What changed in this filing

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Item 1. Financial Statements

2026-05-20 compared with 2025-11-14 · 928 added, 1271 removed, 297 unchanged (88% of the section changed)

Financial Statements

Food Holdings, Inc.

Balance Sheets

September 30,

Innovative Food Holdings, Inc.

Consolidated Balance Sheets

Current assets

4 unchanged sentences

Other current assets

Assets held-for-sale - discontinued operations

Current assets - discontinued operations

4 unchanged sentences

Amortizable intangible assets, net

Indefinite intangible assets

Indefinite-lived intangible assets

Other noncurrent assets

4 unchanged sentences

Accrued separation costs - related parties, current portion

Accrued interest

Stock appreciation rights liability

2 unchanged sentences

Lease liability - finance leases, current

Contingent liability, current

Current liabilities - discontinued operations

Total current liabilities

Note payable, net of discount

Note payable non-current, net of discount

Accrued separation costs - related parties, non-current

1 unchanged sentence

Lease liability - finance leases, non-current

Noncurrent liabilities – discontinued operations

Total liabilities

4 unchanged sentences

500,000,000 shares authorized;

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;

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

57,493,776 shares issued, and 54,649,479 shares outstanding at March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

Treasury stock:

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

2,644,297 shares outstanding at March 31, 2026 and December 31, 2025

( 1,141,372 )

5 unchanged sentences

Total liabilities and stockholders' equity

condensed notes to these unaudited consolidated financial statements.

Food Holdings, Inc.

Statements of Operations

For the Three

September 30,

See condensed notes to these unaudited consolidated

financial statements.

Innovative Food Holdings, Inc.

Consolidated Statements of Operations

Three Months Ended

Cost of goods sold

1 unchanged sentence

Total operating expenses

Operating income (loss)

Other income (expense):

Interest income (expense), net

Gain on sale of assets

Gain on sale of subsidiary

Other leasing income

Total other income (expense)

Income before taxes

Operating income

Other (expense) income:

Interest expense, net

Total expense

Net income before taxes

Income tax expense

Income from continuing operations

Income (loss) from discontinued operations

$ ( 2,369,795 )

$ ( 3,821,096 )

$ ( 809,040 )

Net income (loss)

Net income from continuing operations

Net income (loss) from discontinued operations

$ ( 684,255 )

Consolidated net income (loss)

$ ( 430,436 )

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

Net income per share from continuing operations - basic

Net income per share from continuing operations - diluted

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

Net 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

See condensed notes to these unaudited consolidated

financial statements.

Innovative Food Holdings, Inc.

Consolidated Statements of Stockholders’

Three Months Ended March 31, 2026 and 2025

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

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 nine months ended September 30, 2024

Balance - September 30, 2024

Balance - December 31, 2024

Balance - January 1, 2025

( 1,141,372 )

( 36,209,764 )

Fair value of shares under compensation plan

Shares earned under compensation plans

Shares issued under compensation plans

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.

Food Holdings, Inc.

Statements of Cash Flows

September 30,

Cash flows used in operating activities:

Net income (loss)

Net income for the three months ended March 31, 2025

Balance - March 31, 2025

$ ( 1,141,372 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Gain on disposition of assets

$ ( 36,640,200 )

Gain on sale of subsidiaries

Loss on sale of fixed assets

Depreciation and amortization

Amortization of right of use asset

Amortization of discount on notes payable

Stock based compensation

Gain on derecognition of note payable and accrued interest

Changes in fair value of stock appreciation rights

Balance - January 1, 2026

( 1,141,372 )

Inventory valuation adjustment associated with facility closure

Provision for credit losses

Changes in assets and liabilities:

Accounts receivable, net

Other current assets

Accounts payable and accrued liabilities

( 38,275,076 )

Fair value of shares under compensation plan

Net income for the three months ended March 31, 2026

Balance - March 31, 2026

$ ( 1,141,372 )

Accrued separation costs - related parties

Deferred revenue

Operating lease liability

Net cash used in operating activities

$ ( 36,434,800 )

Cash flows from investing activities:

Acquisition of property and equipment

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

Cash flows from financing activities:

Principal payments on debt

Principal payments financing leases

Cash received from line of credit

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

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period - continuing operations

Cash and cash equivalents at end of period - discontinued operations

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information:

Cash paid during the period for:

Non-cash investing and financing activities:

Reclassify fixed assets as held for sale

Principal and accrued interest paid from escrow to Maple Mark Bank

Issuance of common stock under compensation plans

Issuance of common stock from common stock to be issued

Issuance of stock for cashless exercise of options

Capitalized interest on financing lease

condensed notes to these unaudited consolidated financial statements.

FOOD HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying unaudited interim consolidated financial statements include those of Innovative Food Holdings, Inc.

and all of its wholly-owned

subsidiaries (collectively, “we,” “our,” “us” or the “Company”) and have been prepared

in accordance with generally accepted accounting principles pursuant to Regulation S-X of the Securities and Exchange Commission and

with the instructions to Form 10-Q.

Certain information and footnote disclosures normally included in audited consolidated financial

statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.

Accordingly, these interim

financial statements should be read in conjunction with the Company’s audited financial statements and related notes as contained

in Form 10-K for the year ended December 31, 2024.

In the opinion of management, the interim unaudited consolidated financial statements

reflect all adjustments, including normal recurring adjustments, necessary for fair presentation of the interim periods presented.

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

to be expected for the full year.

provide difficult-to-find specialty foods primarily to both Professional Chefs through our relationships with producers, growers, makers

See condensed notes to these unaudited consolidated

financial statements.

Innovative Food Holdings, Inc.

Consolidated Statements of Cash Flows

flows used in operating activities:

income (loss)

$ ( 430,436 )

to reconcile net income (loss) to net cash used in operating activities:

on sale of assets

( 2,685,277 )

on early extinguishment of debt

and amortization

of right of use asset

of discount on notes payable

based compensation

in value of stock appreciation rights

for credit losses

in assets and liabilities:

receivable, net

current assets

payable and accrued liabilities

( 1,664,232 )

separation costs - related parties

lease liability

cash used in operating activities

flows from investing activities:

received from sale of land and building, net of costs

paid for purchase of property and equipment

received from disposition of asset

cash provided by (used in) investing activities

flows from financing activities:

( 8,793,288 )

on financing leases

from line of credit

on line of credit

cash used in financing activities

( 8,799,477 )

in cash and cash equivalents, and restricted cash

( 1,274,921 )

and cash equivalents, and restricted cash at beginning of period

and cash equivalents, and restricted cash at end of period - continuing operations

and cash equivalents, and restricted cash at end of period - discontinued operations

and cash equivalents, and restricted cash at end of period

disclosure of cash flow information:

paid during the period for:

investing and financing activities:

See condensed notes to these unaudited consolidated

financial statements.

