INNOVATIVE FOOD HOLDINGS INC (IVFH) — 10-K

Filed 2026-03-31 · Period ending 2025-12-31 · 45,734 words · SEC EDGAR

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# INNOVATIVE FOOD HOLDINGS INC (IVFH) — 10-K

**Filed:** 2026-03-31
**Period ending:** 2025-12-31
**Accession:** 0001185185-26-001180
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/312257/000118518526001180/)
**Origin leaf:** aea3f5101d848ff4073852fac0505c72f095507b0916b122f1bb9c8b4ea9eeb7
**Words:** 45,734



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**
UNITED
STATES**
**SECURITIES
AND EXCHANGE COMMISSION**
**WASHINGTON,
D.C. 20549**
**FORM
10-K**
**
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**
**For
the Fiscal Year Ended December 31, 2025**
**OR**
**
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**
**Commission
File Number: 000-09376**
*
**INNOVATIVE
FOOD HOLDINGS, INC.**
(Exact
Name of Registrant as Specified in Its Charter)
| Florida | | 20-1167761 | |
| (State or Other Jurisdiction of 
Incorporation or Organization) | | (I.R.S. Employer 
Identification No.) | |
| 2528 S. 27th Ave. Broadview,Illinois | | 60155 | |
| (Address of Principal Executive Offices) | | (Zip Code) | |
**(239)
596-0204**
(Registrants
Telephone Number, Including Area Code)
Securities
Registered Pursuant to Section 12(b) of the Act: **NONE**
Securities
Registered Pursuant to Section 12(g) of the Act:
****
**Common
Stock, Par Value $0.0001 Per Share**
(Title
of Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No 
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No 
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No 
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No 
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer,
smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | | Accelerated filer | | |
| Non-accelerated filer | | Smaller reporting company | | |
| | Emerging Growth Company | | |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate
by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. 
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. 
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). 
Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No 
The
aggregate market value of the voting and non-voting stock held by non-affiliates was approximately $32,730,248 as of June 30, 2025, based
upon a closing price of $1.30 per share for the registrants common stock on such date.
On
March 30, 2026, a total of 54,649,479 shares of our common stock were outstanding.
**INNOVATIVE
FOOD HOLDINGS, INC.**
**INDEX
TO ANNUAL REPORT ON FORM 10-K**
| | PART I | PAGE | |
| | | | |
| Item 1. | Business | 1 | |
| Item 1A. | Risk Factors | 4 | |
| Item 1B. | Unresolved Staff Comments | 13 | |
| Item 1C. | Cybersecurity | 14 | |
| Item 2. | Properties | 14 | |
| Item 3. | Legal Proceedings | 14 | |
| Item 4. | Mine Safety Disclosures | 14 | |
| | | | |
| | PART II | | |
| | | | |
| Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 15 | |
| Item 6. | Reserved | 16 | |
| Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 16 | |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | |
| Item 8. | Financial Statements and Supplementary Data | F-1 | |
| | Reports of Independent Registered Public Accounting Firm (PCAOB ID Number199) | F-1 | |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 22 | |
| Item 9A. | Controls and Procedures | 22 | |
| Item 9B. | Other Information | 24 | |
| Item 9C. | Disclosures Regarding Foreign Jurisdictions that Prevent Inspections | 24 | |
| | | | |
| | PART III | | |
| | | | |
| Item 10. | Directors, Executive Officers and Corporate Governance | | |
| Item 11. | Executive Compensation | | |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | | |
| Item 14. | Principal Accountant Fees and Services | | |
| | | | |
| | PART IV | | |
| | | | |
| Item 15. | Exhibits and Financial Statement Schedules | 26 | |
| Item 16. | Form 10-K Summary | | |
| | Signatures | 30 | |
i
Table of Contents
**FORWARD-LOOKING
INFORMATION**
**MAY
PROVE INACCURATE**
This
Annual Report on Form 10-K contains, or may contain, certain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements involve significant risks and uncertainties. Such statements
may include, without limitation, statements with respect to the Companys plans, objectives, projections, expectations and intentions
and other statements identified by words such as may, will, could, would, should,
believes, expects, anticipates, estimates, intends, plans,
potential or similar expressions. These statements are based upon the current beliefs and expectations of the Companys
management and do not constitute guarantees of future performance. Actual results could differ materially from those contained in the
forward-looking statements and are subject to significant risks and uncertainties, including those discussed under Risk Factors,
as well as those discussed elsewhere in this Form 10-K. Actual results may differ significantly from those set forth in the forward-looking
statements. These forward-looking statements involve risks and uncertainties that are subject to change based on various factors (many
of which are beyond the Companys control).
You
are further cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-K
or, in the case of documents referred to or incorporated by reference, the date of those documents.
All
subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly
any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-K or to reflect the
occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
Unless
the context requires otherwise, references in this Annual Report on Form 10-K to we, us, our,
our company, the Company, IVFH, or similar terminology refer to Innovative Food Holdings, Inc.,
a Florida corporation.
ii
Table of Contents
**PART
I**
**ITEM
1. Business**
**Our
History**
We
were incorporated on June 14, 1979 under the laws of the State of Colorado originally under the name Alpha Solarco Inc. On February 18,
2003, we changed our name to Fiber Application Systems Technology, Ltd. On February 17, 2004, we changed our state of incorporation by
merging into Innovative Food Holdings, Inc., a Florida corporation.
**Our
Operations**
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 reliability.
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 typically 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 serve the needs of Professional Chefs in settings such as restaurants, hotels, country clubs,
national chain accounts, casinos, hospitals and catering houses. We provide these premium customers with products that cannot typically
be found through their broadline distributors warehouse assortment. We distribute these products directly to Professional Chefs
in Chicago through our subsidiary, Artisan Specialty Foods, Inc. (Artisan), and nationally through our e-commerce businesses
on Amazon.com and our own website. We also drop ship specialty foods to Professional Chefs nationally through the websites of broadline
distributors, such as US Foods, Inc (USF). Between this variety of sales channels, we are able to serve our Professional
Chef customers wherever they are located.
We
service our customers from two warehouses: a 28K square foot facility in the greater Chicago area, and a 22K square foot facility in
the greater Denver area. We have the capabilities to pack and ship frozen, refrigerated, and ambient products, enabling us to sell a
broad range of specialty foods. We also have GFSI/SQF certifications, allowing compatibility with the highest standards of food handling
supply chains in the world, and the quality and food safety that our premium customers expect from us. These warehouses have the ability
to ship packages and pallets of all sizes through overnight shipping. We also leverage our own fleet of trucks to deliver directly to
our Professional Chef customers within our reach.
We
are dependent on internal technology systems and third-party platforms to support core operations, including order intake and processing
across multiple sales channels, product and pricing data management, vendor communications, inventory recordkeeping, warehouse operations,
and shipping and logistics coordination. Order information is transmitted electronically in many cases through integrations and other
interfaces to our warehouse operations and vendor partners, and certain workflows may include manual review steps and exception handling.
Our warehouse fulfillment processes use a combination of system-generated documentation and manual execution, including paper-based picking
in certain facilities, supported by inventory location records and standard operating procedures. We receive shipment status information
and delivery confirmations through carrier systems and third-party platforms where available; however, visibility and automation levels
vary by carrier and shipment type, including between parcel and freight shipments. Packaging and refrigerant requirements are generally
determined using product attributes and shipping configurations maintained in our systems and standard packing protocols, with operational
adjustments made by warehouse personnel as appropriate.
**Our
Products**
As
of the date of this report, we distribute thousands of perishable and specialty food products, including origin-specific seafood, domestic
and imported meats, exotic game and poultry, artisanal cheeses, freshly prepared meals, caviar, wild and cultivated mushrooms, micro-greens,
organic farmed and manufactured food products, estate-bottled olive oils and aged vinegars. Products are sold under both the vendors
brands and various Company-owned brands.
1
Table of Contents
Our
selection includes high-quality items like Alaskan wild king salmon, Gulf of Mexico day-boat snapper, prime rib of American kurobuta
pork, dry-aged buffalo tenderloin, white asparagus, free-range and organic chicken, truffle oils, fennel pollen, fresh morels, Trumpet
Royale mushrooms, and artisan cheeses.. These offerings ensure that our nationwide customers have access to the best food products from
around the world, delivered quickly and cost-effectively.
