What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-05-20 · 564 added, 462 removed, 763 unchanged (57% of the section changed)

5 unchanged sentences

Cash, restricted

Accounts receivable, net

Accounts receivable, net of allowance for doubtful accounts of $ 259,446 and $ 218,319 , respectively

Inventory, net

Other current assets

Assets held-for-sale - discontinued operations

Asset held for sale - discontinued operations

Current assets - discontinued operations

9 unchanged sentences

Current liabilities

Accounts payable and accrued liabilities

Accounts payable

Accrued payroll

Accrued liabilities

Accrued separation costs - related parties, current portion

5 unchanged sentences

Total current liabilities

Note payable non-current, net of discount

Note payable non-current

Accrued separation costs - related parties, non-current

7 unchanged sentences

500,000,000 shares authorized;

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

57,493,776 shares issued, and 54,649,479 shares outstanding at June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

Treasury stock:

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

2,644,297 shares outstanding at June 30, 2026 and December 31, 2025

( 1,141,372 )

9 unchanged sentences

Consolidated Statements of Operations

Three Months Ended

Cost of goods sold

2 unchanged sentences

Operating income

Other (expense) income:

Interest expense, net

Total expense

Other income (expense):

Interest income (expense), net

Total other income (expense)

Net income before taxes

3 unchanged sentences

$ ( 767,046 )

$ ( 1,451,301 )

Consolidated net income (loss)

10 unchanged sentences

Consolidated Statements of Stockholders’

Three Months Ended March 31, 2026 and 2025

Treasury Stock

Three and Six Months Ended June 30, 2026 and

Balance - April

$ ( 1,141,372 )

$ ( 36,640,200 )

Fair value of shares under compensation plan

Shares issued under compensation

Net loss for the three

months ended June 30, 2025

- June 30, 2025

$ ( 1,141,372 )

$ ( 36,581,690 )

Balance - April 1, 2026

$ ( 1,141,372 )

$ ( 36,434,800 )

Fair value of shares under compensation plan

Net income for the three

months ended June 30, 2026

- June 30, 2026

$ ( 1,141,372 )

$ ( 36,070,416 )

Balance - January 1, 2025

2 unchanged sentences

Fair value of shares under compensation plan

Shares earned under compensation plans

Shares issued under compensation plans

Shares issued in cashless conversion of options

Net income for the three months ended March 31, 2025

Balance - March 31, 2025

Shares issued in cashless

conversion of options

Shares earned under compensation

Shares issued under compensation

( 1,103,236 )

Net income for the six

months ended June 30, 2025

- June 30, 2025

$ ( 1,141,372 )

$ ( 36,581,690 )

Balance - January 1, 2026

2 unchanged sentences

Fair value of shares under compensation plan

Net income for the three months ended March 31, 2026

Balance - March 31, 2026

Net income for the six

months ended June 30, 2026

- June 30, 2026

$ ( 1,141,372 )

4 unchanged sentences

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

Cash flows from operating activities:

Net income (loss)

$ ( 371,926 )

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

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

Gain on disposition of assets

( 2,685,277 )

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:

Loss on extinguishment of debt

Depreciation and amortization

Amortization of right of use asset

Amortization of discount on notes payable

Stock based compensation

Change in value of stock appreciation rights

Provision for credit losses

Changes in assets and liabilities:

Accounts receivable, net

Inventory, net

Other current assets

Accounts payable and accrued liabilities

( 2,473,041 )

on financing leases

from line of credit

on line of credit

cash used in financing activities

Accrued separation costs - related parties

Deferred revenue

Operating lease liability

Net cash provided by (used in) operating activities

Cash flows from investing activities:

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

Cash paid for purchase of property and equipment

Cash received from disposition of asset

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Principal payments on debt

( 8,809,669 )

in cash and cash equivalents, and restricted cash

Principal payments on financing leases

Cash received from line of credit

Principal payments on line of credit

Net cash used in financing activities

( 8,815,858 )

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:

Increase (decrease) in cash and cash equivalents, and restricted cash

Cash and cash equivalents, and restricted cash at beginning of period

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

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

Cash and cash equivalents, and restricted cash at end of period

Supplemental disclosure of cash flow information:

Cash paid during the period for:

Non-cash investing and financing activities:

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

See condensed notes to these unaudited consolidated

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CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL

March 31, 2026

June 30, 2026

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING

Basis of Presentation

The accompanying unaudited interim consolidated financial

statements include those of Innovative Food Holdings, Inc.