INNOVATIVE FOOD HOLDINGS, INC.

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL

March 31, 2026

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING

Basis of Presentation

The accompanying unaudited interim consolidated financial

statements include those of Innovative Food Holdings, Inc.

and all of its wholly-owned subsidiaries (collectively, the “Company”)

and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

pursuant to Regulation S-X of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q.

information and footnote disclosures normally included in audited consolidated financial statements prepared in accordance with U.S.

have been condensed or omitted.

Accordingly, these interim financial statements should be read in conjunction with the Company’s

audited financial statements and related notes as contained in its Annual Report on Form 10-K for the year ended December 31, 2025.

the opinion of management, the interim unaudited consolidated financial statements reflect all adjustments, including normal recurring

adjustments, necessary for fair presentation of the interim periods presented.

The results of the operations for the three months ended

March 31, 2026 are not necessarily indicative of the results of operations to be expected for the full year.

Business Activity

The Company provides difficult-to-find specialty

foods primarily to both Professional Chefs and Home Gourmets through the Company’s relationships with producers, growers, makers

and distributors of these products worldwide.

The distribution of these products primarily originates from our two warehouses and those

of our drop ship partners, and is driven by our proprietary technology platform.

In addition, we provide value-added services through

our team of food specialists and Chef Advisors who offer customer support, menu ideas, and preparation guidance.

Restructuring

the fourth quarter of 2023, we made the decision to focus more on our Business to Business (B2B) activities and less on our Direct to

Consumer (“D2C”) products.

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

Haley Food Group, Inc.

(“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.

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 .

The distribution of these products primarily originates from the Company’s two unified

warehouses and those of its drop ship partners, and is driven by its proprietary technology platform.

In addition, the Company provides

value-added services through its team of food specialists and Chef Advisors who offer customer support, menu ideas, and preparation guidance.

Discontinued Operations

The Company relied on the guidance of Accounting Standards Codification

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

results of its discontinued operations.

During 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, including igourmet, along with the Company’s logistics subsidiaries (Logistics Innovations LLC (“LII”) and

Innovative Food Properties LLC (“IFP”)).

During the year ended December 31, 2025, the accounts of the following entities are

included in net loss from discontinued operations and in the discontinued operations sections of the Company’s balance sheet:

LII, and the activity of igourmet directly related to its cheese business.

Reclassifications

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

of discontinued operations.

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

Certain amounts presented in the financial statements

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

addition, restricted cash has been included with unrestricted cash in the cash totals in the statement of cash flows.

Use of Estimates

The preparation of these unaudited consolidated financial

statements requires the Company 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.

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;

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

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

On an on-going basis, the Company evaluates these estimates, including

those related to revenue recognition and concentration of credit risk.

The Company bases its 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 allowance for credit losses, allowance for slow moving and obsolete inventory, income taxes, contingent liabilities, 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.

The Company believes its estimates have not been materially inaccurate in past years, and its assumptions are

not likely to change in the foreseeable future.

Concentrations of Credit Risk

Financial instruments and related items, which potentially

subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade accounts receivable.

places its cash and temporary cash in investments with credit quality institutions.

At times, such investments may be in excess of applicable

government mandated insurance limit.

As of March 31, 2026 and December 31, 2025, trade receivables from the Company’s largest customer

accounted for approximately 23 % and 18 %, respectively, of total trade receivables.

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.

At March 31, 2026 and December 31, 2025, the total cash in excess of these limits was

$ 0 and $ 261,808 , respectively.

Accounts Receivable

The Company provides an allowance for credit losses equal to the estimated

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

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

Under ASC 326, the

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

The Company’s estimate is based on historical collection

2 unchanged sentences

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 .

Company determines if an arrangement is a lease at inception.

Operating lease right-of-use assets (“ROU assets”) and short-term

and long-term lease liabilities are included on the face of the consolidated balance sheet.

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

Accounts receivable are presented net of an allowance for credit losses of $ 247,272 and

$ 218,319 at March 31, 2026 and December 31, 2025, respectively.

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 inventory.

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

The Company accounts for leases in accordance with

Financial Accounting Standards Board (“FASB”) ASC 842, Leases .

The Company determines if an arrangement is a lease

at inception.

Operating and Finance lease right-of-use (“ROU”) assets and current and noncurrent lease liabilities are included

on the face of the consolidated balance sheet.

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

For finance leases, the Company recognizes the amortization of the ROU asset over the shorter of the lease term or useful life of

the underlying asset.

Interest accretion on the finance lease liabilities is recorded as interest expense.

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.

The Company has lease agreements with lease and non-lease components, which

are accounted for as a single lease component.

For lease agreements with terms less than 12 months, the Company has elected the short-term

lease measurement and recognition exemption, and it recognizes such lease payments on a straight-line basis over the lease term.

Company recognizes revenue upon product delivery.

All of our products are shipped either same day or overnight or through longer shipping

terms to the customer and the customer takes title to product and assumes risk and ownership of the product when it is delivered.

charges to customers are included in revenues.

revenue from product sales (i.e., specialty foodservice and e-commerce), the Company recognizes revenue in accordance with FASB ASC Topic

606, Revenue from Contracts with Customers .

A five-step analysis must be met as outlined in Topic 606:

(i) identify the contract

with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the

transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied.

for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the

related sales are recorded.

The Company defers any revenue for which the product has not been delivered or is subject to refund until

such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

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

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

Disaggregation

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

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.

Revenue Recognition

The Company recognizes revenue upon product delivery.

All of the Company’s products are shipped either same day or overnight or through longer shipping terms to the customer and the

customer takes title to product and assumes risk and ownership of the product when it is delivered.

Shipping charges to customers are

included in revenues.

For revenue from product sales (i.e., specialty foodservice

and e-commerce), the Company recognizes revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers .

five-step analysis must be met as outlined in Topic 606:

(i) identify the contract with the customer, (ii) identify the performance obligations

in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize

revenue when (or as) performance obligations are satisfied.

Provisions for discounts and rebates to customers, estimated returns and allowances,

and other adjustments are provided for in the same period the related sales are recorded.

Warehouse and logistics services revenue is primarily

comprised of inventory management, order fulfilment and warehousing services.

Warehouse and logistics services revenues are recognized

at the point in time when the services are rendered to the customer.