**Customer
Service and Logistics**
We
provide customer service support to customers by telephone, email, and other communication channels. Customer service personnel assist
with order placement, product availability, substitutions, product specifications, and delivery-related inquiries. In certain cases,
personnel with culinary experience may also provide product usage guidance.
Our
logistics team manages the shipping and delivery process of every package to ensure timely delivery of products to our customers. The
logistics team receives shipping information on all products ordered, and packages are monitored from origin to delivery. If delivery
service is interrupted, our logistics department begins the process of expediting the package to its destination or potentially reshipping
the package with a goal of 100% customer satisfaction. Our logistics team works directly with our suppliers on an ongoing basis, to ensure
that the appropriate packaging and shipping specifications are in place at all times.
**Acquisitionsand
Disposition**
On
August 30, 2024, Innovative Gourmet LLC (Innovative Gourmet), which is a wholly-owned subsidiary of the Company, and igourmet,
LLC, a Florida limited liability company (igourmet), entered into an amended and restated asset purchase agreement (the
Amended and Restates APA). Pursuant to the Amended and Restates APA, Innovative Gourmet sold to igourmet substantially
all of its assets related to marketing and selling certain artisan foods and related drop-ship fulfillment services including the website
www. igourmet.com(the Purchased Assets), for total consideration of $700,000. This transaction was closed on October
23, 2024. In connection with the closing of the transaction, Innovative Gourmet and igourmet entered into a Transition Services Agreement,
dated August 30, 2024, pursuant to which Innovative Gourmet provided certain inventory and fulfilment services related to the Purchased
Assets for a period of thirty days after closing pursuant to that certain Transition Services Agreement, dated August 30, 2024, with
igourmet.
****
On
October 14, 2024, the Company entered into an asset purchase agreement (the Golden APA) with Golden Organics, Inc., a Colorado
corporation (the Golden Organics), and David Rickard. Pursuant to the Golden APA, the Company (i) purchased substantially
all of the properties, business, and assets of Golden Organics used and/or useful in the operation of the Golden Organics business
of wholesaling bulk organic ingredients and other related food products and (ii) assume certain liabilities and obligations of Golden
Organics (such transaction, the Golden Transaction) for an aggregate purchase price of $1,580,000, which consists of (a)
a cash payment of $1,230,000 after taking into account certain working capital adjustments at the closing of the Golden Transaction and
(b) a promissory note of $350,000, payable to Golden Organics (the Seller Financing Note), with interest at six percent
(6%) per annum for a term of sixty (60) months payable in equal monthly installments with the first payment due one month after the closing.
The Seller Financing Note contains default notice and acceleration provisions, including a default interest at twelve percent (12%),
a five (5) day grace period, a five percent (5%) late fee, no prepayment penalty and a right of set-off. Under the Golden APA, David
Rickard has agreed to provide assistance to the Company for a period of ninety (90) days following the closing with respect to the transitioning
of the business and developing new business opportunities without any compensation. The Golden Transaction closed on November 18, 2024.
On
October 31, 2024, M Innovations LLC, a Delaware corporation and a wholly owned subsidiary of the Company (M Innovation)
entered into an asset purchase agreement (the M Innovation APA) with M Specialty Foods Inc., a New York corporation (M
Specialty). Pursuant to the M innovation APA, M Specialty purchased right, title, and interest in and to the assets of M Innovation
in exchange of assuming the gift card liability of $174,637.
On
December 20, 2024, the Company through its subsidiary, Golden Organics, acquired substantially all of LoCos (defined below) properties,
business, and assets used and/or useful in the operation of LoCos business of sourcing and wholesaling food products, and agreed
to assume certain liabilities of LoCo for an aggregate purchase price of $304,269, which is payable to LoCos lenders for all outstanding
and unpaid indebtedness of LoCo, pursuant to that certain asset purchase agreement, dated December 20, 2024 (the LoCo APA),
with LoCo Food Distribution LLC, a Colorado limited liability company and a wholesaler of food related products (LoCo),
and Elizabeth G. Mozer and Benjamin Mozer. . In connection with the LoCo APA, Ms. Mozer entered into a consulting services agreement
with Golden Organics to provide consulting services for a period of twelve (12) months with the option to extend on a month-to-month
basis with respect to the transitioning of the relationships and knowledge concerning the LoCos business, which agreement also
contains a two-year non-solicitation provision.
2
Table of Contents
Our subsidiary, Innovative Food Properties LLC,
a Delaware limited liability company ("Innovative Properties"), entered into an Agreement of Purchase and Sale dated July 28,
2025, as amended on September 11, 2025, September 29, 2025, and November 13, 2025, with Mountaintop Holdings, LLC, a New York limited
liability company ("Mountaintop Holdings"). Pursuant to the agreement, Innovative Properties agreed to sell to Mountaintop Holdings
certain real property located at 220 Oak Hill Road, Mountaintop, Pennsylvania 18707, together with all rights, title, improvements, easements,
and appurtenant interests, which is improved with warehouse facilities, as well as certain personal property, contracts, and intangibles
of Innovative Properties. The sale closed on March 6, 2026, at which time Innovative Properties received gross proceeds of $9.225 million.
**Business
Strategy**
****
We
are focused on specialty foodservice distribution across Local Distribution, National Distribution, and Digital Channels. We have exited
the direct-to-consumer ecommerce business. In Digital Channels, we distribute products through drop-ship arrangements and e-commerce
channels, including third-party distributor platforms and other sales channels. In Local Distribution, we focus on our Chicago and Denver
markets through Artisan and Golden Organics operations. In National Distribution, we serve customers outside of our local footprint through
our warehouse network and third-party logistics providers.
Because
revenue is concentrated on a limited number of customers, we may seek to reduce customer concentration over time through channel and
customer diversification; however, there can be no assurance that such efforts will be successful.
**Competition**
While
we face intense competition in the marketing of our products and services, it is our belief that there are few companies offering a platform
similar to ours, offering a broad range of unique, high quality, chef driven specialty products, for nationwide delivery as soon as the
next day. Our primary competition is from local purveyors that supply a limited local market and have a limited range of products. In
addition, many purveyors are well established, have reputations for success in the development and marketing of these types of products
and services and have significantly greater financial, marketing, distribution, personnel and other resources. These financial and other
capabilities permit such companies to implement extensive advertising and promotional campaigns, both generally and in response to efforts
by additional competitors such as us, to enter into new markets and introduce new products and services.
**Insurance**
We
maintain a Business Owners Policy with a general liability per occurrence limit of $1,000,000 and aggregate policy covering $2,000,000
of liability for all entities,as well as building coverage with a limit up to $4,100,000for its building in Illinois. The
Company carries an Auto Policy with non-owned automobile bodily injury and property damage coverage with a limit of $1,000,000 for all
entities. The Company also carries an Umbrella policy of up to $11,000,000 which covers all entities, along with two excess umbrella
policies that sit over the BOP and Umbrella policies. The excess umbrella policies have limits of $5,000,000 and $6,000,000. The Company
carries a Cyber policy of up to $2,000,000 which insures the Company and its subsidiaries. The Company carries a Commercial Property
Policy for its building in PA, with a limit of up to $12,350,000. Such insurance may not be sufficient to cover all potential claims
against us and additional insurance may not be available in the future at a reasonable price.
****
**Government
Regulation**
Various
federal and state laws regulate the delivery of fresh food products, requiring specialty foodservice third-party vendors to maintain
at least $3,000,000 liability insurance coverage and compliance with Hazard Analysis and Critical Control Point (HACCP) standards. Key
regulations include Pennsylvanias Solid Waste Management Act, Clean Streams Law, Air Pollution Control Act, FDAs Food Safety
Modernization Act, Pennsylvania Food Code, FDAs Fair Packaging and Labeling Act, Nutrition Labeling and Education Act, PA Food
Safety Act, and Pennsylvanias Weights and Measures Act. Compliance with these regulations is crucial to avoid penalties, ensure
food safety, accurate labeling, and maintain profitability, as any changes that hinder our ability or increase costs could adversely
impact our net revenues, gross margins, and cash flows.
**Intellectual
Property**
The
Company acquired certain Trade Names in connection with the acquisitions of Golden Organics and LoCo. As of the date of this report,
we are not aware of any valid claim or challenges to our right to use the registered trademarks or any counterfeit or other infringement
to the registered trademarks.
**Employees**
As
of December 31, 2025, we employed approximately 70 employees. Our workforce includes personnel supporting warehouse operations and logistics,
merchandising and procurement, sales and customer service, and corporate functions, including finance, technology, and human resources.
