Item 9A. Controls and Procedures
ITEM
9A. Controls and Procedures
Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures
Disclosure
controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including
our Chief Executive Officer (the “Certifying Officer”), or persons performing similar functions, as appropriate, to allow
timely decisions regarding required disclosure.
Under the supervision and with the participation
of our management, including our Certifying Officer, we carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our
Certifying Officer concluded that our disclosure controls and procedures were ineffective as of the end of the fiscal year ended December
31, 2025.
Management ’ s
Annual Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)
and 15d-(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with
U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:
(i)
pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our
assets;
(ii)
provide
reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements
in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our
management and directors; and
(iii)
provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the consolidated financial statements.
22
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Management’s
Evaluation of Disclosure Controls and Procedures
The
Company’s management, with the participation of its Chief Executive Officer, evaluated the effectiveness of the Company’s
disclosure controls and procedures as of December 31, 2025. Disclosure controls and procedures are designed to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange
Commission.
Based
on this evaluation, and because of the material weaknesses in internal control over financial reporting described below, management concluded
that the Company’s disclosure controls and procedures were not effective as of December 31, 2025.
Management’s
Report on Internal Control Over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as defined in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with policies or procedures may deteriorate.
Management
conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025
using the criteria established in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.
Based
on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December
31, 2025 due to the material weaknesses described below.
Material
Weaknesses in Internal Control Over Financial Reporting
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is
a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented
or detected on a timely basis.
During
management’s evaluation of internal control over financial reporting, management identified material weaknesses related to information
technology general controls over certain applications that support the Company’s financial reporting processes.
Management identified material weaknesses related
to information technology general controls over certain applications that support the Company’s financial reporting processes. Specifically,
management identified deficiencies associated with (a) effective user access controls to appropriately segregate duties and adequately
restrict user and privileged access, (b) effective controls to monitor, document and approve application changes, and (c) effective controls
related to monitoring of critical jobs. As a result of these deficiencies and certain account reconciliation and review controls that
were not effectively designed in fully mitigating the related risks, automated process- level and manual controls within the financial
reporting cycles that rely on information generated from such financially relevant systems were not considered effective.
Accordingly,
management determined that these deficiencies constituted material weaknesses in internal control over financial reporting as of December
31, 2025.
The
material weaknesses identified above did not result in any material misstatements in our financial statements or disclosures, and there
were no changes to previously released financial results. Our management concluded that the consolidated financial statements included
in this Annual Report on Form 10-K, present fairly, in all material respects, our financial position, results of operations, and cash
flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or U.S.
GAAP.
23
Table of Contents
Remediation
Plan
Management
has begun implementing measures designed to remediate the material weaknesses described above. These remediation efforts include:
● Formalizing information
technology governance procedures related to user access administration, periodic access reviews, and application change management for
systems supporting financial reporting;
● Enhancing documentation,
approval, testing, and tracking procedures for application changes;
● Reviewing user
roles and access permissions within relevant applications and implementing additional role-based access governance procedures, as appropriate;
● Enhancing the documentation,
retention, and review of system change logs and other relevant system activity logs; and
● Strengthening documentation
of existing monitoring controls related to system interfaces, application functionality, and data validation processes.
Management
will continue to evaluate the design and operating effectiveness of these remediation efforts. The material weaknesses will not be considered
remediated until the applicable controls have been fully implemented, tested, and determined to be operating effectively for a sufficient
period of time.
Inherent
Limitations over Internal Controls
Internal
control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent
limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an
effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that
the degree of compliance with the policies or procedures may deteriorate. Accordingly, our internal controls and procedures are designed
to provide reasonable assurance of achieving their objectives.
Changes
in Internal Control over Financial Reporting
We
have made no change in our internal control over financial reporting during the last fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting.
Attestation
Report of the Registered Public Accounting Firm
This
Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm
as we are not a large accelerated filer or an accelerated filer.
ITEM
9B. Other Information
During
the three months ended December 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement”
or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM
9C. Disclosures Regarding Foreign Jurisdictions That Prevent Inspections
Not
applicable.
24
Table of Contents
PART
III
The
information required by Part III is incorporated by reference to the Company’s proxy statement to be filed for the 2026 Annual
Meeting.