Warehouse rental services are recognized over the period the service

Disaggregation of Revenue

The following table represents a disaggregation

of revenue for the three months ended March 31, 2026 and 2025:

Three Months Ended

Nine Months Ended

September 30,

Digital Channels

1 unchanged sentence

Local Distribution

of Goods Sold

have included in cost of goods sold all costs which are directly related to the generation of revenue.

These costs include primarily

the cost of food and raw materials, packing and handling, shipping, and delivery costs.

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

and Diluted Earnings Per Share

net earnings per share is based on the weighted average number of shares outstanding during the period, while fully-diluted net earnings

per share is based on the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding

during the period using the treasury stock method.

Potentially dilutive securities consist of options and warrants to purchase common

stock and shares issuable under executive compensation plan.

Basic and diluted net loss per share is computed based on the weighted average

number of shares of common stock outstanding during the period.

Company uses the treasury stock method to calculate the impact of outstanding stock options and warrants.

Stock options and warrants

for which the exercise price exceeds the average market price over the period have an anti-dilutive effect on earnings per common share

and, accordingly, are excluded from the calculation.

Cost of Goods Sold

The Company has included in cost of goods sold

all costs which are directly related to the generation of revenue.

These costs include primarily the cost of food and raw materials,

packing and handling, shipping, and delivery costs.

The Company has also included all payroll costs as cost of goods sold in its warehouse

and logistics services business.

Basic and Diluted Earnings Per Share (“EPS”)

Basic net EPS is based on the weighted average number

of shares outstanding during the period, while fully-diluted net EPS is based on the weighted average number of shares of common stock

and potentially dilutive securities assumed to be outstanding during the period using the treasury stock method.

Potentially dilutive

securities consist of options and restricted stock awards (“RSAs”).

Stock options and warrants for which the exercise

price exceeds the average market price over the period have an anti-dilutive effect on earnings per common share and, accordingly, are

excluded from the calculation.

Three Months Ended

Nine Months Ended

September 30,

Income from continuing operations

2 unchanged sentences

Weighted average shares outstanding - diluted

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

Income per share from continuing operations - diluted

Dilutive Shares at March 31, 2026:

Stock Options

Restricted Stock Awards

At March 31, 2026, there were 300,000 unvested

RSAs remaining from grants in a prior year.

Those 300,000 RSAs will vest as follows:

125,000 RSAs 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 RSAs will vest contingent

upon the attainment of a stock price of $3.00 per share for 20 straight trading days .

At March 31, 2026, none of these RSAs vested

as conditions were not satisfied.

Accordingly, there was no charge for these RSAs during the three months ended March 31,

2026, and 2025.

The Company also has in place Executive Stock

Plans for its executive team.

When shares are granted under the Company’s

Executive Stock Plans, the Company withholds the number of shares required to satisfy income tax withholding requirements on

the award, calculated at the market value of the Company’s stock on the date the award is granted.

Stock-based Compensation

See Notes 14 and 17.

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 September 30, 2024:

Weighted average

Exercise Price Number of Options Remaining contractual life (years)

$ 1.00 50,000 1.24

$ 1.25 130,000 1.75

$ 1.75 130,000 1.75

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 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.

During the three months ended March 31, 2026,

the Company charged the amount of $ 23,874 to operations in connection with Executive Stock Plans.

See Note 16 for additional information.

At March 31, 2026, there were no shares of common

stock which have vested and are issuable pursuant to Executive Stock Plans.

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 months ended March 31, 2026.

Dilutive Shares at March 31, 2025:

Stock Options

Restricted Stock Awards

At March 31, 2025, there

were 300,000 unvested RSAs remaining from grants in a prior year.

Those 300,000 RSAs will vest

125,000 RSAs 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 RSAs 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 RSAs at the date of the grants will be charged to operations upon vesting.

2025, none of these RSA’s were vested.

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

Stock-based Compensation

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

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

the achievement of certain performance goals (see Note 16).

Of these, 798,891 shares have vested and are included in fully-diluted shares

outstanding during the three months ended March 31, 2025;

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

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

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

was charged to stock-based compensation.

Computation of basic and diluted EPS:

The Company recorded a net loss for the three

months ended March 31, 2025, and all of potentially issuable shares are anti-dilutive.

There is no difference between EPS and fully-diluted

EPS for the three months ended March 31, 2025.

Recently Adopted Accounting Pronouncements

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

the Company’s results for the three months ended March 31, 2026, and there was no impact to its income tax expense or

effective income tax rate.

In July 2025, the FASB issued 2025-05, Financial

Instruments—Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets , which allows

companies to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for

the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on

these assets.

The Company adopted ASU 2025-05 effective January 1, 2026, on a prospective basis.

The adoption of this accounting standard

did not have a material impact on the Company’s financial condition, results of operations, or cash flows.

New 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;

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

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

after December 15, 2027.

rather, it requires disaggregation

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

ASU 2024-03 is

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

Early adoption is permitted.

The Company 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.

The Company is evaluating standard and its potential effect on its consolidated financial statements and

segment disclosures.

REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

As previously reported in the Annual Report on Form

10-K for the year ended December 31, 2025, the Company revised amounts reported in previously issued financial statements for the periods

presented in this Quarterly Report on Form 10-Q related to immaterial errors.

The errors relate to certain costs directly related to the

revenue generation and cost of goods sold.

The costs were not properly categorized in prior periods, which led to an overstatement of

revenue and a corresponding overstatement of cost of goods sold.

There was no effect to consolidated net income (loss) in any of the revised

The Company evaluated the aggregate effects of the

errors to its previously issued financial statements in accordance with SEC Staff Accounting Bulletins No.

108 and, based upon

quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements and disclosures

included in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

The following tables present the effects of the aforementioned

revisions on the Company’s consolidated statements of operations for the quarterly period ended March 31, 2025.

Three Months Ended

March 31, 2025

$ ( 579,818 )

Cost of goods sold

$ ( 579,818 )

DISCONTINUED OPERATIONS

the fourth quarter of fiscal 2023, in connection with an analysis of the Company’s sales mix and profitability by service offering,

management made the strategic decision to focus on the Company’s B2B service offering and to allocate fewer resources to and in

some cases to sell certain of the Company’s subsidiaries involved in its D2C service offerings.

Pursuant to this strategy, on December

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

on February 26, 2024, the Company completed the sale of

its Haley subsidiary (see Note 4), and 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,

During 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 has sold the associated Pennsylvania production and distribution

Accordingly, the operating results and related assets

and liabilities of the retail specialty cheese business, including igourmet, along with the Company’s logistics subsidiaries (LII

and IFP) and specialty cheese cutting operations, have been reclassified to discontinued operations for all periods presented.

