 , respectively.

$ 298,692 $ 344,984

Total $ 298,692 $ 364,984

Discount ( 374,802 ) ( 377,370 )

Net of discount $ 8,796,640 $ 8,882,726

Current portion $ 65,046 $ 20,000

1 unchanged sentence

Total $ 298,692 $ 364,984

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:

There was a total of $ 0 and $ 18,866 accrued interest

on notes payable at September 30, 2025 and December 31, 2024, respectively.

maturities of notes payable as of September 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

of September 30, 2025, total number of shares of common stock issued and outstanding was 57,279,246 and 54,434,949 , respectively.

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

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.

At September 30,

2025 and December 31, 2024, an additional 350,735 and 738,032 shares, respectively, were classified as common stock to be issued.

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

being administratively issued.

the nine months ended September 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.

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.

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

1 unchanged sentence

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.

There was no gain or loss recorded on this transaction.

and 73,735 shares were issued to its CFO.

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.

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

4 unchanged sentences

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.

July 3, 2025, the Company issued 82,952 shares of common stock to its CFO pursuant to an executive compensation plan.

There was no gain

or loss recorded on this transaction.

the nine months ended September 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.

July 9, 2024, the Company issued a total of 1,415,544 shares of common stock pursuant to the Company’s executive stock

option plans.

These shares were recorded at the aggregate par value of $ 1,415 ;

there was no gain or loss recorded on these transactions

as the shares were issued pursuant to the terms of the compensation plans.

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.

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.

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

14 unchanged sentences

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.

Number of Shares Granted - Lower of:

Number of Shares Issued

and Outstanding on

Stock Price Target

Grant Date Multiplied by:

fair value of the CEO Stock Plan was determined via a Monte Carlo market-based performance stock awards model to be $ 660,541 .

will be recorded as a charge to compensation expense and additional paid-in capital on a straight-line basis over 34 months.

October 4, 2025, the Company entered into a separation agreement and general release with Mr.

Bennett, pursuant to which Mr.

resigned from his position as the Chief Executive Officer of the Company effective October 1, 2025.

During the three months

ended September 30, 2025, the Company charged the unamortized portion of the value of the CEO Stock Plan I the amount of $ 115,795 to

compensation expense and additional paid-in capital.

During the three and nine months ended September 30, 2025, the amount of $ 115,795

and $ 232,361 , respectively, were charged to operations pursuant to the CEO Stock Plan.

During the three months and nine months ended

September 30, 2024, the amounts of $ 58,283 and $ 174,849 , respectively, were charged to operations pursuant to the CEO Stock Plan.

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 September 30, 2025.

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;

4 unchanged sentences

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.

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

shares were issued on July 9, 2024.

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

shares were issued on July 9, 2024.

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.

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

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

3 unchanged sentences

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.

Number of Shares Granted - Lower of:

Number of Shares Issued

and Outstanding on

Stock Price Target

Grant Date Multiplied by:

fair value of the COO Stock Plan was determined via a Monte Carlo market-based performance stock awards model to be $ 199,951 .

will be recorded as a charge to compensation expense and additional paid-in capital on a straight-line basis over 31.5 months.

the three and nine months ended September 30, 2025, the amount of $ 19,043 and $ 57,129 , respectively, was charged to operations pursuant

to the COO Stock Plan.

During the three and nine months ended September 30, 2024, the amounts of $ 19,043 and $ 57,129 , 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 of the COO Stock Plan.

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

7 unchanged sentences

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.

September 30, 2025, a total of 147,470 shares of common stock remain unvested under the COO Stock Plan, and an additional 55,503 shares

are classified as common stock to be issued on the Company’s balance sheet.

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

4 unchanged sentences

of Shares Granted - Lower of:

Shares Issued

and Outstanding

of Shares Issued

Outstanding on

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.

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).

This amount 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 nine months

ended September 30, 2025, the amount of $ 23,875 and $ 71,625 , respectively, was charged to operations pursuant to the CFO Stock Plan.

During the three and nine months ended September 30, 2024, the amounts of $ 23,875 and $ 71,625 , 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

2 unchanged sentences

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

per share under the CFO Stock Plan was achieved and 65,542 shares of common stock vested.

The total number of shares vested for achievement

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

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.

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 per share under the CFO Stock Plan was achieved and 65,542 shares of common stock vested.