We also utilize seasonal or temporary labor in certain periods. None of our employees are represented by a union.
**Corporate
Information**
Our
executive offices are located at 2528 S. 27th Ave., Broadview, Illinois, 60155; our corporate website is www.ivfh.com; and our telephone
number is (239) 596-0204. The contents of our website are not incorporated in or deemed to be a part of this Annual Report on Form 10-K.
3
Table of Contents
**ITEM
1A. Risk Factors**
**Risks
Relating to Our Business and Industry**
**We
have a history of losses requiring us to seek additional sources of capital.**
As
of December 31, 2025, we had an accumulated deficit of $38,275,076. We had unrestricted cash at December 31, 2025 of $927,468, a decrease
of $350,620 compared to December 31, 2024. We also had restricted cash of $507,517, a decrease of $352,264 compared to December 31, 2024.
We cannot assure you that we can achieve profitability on a quarterly or annual basis in the future. If revenues grow more slowly than
we anticipate, or if operating expenses exceed our expectations or cannot be adjusted accordingly, or other extraordinary events occur,
we will incur losses. Our potential success is contingent upon the effective development and commercialization of our services and products,
as well as the continued expansion of our product portfolio and customer base, for which we can provide no assurance. Any future success
we may achieve will be influenced by numerous factors, including those beyond our control or presently unforeseeable. These factors may
include changes in or increased levels of competition, including the entry of additional competitors and increased success by existing
competitors, changes in general economic conditions, increases in operating costs, including costs of supplies, personnel, marketing
and promotions, reduced margins caused by competitive pressures, taxes, and other economic and non-economic factors. These conditions
may have a materially adverse effect upon us or may force us to curtail operations. In addition, we could require additional funds to
sustain and expand our sales and marketing activities, particularly if a well-financed competitor emerges. We can give no assurance that
financing will be available in amounts or on terms acceptable to us, if at all. Our inability in such instance to obtain sufficient funds
from our operations or external sources could require us to curtail operations.
**We
rely on a few key customers for most of our revenue and if we were to lose one or more of those clients and be unable to generate new
sales to offset such loss, we may be forced to cease or curtail our operations.**
In 2003, Next Day Gourmet initially contracted
with our subsidiary, Food Innovations, Inc. (Food Innovations), to handle the distribution of over 3,000 perishable and
specialty food products to customers of USF. Effective January 1, 2018, we executed a contract amendment between Food Innovations, our
wholly owned subsidiary, and USF which provides for no limit on automatic annual renewals thereafter if no party gives the other 30 days
notice of its intent not to renew. Our sales through USF generated gross revenues for us of $26,914,423 in the year ended December 31,
2025, and $31,185,864 in the year ended December 31, 2024. Those amounts contributed 37% and 43% of our total consolidated sales for each
of 2025 and 2024, respectively. Other significant customers include Gate Gourmet and Sams Club. During the years ended December
31, 2025 and 2024, sales to Gate Gourmet amounted to $11,253,657, or 14% of total consolidated sales, and $11,930,216, or 16% of total
consolidated sales, respectively. During the years ended December 31, 2025 and 2024, sales to Sams Club amounted to $8,563,465
or 12% of total consolidated sales, and $5,863,377, or 8%, respectively. With the discontinuance of the retail cheese business, we do
not anticipate further sales with Sams. Our sales efforts within specialty foodservice are for the most part substantially dependent upon
the efforts of the USF sales force. Although we have generated revenues from customers other than USF, if our relationship with USF were
to be materially changed and we may not be able to secure alternative revenue streams to mitigate the impact of such a loss, which may
result in us significantly curtailing our operations.
**A
variety of factors, including seasonality and the economic environment, may cause our operating results to fluctuate, leading to volatility
in our stock price.**
Our
operational results have fluctuated in the past and may fluctuate in the future, depending upon a variety of factors, including changes
in economic conditions, and shifts in the timing of holiday related purchases. Although our annual sales have historically had a significant
seasonal aspect, this has become less pronounced following the divestment of the assets of igourmet.com and M Innovations LLC (Mouth).
Additionally, events such as pandemics, strikes, or weather-related delays that interfere with the shipment of goods during the critical
holiday season would adversely affect us.
**Computer
system disruption and cyber security attacks or a data breach could damage our relationships with our customers, harm our reputation,
expose us to litigation and adversely affect our business.**
Our
systems are subject to damage or interruption from computer viruses, malicious attacks and other security breaches. The possibility of
a cyberattack on any one or all of these systems is a serious threat.
4
Table of Contents
As
part of our business model, we collect, retain, and transmit confidential information over public networks. In addition to our own databases,
we use third party service providers to store, process and transmit this information on our behalf. Although we contractually require
these service providers to implement and use reasonable security measures, we cannot control third parties and cannot guarantee that
a security breach will not occur in the future either at their location or within their systems. We have confidential security measures
in place to protect both our physical facilities and digital systems from attacks. Despite these efforts, we may be vulnerable to targeted
or random security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar
events.
Given
the growing nature of our e-commerce presence and digital strategy, it is imperative that we and our partners maintain uninterrupted
and secure operation of our: (i) computer hardware, (ii) software systems, (iii) customer marketing databases and other customer information,
and (iv) ability to email our current and potential customers.
If
our systems are damaged or fail to function properly or reliably, we may incur substantial repair or replacement costs, experience data
loss or theft and impediments to our ability to conduct our operations. Any material disruptions in our e-commerce presence or information
technology systems could have a material adverse effect on our business, financial condition and results of operations.
****
**If
we fail to continuously improve our website, it may not attract or retain customers.**
If
potential or existing customers do not find our websites, a convenient place to shop, we may not attract or retain customers and our
sales may suffer. To encourage the use of our website, we must continuously improve its accessibility, mobile capabilities, content and
ease of use. In addition, customer traffic and our business would be adversely affected if competitors websites are perceived
as easier to use or better able to satisfy customer needs. Furthermore, e-commerce conversion rates could be adversely affected by a
variety of website related factors.
**Our
marketing efforts to help grow our business may not be effective.**
Maintaining
and promoting awareness of our websites is important to our ability to attract and retain visitors. Generating a meaningful return on
our investments in marketing initiatives may be difficult. The marketing efforts we implement may not succeed for a variety of reasons,
including our inability to execute and implement our plans. External factors beyond our control may also impact the success of our marketing
initiatives. Search engines frequently change the algorithms that determine the ranking and display of results of a users search
and may make other changes to the way results are displayed, which can negatively affect the placement of links to our websites and,
therefore, reduce the number of visits to our websites.
The
growing use of online ad-blocking software, including on mobile devices, may also impact the success of our marketing efforts because
we may reach a smaller audience and fail to bring more visitors to our websites. In addition, ongoing privacy regulatory changes may
impact the scope and effectiveness of marketing and advertising services generally, including those used related to our websites. We
also seek to obtain website visitors through email. If we are unable to successfully deliver emails to potential customers or customers
do not open our emails, whether by choice or because those emails are marked as low priority or spam, or for other reasons, our business
could be adversely affected. Social networking websites, such as Facebook and others are another source of visits to our websites. As
ecommerce and social networking evolve, we must continue to evolve our marketing tactics accordingly and, if we are unable to do so,
our business could be adversely affected.
**If
we do not accurately predict customer demand for our products, we may lose customers or experience increased costs.**
As
we expand the volume of products offered to our customers, we may be required or may elect, for business purposes, to increase inventory
levels and the number of products maintained in our warehouses. If we overestimate customer demand for our products, excess inventory
and outdated merchandise could accumulate, tying up working capital and potentially resulting in reduced warehouse capacity and inventory
losses due to damage, theft and obsolescence. If we underestimate customer demand, it may disappoint customers who may turn to our competitors.
5
Table of Contents
**Unanticipated
changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect
our financial condition and results of operations.**
We
are subject to income taxes in the United States, and our domestic tax liabilities are subject to the allocation of expenses in differing
jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:
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changes
in the valuation of our deferred tax assets and liabilities; | |
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expected
timing and amount of the release of any tax valuation allowances; | |
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| |
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tax
effects of stock-based compensation; | |
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| |
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costs
related to intercompany restructurings; | |
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| |
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changes
in tax laws, regulations or interpretations thereof; or | |
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lower
than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings
in jurisdictions where we have higher statutory tax rates. | |
The Company has evaluated the potential impact
of recently enacted legislation, including but not limited to the OBBBA, on its business, financial condition, results of operations,
and cash flows. Based on managements review, the Company concluded the legislation did not have a material impact on its financial
condition, results of operations, or cash flows. However, the legislation is complex and may be subject to additional regulatory guidance,
interpretation, or implementation requirements. The Company will continue to monitor developments and assess any potential effects as
further guidance becomes available.