The following information presents the major

classes of line item of assets and liabilities included as part of discontinued operations in the consolidated balance sheets:

Current assets - discontinued operations:

1 unchanged sentence

Assets held for sale

ROU assets – financing leases, net

Total current assets - discontinued operations

September 30,

Noncurrent assets - discontinued operations:

2 unchanged sentences

Total noncurrent assets - discontinued operations

September 30,

Current liabilities - discontinued operations:

2 unchanged sentences

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

statements of operations:

The following information presents the major

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

Three Months Ended

Nine Months Ended

September 30,

Cost of goods sold

( 1,494,296 )

Selling, general, and administrative expenses

( 1,049,169 )

( 2,073,222 )

Other (expense) income

Gain on sale of assets

Loss on early extinguishment of debt

Other expense

Income (loss) from discontinued operations, net of tax

$ ( 684,255 )

$ ( 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,

items related to discontinued operations in the statement of cash flows:

Three Months Ended

Operating activities:

1 unchanged sentence

Net cash provided by (used in) operating activities

Inventory valuation adjustment associated with facility closure

Gain on sale of assets

$ ( 2,685,277 )

Loss on early extinguishment of debt

Depreciation and amortization

2 unchanged sentences

Accounts payable and accrued liabilities

Deferred revenue

Investing activities:

Acquisition of property and equipment

Cash paid for purchase of property and equipment

Proceeds from sale of fixed assets

Cash received from sale of land and building, net of costs

Financing activities:

Payments on debt

( 8,740,846 )

Payments on financing leases

SALE OF ASSETS

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

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.

On March 6, 2026, the Company closed the sale

of its warehouse and office facility in Mountaintop, Pennsylvania.

A gain in the amount of $ 2,764,063 was recorded on this transaction.

The following table presents components of the sale and gain:

Sales price of land and building

Assets held-for-sale

( 6,144,793 )

ROU assets, financing

Deferred revenue

Legal, title, and other expenses

In connection with this transaction, the Company’s

term loan with Maple Mark Bank was paid off and a loss on the early extinguishment of debt of $ 608,539 was recorded.

ACCOUNTS RECEIVABLE

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

September 30,

At March 31, 2026 and December 31, 2025, accounts

receivable consisted of:

Accounts receivable from customers

1 unchanged sentence

Accounts receivable, net

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

September 30,

During the three months ended March 31, 2026

and 2025, the Company charged the amount of $ 8,199 and $ 9,381 to provision for credit losses, respectively.

Inventory consists primarily of specialty food

At March 31, 2026 and December 31, 2025, inventory consisted of the following:

Finished goods inventory

Allowance for slow moving & obsolete inventory

Finished goods inventory, net

PROPERTY AND EQUIPMENT

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

September 30,

A summary of property and equipment at March

31, 2026 and December 31, 2025 is as follows:

Computer and Office Equipment

5 unchanged sentences

( 1,581,356 )

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 amounted

to $ 38,751 and $ 50,171 for the three months ended March 31, 2026 and 2025, respectively.

Depreciation expense for property and equipment

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

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

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

The Company’s leases have remaining lease

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

Company’s lease expense for the three months ended 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 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 2.17 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

Office equipment

During the three months

ended March 31, 2026 and 2025, the Company acquired property and equipment in the amount of $ 31,183 and $ 163,366 , respectively.

PROPERTY AND EQUIPMENT CLASSIFIED AS HELD

Assets held for sale include the net book value

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

Long lived assets that meet the criteria are held for sale

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

As of December 31, 2025, the Company classified

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

During the year ended December 31,

2025, the Company classified certain leasehold improvements at the Mountain Top property as held for sale.

This property was sold during

the three months ended March 31, 2026.

See Note 4 for additional information.

The net book value of these assets consisted

of the following at December 31, 2025:

RIGHT OF USE ASSETS AND LEASE LIABILITIES

– OPERATING LEASES

The Company has operating leases for offices,

warehouses, vehicles, and office equipment.

The Company’s leases have remaining lease terms of 1 year to 3 years, some of which

include options to extend.

The Company’s lease expense for the three

months ended March 31, 2026 and 2025 was entirely comprised of operating leases and amounted to $ 75,877 and $ 70,866 , respectively.

The Company’s ROU asset amortization for

the three months ended March 31, 2026 and 2025 was $ 68,896 and $ 61,469 , respectively.

The difference between the lease expense and the

associated ROU asset amortization consists of interest.

The weighted-average discount rate for operating

leases was 7.00 % at March 31, 2026 and December 31, 2025.

The weighted-average remaining lease term of operating leases was 1.68 and

2.16 years at March 31, 2026 and December 31, 2025, respectively.

Right of use assets – operating leases

are summarized below:

Right of use assets, net

lease liabilities are summarized below:

September 30,

Operating lease liabilities are summarized below:

Warehouse equipment

3 unchanged sentences

Lease liability, non-current

analysis under these lease agreements are as follows:

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

Maturity analysis under these lease agreements

are as follows for the year ended December 31:

Present value discount

Lease liability

RIGHT OF USE ASSETS – FINANCING LEASES

Company has financing leases for vehicles and warehouse equipment.

RIGHT OF USE ASSETS – FINANCING

The Company has financing leases for vehicles

and warehouse equipment.

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 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.

Depreciation expense related to right of use

assets for the three months ended March 31, 2026 and 2025 was $ 5,954 and $ 24,915 , 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,

leases was 5.4 % and 5.77 % at March 31, 2026 and December 31, 2025, respectively.

The weighted-average remaining lease term of financing

92 and 2.80 years at March 31, 2026 and December 31, 2025, respectively.

Financing lease liabilities are summarized below:

2026 December 31,

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.

During the three months ended March 31, 2026, the Company made principal and interest payments on this lease obligation in the amounts of $ 6,189 and $ 375 , respectively.

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

$ 23,427 $ 29,616

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

During the three months ended March 31, 2026, the Company concluded the obligation was fully paid off.

Accordingly, there were no principal or interest payments made and the balance is zero as of March 31, 2026.

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

Financing lease obligation under a lease agreement for warehouse equipment dated September 12, 2024 in the original amount of $ 180,740 payable in sixty monthly payments in the minimum amount of $2,846 including interest at the rate of 6.01 %.