The accompanying unaudited interim consolidated

financial statements include those of Innovative Food Holdings, Inc.

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

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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.

The results of the operations for the three and six months

ended June 30, 2026 are not necessarily indicative of the results of operations to be expected for the full year.

Business Activity

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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.

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

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:

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

Reclassifications

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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, 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.

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, 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.

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.

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

At times, such investments may be in excess

of applicable government mandated insurance limit.

As of June 30, 2026 and December 31, 2025, trade receivables from the Company’s

largest customer accounted for approximately 20 % and 18 %, respectively, of total trade receivables.

The Company maintains cash balances in excess

of Federal Deposit Insurance Corporation limits.

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

At June 30, 2026 and December 31, 2025, the total cash exceeding these limits was $ 570

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

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 $ 247,272 and

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

The Company’s allowance for credit losses estimate is based

on historical collections experience, future expected losses, as well as identified customer specific collection issues.

Accounts receivable

are presented net of an allowance for credit losses of $ 259,446 and $ 218,319 at June 30, 2026 and December 31, 2025, respectively.

is reasonably possible that the Company’s estimate of the allowance for credit losses could change.

During the three and six months

ended June 30, 2026 and 2025, the Company charged $ 7,331 and $ 755 and $ 15,530 and $ 28,310 to provision for credit losses, respectively.

Inventory is valued at the lower of cost or net

4 unchanged sentences

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.

Revenue Recognition

4 unchanged sentences

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.

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 .

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

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

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

and (v) recognize revenue when (or as) performance obligations are satisfied.

Provisions for discounts and rebates to customers, estimated

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

Warehouse and logistics services revenue is primarily

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The following table represents a disaggregation

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

of revenue for the three and six months ended June 30, 2026 and 2025:

Three Months Ended

Six Months Ended

Digital Channels

4 unchanged sentences

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.

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.

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

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Three Months Ended

Six Months Ended

Income from continuing operations

3 unchanged sentences

Income per share from continuing operations - diluted

Dilutive Shares at March 31, 2026:

Dilutive Shares at June 30, 2026:

Stock Options

Restricted Stock Awards

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

At June 30, 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.

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 June 30, 2026, none of these RSAs vested as conditions were not satisfied.

Accordingly, there was no charge for these RSAs during the three and six months ended June 30, 2026 and 2025.

The Company also has in place Executive Stock

4 unchanged sentences

Stock-based Compensation

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

During the three and six months ended June 30,

2026, the Company charged the amount of $ 23,874 and $ 47,748 , respectively, to operations in connection with Executive Stock Plans.

Note 14 for additional information.

At June 30, 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:

There are no potentially issuable shares not included

in basic earnings per share, and no difference between EPS and fully-diluted EPS for the three and six months ended June 30, 2026.

Dilutive Shares at June 30, 2025:

Stock Options

Restricted Stock Awards

At March 31, 2025, there

At June 30, 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,

Those 300,000 RSAs will vest as follows:

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.

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

no charge to operations for these RSAs during the three and six months ended June 30, 2025.

Stock-based Compensation

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

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

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

the achievement of certain performance goals (see Note 14).

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.

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

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

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

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

Computation of Basic and Diluted EPS

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.

There are no potentially issuable shares not included

in basic earnings per share, and no difference between EPS and fully-diluted EPS for the three and six months ended June 30, 2025.

Recently Adopted Accounting Pronouncements

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”)

was enacted in the U.S.

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.

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 and six months ended June 30, 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

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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.

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

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

for public business entities.

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

rather, it requires disaggregation

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

ASU 2024-03 is

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

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

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

after December 15, 2027.

Early adoption is permitted.

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

segment disclosures.

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.

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 periods.

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 June 30, 2025.

The following tables present the effects of the

aforementioned revisions on the Company’s consolidated statements of operations for the quarterly period ended June 30, 2025.

Three months ended

March 31, 2025

Six months ended

June 30, 2025

$ ( 642,097 )

$ ( 1,221,915 )

Cost of goods sold

$ ( 642,097 )

$ ( 1,221,915 )

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.

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:

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

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 facility.