The total number of shares vested for achievement of the $ 1.63 and $ 2.04 price targets was 163,855 ;

on June 3, 2025, 92,168 of these

shares were issued.

On July 3, 2025, 82,952 shares, which were previously

earned, were issued from common stock to be issued pursuant to the CFO stock plan.

September 30, 2025, a total of 196,627 shares of common stock remain unvested under the CFO Stock Plan, and an additional 80,903 shares

are classified as common stock to be issued on the Company’s balance sheet.

October 3, 2025, the Company entered into an executive employment agreement (the “Schubert Agreement”) with Gary Schubert,

pursuant to which Mr.

Schubert shall resign from his current position of Chief Financial Officer of the Company and shall be appointed

as the Chief Executive Officer of the Company and a member of the Company’s Board of Directors (the “Board”), effective

October 3, 2025.

Appreciation Rights

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

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

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;

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

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 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.

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

and 750,000 are priced at $ 2.00 per share.

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 date.

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 three and nine months ended September 30, 2025, Smallwood SARs decreased in fair value in the amount $ 849,835 and $ 1,077,098 , respectively;

these amounts were charged to non-cash compensation.

During the three and nine months ended September 30, 2024, the Smallwood SARs decreased

in fair value and increased in fair value in the amount $ 55,587 and $ 476,161 , respectively;

these amounts were charged to non-cash compensation.

At September 30, 2025 and December 31, 2024, the Smallwood SARs had a fair value of $ 276,052 and 1,353,150 , respectively.

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

September 30,

135.88 - 205.63 %

1 unchanged sentence

Risk-free interest rates

3.68 - 3.96 %

3.66 - 4.71 %

Remaining expected term (years)

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.

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.

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 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

Options outstanding at September 30, 2025 (unaudited)

Options exercisable at September 30, 2025 (unaudited)

the three months ended September 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 nine months ended September 30, 2025 and 2024, the Company charged the amount of $ 0 and $ 4,068 ,

respectively, to operations for the vesting of stock options.

Company’s Chief Operating Decision Maker (“CODM”) has determined that the Company operates in one reportable segment:

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

determined by the Chief Operating Decision Maker (“CODM”).

The Company’s CODM is a group consisting of our executive

management team:

Bill Bennett, CEO;

Brady Smallwood, COO;

and Gary Schubert, CFO.

The CODM uses net income to monitor budget versus

actual results.

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

The following table presents our segment results by sales channel:

During the three and nine months ended September

30, 2025, the Company’s CODM was a group consisting of our executive management team:

Gary Schubert, CEO and Brady Smallwood, COO.

CODM uses net income to monitor budget versus actual results.

The CODM also uses revenue by category to monitor the growth of the business

in each of our target markets.

following table presents our segment results by sales channel:

September 30,

Digital Channels

$ ( 1,495,053 )

National distribution

Local distribution

Direct to consumer

Other services

Total revenue

8 unchanged sentences

Non-cash OpEx:

Bad debt expense

Credit loss expense

Share based compensation

$ ( 715,983 )

$ ( 1,505,918 )

Depreciation & amortization

$ ( 315,424 )

$ ( 1,333,975 )

Non-Operating (Income) Expense:

2 unchanged sentences

(Gain) loss on sale of assets

$ ( 1,807,516 )

Other (income) expense

Total other (income) expense

$ ( 1,865,234 )

Net income (loss) from continuing operations

$ ( 1,658,295 )

Other segment disclosures:

1 unchanged sentence

Expenditures for segment assets

September 30,

Digital Channels

$ ( 419,045 )

National distribution

Local distribution

Direct to consumer

Other services

Total revenue

8 unchanged sentences

Non-cash OpEx:

Bad debt expense

Credit loss expense

Share based compensation

$ ( 691,122 )

$ ( 740,804 )

Depreciation & amortization

$ ( 583,306 )

$ ( 640,972 )

Non-Operating (Income) Expense:

Interest expense

(Gain) loss on sale of subsidiaries

(Gain) loss on sale of assets

Other (income) expense

1 unchanged sentence

Net income (loss) from continuing operations

$ ( 132,262 )

Other segment disclosures:

2 unchanged sentences

RELATED PARTY TRANSACTIONS

Payments to Prior Executive Officers under

Separation Agreements

Six months ended June 30, 2025:

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

to Prior Executive Officers under Separation Agreements

months ended September 30, 2025:

the three and nine months ended September 30, 2025, the Company paid cash in the amount of $ 55,556 and $ 222,222 , respectively, to Mr.