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 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

During the three months ended March 31, 2026, the Company made principal and interest payments on this lease obligation in the amount of $ 0 and capitalized interest in the amount of $ 813 .

During the three months ended March 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $ 50,828 and $ 2,154 , respectively.

On March 18, 2026, this lease was assumed by a third party for a payment to the Company in the amount of $10,000.

A loss of $ 79,599 was recorded on this transaction.

Total $ 23,427 $ 101,549

2 unchanged sentences

Total $ 23,427 $ 101,549

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

maturities of lease liabilities:

There was no accrued interest on financing leases

at March 31, 2026 and December 31, 2025.

Aggregate maturities of lease liabilities –

financing leases:

For the period ended December 31,

1 unchanged sentence

The Company acquired certain indefinite intangible

assets pursuant to the acquisitions of Artisan and Golden Organics.

assets pursuant to the acquisitions of Artisan Specialty Foods, Inc.

(“Artisan”) and Golden Organics, Inc.

These assets include trade names and customer lists.

Amortizable Intangible Assets

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

September 30, 2025

Other Amortizable Intangible Assets

The following table represents the balances of

other amortizable intangible assets as of March 31, 2026 and December 31, 2025:

March 31, 2026

Total Customer lists

1 unchanged sentence

Total Customer lists

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,

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

September 30, 2025

Total Indefinite Intangible Assets

December 31, 2024

Total Indefinite Intangible Assets

Total amortization expense for the three months

ended March 31, 2026 and 2025 was $ 21,579 and $ 21,578 , respectively.

Remaining amortization expense for intangible

assets as of March 31, 2026 is as follows:

For the twelve months ended March 31,

Indefinite-lived Intangible Assets

Indefinite-lived intangible assets consist of

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

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

September 30,

Accounts payable and accrued liabilities at March

31, 2026 and December 31, 2025 are as follows:

Trade payables and accrued liabilities

Accrued payroll and commissions

ACCRUED SEPARATION COSTS – RELATED PARTIES

February 3, 2023, the Company entered into a Severance Note, an Agreement and General Release, and a Side Letter thereto (the “SK

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

ACCRUED SEPARATION COSTS – RELATED

On February 3, 2023, the Company entered into

a Severance Note, an Agreement and General Release, and a Side Letter thereto (the “SK Agreements”) with Sam Klepfish, its

prior Chief Executive Officer (“CEO”) and a previous board member.

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

20 unchanged sentences

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 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

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

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 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 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;

During the three months ended March 31,

2026 and 2025, the Company paid cash in the amount of $ 64,477 and $ 83,333 , respectively, to Mr.

Klepfish in connection with the SK Agreements.

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.

Bennett will resign from his position as the CEO of the Company, effective October 3, 2025.

Pursuant to the Bennett Separation Agreement,

the Company shall (i) pay Mr.

Bennett 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.

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.

Tang in the amount of $ 0 and $ 5,178 , respectively;

and COBRA payments on behalf of Mr.

Tang in the amount

of $ 0 and $ 2,956 , respectively.

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.

Tang in the amount of $ 0 and $ 113,918 , respectively;

and COBRA payments on behalf of Mr.

Tang in the amount

of $ 0 and $ 14,495 , respectively.

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

During the three months ended March 31, 2026, the Company paid cash in the amount of $ 16,428 and COBRA payments in the amount of $ 8,572

under the Bennett Separation Agreement.

The following table represents the amounts accrued,

paid, and outstanding on these agreements as of March 31, 2026:

Cash – through March 6, 2026

5 unchanged sentences

$ ( 1,423,617 )

Cash - three equal payments

$ ( 100,000 )

COBRA - over eighteen months

$ ( 126,451 )

Cash – over seventeen weeks

$ ( 113,918 )

COBRA - over five months

$ ( 128,413 )

Cash – installments through December 31, 2025

$ ( 126,598 )

Insurance – installments through September 30, 2026

$ ( 149,823 )

Total Company

$ ( 1,573,440 )

* Amount represents an overpayment which is expected to be reimbursed.

STOCK APPRECIATION RIGHTS LIABILITY

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

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

stock appreciation rights (the “Smallwood SARs”) to Brady Smallwood, its former 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;

2 unchanged sentences

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:

During the three months ended March 31, 2026

and 2025, Smallwood SARs decreased in fair value in the amount $ 15,410 and $ 60,595 , respectively;

these amounts were charged to non-cash

compensation.

At March 31, 2026 and December 31, 2025, the Smallwood SARs had a fair value of $ 733 and $ 16,143 , respectively.

The change in valuation of the Smallwood SARs

is summarized in the table below:

May 15, 2023 - fair value

(Gain) Loss on revaluation

Loss on revaluation

December 31, 2023 -fair value

(Gain) Loss on revaluation

Loss on revaluation

December 31, 2024 - fair value

(Gain) Loss on revaluation

Gain on revaluation

( 1,337,007 )

December 31, 2025 - fair value

Gain on revaluation

March 31, 2026 - fair value

(Gain) Loss on revaluation

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”) 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.

The Smallwood SARs were valued using the Black-Scholes

valuation model utilizing the following variables:

March 31, December 31,

Volatility 66.47 % 77.84 - 205.63 %

Dividends 0 % 0 %

Risk-free interest rates 3.68 % 3.48 - 4.10 %

Term (in years) 0.75 1.00 - 2.00

The price of the Company’s common stock

on the date of the grant of the Smallwood SARs was $ 0.41 .

The exercise prices at the dates of the grants were $ 1.50 and $ 2.00 .

NOTES PAYABLE

September 30,

2026 December 31,

A note payable in the amount of $ 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”).

A note payable in the amount of $ 350,000 issued in connection with the Golden Organics 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 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.

During the three months ended March 31, 2026, the Company made principal and interest payments on the GO Note in the amount of $ 16,138 and $ 4,161 , respectively.

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

$ 266,655 $ 282,973

3 unchanged sentences

Total $ 266,655 $ 282,973

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 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 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.

Aggregate maturities of notes payable as of March

31, 2026 are as follows:

For the period ended December 31,

As of March 31, 2026, total number of shares

of common stock issued and total number of shares of common stock outstanding was 57,493,776 and 54,649,479 , respectively.

As of December

31, 2025, total number of shares of common stock issued and total number of shares of common stock outstanding was 57,493,776 and 54,649,479 ,

respectively.

At March 31, 2026 and December 31, 2025, a total of 2,844,297 shares of common stock were deemed issued but not outstanding.

For the three months ended March 31, 2026, the

Company did not issue any common stock.