25
Table of Contents
PART
IV
ITEM
15. Exhibits and Financial Statement Schedules
EXHIBIT
NUMBER
3.1
Articles of
Incorporation (incorporated by reference to exhibit 3.1 of the Company’s annual report on Form 10-KSB for the year ended December
31, 2004 filed with the Securities and Exchange Commission on September 28, 2005)
3.2
Amended Bylaws
of the Company (incorporated by reference to exhibit 3.2 of the Company’s annual report Form 10-K for the year ended December
31, 2010 filed with the Securities and Exchange Commission on March 16, 2011)
3.3
Amended Bylaws of the Company (incorporated by reference to exhibit 3.1 of the Company’s current report Form 8-K filed with the Securities and Exchange Commission on January 31, 2012)
3.4
Amended Bylaws
of the Company (incorporated by reference to exhibit 3.2 of the Company’s current report Form 8-K filed with the Securities
and Exchange Commission on January 23, 2018)
3.5
Amended Bylaws
of the Company (incorporated by reference to exhibit 3.1 of the Company’s current report Form 8-K filed with the Securities
and Exchange Commission on September 14, 2021)
3.6
Amended Bylaws of the Company (incorporated by reference to exhibit 3.1 of the Company’s current report Form 8-K filed with the Securities and Exchange Commission on March 13, 2023)
3.7
Amended Bylaws of the Company (incorporated by reference to exhibit
3.1 of the Company’s current report Form 8-K filed with the Securities and Exchange Commission on May 23, 2023)
4.1
Description
of Securities (incorporated by reference to exhibit 4.1 of the Company’s annual report Form 10-K for the year ended December
31, 2024 filed with the Securities and Exchange Commission on March 20, 2025)
10.1
Loan Sale
Agreement dated as of January 10, 2018 between Food Funding, LLC, a subsidiary of the registrant and UPS Capital Business Credit
(incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on January 30, 2018)
10.2
Fifth Amendment
to Restated Loan Agreement dated February 28, 2018 between Fifth Third Bank and the registrant and its subsidiaries (incorporated
by reference to the Company’s Form 10-K filed with the Securities and Exchange Commission on March 29, 2018).
10.3
Promissory Note
of the registrant and its subsidiaries in favor of Fifth Third Bank dated as of February 28, 2018 (incorporated by reference to the
Company’s Form 10-K filed with the Securities and Exchange Commission on March 29, 2018).
10.4
Draw Promissory
Note of the registrant and its subsidiaries in favor of Fifth Third Bank dated as of March 13, 2018 (incorporated by reference to
the Company’s Form 10-K filed with the Securities and Exchange Commission on March 29, 2018).
10.5
Master Loan
and Security Agreement dated March 13, 2018 between Fifth Third Bank and the registrant and its subsidiaries (incorporated by reference
to the Company’s Form 10-K filed with the Securities and Exchange Commission on March 29, 2018).
10.6
Form of
Director Agreement dated as of January 28, 2019 (incorporated by reference to the Company’s Form 8-K filed with the Securities
and Exchange Commission on February 1, 2019)
10.7
Eighth Amendment
to Restated Loan Agreement dated as of November 9, 2019 between Fifth Third Bank, National Association, and the Registrant and certain
of its subsidiaries (incorporated by reference to the Company’s Form 10-Q filed with the Securities and Exchange Commission
on November 14, 2019).
10.8
Promissory Note
effective November 9, 2019 between Fifth Third Bank, National Association, and Innovative Food Properties, LLC, a wholly-owned subsidiary
of the Registrant (incorporated by reference to the Company’s Form 10-Q filed with the Securities and Exchange Commission on
November 14, 2019).
10.9
Mortgage, Assignment
of Leases, Fixture Filing and Security Agreement date as of November 9, 2019 between Fifth Third Bank, National Association, and
Innovative Food Properties, LLC, a wholly-owned subsidiary of the Registrant (incorporated by reference to the Company’s Form
10-Q filed with the Securities and Exchange Commission on November 14, 2019).
26
Table of Contents
10.10
Agreement for
Purchase and Sale of Real Estate dated as of August 9, 2019 (incorporated by reference to the Company’s Form 10-Q filed with
the Securities and Exchange Commission on August 14, 2019).
10.11*
Securities Purchase
Agreement dated August 26, 2021 between the Company and each of JCP Investment Partnership LP, Bandera Master Fund L.P. and SV Asset
Management LLC (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August
31, 2021).
10.12
Loan Agreement
dated as of June 6, 2022 between the Registrant, Innovative Food Properties, LLC and MapleMark Bank (FL, IL) (incorporated by reference
to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 14, 2022).
10.13
Loan Agreement
dated as of June 6, 2022 between the Registrant, Innovative Food Properties, LLC and MapleMark Bank (PA) (incorporated by reference
to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 14, 2022).
10.14
Loan Agreement
dated as of June 6, 2022 between the Registrant and MapleMark Bank (incorporated by reference to the Company’s Form 8-K filed
with the Securities and Exchange Commission on June 14, 2022).
10.15
Board Observer
Agreement dated as of November 28, 2022 between the Registrant and Denver J. Smith (incorporated by reference to the Company’s
Form 8-K filed with the Securities and Exchange Commission on November 29, 2022).