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:

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Total current liabilities - discontinued operations

The following information presents the major

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

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

Six Months Ended

Cost of goods sold

6 unchanged sentences

$ ( 767,046 )

$ ( 1,451,301 )

The following information presents the significant

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

Three Months Ended

Six Months Ended

Operating activities:

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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

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

receivable consisted of:

Accounts receivable from customers

Allowance for credit losses

Accounts receivable, net

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

PROPERTY AND EQUIPMENT

A summary of property and equipment at March

A summary of property and equipment at June 30,

2026 and December 31, 2025 is as follows:

6 unchanged sentences

( 1,581,356 )

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 three months

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

amounted to $ 45,936 and $ 88,594 for the three months ended June 30, 2026 and 2025, respectively, and $ 84,687 and $ 175,318 for the six

months ended June 30, 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 six months ended June 30, 2026 and 2025, the Company

acquired property and equipment in the amount of $ 31,183 and $ 208,886 , respectively.

PROPERTY AND EQUIPMENT CLASSIFIED AS HELD

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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.

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

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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.

This property was sold during the

six months ended June 30, 2026.

See Note 4 for additional information.

The net book value of these assets consisted

of the following at December 31, 2025:

The net book value of these assets consisted of

the following at December 31, 2025:

RIGHT OF USE ASSETS AND LEASE LIABILITIES

5 unchanged sentences

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.

months ended June 30, 2026 and 2025 was entirely comprised of operating leases and amounted to $ 77,242 and $ 71,566 , respectively.

Company’s lease expense for the six months ended June 30, 2026 and 2025 was entirely comprised of operating leases and amounted

to $ 153,118 and $ 142,432 , 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 three months ended June 30, 2026 and 2025 was $ 70,078 and $ 61,469 , respectively.

The Company’s ROU asset amortization for the

six months ended June 30, 2026 and 2025 was $ 138,973 and $ 123,972 , 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.

leases was 7.00 % at June 30, 2026 and December 31, 2025.

The weighted-average remaining lease term of operating leases was 1.43 and 2.16

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

Right of use assets – operating leases

are summarized below:

years at June 30, 2026 and December 31, 2025, respectively.

Right of use assets – operating leases are

summarized below:

Right of use assets, net

Operating lease liabilities are summarized below:

Warehouse equipment

Office equipment

Lease liability

2 unchanged sentences

Maturity analysis under these lease agreements

are as follows for the year ended December 31:

are as follows for the year ending December 31:

Present value discount

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accumulated depreciation

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.

Depreciation expense related to right of use assets

for the three months ended June 30, 2026 and 2025 was $ 1,518 and $ 29,883 , respectively.

Depreciation expense related to right of use assets

for the six months ended June 30, 2026 and 2025 was $ 3,036 and $ 59,766 , respectively.

The weighted-average interest rate for financing

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 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 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 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

Current portion $ 23,427 $ 48,866

Long-term maturities - 52,683

Total $ 23,427 $ 101,549

leases was 5.77 % at December 31, 2025.

The weighted-average remaining lease term of financing leases was 2.80 years at December 31, 2025.

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,

at December 31, 2025.

INTANGIBLE ASSETS

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The following table represents the balances of

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

March 31, 2026

other amortizable intangible assets as of June 30, 2026 and December 31, 2025:

June 30, 2026

Total Customer lists

2 unchanged sentences

Total amortization expense for the three months

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

ended June 30, 2026 and 2025 was $ 21,578 and $ 21,578 , respectively.

Total amortization expense for the six months ended June 30, 2026

and 2025 was $ 43,157 and $ 43,156 , respectively.

Remaining amortization expense for intangible

assets as of March 31, 2026 is as follows:

For the twelve months ended March 31,

assets as of June 30, 2026 is as follows:

For the twelve months ending

Indefinite-lived Intangible Assets

2 unchanged sentences

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at March

Accounts payable and accrued liabilities at June

30, 2026 and December 31, 2025 are as follows:

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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.

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

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

for future election to the board of directors at least through the 2024 general meeting of shareholders based on certain minimum stock

ownership and board observer rights when Mr.

Klepfish is no longer a director but maintains certain minimum agreed upon stock ownership.

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

2023 through March 6, 2026.

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

The SK Agreements provide, among other

things, for Mr.

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

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

Klepfish for future election to the board of directors at least through the 2024 general meeting of shareholders based on certain

minimum stock ownership and board observer rights when Mr.

Klepfish is no longer a director but maintains certain minimum agreed upon

stock ownership.