Below is the common stock activity for the three

months ended March 31, 2025:

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

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

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

There was no gain or loss

recorded on this transaction.

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

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

at a price of $ 1.00 per share.

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

On March 14, 2025, the Company issued the following

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

530,665 shares were issued to its CEO;

1 unchanged sentence

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.

There was no gain

or loss recorded on this transaction.

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

There was no gain

or loss recorded on this transaction.

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.

(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.

based executive compensation plans

February 3, 2023, the Company entered into an employment agreement with Bill Bennett to become the Company’s CEO.

On November 3,

2023, the Company recognized that the hiring of Mr.

Bennett was protracted, and the original employment agreement calculated the number

of shares of common stock to be granted in connection with the CEO Stock Plan on the basis of the number of shares of common stock outstanding

as of October 2022, which did not take into consideration the number of shares that were issued to a departing executive and to certain

other employees of the Company thereafter.

Accordingly, the number of shares issuable to Mr.

Bennett at each price target was adjusted,

effective as of the original date of the plan.

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.

Executive Stock Plans

Predecessor CEO Stock Plan

The stock plan with Mr.

Bennett (the “Predecessor

CEO Stock Plan”) had a fair value of $ 660,541 at inception (see “Stock Plan Valuation” section below).

is being amortized over the 34-month life of the plan.

During the years ended December 31, 2025 and 2024, $ 232,361 and $ 233,132 of

this amount was charged to operations, respectively.

During the year ended December 31, 2025, the

price targets of $ 1.80 and $ 2.00 were achieved, and Mr.

Bennett became eligible to receive an additional total of 487,566 shares.

A total of 1,018,231 shares were issued to Mr.

Bennett, net of 444,468 shares withheld for taxes;

at December 31,

2025, there are no further shares due to Mr.

Bennett pursuant to the Predecessor CEO Stock Plan.

On October 4, 2025, the Company entered into

a separation agreement and general release with Mr.

Bennett, pursuant to which Mr.

Bennett resigned from his position as the CEO of the

Company effective October 1, 2025.

During the year ended December 31, 2025, the Company charged the unamortized portion of the value

of the Predecessor CEO Stock Plan in the amount of $ 115,795 to compensation expense and additional paid-in capital

There are no shares unvested under the Predecessor

CEO Stock Plan at March 31, 2026 or December 31, 2025.

COO Stock Plan

On April 14, 2023, the Company entered into an

employment agreement with Brady Smallwood to become the Company’s COO effective May 15, 2023.

Pursuant to this agreement, Mr.

Bennett was provided with an incentive compensation plan

(the “CEO Stock Plan”) whereby Mr.

Bennett would be granted shares of the Company’s common stock upon the common stock

meeting certain price points at various 60-day volume weighted prices, as described below:

was provided with an incentive compensation plan (the “COO Stock Plan”) whereby Mr.

Smallwood would be granted shares of

the Company’s common stock upon the common stock meeting certain price points at various 60-day volume weighted prices, as described

Number of Shares Granted - Lower of:

1 unchanged sentence

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;

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

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

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

On February 6, 2025, a

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

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

Pursuant to this agreement, Mr.

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

Smallwood would be granted shares of the Company’s common stock upon the common stock meeting certain price points

at various 60-day volume weighted prices, as described below:

The COO Stock Plan had a fair value of $ 199,951 at

inception (see “Valuation of Executive Stock Plans” section below).

This amount is being amortized over the 31.5-month life

During the three months ended March 31, 2026 and 2025, $ 0 and $ 19,043 of this amount was charged to operations, respectively.

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

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

and on March 7, 2025, the price target

of $ 2.03 per share under the COO Stock Plan was achieved, and 73,735 shares of common stock vested.

The total number

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

These shares were issued during the year ended December

On December 31, 2025, a total of 147,471 unvested shares were forfeited under the COO Stock Plan.

Successor CEO Stock Plan

On October 3, 2025, the Company entered into an employment

agreement with Gary Schubert pursuant to which he will serve as the Company’s Chief Executive Officer (the “CEO Employment

The CEO Employment Agreement provides for the grant of 1,350,000 shares of the Company’s common stock, subject

to a vesting schedule, no later than March 31, 2026 (the “Successor CEO Stock Plan”).

As of March 31, 2026, such shares had

not yet been granted.

The Company and Mr.

Schubert are working collaboratively and in good faith to finalize the applicable vesting schedule,

performance criteria and related grant documentation, with the objective of completing the grant process by June 30, 2026.

have not entered into an amendment to the CEO Employment Agreement, and no waiver of any rights or obligations thereunder has been made.

As of the date of this filing, there are no disputes between the Company and Mr.

Schubert regarding the Successor CEO Stock Grant, and

Schubert has not delivered any notice of resignation for Good Reason under the CEO Employment Agreement.

In the event Mr.

were to deliver such a notice, the CEO Employment Agreement provides the Company with a 60-calendar-day period to cure the circumstances

giving rise to such notice, as provided therein.

The CEO Employment Agreement and Successor CEO Stock Plan replaced Mr.

executive compensation plan that was in place during his role as the Company’s Chief Financial Officer.

Prior CFO Stock Plan

On December 29, 2023, the Company entered into

an employment agreement with Gary Schubert to become the Company’s Chief Financial Officer effective January 1, 2024.

to this agreement, Mr.

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

Schubert would be granted shares of the Company’s common stock upon the common stock meeting certain price points at various 60-day

volume weighted prices, as described below:

Number of Shares Granted - Lower of:

1 unchanged sentence

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

to this plan;

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

stock vested.

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

withheld for taxes.

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

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

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

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

Pursuant to this agreement, Mr.

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

Schubert would be granted shares of the Company’s common stock upon the common stock meeting certain price points at

various 60-day volume weighted prices, as described below:

of Shares Granted - Lower of:

of Shares Issued

Outstanding on

Date Multiplied by:

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

to this plan.

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

withheld for taxes.

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

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 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 %

86.58 - 131.55 %

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.

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.

The Prior CFO Stock Plan had a fair value of

$ 238,747 at inception (see “Valuation of Executive Stock Plans” section below).

This amount is being amortized over

the 30-month life of the plan.

During the three months ended March 31, 2026 and 2025, $ 23,874 and $ 23,875 of this amount was

charged to operations, respectively.

On March 10, 2025, the price target of $ 2.04

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

These shares were issued during the year

ended December 31, 2025.

On October 3, 2025, a total of 196,627 unvested shares were forfeited under the Prior CFO Stock Plan.

Valuation of Executive Stock Plans

The Company relied upon the guidance of Statement

of Financial Account Standards No.