Changes
in domestic and international trade policies could materially and adversely affect our business, financial condition, and results of
operations. Any import tariffs may increase the cost of key food products and ingredients that we rely on, leading to higher production
costs and potential supply chain disruptions. If we are unable to pass these increased costs on to customers through pricing adjustments,
our profit margins could be adversely affected. The evolving trade environment may also create uncertainty in supplier relationships,
cause delays in sourcing raw materials, and result in fluctuating commodity prices, further impacting our operations.
In
addition, we may be subject to audits of our income, sales and other transaction taxes by federal, state and local authorities. Outcomes
from these audits could have an adverse effect on our financial condition and results of operations.
**If
we fail to attract and retain key personnel, our business and operating results may be harmed.**
Our
future success depends to a significant degree on the skills, experience, and efforts of key personnel in our senior management team,
whose vision for the Company, knowledge of our business, and expertise would be difficult to replace. We have experienced significant
turnover in senior leadership and our Board of Directors (the Board) during the past 2 years, including the departures
of Robert William Bennett as Chief Executive Officer and director, Hank Cohn as a director and Sam Klepfish as a director.
In
October 2025, Gary Schubert, our former Chief Financial Officer, was appointed Chief Executive Officer, and we are currently conducting
a search for a new Chief Financial Officer. Mr. Schubert had not previously served as Chief Executive Officer of a public company prior
to his appointment. If any of our key employees or directors leave, are unable to work, or fail to perform, or if we are unable to recruit
and retain qualified replacements and successfully manage leadership transitions, we may be unable to execute our business strategy and
our business, financial condition, results of operations, and stock price could be adversely affected.
**We
may be unable to manage our growth or operational complexity, which could impair our ability to maintain our operations and execute our
business model.**
Our
strategy involves operating multiple distribution channels and managing a large supplier base and product portfolio, including Local
Distribution (Chicago and Denver operations), National Distribution, and Digital Channels (drop-ship and e-commerce). The execution of
this strategy requires effective operational controls, forecasting and procurement discipline, reliable technology systems, and sufficient
management and personnel resources. As we seek to increase sales, expand our supplier relationships, and broaden our product assortment,
we may experience additional complexity in inventory management, fulfillment operations, customer service, vendor onboarding, and compliance
obligations.
6
Table of Contents
We
may not be able to successfully increase sales to existing customers or attract new customers at the rate we anticipate, and we may not
achieve the operational efficiencies or economies of scale required to sustain profitability. Any expansion of our operations could place
increased demands on our management team, systems, internal controls, and working capital. Our ability to execute may also depend on
our ability to obtain additional capital on acceptable terms, if needed. We can give no assurance that we will be able to successfully
implement growth initiatives, finance expansion, or manage a larger operation. If our systems, procedures, or controls are not adequate
to support our operational requirements, or if we fail to manage growth and complexity effectively, our business, financial condition,
results of operations, liquidity, and stock price could be adversely affected.
**Our
recent acquisitions, dispositions, discontinued operations, facility closures, and leadership transition may create operational disruption
and uncertainty and could adversely affect our business.**
In
recent periods, we have undertaken significant strategic actions that have changed our operating footprint, business mix, and leadership
structure. These actions have included acquisitions, divestitures, discontinued operations, and operational wind-down activity, each
of which has required management attention, integration and restructuring efforts, and operational adjustments.
****
**Acquisitions.**
In November 2024, we acquired Golden Organics and, through our Golden Organics operations, acquired substantially all of the operating
assets of LoCo in December 2024. Integration of acquired operations can involve challenges related to personnel, systems, logistics,
vendor and customer relationships, controls, and operational processes, and may take longer or cost more than anticipated.
**Dispositions
and discontinued operations.** We have also exited or divested certain businesses and assets in recent periods, including the sale
of substantially all assets related to marketing and selling certain artisan foods and related drop-ship fulfillment services including
the website www.igourmet.com (which closed October 23, 2024), as well as other discontinued operations
referenced in our SEC filings. In March 2026, we sold real property located at 220 Oak Hill Road, Mountaintop, Pennsylvania 18707, together
with all rights, title, improvements, easements, and appurtenant interests, as well as certain personal property, contracts, and intangibles
of Innovative Properties. These actions have required changes to personnel, systems, and processes and may continue to require management
attention and operational resources.
**Operational
changes and facility actions.** We have also undertaken operational changes, including facility-related actions and business wind-down
activity. Such actions may require additional expenditures, increase operational complexity during transition periods, and create execution
risk related to fulfillment, customer service, workforce management, and vendor coordination.
****
**Leadership
transition.** In addition, we have experienced changes in senior leadership in recent periods, including a transition in the Chief
Executive Officer role in 2025. Leadership transitions can create execution risk, including disruption to strategic planning, operational
decision-making, and internal controls, and may impair our ability to retain key personnel or maintain relationships with customers,
suppliers, and other business partners. If we are unable to effectively manage leadership transitions, maintain continuity of operations,
and sustain adequate management and financial oversight, our business, financial condition, results of operations, liquidity, and stock
price could be adversely affected.
Collectively,
these acquisitions, dispositions, discontinued operations, operational changes, and leadership transition may create uncertainty among
employees, customers, suppliers, and investors and may contribute to the perception that our business remains in transition. They may
also divert management attention, increase costs, and disrupt operations. If we are unable to stabilize and execute our current operating
model and strategy, or if we experience further unanticipated disruption, our business, financial condition, results of operations, liquidity,
and stock price could be adversely affected.
7
Table of Contents
**The
specialty food and foodservice industry is very competitive, which may result in decreased revenue for us as well as increased expenses
associated with marketing our services and products.**
The
specialty food and foodservice businesses are highly competitive. We compete against other providers of quality foods, some of which
sell their services globally, and some of these providers have considerably greater resources than we have. These competitors may have
greater marketing and sales capacity, established distribution networks, significant goodwill and global name recognition. Our e-commerce
and product catalog websites and paper mailings compete with other e-commerce websites and other catalogs, and other specialty foodservice
providers that market products similar to ours. We compete with national, regional and local businesses utilizing a similar strategy,
as well as traditional specialty food and foodservice distributors. The substantial sales growth in the direct-to-customer industry within
the last decade has encouraged the entry of many new competitors, new business models, and an increase in competition from established
companies. Furthermore, it may become necessary for us to reduce our prices in response to competition. This could negatively impact
our ability to be profitable.
**We
rely upon outside vendors and shippers for our specialty food products and interruption in the supply of our products or their failure
to adhere to our quality standards may negatively impact our revenues.**
Shortages
in supplies of the food products we sell may impair our ability to provide our services. Our vendors are independent and we cannot guarantee
their ability to source the products that we sell. Many of our products are wild-caught, and we cannot guarantee their availability in
the future. Unforeseen strikes and labor disputes as well as adverse weather conditions may result in our inability to deliver our products
in a timely manner. Also, if our suppliers fail to supply quality product in a timely and effective manner it could lead to an increase
in recalls and customer litigation against us which could harm our brands images and negatively affect our business and operating
results. The success of our business depends, in part, on our ability to timely and effectively deliver merchandise (e.g. fresh products)
to our customers. We cannot control all of the various factors that might affect our fulfilment rates in direct-to-customer sales. We
are heavily dependent upon one national carrier for the delivery of our fresh products to our customers. Accordingly, we
are subject to risks, including labor disputes, union organizing activity, inclement weather, technology breakdowns, natural disasters,
the closure of their offices or a reduction in operational hours due to an economic slowdown or health related crisis, possible acts
of terrorism, their ability to provide delivery services to meet our shipping needs, disruptions or increased fuel costs, and costs associated
with any regulations to address climate change. Since our customers rely on us to deliver their orders typically within 24-72 hours,
delivery delays could significantly harm our business.