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

from March 8, 2023 through March 6, 2026.

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

Klepfish on his separation date.

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

The SK Agreements also called for

the delivery of 400,000 shares of the Company’s common stock valued at $ 168,000 based upon the closing price of the Company’s

Klepfish on his separation

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

The SK Agreements also

called for the delivery of 400,000 shares of the Company’s common stock valued at $ 168,000 based upon the closing price of the Company’s

common stock on Mr.

7 unchanged sentences

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

During the three months ended March 31,

During the three months ended June 30,

2026 and 2025, the Company paid cash in the amount of $ 0 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;

During the six months ended June 30, 2026 and 2025, the Company paid cash in the amount of $ 58,860 and $ 166,666 , respectively, to Mr.

Klepfish in connection with the SK Agreements.

As of June 30, 2026, no further cash payments were due under 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.

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 and consulting fees through September 30, 2026, in the total

gross amount of $ 140,501 , primarily 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 .

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

Bennett’s group health insurance premiums for the period from November 1, 2025 through September 30, 2026 in the total gross amount

of $ 32,269 .

During the three months ended June 30, 2026, the Company paid $ 8,333 for salary and consulting fees and $ 5,731 for insurance

under the Bennett Separation Agreement.

During the six months ended June 30, 2026, the Company paid $ 30,331 for salary and consulting

fees and $ 17,193 for insurance under the Bennett Separation Agreement.

The following table represents the amounts accrued,

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

paid, and outstanding on these agreements as of June 30, 2026:

Cash – through March 6, 2026

5 unchanged sentences

$ ( 1,418,000 )

Cash – installments through December 31, 2025

Salary and consulting – through September 30, 2026

$ ( 125,670 )

Insurance – installments through September 30, 2026

Insurance – through September 30, 2026

$ ( 148,593 )

1 unchanged sentence

$ ( 1,566,593 )

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

STOCK APPRECIATION RIGHTS LIABILITY

2 unchanged sentences

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.

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;

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.

During the three months ended June 30, 2026 and

2025, Smallwood SARs decreased in fair value in the amount of $ 733 and $ 287,858 , respectively.

During the six months ended June 30, 2026

and 2025, Smallwood SARs decreased in fair value in the amount of $ 16,143 and $ 227,263 , 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.

At June 30, 2026 and December 31, 2025, the Smallwood SARs had a fair value of $ 0 and $ 16,143 , respectively.

The change in valuation of the Smallwood SARs

10 unchanged sentences

March 31, 2026 - fair value

Gain on revaluation

June 30, 2026 - fair value

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 %

Six Months Ended

77.84 - 205.63 %

Risk-free interest rates

3.48 - 4.10 %

Term (in years)

2 unchanged sentences

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

As of June 30, 2026, no SARs were executed and all SARs were expired.

NOTES PAYABLE

2 unchanged sentences

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

During the three months ended March 31, 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.

During the three months ended June 30, 2026, the Company made principal and interest payments of $ 16,381 and $ 3,918 , respectively.

During the six months ended June 30, 2026, the Company made principal and interest payments of $ 32,519 and $ 8,080 , respectively.

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

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

$ 250,274 $ 282,973

3 unchanged sentences

Total $ 250,274 $ 282,973

Aggregate maturities of notes payable as of March

Aggregate maturities of notes payable as of June

30, 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 June 30, 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

1 unchanged sentence

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:

At June 30, 2026 and December 31, 2025, a total of 2,844,297 shares of common stock were deemed issued but not outstanding.

For the six months ended June 30, 2026, the Company

did not issue any common stock.

Below is the common stock activity for the six

months ended June 30, 2025:

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

15 unchanged sentences

There was no gain or loss recorded on this transaction.

On 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.

On 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.

Executive Stock Plans

22 unchanged sentences

There are no shares unvested under the Predecessor

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

CEO Stock Plan at June 30, 2026 or December 31, 2025.

COO Stock Plan

12 unchanged sentences

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.

During 2026, no expense was incurred as the shares were forfeited as of December 31, 2025.

During the three and six months

ended June 30, 2025, $ 19,043 and $ 38,086 was charged to operations, respectively.

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

7 unchanged sentences

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.

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 Agreement”).

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 June 30, 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.

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 September 30, 2026.

The parties 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 regarding the Successor CEO

Stock Grant, and Mr.

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.