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

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.

Tang in the amount of $ 11,539 .

months ended September 30, 2024:

the three and nine months ended September 30, 2024, the Company paid cash in the amount of $ 83,333 and $ 250,000 , respectively, to Mr.

the three and nine months ended September 30, 2024, the Company made the following payments in connection with the Wiernasz Separation

The Company made COBRA payments on behalf of Mr.

Weirnasz in the amount of $ 0 and $ 967 , respectively.

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

The Company paid cash to Mr.

Tang in the amount of $ 5,178 and $ 113,918 , respectively, and COBRA payments on behalf of Mr.

the amount of $ 2,956 and $ 14,495 , respectively.

MAJOR CUSTOMERS

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.

During the three months ended September 30, 2025

and 2024, U.S.

and its affiliates accounted for approximately 36 % and 41 % of total consolidated sales, respectively.

Gourmet accounted for approximately 15 % and 20 % of total consolidated sales, respectively.

Discontinued operations:

Sams Club accounted for

approximately 18 % and 0 % of total consolidated sales in 2025 and 2024, respectively.

Sales to Sams Club related entirely to the discontinued

Pennsylvania distribution operations and are not expected to continue in future periods.

During the nine months ended September 30, 2025

and 2024, U.S.

and its affiliates accounted for approximately 34 % and 47 % of total consolidated sales, respectively.

Gourmet accounted for approximately 15 % and 18 % of total consolidated sales, respectively.

Discontinued Operations:

Sams Club accounted for

approximately 18 % and 0 % of total consolidated sales in 2025 and 2024, respectively.

Sales to Sams Club related entirely to the discontinued

Pennsylvania distribution operations and are not expected to continue in future periods.

COMMITMENTS AND CONTINGENCIES

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.

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

SUBSEQUENT EVENTS

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.

On October 3, 2025, Innovative Food Holdings,

Inc., entered into an executive employment agreement (the “Schubert Agreement”) with Gary Schubert, pursuant to which Mr.

Schubert resigned from his current position of Chief Financial Officer of the Company and was appointed as the Chief Executive Officer

of the Company and a member of the Board, effective October 3, 2025.

to the Schubert Agreement, Mr.

Schubert is entitled to (i) an annual base salary of $ 400,000 , beginning on January 1, 2026, subject to

a 3 % annual increase, (ii) a stock grant of 1,350,000 shares of common stock of the Company, subject to a vesting schedule, by March

31, 2026, and (iii) an annual cash incentive with a target (attainable upon achievement of certain performance goals) of not less than

$137,500 with a cap of the lower of (a) $400,000 and (b) 8% of the Company’s adjusted free cash flow over the previous calendar

year, beginning in calendar year 2026.

Schubert’s employment with the Company shall terminate upon the first of the following:

(i) December 31, 2028, provided that the

Schubert Agreement will be automatically renewed for successive one-year terms unless the Board gives Mr.

Schubert with a 90-day advance

written notice of non-renewal;

(iii) the termination due to disability upon not less than 30-day prior written notice by

the Company to Mr.

(iv) the written notice by the Company to Mr.

Schubert of a termination for cause;

(v) the written notice

by the Company to Mr.

Schubert of an involuntary termination without cause;

(vi) the written notice by Mr.

Schubert to the Company of

a resignation for good reason;

and (vii) the not less than 30-day prior written notice by Mr.

Schubert to the Company of a resignation

without good reason.

are no arrangements or understandings between the Company and Mr.

Schubert pursuant to which Schubert was appointed and there is no family

relationship between or among any director or executive officer of the Company or Mr.

There are no transactions, to which the

Company is or was a participant and in which Mr.

Schubert has a material interest subject to disclosure under Item 404(a) of Regulation

Separation Agreement

October 4, 2025, the Company entered into a separation agreement and general release (the “Bennett Separation Agreement”)

with Bill Bennett, pursuant to which Mr.

Benett will resign from his position as the Chief Executive Officer of the Company, effective

October 3, 2025.

to the Separation Agreement, the Company shall (i) pay Mr.