718 Compensation – Stock Compensation (“ASC 718”) in accounting for the Predecessor

CEO Stock Plan, the COO Stock Plan, and the Prior CFO Stock Plan (collectively, the Executive Stock Plans).

A Monte Carlo market-based

performance stock awards model was used in valuing the Executive Stock Plans, with the following assumptions:

stock price for each trading day would fluctuate with an estimated projected volatility using a normal distribution.

The stock price

of the underlying instrument is modeled such that it follows a geometric Brownian motion with constant drift and volatility.

Company would award the stock upon triggering the thresholds.

attrition or forfeiture rates (i.e., pre–vesting forfeiture assumption) are assumed to be zero given the holder’s position

with the Company.

projected capital events were included in the adjustments to the shares issued and outstanding in the projected simulations.

● Awards/payouts

were discounted at the risk–free rate.

For the three months ended March 31, 2026, there

was no stock options activity.

Below is the stock option activity for the three

months ended March 31, 2025:

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

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

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

There was no gain or loss

recorded on this transaction.

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

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

at a price of $ 1.00 per share.

There was no gain or loss recorded on this transaction.

Options outstanding at December 31, 2024

Cancelled / Expired

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

As of March 31, 2026 and 2025, there were no

options outstanding.

The Company’s Chief Operating Decision Maker

(“CODM”) is the CEO, Gary Schubert, and he has determined that the Company operates in one reportable segment:

of specialty foods.

This determination was made based upon the characteristics of the Company’s business and the information used

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

The single segment utilizes multiple sales channels.

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,

The CODM uses consolidated revenue, gross margin percentage

and net income to monitor results.

The CODM also uses revenue by category to monitor the growth of the business in each of the Company’s

target markets.

The following table presents the Company’s segment results:

Digital Channels

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National distribution

Local distribution

Total revenue

Cost of sales

Payroll & related costs

Computer and IT

Office, facility, vehicles

Travel & entertainment

Advertising & marketing

Banking and credit card processing

Professional fees

Non-cash OpEx:

Credit loss expense

Share based compensation

$ ( 323,982 )

$ ( 1,505,918 )

Depreciation & amortization

$ ( 315,424 )

$ ( 1,333,975 )

Non-Operating (Income) Expense:

Interest expense

(Gain) loss on sale of subsidiaries

(Gain) loss on sale of assets

Local distribution

$ ( 1,372,690 )

Other (income) expense

Total other (income) expense

Total revenue

$ ( 2,849,442 )

Net income (loss) from continuing operations

Cost of sales

$ ( 2,051,799 )

Other segment disclosures:

Segment assets

Expenditures for segment assets

September 30,

Digital Channels

$ ( 797,643 )

National distribution

Local distribution

Total revenue

Cost of sales

Payroll & related costs

$ ( 426,334 )

Computer and IT

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Professional fees

$ ( 276,006 )

$ ( 680,353 )

Non-cash OpEx:

2 unchanged sentences

$ ( 153,332 )

$ ( 740,804 )

Depreciation & amortization

$ ( 207,527 )

$ ( 640,972 )

Non-Operating (Income) Expense:

Non-Operating Expense:

Interest expense

Other (income) expense

Total other (income) expense

Net income (loss) from continuing operations

$ ( 132,262 )

Total other expense

Income tax expense

Net income from continuing operations

Other segment disclosures:

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RELATED PARTY TRANSACTIONS

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.

Payments to Prior

Executive Officers under Separation Agreements

For the three months

ended March 31, 2026

The Company paid cash

in the amount of $ 64,477 to Mr.

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

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.

The Company paid cash

in the amount of $ 25,000 to Mr.

Bennett, its prior CEO, in connection with the Bennet Separation Agreement.

For the three months

ended March 31, 2025

The Company paid cash

in the amount of $ 83,333 to Mr.

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

MAJOR CUSTOMERS

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

During the three months ended March 31, 2026

and 2025, U.S.

and its affiliates accounted for approximately 40 % and 41 % of total consolidated sales, respectively.

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

Gourmet accounted for approximately 15 % and 19 % of total consolidated sales during the three months ended March 31, 2026 and 2025, respectively.

Discontinued operations:

Sams Club accounted for

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

Sams Club accounted

for approximately 0 % and 19 % of total consolidated sales in 2026 and 2025, respectively.

Sales to Sams Club related entirely to the discontinued

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COMMITMENTS AND CONTINGENCIES

time to time, the Company has become and may become involved in certain lawsuits and legal proceedings which arise in the ordinary course

of business, or as the result of current or previous investments, or current or previous subsidiaries, or current or previous employees,

or current or previous directors, or as a result of acquisitions and dispositions or other corporate activities.

The Company intends

to vigorously defend its positions.

However, litigation is subject to inherent uncertainties, and an adverse result in these or other

matters may arise from time to time that may harm our financial position or our business and the outcome of these matters cannot be ultimately

SUBSEQUENT EVENTS

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

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 the Company’s financial position or its business and the outcome of these matters cannot be ultimately predicted.

Management ’ s Discussion

and Analysis of Financial Condition and Results of Operations

References in this report to “we,”

“our,” “us,” or the “Company” refer to Innovative Food Holdings, Inc.

and all of its wholly-owned

subsidiaries.

FORWARD-LOOKING STATEMENTS

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

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

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

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 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

Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking

We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future

events or otherwise.

Critical Accounting Policy and Estimates

Use of Estimates in the Preparation of Financial

The preparation of these financial statements

7 unchanged sentences

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

liabilities in accordance with accounting principles generally accepted in the United States of America.

The estimated fair values approximate

their carrying value because of the short-term maturity of these instruments or the stated interest rates are indicative of market interest

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

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.

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.

Stock Options and Stock Appreciation Rights

The Company accounts

for options in accordance with FASB ASC 718-40.

Options are valued upon issuance utilizing the Black-Scholes valuation model.

expense is recognized over the requisite service period of the related option award.

The following table illustrates certain key information

regarding our options, SARS, and valuation assumptions:

77.84-205.63 %

Risk-free interest rates

Term (in years)

Allowance for Credit Losses

The Company maintained

an allowance in the amount of $247,272 and $218,319 for credit losses at March 31, 2026 and December 31, 2025, respectively.

has an operational relationship of several years with our major customers, and we believe this experience provides us with a solid foundation

from which to estimate our expected losses on accounts receivable.

Should our sales mix change or if we develop new lines of business

or new customers, these estimates and our estimation process will change accordingly.

These estimates have been accurate in the past.