**If
we are unable to enhance our existing products and services or develop and introduce new products and services in response to changing
market demand, our results of operations could be adversely affected.**
Demand
for specialty food products and services can change based on customer preferences, competition, pricing dynamics, supply availability,
and broader economic conditions. Our ability to respond to these changes may depend on our ability to identify attractive offerings,
source or develop them, and execute fulfillment and service requirements on a timely and cost-effective basis. We may be unable to develop,
introduce, or market enhancements to our existing offerings or new offerings at all, or we may be unable to do so profitably due to constraints
related to facilities, labor, systems, supplier capabilities, or logistics. For example, we may identify demand for certain value-added
or processing-related offerings, but may be unable to scale those offerings profitably within our existing operating footprint.* If
we fail to respond effectively to customer demand or competitive changes, we could experience reduced sales, margin pressure, loss of
customers, or increased operating costs.
**Any
acquisitions we complete, and integrations of acquisitions we have completed, could result in difficulties in successfully managing our
business and could harm our financial condition and results of operations.**
We
have completed acquisitions in recent periods, and we have experienced integration challenges from time to time, including difficulties
aligning operating processes, systems, and controls; retaining personnel and customers of the acquired business; and devoting significant
management attention and resources to integration and operational stabilization. We may not realize expected operational or commercial
benefits, including anticipated synergies, cross-selling opportunities, or channel expansion initiatives, and integration efforts may
take longer or cost more than expected. In addition, service disruptions or performance issues during integration periods may harm our
reputation and customer relationships. Similar challenges could occur in connection with any future acquisitions or continued integration
of recent acquisitions, which could adversely affect our results of operations, liquidity, and financial condition.
8
[Table of Contents](#TableOfContents)
**Failure to establish and maintain effective internal controls in
accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.**
We are required to comply with the SECs
rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information
in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.
Our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial
reporting until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer
an emerging growth company and are an accelerated or large accelerated filer.
We may need to undertake various actions, such
as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. In addition, we may identify
material weaknesses in our internal control over financial reporting that we may not be able to remediate in time to meet the applicable
deadline imposed upon us for compliance with the requirements of Section 404.
If we identify weaknesses in our internal control
over financial reporting, are unable to comply with the requirements of Section 404 in a timely manner or to assert that our internal
control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion
as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness
of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations
by Nasdaq on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management
resources.
As of December 31, 2025, we have identified material weakness existing
in the Companys internal control over financial reporting related to information technology general controls over certain applications
that support the Companys financial reporting processes. We are working to remediate the material weaknesses as further discussed
in Item 9A of this Amended 2024 Annual Report. If we cannot successfully remediate identified control deficiencies, including any current
or future material weaknesses in our internal control over financial reporting; the accuracy and timing of our financial reporting may
be adversely affected; our liquidity, access to capital markets and perceptions of our creditworthiness may be adversely affected; we
could face difficulty forecasting our financial results accurately, impacting decision-making by investors and analysts; we may be unable
to maintain compliance with securities laws, stock exchange listing requirements and debt instruments covenants regarding the timely
filing of periodic reports; we may be subject to regulatory investigations and penalties; investors may lose confidence in our financial
reporting; and our common stock price may decline.
**If
we are unable to effectively manage our IT dependent business our reputation and operating results may be harmed.**
Our
business depends on internal technology systems and third-party platforms that support core operations, including order management, inventory
and warehouse processes, logistics coordination, product and pricing data management, and integrations with customers, vendors, and other
partners, and we may have limited control over required technology interfaces. These systems are subject to limitations, errors, failures,
downtime, and integration disruptions (which we have experienced from time to time), as well as cybersecurity incidents and evolving
privacy and data protection requirements. Any of these events could disrupt operations, increase costs, and harm customer or vendor relationships
and our reputation.
**We
may be exposed to risks and costs associated with credit card fraud and identity theft that could cause us to incur unexpected expenses
and loss of revenue.**
An
increasing portion of our customer orders are placed through our e-commerce websites and a significant portion of our orders are submitted
via networked applications. In addition, a significant portion of sales made through our retail channel require the collection of certain
customer data, such as credit card information. In order for our sales channels to function and develop successfully, we and other parties
involved in processing customer transactions must be able to transmit confidential information, including credit card information, securely
over public networks. Third parties may have the technology or knowledge to breach the security of customer transaction data. Although
we take the security of our systems and the privacy of our customers confidential information extremely seriously, we cannot guarantee
that our security measures will effectively prevent others from obtaining unauthorized access to our information and our customers
information. Any person who circumvents our security measures could destroy or steal valuable information or disrupt our operations.
Any security breach could cause consumers to lose confidence in the security of our websites and choose not to purchase from us. Any
security breach could also expose us to risks of data loss, litigation and liability and could seriously disrupt our operations and harm
our reputation, any of which could harm our business.
In
addition, states and the federal government are increasingly enacting laws and regulations to protect consumers against identity theft.
Compliance with these laws will likely increase the costs of doing business and, if we fail to implement appropriate safeguards or to
detect and provide prompt notice of unauthorized access as required by some of these new laws, we could be subject to potential claims
for damages and other remedies, which could harm our results of operations.
**Earthquakes,
inclement weather or other events out of our control may damage or limit production from our facilities and our ability to timely deliver
products thereby adversely affecting our results of operations.**
We
have significant operations in Colorado, Illinois, and in other areas where weather or other events such as an earthquake, tsunami,
hurricane, flood, fire, high winds, extreme heat or cold, or other natural or manmade events, could disrupt our operations and impair
production or distribution of our products, damage inventory, interrupt critical functions, or otherwise affect our business negatively,
adversely affecting our results of operations.
**Declines
in general economic conditions and the resulting impact on consumer confidence and consumer spending could adversely impact our results
of operations.**
Our
financial performance is subject to declines in general economic conditions and the impact of such economic conditions on levels of consumer
confidence and consumer spending. Consumer confidence and consumer spending may deteriorate significantly and could remain depressed
for an extended period of time, whether due to pandemic, inflation, bank failure, or other unrelated reasons. Consumer purchases of discretionary
items, including specifically our merchandise, generally decline during periods when disposable income is limited, unemployment rates
increase, and consumer perceptions of personal well-being and security declines or there is economic uncertainty. An uncertain economic
environment could adversely impact our business and operating results.
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**We
may be subject to legal proceedings that could be time consuming, result in costly litigation, require significant amounts of management
time and result in the diversion of significant operational resources.**
We
are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. Litigation is inherently unpredictable.
Any claims against us, whether meritorious or not, could be time consuming, result in costly arbitration or litigation, require significant
amounts of management time and result in the diversion of significant operational resources. Even if we believe that we have meritorious
defenses against these actions, and we resolve to vigorously defend against them, the cost of defending against all these types of claims
against us or the ultimate resolution of such claims, whether by settlement or adverse court decision, may harm our business and operating
results and may be in excess of any amounts previously reserved for legal expenses. In addition, the increasingly regulated business
environment and the nature of our products may result in a greater number of enforcement actions and private litigation. This could subject
us to increased exposure to stockholder lawsuits. Also, we (and our affiliates) may be subject to attempts to bring legal claims by creditors
and other third parties related to the liabilities or potential liabilities, of our former subsidiaries, or of the liabilities related
to any company whose assets we acquired or do business with.
**We
are a smaller reporting company, and we cannot be certain if the reduced reporting requirements applicable to smaller reporting companies
will make our common stock less attractive to investors.**
We
are a smaller reporting company, as defined in the Securities Act of 1933, as amended (the Securities Act). For as long
as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable
to other public companies that are not smaller reporting companies, including not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding historical financial statements,
executive compensation in our periodic reports, registration statements, and proxy statements and exemptions from the requirements of
holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously
approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some
investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock
price may be more volatile.
We
will remain a smaller reporting company until the beginning of a year in which we had a public float of $250 million held by non-affiliates
or revenues below $100 million and a public float below $700 million, in each case as determined as of the last business day of the second
quarter of the Companys fiscal year.
**We
rely on trademarks, trade secrets, and other forms of intellectual property protections, however, these protections may not be adequate.**
****
We
rely on a combination of trademark, trade secret and other intellectual property laws in the United States. We have applied in the United
States and in certain countries for registration of a limited number of trademarks, some of which have been registered or issued. We
cannot guarantee that our applications will be approved by the applicable governmental authorities, or that third parties will not seek
to oppose or otherwise challenge our registrations or applications. We also rely on unregistered proprietary rights, including common
law trademark protection. However, third parties may use trademarks identical or confusingly similar to ours, or independently develop
trade secrets or know-how similar or equivalent to ours. If our proprietary information is divulged to third parties, including our competitors,
or our intellectual property rights are otherwise misappropriated or infringed, our competitive position could be harmed.