Benett a severance payment in installments for a total gross amount of $ 115,500.97

for the period of October 4, 2025, through and including December 31, 2025, and (ii) reimburse Mr.

Bennett for his group health insurance

premiums for the period from November 1, 2025 through September 30, 2026, subject to the terms and conditions of the Separation Agreement.

Bennett has agreed to provide consultancy services to the Company as a consultant and independent contractor from January 1, 2025 until

March 31, 2025 for $ 25,000 , which is to be paid in installments.

Bennett also resigned as a member of the Board, effective October 3, 2025.

Bennett’s resignation is not the result of any disagreement

with the Company, the Board, or management, or any matter relating to the Company’s operations, policies or practices.

foregoing descriptions of the Schubert Agreement and Separation Agreement do not purport to be complete and are qualified in their entirety

by reference to the full text of the Schubert Agreement and Separation Agreement, which are filed as Exhibits 10.1 and 10.2 to this Current

Report on Form 8-K and are incorporated herein by reference.

Sale of Facility

The Company, through

its subsidiary Innovative Food Properties LLC, entered into an Agreement of Purchase and Sale, dated as of July 28, 2025 and amended on

September 11, 2025, September 29, 2025 and November 13, 2025 (the “Sale Agreement”), with Mountaintop Holdings LLC (“Mountaintop

Holdings”), pursuant to which the Company agreed to sell to Mountaintop Holdings the real property located at 220 Oak Hill Road

in Mountaintop, Pennsylvania, together with certain associated property.

The total purchase price specified in the agreement is $9,225,000 ,

which includes deposits already paid and held in escrow.

The purchaser inspection and due diligence period has been completed and passed.

No gain or loss has been recorded as of the date of these financial statements.

The sale of the properties under the Sale Agreement is

expected to occur on January 12, 2026.

If the closing has not occurred by January 12, 2026, Mountaintop Holdings may request a t30-day

extension to such closing date by depositing $ 250,000 with the title company and an additional 30 -day extension by depositing $ 100,000

with the title company.

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

forward-looking statements.

The following discussion should be read in conjunction

with the consolidated financial statements and the related notes thereto, as well as all other related notes, and financial and operational

references, appearing elsewhere in this document.

Certain information contained in this discussion

and elsewhere in this report may include “forward-looking statements” within the meaning of the Private Securities Litigation

Reform Act of 1995 (the “Private Securities Litigation Reform Act”), and is subject to the safe harbor created by that act.

The safe harbor created by the Private Securities Litigation Reform Act will not apply to certain “forward-looking statements”

because we issued “penny stock” (as defined in Section 3(a)(51) of the Securities Exchange Act of 1934, as amended (the “Exchange

Act”), and Rule 3(a)(51-1) under the Exchange Act) during the three year period preceding the date(s) on which those forward-looking

statements were first made, except to the extent otherwise specifically provided by rule, regulation or order of the Securities and Exchange

Commission (the “SEC”).

We caution readers that certain important factors may affect our actual results and could cause such

results to differ materially from any forward-looking statements which may be deemed to have been made in this report or which are otherwise

made by or on our behalf.

For this purpose, any statements contained in this report that are not statements of historical fact may be

deemed to be forward-looking statements.

Without limiting the generality of the foregoing, words such as “may,” “will,”

“expect,” “believe,” “explore,” “consider,” “anticipate,” “intend,”

“could,” “estimate,” “plan,” “propose” or “continue” or the negative variations

of those words or comparable terminology are intended to identify forward-looking statements.

Factors that may affect our results include,

but are not limited to, the risks and uncertainties associated with:

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

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

The potential impact on future revenue and operations resulting from changes to our business plan, including

our decision to exit certain business lines such as cheese and logistics.

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

Our dependence on three major customers,

Our ability to employ and retain qualified management and employees,

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

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

Changes in the demand for our services and different food trends,

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

The degree and nature of our competition,

The lack of diversification of our business plan,

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

Disruption in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future attacks, police and military activities overseas and other disruptive worldwide political and economic events, health pandemics, rising inflation and energy costs, and environmental weather conditions.

We are also subject to other risks detailed from

time to time in our other filings with the SEC and elsewhere in this report.

Any one or more of these uncertainties, risks and other influences

could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate.

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

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,

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.

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

The preparation of these financial statements

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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 $40,000

at June 30, 2025 and December 31, 2024.