Schubert 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

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

Prior CFO Stock Plan

13 unchanged sentences

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.

During the three and six months ended June 30, 2026, the remaining unamortized amount of $ 23,874 and $ 47,748

was charged to operations, respectively.

During the three and six months ended June 30, 2025, $ 23,874 and $ 47,750 of this amount

was charged to operations, respectively.

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

10 unchanged sentences

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

The 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.

The Company would award

the stock upon triggering the thresholds.

Annual attrition or forfeiture

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

No 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 six months ended June 30, 2026, there

was no stock options activity.

Below is the stock option activity for the three

months ended March 31, 2025:

Below is the stock option activity for the six

months ended June 30, 2025:

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

7 unchanged sentences

There was no gain or loss recorded on this transaction.

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 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.

As of June 30, 2026 and 2025, there were no options

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:

delivery 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 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:

For the Six Months Ended

June 30, 2026

For the Six Months Ended

June 30, 2025

Digital Channels

13 unchanged sentences

Office, facility, vehicles

$ ( 145,992 )

Travel & entertainment

7 unchanged sentences

Share based compensation

$ ( 153,332 )

Depreciation & amortization

Non-Operating (Income) Expense:

Interest expense

Total other (income) expense

Income tax expense

Net income (loss) from continuing operations

$ ( 369,992 )

Non-Operating Expense:

Other segment disclosures:

Segment assets

Expenditures for segment assets

For the Three Months Ended

June 30, 2026

For the Three Months Ended

June 30, 2025

Digital Channels

$ ( 1,419,948 )

National distribution

$ ( 1,146,547 )

Local distribution

$ ( 1,014,073 )

Total revenue

$ ( 3,580,568 )

Cost of sales

$ ( 2,720,226 )

$ ( 860,342 )

Payroll & related costs

$ ( 738,042 )

Computer and IT

Office, facility, vehicles

Travel & entertainment

Advertising & marketing

Banking and credit card processing

Professional fees

$ ( 621,991 )

Non-cash OpEx:

Credit loss expense

Share based compensation

$ ( 186,657 )

Depreciation & amortization

Non-Operating (Income) Expense:

Interest expense

Total other expense

Total other (income) expense

Income tax expense

Net income from continuing operations

Net income (loss) from continuing operations

$ ( 459,564 )

Other segment disclosures:

2 unchanged sentences

RELATED PARTY TRANSACTIONS

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.

Payments to Prior Executive

Officers under Separation Agreements were as follows:

For the three

months ended June 30, 2026

The Company did not

make any payments to Mr.

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

The Company paid $ 8,333

for salary and consulting fees and $ 5,731 for insurance to Mr.

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

For the six months

ended June 30, 2026

The Company paid cash in the amount of $ 58,860

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

The Company paid $ 30,331 for salary and consulting

fees and $ 17,193 for insurance to Mr.

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

For the three

months ended June 30, 2025

The Company paid cash

in the amount of $ 83,333 to Mr.

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

For the three months

ended March 31, 2025

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

For the six months

ended June 30, 2025

The Company paid cash

2 unchanged sentences

MAJOR CUSTOMERS

During the three months ended March 31, 2026

and 2025, U.S.

During the three months ended June 30, 2026 and

and its affiliates accounted for approximately 40 % and 34 % 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.

accounted for approximately 18 % and 15 % of total consolidated sales during the three months ended June 30, 2026 and 2025, respectively.

During the six months ended June 30, 2026 and

and its affiliates accounted for approximately 40 % and 34 % of total consolidated sales, respectively.

accounted for approximately 17 % and 14 % of total consolidated sales during the six months ended June 30, 2026 and 2025, respectively.

Discontinued operations:

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

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

for approximately 0 % and 19 % of total consolidated sales during the three months ended June 30, 2026 and 2025, respectively.

Sams Club related entirely to the discontinued Pennsylvania distribution operations and are not expected to continue in future periods.

Sams Club accounted for approximately 0 % and 19 % of total consolidated sales during the six months ended June 30, 2026 and 2025, respectively.

Sales to Sams Club related entirely to the discontinued Pennsylvania distribution operations and are not expected to continue in future

COMMITMENTS AND CONTINGENCIES

From time to time, the Company has become and may

become involved in certain lawsuits and legal proceedings which arise in the ordinary course of business, or as the result of current

or previous investments, or current or previous subsidiaries, or current or previous employees, or current or previous directors, or as

a result of acquisitions and dispositions or other corporate activities.