**Our
business is subject to governmental regulation, which could impact our operations.**
****
Our
business is subject to extensive federal and state regulations governing the delivery of fresh food products. Various laws and regulatory
frameworks, including but not limited to the FDAs Food Safety Modernization Act, Pennsylvanias Solid Waste Management Act,
Clean Streams Law, Air Pollution Control Act, Pennsylvania Food Code, FDAs Fair Packaging and Labeling Act, Nutrition Labeling
and Education Act, PA Food Safety Act, and Pennsylvanias Weights and Measures Act, impose stringent operational, food safety,
packaging, and labeling requirements on our company and third-party vendors.
Additionally,
specialty foodservice vendors are required to maintain a minimum of $3,000,000 in liability insurance coverage and comply with Hazard
Analysis and Critical Control Point (HACCP) standards. Compliance with these regulations is critical to our operations, as noncompliance
could result in significant penalties, legal liabilities, operational disruptions, and reputational harm.
10
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While
we currently maintain compliance with applicable laws and regulations, we cannot guarantee that we will continue to be in compliance
in the future, particularly as regulations evolve or become more stringent. Regulatory changes or increased enforcement efforts could
impose additional costs, limit our ability to operate efficiently, or require modifications to our business practices. Any failure to
comply with existing or future regulatory requirements could adversely affect our net revenues, gross margins, and cash flows. Any regulatory
actions or changes that increase our compliance costs or restrict our ability to source, distribute, or label products effectively may
materially impact our financial condition and results of operations.
**Risks
Relating to Our Indebtedness**
**The
loss of availability of our bank loans could adversely impact our business and financial condition.**
As
of December 31, 2025, we have a loan with MapleMark Bank subject to negative covenants which, during the life of the loans, prohibit
and/or limit us from, among other things, incurring certain types of other debt, acquiring other companies, making certain expenditures
or investments, and changing the character of our business. Any material change to the business and economic landscape negatively impacting
our business, including among other things, an outbreak of infectious disease, a pandemic or a similar public health threat, such as
the COVID-19 outbreak, or bank failures, inflation, recession, or other significant economic turmoil, could adversely impact our ability
to comply with such covenants. Our failure to comply with such covenants or any other breach of the loan documents could cause a default
and we may then be required to repay all of such borrowings with capital from other sources. Under these circumstances, other sources
of capital may not be available or may be available only on unfavorable terms. In the event of a default, it is possible that our assets
and certain of our subsidiaries assets may be attached or seized by the lenders. Any (i) failure by us to comply with the covenants
or other provisions of the loan documents, (ii) difficulty in securing any required future financing, or (iii) any such seizure or attachment
of assets could have a material adverse effect on our business and financial condition. This has not occurred in the past.
In addition, subsequent to year end, the Company
repaid the MapleMark Bank loan in full on March 6, 2026 and, as a result, the negative covenants and related restrictions under that facility
are no longer applicable. However, the Company may in the future enter into other financing arrangements that contain similar covenants
and restrictions.
**Our
ability to generate sufficient cash to service our indebtedness depends on many factors, some of which are not within our control.**
****
Our
ability to make payments on our indebtedness will depend on our ability to generate cash in the future. To a certain extent, this ability
is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control. If we
are unable to generate sufficient cash flow to service our debt, we may need to restructure or refinance all or a portion of our debt,
sell material assets or operations, or raise additional debt or equity capital. We may not be able to affect any of these actions on
a timely basis, on commercially reasonable terms, or at all, and these actions may not be sufficient to meet our debt service requirements.
In addition, any refinancing of our indebtedness could be at a higher interest rate, and the terms of our existing or future debt arrangements
may restrict us from effecting any of these alternatives. Our failure to make the required interest and principal payments on our indebtedness
would result in an event of default under the agreement governing such indebtedness, which may result in the acceleration of some or
all of our outstanding indebtedness.
**Despite
our level of indebtedness, we and our subsidiaries will still be able to incur significant additional amounts of debt, which could further
exacerbate the risks associated with our level of indebtedness.**
We
and our subsidiaries may incur substantial additional indebtedness in the future. Although the agreements governing our indebtedness
contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications
and exceptions and, under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions
could be substantial.
**The
agreements governing our outstanding indebtedness contain restrictions that limit our flexibility in operating our business.**
****
The
agreements governing our outstanding indebtedness contain various covenants that limit our ability to engage in specified types of transactions.
These covenants limit the ability of our subsidiaries to, among other things:
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incur,
assume, or permit to exist additional indebtedness or guarantees; | |
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incur
liens; | |
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make
investments and loans; | |
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pay
dividends, make payments, or redeem or repurchase capital stock; | |
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engage
in mergers, liquidations, dissolutions, asset sales, and other dispositions (including sale leaseback transactions); | |
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amend
or otherwise alter terms of certain indebtedness; | |
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enter
into agreements limiting subsidiary distributions or containing negative pledge clauses; | |
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engage
in certain transactions with affiliates; | |
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alter
the business that we conduct; | |
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change
our fiscal year; and | |
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engage
in any activities other than permitted activities. | |
As
a result of these restrictions, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity
financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur
could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the
future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.
A
breach of any of these covenants could result in a default under one or more of these agreements, including as a result of cross default
provisions, and acceleration of amounts due, and exercise of lenders rights and remedies, including rights with respect to the
collateral securing the obligations.
**Risk
Relating to Our Securities**
****
**Since
we do not intend to pay any cash dividends on our shares of common stock, our stockholders will not be able to receive a return on their
shares unless they sell them**.
We
intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends
on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their
shares unless they sell them at a price higher than that which they initially paid for such shares.
**Our
common stock is subject to the****penny stock** **rules of the Securities and Exchange Commission (the SEC)
and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an
investment in our stock.**
The
SEC has adopted Rule 15g-9 which establishes the definition of a penny stock, for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an exercise price, for warrants or options or conversion price
for convertible notes, of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require:
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that
a broker or dealer approve a persons account for transactions in penny stocks; and | |
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the
broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. | |
In
order to approve a persons account for transactions in penny stocks, the broker or dealer must:
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obtain
financial information and investment experience objectives of the person; and | |
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make
a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. | |
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The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to
the penny stock market, which, in highlight form:
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Sets
forth the basis on which the broker or dealer made the suitability determination, and | |
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that
the broker or dealer received a signed, written agreement from the investor prior to the transaction. | |
Disclosure
also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the limited market in penny stocks.
Generally,
brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more
difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
**The
market price of our common stock has been and will likely continue to bevolatile, and you could lose all or part of your investment.**
****
The
market price of our common stock may be subject to wide fluctuations in response to various factors, some of which are beyond our control
and may not be related to our operating performance. In addition to the factors discussed in this*Risk Factors*section
and elsewhere in this Annual Report on Form 10-K, factors that could cause fluctuations in the market price of our common stock include
the following:
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general
economic, regulatory, and market conditions; | |
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public
health crises and related measures to protect the public health; | |
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sales
of shares of our common stock by us or our stockholders; | |
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issuance
of shares of our common stock, whether in connection with an acquisition or disposition of our subsidiaries or assets; | |
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short
selling of our common stock or related derivative securities; | |
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from
time to time we make investments in equity that is, or may become, publicly held, and we may experience volatility due to changes
in the market prices of such equity investments; | |
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reports
by securities or industry analysts, media or other third parties, that are interpreted either negatively or positively by investors,
failure of securities analysts to maintain coverage and/or to provide accurate consensus results of us, changes in financial estimates
by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; | |
| 
| 
| 
the
financial or other projections we may provide to the public, any changes in those projections, or our failure to meet those projections; | |
| 
| 
| 
announcements
by us or our competitors of new products or services; | |
| 
| 
| 
rumors
and market speculation involving us or other companies in our industry; | |
| 
| 
| 
actual
or perceived security incidents that we or our service providers may suffer; | |
| 
| 
| 
actual
or anticipated developments in our business, our competitors businesses, or the competitive landscape generally; and | |
| 
| 
| 
potential
acquisitions, dispositions, and discontinuance of business segments. | |
In
addition, in the past, following periods of volatility in the overall market and the market price of a particular companys securities,
securities class action litigation has often been instituted against these companies. Such litigation could result in substantial costs
and a diversion of our managements attention and resources.
**ITEM
1B. Unresolved Staff Comments**
None.