Fair Value of Financial Instruments

receivable, inventory, valuation of stock-based services, operating right of use assets and liabilities, impairment of intangible assets,

and income taxes.

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

of credit risk.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under

the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are

not readily apparent from other sources.

Accounts subject to estimate and judgements are accounts receivable reserves, income taxes, intangible

assets, contingent liabilities, and equity-based instruments.

Actual results may differ from these estimates under different assumptions

or conditions.

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

in the foreseeable future.

Provision for Credit Losses Receivable

The Company provides an allowance for credit losses

equal to the estimated uncollectible amounts pursuant to the guidance of Accounting Standards Update (“ASU”) 2016-13, Financial

Instruments – Credit Losses (Topic 326) as codified in ASC 326, Financial Instruments – Credit Losses.

The Company utilizes

a current and expected credit loss (CECL) impairment model.

The Company’s estimate is based on historical collection experience

and a review of the current status of trade accounts receivable.

It is reasonably possible that the Company’s estimate of the allowance

for credit losses will change.

Accounts receivable are presented net of an allowance for credit losses of $40,002 at September 30, 2025

and December 31, 2024.

Inventory consists of food products and is valued

at the lower of cost or net realizable value.

Cost is determined using the average-cost method.

The Company adjusts the inventory based

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

In addition, the Company records a provision for excess, obsolete,

and slow-moving inventory.

Adjustments to reduce inventory to net realizable value are recorded when necessary and included in cost of

Impairment of Intangible Assets

Indefinite-lived intangible assets are not amortized

but are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the assets might

Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives and reviewed

for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Value of Financial Instruments

The Company measures its financial assets and

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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

the food safety and supply chain capabilities of small batch producers who don’t typically sell through broad-based sales channels.

We seek out the freshest, most unique, origin-specific gourmet cheese, meat, produce, and premium ingredients available, and distribute

them directly from our robust network of vendors and warehouses within 24 – 72 hours of an order being placed.

We also source, package,

and brand a meaningful segment of these products ourselves, enabling us to better control the assortment, offer more flexibility and variety

to our customers, and capture additional margin.

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.

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.

IVFH team is adept at evaluating and certifying the food safety and supply chain capabilities of small batch producers who don’t

typically sell through broad-based sales channels.

We seek out the freshest, most unique, origin-specific gourmet cheese, meat, produce,

and premium ingredients available, and distribute them directly from our robust network of vendors and warehouses within 24 – 72

hours of an order being placed.

We also source, package, and brand a meaningful segment of these products ourselves, enabling us to better

control the assortment, offer more flexibility and variety to our customers, and capture additional margin.

We leverage this unique, premium assortment to

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We also drop ship specialty foods to

Professional Chefs nationally through the websites of broadline distributors, such as US Foods, Inc.

Professional Chefs nationally through the websites of broadline distributors, such as U.S.

Lastly, we sell these food to large

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Chef customers wherever they are located.

We operate our airline catering distribution business

out of our owned 28,000 square foot facility in the greater Chicago area.

In addition, following the closing of our acquisition of Golden

Organics, we now operate a warehouse in Denver, Colorado, measuring approximately 20,000 square feet.

We also operated a 200,000 square

foot facility in Mountain Top, Pennsylvania, which previously supported both our retail and airline catering operations.

Subsequent to

the date of these financial statements, we entered into a sale agreement for this Pennsylvania property.

In connection with this transition,

our airline catering operations have been relocated to the Chicago facility, and our retail business is being wound down.

Our facilities have the capabilities to pack and

ship frozen, refrigerated, and ambient products, enabling us to offer a broad range of specialty foods.

We maintain GFSI/SQF certifications,

ensuring compatibility with the highest global standards for food handling and meeting the quality and food safety expectations of our

premium customers.

These warehouses are equipped to ship packages and pallets of all sizes via overnight carriers.

We also utilize our

own fleet of trucks to deliver directly to Professional Chef customers within our delivery footprint.

Our proprietary technology platform underpins

our entire business, driving transparency and efficiency up and down the supply chain.

Orders flow in real time, whether to our warehouses

or to our vendor partners, to allow for fast handling and fulfillment.

Our picking is enabled by efficient scan-based, handheld devices,

ensuring order and inventory accuracy.