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.

39 unchanged sentences

sufficient cash to pay our lenders and other creditors,

Our dependence on three

major customers,

Our dependence on two major

Our ability to employ and

51 unchanged sentences

regarding our options, SARS, and valuation assumptions:

77.84-205.63 %

Risk-free interest rates

Term (in years)

As of June 30, 2026, no SARs were executed and

all SARs were expired.

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.

The Company maintained an allowance in the amount of $259,446

and $218,319 for credit losses at June 30, 2026 and December 31, 2025, respectively.

The Company 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.

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Financial highlights for the fiscal quarter ended

March 31, 2026:

June 30, 2026:

we reported revenue of $13.1 million, a 21.5% decrease compared to $16.6 million in 2025.

Three Months Ended March 31, 2026

Three Months Ended June 30, 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:

Digital Channels:

comprised of our distributor relationships and supported by our drop-ship model generated $7.1 million, or 54% of total revenue,

in the current period, compared to $8.5 million in the prior year period, a decrease of approximately 17%.

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.

National Distribution:

Revenue was $2.8 million, 21% of total revenue, compared to $4.0 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

$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;

The decrease was primarily driven

by stiffer competition and airline menu cycle changes.

Local Distribution:

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

This category generated $3.2 million,

or 25% of total revenue, which is a 24% decrease from $4.2 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

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%.

June 30, 2026 decreased by approximately 22% to $9.6 million compared to $12.4 million in the prior year period, which is primarily due

to a 21.5% decrease in revenue.

Gross profit declined by 20.1% to $3.4 million, while gross margin increased to 26.2% from 25.7%.

Operating Expenses

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or 12.4%, 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.

Payroll and related costs

decreased by $738 thousand to $1.8 million.

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

largely at the executive level.

Professional fees increased

by $153 thousand to $454 thousand primarily due to consulting fees associated with our back-office transformation efforts.

Share-based compensation

increased by $210 thousand to $23 thousand, due to revaluation of stock options and other equity-based incentives offered to attract

and retain key personnel.

Six Months Ended June 30, 2026

Revenue Breakdown:

Digital Channels:

comprised of our distributor relationships and supported by our drop-ship model generated $13.7 million, or 54% of total revenue,

in the current period, compared to $16.2 million in the prior year period, a decrease of approximately 15%.

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.

National Distribution:

Revenue was $5.3 million, 21% of total revenue, compared to $6.8 million in the prior year period.

The decrease was primarily driven

by stiffer competition and airline menu cycle changes.

Local Distribution:

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

This category generated $6.3 million,

or 25% of total revenue, which is a 28% decrease from $8.7 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 six months ended June 30, 2026 decreased

by approximately 20% to $18.7 million compared to $23.5 million in the prior year period, which is primarily due to a 21% decrease in

Gross margin remained flat at approximately 26%.

Operating Expenses

Total operating expenses decreased by $1.3 million,

or 18.5%, primarily due to the factors described below:

Payroll and related costs

decreased by $1.2 million to $3.7 million.

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

largely at the executive level.

Professional fees decreased

by $123 thousand to $704 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

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

Share-based compensation

increased by $56 thousand to $32 thousand, due to revaluation of stock options and other equity-based incentives offered to attract

and retain key personnel.

Liquidity and Capital Resources at June 30,

As of June 30, 2026, we had current assets of

$10.1 million and current liabilities of $3.5 million.

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We do not anticipate the need to raise additional capital.

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.

exploring new credit facility options 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:

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.

Net cash provided by operating

activities was $375 thousand, primarily due to net income of $2.2 million, a decrease in inventory of $581 thousand primarily 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 $179 thousand primarily

due to the collection of receivables related to discontinuing the cheese business, and a $700 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

During the three months ended March 31, 2026,

and 2025, U.S.

During the three months ended June 30, 2026 and

and its affiliates accounted for approximately 40% and 34% 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.

for approximately 18% and 15% of total revenue, respectively, during the three months ended June 30, 2026 and 2025.

During the six months ended June 30, 2026 and

and its affiliates accounted for approximately 40% and 34% of total revenue, respectively.

Gate Gourmet accounted

for approximately 17% and 14% of total revenue, respectively, during the six months ended June 30, 2026 and 2025.

Off-Balance Sheet Arrangements

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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