13
[Table of Contents](#TableOfContents)
**ITEM
1C. Cybersecurity Risk**
Our
cybersecurity risks include theft of business data, fraud or extortion, lack of access to our information systems, harm to employees,
harm to business partners, violation of privacy laws, potential reputational damage, and litigation or other legal risk if a cybersecurity
incident were to occur. It is difficult to assign a monetary materiality assessment to these risks or to the impact if we were to sustain
a breach of our systems. Our approach is based on the premise that any cybersecurity incident could result in material harm to the Company.
We
utilize Information Technology Associates (ITA), an outsourced IT provider which has been designated with oversight responsibility
for our cybersecurity risks. ITA possesses a deep understanding of our information technology systems, including methods to manage and
monitor cybersecurity risks. It also provides active monitoring and risk assessments of cybersecurity threats and communicates such threats
to our Company. Low risk threats are communicated to our systems analysts, and high risk threats are first communicated to Gary Schubert,
our Chief Executive Officer, and are then discussed with our Board.
We
conduct annual assessments of risks posed by cybersecurity threats in conjunction with our insurance renewal cycles. This includes a
thorough review of our systems and vulnerabilities. As a result of these assessments, we have implemented tools and practices to proactively
monitor our systems and user accounts including, but not limited to, deploying solutions to constantly monitor users accessing systems,
implementation of two factor authentication for logins, and improved rules for password maintenance. Additionally, we require our associates
to complete cybersecurity awareness training provided by NINJIO.
Like
many companies, we make use of cloud-based solutions provided by several large service providers for critical information technology
infrastructure such as email and file storage. We do not maintain stand-alone servers for our emails. However, we do maintain a standalone
server for our main enterprise resource planning (ERP) program (Great Plains), and we maintain two servers dedicated to processing orders
for Artisan Specialty Foods and Food Innovations, Inc. We also maintain a file server that currently houses approximately one terabyte
of data. Each of our servers is protected by firewall and two-factor-authentication. Additionally, we take multiple snapshots of our
servers several times throughout the day and store encrypted backups of our data both locally and in a cloud server to mitigate loss
in the event of any malicious attacks on these resources. In the normal course of our relationships with the providers of our services
not controlled in-house, we regularly monitor their message boards and other formal and informal communications channels for signs of
breaches of their systems. We also survey available public information for indications that they have suffered a breach of their systems.
**ITEM
2. Properties**
We
believe our existing facilities meet our current needs. We will need additional office space or facilities in the future as we continue
to build our development, commercial and support teams. We believe we can find suitable additional space in the future on commercially
reasonable terms.
The
following table summarizes our properties as of December 31, 2025
| 
Location | | 
End of the Term | | 
Type | | 
Own/Lease | | 
Square Feet | | |
| 
Mountain Top, PA (held for sale) (a) | | 
N/A | | 
Office/Warehouse | | 
Own | | 
| 200,000 | | |
| 
Broadview, IL | | 
N/A | | 
Office/Warehouse | | 
Own | | 
| 28,711 | | |
| 
Denver, CO | | 
August 31, 2027 | | 
Office/Warehouse | | 
Lease | | 
| 20,000 | | |
| 
(a) | 
This
property is encumbered under the terms of the Maple Mark Term Loan 3 and was sold on March 6, 2026. | |
**ITEM
3. Legal Proceedings**
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. 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 predicted.
To
the knowledge of our management team, except as set forth below, there is no material litigation, arbitration or governmental proceeding
currently pending against us or any members of our management team in their capacity as such.
**ITEM
4. Mine Safety Disclosure**
Not
Applicable.
14
[Table of Contents](#TableOfContents)
**PART
II**
**ITEM
5. Market For Registrant****s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**
**Market
Information**
Prices for our common stock are quoted on the
OTCQB. Since March 2004, our common stock has traded under the symbol IVFH. Prior thereto, our common stock traded under
the symbol FBSN. At March 12, 2026, there were 54,649,479 shares of our common stock outstanding.
**Security
Holders**
On
March 12, 2026, there were approximately 63 record holders of our common stock. In addition, we believe there are at least several hundred
additional beneficial owners of our common stock whose shares are held in street name.
**Dividends**
We
have not paid dividends during the three most recently completed fiscal years and have no current plans to pay dividends on our common
stock. We currently intend to retain all earnings, if any, for use in our business.
**Recent
Sales and Other Issuances of Our Equity Securities**
The
table below provides information regarding our issuance of stock during the periods indicated.
| 
Period | | 
Total Number of Shares Issued | | | 
Average Price Issued per Share | | |
| 
Jan. 1, 2025 to Mar. 31, 2025 (1) | | 
| 822,058 | | | 
$ | 1.60 | | |
| 
Apr. 1, 2025 to Jun. 30, 2025 (2) | | 
| 365,204 | | | 
$ | 2.05 | | |
| 
Jul. 1, 2025 to Sep. 30, 2025 (3) | | 
| 82,952 | | | 
$ | 1.98 | | |
| 
Oct. 1, 2025 to Dec. 31, 2025 (4) | | 
| 214,530 | | | 
$ | 1.60 | | |
| 
Total | | 
| 1,484,744 | | | 
| | | |
| 
(1) | 
Consists of shares issued to executive officers pursuant to executive compensation plans: 530,665 shares were issued to the predecessor CEO; 133,632 shares were issued to the COO; and 73,735 shares were issued to the successor CEO under the Prior CFO stock plan. Also includes cash conversion of options to purchase 310,000 shares of common stock for a net amount issued of 84,026 shares. These shares were classified as shares to be issued on the Companys balance sheet at December 31, 2024. | |
| 
(2) | 
Consists of shares issued to executive officers pursuant to stock compensation plans: 273,036 shares were issued to the predecessor CEO; and 92,168 shares were issued to the successor CEO under the Prior CFO stock plan. | |
| 
(3) | 
Consists
of shares issued to the COO pursuant to a stock compensation plan. | |
| 
(4) | 
Consists
of shares issued to the predecessor CEO pursuant to a stock compensation plan. | |
All
of the issuances described above were exempt from registration pursuant to Section 4(2) of the Securities Act for the following reasons:
(i) none of the issuances involved a public offering or public advertising for the payment of any commissions or fees; (ii) the issuances
to investors were to accredited investors; and (iii) all issuances to affiliates and to non-affiliates holding the securities
for less than six months carried restrictive legends.
**Dilutive
Securities**
****
None**.**
15
[Table of Contents](#TableOfContents)
**Securities
Authorized for Issuance Under Equity Compensation Plans**
As
of December 31, 2025, the following shares were issuable pursuant to outstanding stock options, warrants, and rights issued under the
2011 Stock Option Plan:
| 
Plan Category | | 
Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | 
Weighted- average exercise price of outstanding options, warrants, and rights | | | 
Number of securities remaining available for future issuance under equity compensation plans | | |
| 
Equity compensation plans approved by security holders | | 
| - | | | 
$ | N/A | | | 
| 97,872,500 | | |
| 
Equity compensation plans not approved by shareholders | | 
| - | | | 
$ | - | | | 
$ | - | | |
**ITEM
6. [Reserved]**
**ITEM
7. Management****s Discussion and Analysis of Financial Condition and Results of Operations**
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, 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 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, | |
| 
| 
| 
| |
| 
| 
| 
Our
ability to implement our business plan, | |
| 
| 
| 
| |
| 
| 
| 
Our
ability to generate sufficient cash to pay our lenders and other creditors, | |
| 
| 
| 
| |
| 
| 
| 
Our
dependence on one major customer, | |
| 
| 
| 
| |
| 
| 
| 
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
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, bank failures, and environmental weather conditions. | |
16
[Table of Contents](#TableOfContents)
We
are also subject to other risks detailed from time to time in our other filings with the SEC and elsewhere in this report. Any one or
more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking
statements made by us ultimately prove to be accurate. 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.
**Acquisitions
and Disposition**
On
August 30, 2024, Innovative Gourmet, which is a wholly-owned subsidiary of the Company, and iGourmet, entered into an amended and restated
asset purchase agreement (the Amended and Restates APA). Pursuant to the Amended and Restates APA, Innovative Gourmet sold
to iGourmet substantially all of its assets related to marketing and selling certain artisan foods and related drop-ship fulfillment
services including the website www. igourmet.com (the Purchased Assets), for total consideration of $700,000. This transaction
was closed on October 23, 2024. In connection with the closing of the transaction, Innovative Gourmet and iGourmet entered into a Transition
Services Agreement, dated August 30, 2024, pursuant to which Innovative Gourmet provided certain inventory and fulfilment services related
to the Purchased Assets for a period of thirty days after closing pursuant to that certain Transition Services Agreement, dated August
30, 2024, with iGourmet. We exited this business during the year ended December 31, 2024.