Our warehouse management software optimizes pick routes for common items and order types, recommends

a box size, and calculates the appropriate amount of packaging and ice required based on forecasted temperatures along the delivery route.

We have built a team consisting of passionate,

committed, and food-obsessed people:

our average tenure (outside of seasonal workers) across the Company is over five years.

Our merchandising

team has deep connections within the specialty food space around the globe.

Our customer service and sales teams, as ex-chefs themselves,

go beyond customer service to offer our Professional Chefs customer support, menu ideas, and preparation guidance.

RESULTS OF OPERATIONS

This discussion may contain forward-looking statements

that involve risks and uncertainties.

Our future results could differ materially from the forward-looking statements discussed in this

This discussion should be read in conjunction with our consolidated financial statements, the notes thereto and other financial

information included elsewhere in the report.

Financial Highlights for the fiscal quarter ended

June 30, 2025:

IVFH reported revenue of $21.1 million, a 26.9% increase compared to $16.6 million in 2024.

Our organic revenue growth,

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

Three Months Ended June 30, 2025

Revenue Breakdown:

operate our airline catering distribution business out of our owned 28,000 square foot facility in the greater Chicago area.

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.

facilities have the capabilities to pack and ship frozen, refrigerated, and ambient products, enabling us to offer a broad range of specialty

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

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

discussion may contain forward-looking statements that involve risks and uncertainties.

Our future results could differ materially from

the forward-looking statements discussed in this report.

This discussion should be read in conjunction with our consolidated financial

statements, the notes thereto and other financial information included elsewhere in the report.

Highlights for the fiscal quarter ended September 30, 2025:

IVFH reported revenue of $16.4 million, a 3.5% increase compared to $15.9

million in 2024.

Months Ended September 30, 2025

Digital Channels:

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

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.

Largely comprised of our distributor relationships and supported by our drop-ship model generated $8.9.

million, or 54.1% of total revenue, in the current period, compared to $9.3 million in the prior year period, a decrease of approximately 4.5%.

This decrease was primarily driven by continued headwinds in our legacy U.S.

Food Platform drop-ship business, where increased competition in online marketplace channels has resulted in lower order volumes and pricing pressure.

National Distribution:

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.

Revenue was $3.5 million, or 21.3% of total revenue, compared to $3.5 million in the prior year period.

We expect this channel to continue to expand as we further develop over time broker relationships and deepen participation in airline menu programs.

While overall airline related revenue grew approximately 3%, a portion of these sales shifted to channels outside of National Distribution during the period, given the reolocation of PA operations, reducing the amount recorded here.

Local Distribution:

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The figure includes $1.6 million, up from $0 in Q3 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 Q2 2025, Direct-to-Consumer revenue declined by 100%, compared to $0.9 million in Q2 2024.

Other Services:

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.

September 30, 2025 increased 3.1% to $12.6 million compared to $12.2 million in the prior year period, which is generally consistent with

the 3.5% increase in revenue.

Gross margin decreased by 34 basis points to 23.5%, primarily due to changes in the overall sales mix.

improvement in gross margin from continuing operations is largely attributable to the discontinuation of our retail cheese business, which

carried lower margins.

Operating Expenses

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Payroll and related costs increased by $657 thousand to $2.65 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.

This increase was primarily driven by higher headcount to support the local distribution business, including approximately $278 thousand related to the Denver acquisition completed in the fourth quarter of 2024.

The period also included approximately $174 thousand in severance costs associated with the transition of the former CEO and approximately $78 thousand from wage and benefit inflation.

Computer and IT costs remained near flat with a slight increase of $4 thousand to $87 thousand, reflecting stabilization of core IT spend;

on a year-to-date basis, these costs are down approximately 4.4%.

Office, facilities, and vehicle expenses increased by $359 thousand.

The increase is attributed to costs associated with 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).

The increase is attributed to costs associated with a new office location tied to our Q4 acquisitions ($158 thousand), and an increase to truck fleet expenses to support our expanding local distribution business in Chicago ($72 thousand).

Advertising and Digital Marketing Costs:

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.

Increased by $20 thousand in Q3 2025 to $20 thousand as a result of spend related to our Amazon and Harvest platforms.

We expect annual amounts to continue to remain lower, resulting from a full year’s cycle of the restructuring of marketing programs.

Professional and legal fees decreased by $4 thousand to $354 thousand.