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.

The 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.

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

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

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.

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

Our team is adept at evaluating and certifying

the food safety and supply chain capabilities of small batch producers who do not 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

1 unchanged sentence

and catering houses.

We provide these premium customers with products that can’t typically be found through their broadline distributor’s

We provide these premium customers with products that cannot typically be found through their broadline distributor’s

warehouse assortment.

3 unchanged sentences

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

Lastly, we sell these food to large

retailers for resale on their shelves to the end customer.

Lastly, we sell these foods to

large retailers for resale on their shelves to the end customer.

Between this variety of sales channels, we are able to serve our Professional

Chef customers wherever they are located.

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 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:

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:

We operate our airline catering distribution

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

Additionally, we operate a warehouse in Denver, Colorado,

measuring approximately 20,000 square feet.

In March 2026, we sold our facility in Mountain Top, Pennsylvania, which previously supported

both our retail and airline catering operations.

In connection with this sale, 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

March 31, 2026:

we reported revenue of $12.2 million, a 19.0% decrease compared to $15.0 million in 2025.

Three Months Ended March 31, 2026

Revenue Breakdown:

Largely comprised of our distributor relationships and supported by our drop-ship model generated $6.6 million, or 55% of total

revenue, in the current period, compared to $7.8 million in the prior year period, a decrease of approximately 16%.

This decrease was

primarily driven by continued headwinds in our legacy drop-ship business, where increased competition in online marketplace channels

has resulted in lower order volumes and pricing pressure.

Distribution:

Revenue was $2.5 million, 21% of total revenue, compared to $2.8 million in the prior year period.

The decrease was primarily

driven by stiffer competition and airline menu cycle changes.

Distribution:

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

This category generated $4 million, or 21.6% of total revenue, which is a 33% increase from $3 million in 2024.

The figure includes $1.6 million, up from $0 in Q3 2024, due to acquisitions of LoCo Foods and Golden Organics.

This category generated

$3.1 million, or 26% of total revenue, which is a 30% decrease from $4.4 million in 2025.

This decrease was primarily driven by customer

attrition following prior year operational transitions;

however, these strategic customer attrition efforts have stabilized.

Cost of goods sold for the three months ended

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

Cash Operating Expenses (Cash OpEx):

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

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 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:

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):

Share-Based Compensation:

Decreased by $740 thousand a credit of ($691) thousand, due to revaluation of stock options and other equity-based incentives to attract and retain key personnel.

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.

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 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 $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

March 31, 2026 decreased by approximately 18% to $9.1 million compared to $11.1 million in the prior year period, which is primarily

due to a 19% decrease in revenue.

Gross margin remained flat at approximately 26%.

Operating Expenses

Cash Operating Expenses (Cash OpEx):

Payroll and related costs increased by $1.41 million to $7.42 million.

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:

Reduced by $13 thousand to $290 thousand, reflecting the Company’s efforts to streamline IT operations and reduce software and hardware expenses.

Office, facilities, and vehicle expenses increased by $779 thousand.

The increase is primarily due to new office locations costing $452 thousand as a result of the acquisition of Golden Organics and LoCo Foods.

As part of this acquisition, LoCo Foods relocated from Fort Collins to Denver, consolidating offices.

H1 results include $50 thousand in rent and utilities for the closed Fort Collins facility, which will not continue in subsequent quarters.

Additionally, increased fleet costs at our Chicago hub accounted for $160 thousand.

Advertising and Digital Marketing Costs:

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 $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

Credit Loss Expense:

decreased by $2 thousand to $43 thousand, primarily due to changes in customer mix within our local delivery segment.

Total operating expenses decreased by $888 thousand,

or 24%, primarily due to the factors described below:

and related costs decreased by $426 thousand to $1.9 million.

This decrease was primarily due to a reduction in headcount from organizational

restructuring, largely at the executive level.

Professional fees decreased

by $276 thousand to $249 thousand primarily due to the discontinuation of strategic growth initiatives that did not yield desired

● Share-based

compensation decreased by $153 thousand to $8 thousand, due to revaluation of stock options and other equity-based incentives offered

to attract and retain key personnel.

Depreciation and amortization

expense decreased by $11 thousand to $60 thousand primarily due to the expiration of capitalized financial leases.

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 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.

The discontinued operations reported net income

of $1.5 million in the current quarter, compared to a net loss of $684 thousand in the prior year primarily due to the $2.1 million gain

on the sale of the Pennsylvania facility in 2026.

Liquidity and Capital Resources at March 31,

As of March 31, 2026, we had current assets of

$9.8 million and current liabilities of $3.3 million.

Net working capital was $6.5 million.

1 unchanged sentence

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.

With the sale of the Pennsylvania facility, operating cash flows are expected to continue

to improve as facility costs and lower margin product sales roll off.

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.

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 $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 $2.8 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 as well as signing down of vendor accounts associated with the cheese segment.

Investing activities:

Net cash used in investing activities was $174 thousand, primarily related to purchases of property and equipment.

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

Net cash used in operating activities was $234 thousand, primarily due to net income of $1.8 million, a decrease in inventory of $345 thousand due to lowered cheese inventory balances associated with the wind down Pennsylvania of the facility, partially offset by the gain on disposition of assets of $2.7 million, a $609 thousand loss on the early extinguishment of debt, a decrease of $184 thousand primarily due to the collection of receivables related to discontinuing the cheese business, and a $564 thousand decrease in accounts payable and accrued liabilities primarily due to the sale of the Pennsylvania facility.

Net cash provided by investing activities was $8.8 million which was primarily due to cash received for the sale of the Pennsylvania land and building for $8.8 million, offset by the purchase of property and equipment for $31 thousand.

Net cash used in financing Activities was $8.8 million, due to the payments on debt and financing leases.

Transactions with Major Customers

Transactions with a major customer and related

economic dependence information is set forth below and following our discussion of Liquidity and Capital Resources.

During the nine months ended September 30, 2025

During the three months ended March 31, 2026,

and 2025, 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

and its affiliates accounted for approximately 40% and 41% of total revenue, respectively.

Gate Gourmet accounted

for approximately 15% and 19% of total revenue, respectively, during the three months ended March 31, 2026, and 2025.

Off-Balance Sheet Arrangements

2 unchanged sentences

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.

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 2026.

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, 2025 and its Current Reports on

Form 8-K, all of which reports are available at no cost at www.sec.gov .

Quantitative and Qualitative Disclosures

About Market Risk

We are a smaller reporting company as defined

by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.

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

What changed 10-Q

Item 1. Financial Statements