10.16
Employment
Agreement with Robert William Bennett dated as of February 3, 2023 (incorporated by reference to the Company’s Form 8-K filed
with the Securities and Exchange Commission on February 7, 2023)
10.17
First
Amendment to the Employment Agreement with Robert William Bennett dated as of November 3, 2023 (incorporated by reference to the
Company’s Form 8-K filed with the Securities and Exchange Commission on November 9, 2023)
10.18
Employment
Agreement with Brady Smallwood dated as of April 14, 2023 (incorporated by reference to the Company’s Form 8-K filed with the
Securities and Exchange Commission on May 17, 2023)
10.19
Form
of Non-Plan Stock-Appreciation Right Award Grant Notice and Award Agreement with Brady Smallwood dated as of July 7, 2023 (incorporated
by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 12, 2023)
10.20
Employment
Agreement with Gary Schubert dated as of December 29, 2023 (incorporated by reference to the Company’s Form 8-K filed with
the Securities and Exchange Commission on January 3, 2024)
10.21
Amended
and Restated Asset Purchase Agreement, dated August 30, 2024, between Innovative Gourmet LLC, iGourmet LLC and Innovative Gourmet
Group, Inc. (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on September
4, 2024)
10.22
Transition
Services Agreement, dated August 30, 2024, between Innovative Gourmet LLC, iGourmet LLC and Innovative Gourmet Group, Inc. (incorporated
by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on September 4, 2024)
10.23
Asset
Purchase Agreement, dated October 14, 2024, by and among Innovative Food Holdings, Inc., Golden Organics, Inc. and David Rickard
(incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 18, 2024)
10.24
Form
of Seller Financing Note (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission
on October 18, 2024)
27
Table of Contents
10.25
Purchase
Agreement by and between the Company and Gulf Coast Aluminum, dated December 12, 2023 (incorporated by reference to the Company’s
Form 8-K filed with the Securities and Exchange Commission on February 16, 2024)
10.26
Asset
Purchase Agreement by and between M Innovations LLC and M Specialty Foods Inc., dated October 31, 2024 (incorporated by reference to exhibit 10.26 of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 20, 2025)
10.27
Innovative Food Holdings, Inc. 2025 Equity Incentive Plan (incorporated
by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on February 3, 2025)
10.28
Agreement
of Purchase and Sale, dated July 28, 2025, by and between Innovative Food Properties LLC and Mountaintop Holdings, LLC.
(incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 1,
2025)
10.29
First
Amendment to Agreement of Purchase and Sale, dated September 11, 2025, by and between Innovative Food Properties LLC and Mountaintop
Holdings, LLC (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on September
16, 2025)
10.30
Second Amendment to Agreement of Purchase and Sale, dated September
29, 2025, by and between Innovative Food Properties LLC and Mountaintop Holdings, LLC (incorporated by reference to the Company’s
Form 8-K filed with the Securities and Exchange Commission on October 3, 2025)
10.31
Executive Employment Agreement, dated October 3, 2025, by and between
the Company and Gary Schubert (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission
on October 9, 2025)
10.32
Separation Agreement and General Release, dated October 4, 2025, by
and between the Company and Bill Bennett (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange
Commission on October 9, 2025)
10.33
Third Amendment to Agreement of Purchase and Sale, dated September
29, 2025, by and between Innovative Food Properties LLC and Mountaintop Holdings, LLC (incorporated by reference to the Company’s
Form 8-K filed with the Securities and Exchange Commission on November 14, 2025)
14.1
Code of
Ethical Conduct (incorporated by reference to exhibit 14.1 of the Company’s Form 8-K filed with the Securities and Exchange
Commission on July 12, 2023)
16.1
Letter from Assurance Dimensions, LLC addressed to the Audit Committee
of the Company dated April 28, 2025 (incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange
Commission on May 01, 2025)
16.2
Letter from Stephano Slack LLC, dated September 22, 2025 (incorporated
by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on September 23, 2025)
19.1
Insider
Trading Policy (incorporated by reference to exhibit 19.1 of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 20, 2025)
21
Subsidiaries of
the Company (incorporated by reference to exhibit 21 of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 20, 2025)
28
Table of Contents
31.1
Rule 13a-14(a)
Certification of Chief Executive Officer
31.2
Rule 13a-14(a)
Certification of Principal Accounting Officer
32.1
Rule 1350
Certification of Chief Executive Officer
97.1
Compensation
Recovery Policy (incorporated by reference to exhibit 97.1 of the Company’s annual
report Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 20, 2025)
101.INS
Inline
XBRL Instance Document
101.SCH
Inline
XBRL Taxonomy Extension Schema
101.CAL
Inline
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
Inline
XBRL Taxonomy Extension Definition Linkbase
101.LAB
Inline
XBRL Taxonomy Extension Label Linkbase
101.PRE
Inline
XBRL Taxonomy Extension Presentation Linkbase
104
Cover
Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Certain
schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K under the Securities Act. The Company agrees to furnish
supplementally any omitted schedules to the Securities and Exchange Commission upon request.
29
Table of Contents
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
INNOVATIVE
FOOD HOLDINGS, INC.
By:
/s/
Gary Schubert
Gary
Schubert
Chief
Executive Officer
( Principal
Executive Officer, Principal Financial and Accounting Officer )
Dated:
March 31, 2026
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/
Gary Schubert
Chief
Executive Officer
March
31, 2026
Gary
Schubert
( Principal
Executive Officer, Principal Financial and Accounting Officer )
/s/
James C. Pappas
Chairman
March
31, 2026
James
C. Pappas
/s/
Brady Smallwood
Director
March
31, 2026
Brady
Smallwood
/s/
Mark Schmulen
Director
March
31, 2026
Mark
Schmulen
/s/
Denver J. Smith
Director
March
31, 2026
Denver
J. Smith
30
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.