The current period includes approximately $125 thousand of legal fees associated with the Company’s ongoing Nasdaq uplisting process.

We are continuing to undertake a vendor review process aimed at identifying further cost reduction opportunities going forward..

Total Cash OpEx increased by $1.1 million, or

The increase was primarily driven by the Denver facility, which was not part of our operations in the prior-year period and

accounted for approximately $500 thousand of the increase.

The quarter also included approximately $72 thousand in higher fleet-related

expenses, $174 thousand in severance, and approximately $78 thousand from wage and benefit inflation.

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

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Depreciation and amortization expense increased by $49 thousand to $72 thousand, reflecting an increase in PPE associated with Q4 acquisitions similar net book value of property, plant, and equipment compared to the prior year period.

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:

Credit Loss Expense:

Increased by $28 thousand to $33 thousand, primarily due to changes in customer mix within our local delivery segment.

Discontinued Operations

Retail Cheese Operations revenue was $3.4 million

in the current period compared to $0.2 million in the prior year period.

This activity reflects the sell through of remaining product

associated with the wind down of our discontinued retail cheese operations.

We expect only minimal sales in the fourth quarter as the

remaining cheese inventory is sold, after which revenue from this business is not expected on a go forward basis.

The discontinued operations reported a net loss

of $2.4 million in the current quarter.

We continue to progress toward the sale of the Pennsylvania facility, which we anticipate will

close in the fourth quarter.

Upon completion of the sale, we expect a significant reduction in overhead costs associated with these operations.

Months Ended September 30, 2025

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.

Largely comprised of our distributor relationships and supported by our drop ship model, generated $26.3 million, or 53.3% of total revenue, compared to $27.8 million in the prior year period, a decrease of approximately 5.4%.

The decrease was primarily driven by continued headwinds in our legacy U.S.

Food Platform drop ship business, where increased competition within online marketplace channels has resulted in lower order volumes and pricing pressure.

National Distribution revenue was $10.3 million, or 17.4 % of total revenue, compared to $9.5 million in the prior year period, an increase of approximately 8.1%.

The increase was driven by higher volume within our airline catering relationships, including expanded demand from a key existing customer and additional sales through broker partnerships.

We expect this category to continue to grow as broker channels mature, though order volumes may vary by period based on procurement and menu planning cycles.

Local Distribution:

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

This category brought in $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.

Consists mainly of local sales team relationships

and our local fleet delivering direct from warehouse.

This category brought in $12.7 million, or 25.7% of total revenue, an increase of

54.8% from $8.2 million in 2024, supported by $5.3 million from the recent acquisitions of LoCo Foods and Golden Organics

Cost of goods sold for the nine months ended September

30, 2025 was 37.2 million, an increase of 7.85% compared to 34.5 million in the prior year period.

This is generally in line with the

increase in sales of 8.26%.

As a result, gross margin increased 29 basis points to 24.5%.

The gross margin performance was driven by sales

mix, including a 99 basis point increase in digital and a 57 basis point increase in airlines, partially offset by a 524 basis point decline

Local distribution in the current period includes both the Denver and Chicago facilities, whereas the prior year period included

only Chicago.

The Denver facility carries a different product mix than Chicago, which contributed to the change in local distribution

Operating Expenses

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Payroll and related costs increased by $1.41 million to $7.42 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 $141 thousand, reduced payroll taxes of $199 thousand..

This increase was primarily driven by higher headcount associated with employees added through acquisitions completed in Q4 2024, which accounted for approximately $946 thousand of the increase, as well as approximately $174 thousand in CEO severance and $180 thousand related to wage and benefit inflation.

Computer and IT Costs:

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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.

Additionally, increased fleet costs at our Chicago hub accounted for $160 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 $1.8 million, reflecting growth in our national distribution channels and M&A activity in Q4 2024.

Increased by $23 thousand to $27 thousand, reflecting spend towards our Amazon and Harvest platforms.

although We expect annual amounts to continue to remain lower, resulting from a full year’s cycle of the restructuring of marketing programs.

Professional and legal fees increased by $92 thousand to $1.2 million, 222 thousand of which was attributable to transactional activities related to acquisitions, and other corporate actions which are not expected to recur.

Total Cash Operating Expenses increased by $2.4

The increase was primarily driven by the new Denver facility, which was not included in the prior year financials and accounted

for approximately $1.6 million of the increase.

The quarter also included approximately $160 thousand in higher fleet costs, $174 thousand

in CEO severance, and approximately $180 thousand from wage and benefit inflation.

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

Share-Based Compensation:

Decreased by $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.

Decreased by $1.5 million to ($715) thousand, primarily due to lower amortization expense associated with stock appreciation rights (SARs), reflecting a decline in the company’s stock price during the period.

Depreciation and amortization expense increased by $135 thousand to $212 thousand, reflecting an increase in PPE associated with Q4 acquisitions similar net book value of property, plant, and equipment compared to the prior year period

Bad Debt Expense:

Credit Loss Expense:

decreased by $2 thousand to $43 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.

Discontinued Operations

Retail Cheese Operations revenue was $10.7 million for the nine months

ended September 30, 2025, compared to $0.2 million in the prior year period.

Q3 revenue reflects the sell through of remaining product

associated with the wind down of this business.

The discontinued operations reported a net loss of $3.8 million for the nine month period.

Sales are expected to substantially conclude in the fourth quarter as the remaining cheese inventory is sold, after which revenue from

these operations is not expected on a go forward basis.

Net (Loss) Income

During the three months ended 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.

During the three months ended September 30, 2025, the company reported

a net income from continuing operations of $651 thousand, compared to a net income of $861 thousand in 2024, representing a decrease

of $210 thousand.

During the nine months ended September 30, 2025, the company reported a net income from continuing operations of $1.7

million, compared to net income of $3.5 million in 2024, representing a decrease of $1.7 million.

Liquidity and Capital Resources at September

As of September 30, 2025, IVFH had current assets

of $18.6 million and current liabilities of $13.6 million, including an $8.8 million note classified as current due to its expected repayment

upon the sale of the related business.

Although the note is not contractually due within one year, it is presented within current liabilities

based on the expected timing of the sale transaction.

Net working capital was $5 million.

We believe we have sufficient liquidity to fund

operations for at least the next twelve months.

With the shutdown of the Pennsylvania facility, operating cash flows are expected to improve

as facility costs and lower margin product sales roll off.

Upon the sale of the facility, we intend to use the proceeds to repay the associated

note, which will reduce overhead and interest expense.

We do not anticipate the need to raise additional capital.

We are working on a

new credit facility to provide working capital flexibility.

Remaining severance obligations are not expected to be material, and staffing

levels are being managed to align with current business needs.

Cash Flow Analysis:

Operating Activities:

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

Used $687 thousand, primarily due to operations, offset by favorable changes in working capital components of $332 thousand.

The significant changes in working capital included:

Accounts receivable decreased by $2.1 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 receivable decreased by $2.8 million, primarily reflecting the collection of receivables related to discontinuing cheese business.

Inventory decreased by $367 thousand, because of lowered cheese inventory balances associated with the wind down of the facility.

Accounts payable and accrued liabilities decreased by $2.7 million, primarily due to paydowns of inventory purchases related to the elevated Q4 2024 cheese sales, which were settled in Q1 2025.

In addition, the decrease reflects the payment of aged vendor payables associated with the acquired LoCo Foods business.

In addition, the decrease reflects the payment of aged vendor payables associated with the acquired LoCo Foods business as well as signing down of vendor accounts associated with the cheese segment.

Investing activities:

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These investments included equipment for cheese cutting operations and warehouse improvements to support the consolidation of Loco Foods and Golden Organics, acquired in Q4 2024.

As of the end of the quarter we sold approximately 54k worth of cheese cutting equipment.

Financing Activities:

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

Used $40 thousand, primarily from the principal payments on debt and reimbursements from restricted cash on the purchase of Capex equipment

Transactions with Major Customers

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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 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 15% and 18% of total sales, respectively.

During the nine months ended September 30, 2025

and 2024, U.S.

and its affiliates accounted for approximately 34% and 47% of total consolidated sales, respectively.

Gourmet accounted for approximately 15% and 18% of total consolidated sales, respectively.

Sams Club accounted for approximately 18% and

0% of total consolidated sales in 2025 and 2024, respectively.

Sales to Sams Club related entirely to the discontinued Pennsylvania distribution

operations and are not expected to continue in future periods

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have

or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, or expenses,

results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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.

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.

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.

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