On
October 14, 2024, the Company entered into the Golden APA with Golden Organics, and David Rickard. Pursuant to the Golden APA, the Company
(i) purchased substantially all of the properties, business, and assets of Golden Organics used and/or useful in the operation of the
Golden Organics business of wholesaling bulk organic ingredients and other related food products and (ii) assume certain liabilities
and obligations of Golden Organics (such transaction, the Golden Transaction) for an aggregate purchase price of $1,580,000,
which consists of (a) a cash payment of $1,230,000 after taking into account certain working capital adjustments at the closing of the
Golden Transaction and (b) a Seller Financing Note of $350,000, payable to Golden Organics, with interest at six percent (6%) per annum
for a term of sixty (60) months payable in equal monthly installments with the first payment due one month after the closing. The Seller
Financing Note Need contains default, notice and acceleration provisions, including a default interest at twelve percent (12%), a five
(5) day grace period, a five percent (5%) late fee, no prepayment penalty and a right of set-off. Under the Golden APA, David Rickard
has agreed to provide assistance to the Company for a period of ninety (90) days following the closing with respect to the transitioning
of the business and developing new business opportunities without any compensation. The Golden Transaction closed on November 18, 2024.
On
December 20, 2024, the Company through its subsidiary, Golden Organics, acquired substantially all of LoCos properties, business,
and assets used and/or useful in the operation of LoCos business of sourcing and wholesaling food products, and agreed to assume
certain liabilities of LoCo for an aggregate purchase price of $304,269, which is payable to LoCos lenders for all outstanding
and unpaid indebtedness of LoCo, pursuant to the LoCo APA, with LoCo, Elizabeth G. Mozer and Benjamin Mozer. In connection with the LoCo
APA, Ms. Mozer entered into a consulting services agreement with Golden Organics to provide consulting services for a period of twelve
(12) months with the option to extend on a month-to-month basis with respect to the transitioning of the relationships and knowledge
concerning the LoCos business, which agreement also contains a two-year non-solicitation provision.
The
Companys subsidiary, Innovative Properties, entered into an Agreement of Purchase and Sale dated July 28, 2025, as amended on
September 11, 2025, September 29, 2025, and November 13, 2025, with Mountaintop Holdings. Pursuant to the agreement, Innovative Properties
agreed to sell to Mountaintop Holdings certain real property located at 220 Oak Hill Road, Mountaintop, Pennsylvania 18707, together
with all rights, title, improvements, easements, and appurtenant interests, which is improved with warehouse facilities, as well as certain
personal property, contracts, and intangibles of Innovative Properties. The sale closed on March 6, 2026, at which time Innovative Properties
received gross proceeds of $9.225 million.
**RESULTS
OF OPERATIONS**
**Overview**
2025
represented a transitional year for IVFH as the Company shifted its focus toward strengthening its internal operating foundation to support
sustainable growth. During the year, management prioritized improvements to core business processes, operational discipline, and supporting
software and systems, with the objective of creating greater consistency, visibility, and scalability across the organization. These
efforts included initiatives to better align procurement, forecasting, and order management processes, enhance operational workflows
across distribution channels, and reinforce the Companys core operating platform.
17
[Table of Contents](#TableOfContents)
As
part of this effort, the Company also took steps to streamline its operating footprint and improve overall efficiency. This included
the planned exit and subsequent sale of the Pennsylvania facility, which was completed in the first quarter of 2026, and the transition
of certain related activities into existing operating locations. These actions were intended to simplify the operating structure, reduce
complexity, and allow management to focus resources on core distribution and digital channel operations.
**Financial
Highlights**
For the fiscal year ended December 31, 2025,
IVFH reported revenue of $60.7 million, a 2.1% increase compared to $59.5 million in 2024. Revenue Breakdown:
| 
| 
| 
Digital Channels:Largely made up of our distributor relationships and supported by our drop ship model. This category contributed $32.5 million, which is 54% of our total revenue from continuing operations. This represents a decrease of 7.2% from $35 million in 2024, primarily due to continued headwinds in our legacy drop ship business. | |
| 
| 
| 
National Distribution:Captures our partnerships with airline caterers. This category generated
$12.9 million, or 21% of total revenue from continuing operations, marking a 4.8% increase from $12.3 million in 2024. These sales are
generally delivered to the customer through 3PL carriers or FedEx. | |
| 
| 
| 
Local Distribution:Consists mainly of local sales team relationships and our local fleet
delivering direct from warehouse. This category brought in $15.3 million, or 25% of total revenue from continuing operations, an increase
of 26% from $12.1 million in 2024, supported by the expansion of local distribution channels and the acquisition of LoCo Foods. | |
Cost of goods sold for the year was $45.0 million,
compared to $44.4 million in 2024, an increase of 1.4%. Gross margin increased 49 basis points to 25.8%, primarily due to changes in
revenue mix, including shifts in the relative sales volume by distributor within the drop ship channel.
**Operating
Expenses**
**Cash
Operating Expenses (Cash OpEx):**
| 
| 
| 
Payroll
and Related Costs: Increased by $0.8 million to $9.4 million, primarily due to a $1.2 million increase related to the Denver warehouse
acquired in late 2024, partially offset by a $0.4 million decrease in variable compensation and a $0.04 million decrease from headcount
reductions. | |
| 
| 
| 
Computer
and IT Costs: Increased by $69 thousand to $461 thousand, reflecting the Companys efforts to build out the harvest platform | |
| 
| 
| 
Office,
Facilities, and Vehicles Costs: Increased by $770 thousand to $1.4 million, driven by the newly acquired facility in Denver ($435K)
and increased fleet cost of $170 thousand in the Chicago business. | |
| 
| 
| 
Advertising
and Digital Marketing Costs: Increased by $27 thousand to $31 thousand, primarily resulting from our Harvest platform and fees associated
with web design and platform fees. | |
| 
| 
| 
Professional
and Legal Fees: Decreased by $109 thousand to $1.4 million, due to various legal and transactional activities related to acquisitions,
divestitures, and other corporate actions. | |
The
total Cash OpEx increased by $1.4 million, primarily related to $2.0 million in operating expenses associated with the acquisition of
the Denver business, offset by the items noted above.
18
[Table of Contents](#TableOfContents)
**Non-Cash
Operating Expenses (Non-Cash OpEx):**
| 
| 
| 
Share-Based
Compensation: Decreased by $2.5 million to $(933) thousand, due to revaluation of stock appreciation rights. | |
| 
| 
| 
Depreciation
and Amortization Costs: Increased by $139 thousand to $254 thousand, based on increased PPE assets associated with Denver acquisitions. | |
| 
| 
| 
Credit
Loss Expense: Increased by $101 thousand to $106 thousand, primarily due to write offs within our local restaurant business and associated
bankruptcies of certain customers. | |
Total
Non-Cash OpEx Reduction: The total Non-Cash OpEx decreased by $2.2 million, primarily due to the revaluation of stock appreciation rights.
**Non-Recurring
Expenses:**
| 
| 
| 
$174
thousand in separation costs in 2025, compared to $40 thousand in separation costs in 2024. | |
****
**Income Tax Expense:**
| 
| 
| 
Increased to $81 thousand in 2025, compared to $0 in 2024. | |
**Net
Income**
Net
income from continuing operations declined by 39.1% to $2.5 million, compared to $4.2 million in 2024.
**Liquidity
and Capital Resources**
As of December 31, 2025, IVFH had current assets
of $16.8 million, including cash and cash equivalents of $0.9 million, and current liabilities of $12.4 million. The Company had net working
capital of $4.4 million.
****
**Cash
Flow Analysis**:
****
| 
| 
| 
Operating
Activities: Used $27 thousand, primarily due to the Companys net loss. Changes in the Companys working capital
components contributed $630 thousand of working capital. The significant changes in working capital included: | |
| 
| 
| 
Accounts
Receivable: Decreased by $3.3 million, reflecting shut down of the retail cheese business. | |
| 
| 
| 
| |
| 
| 
| 
Inventory:
Decreased by $1.3 million, primarily due to retail cheese business shut down. | |
| 
| 
| 
| |
| 
| 
| 
Accounts
Payable and Accrued Liabilities: Decreased by $3.5 million, mainly due to cheese business shut down and the lower annual incentive
plan payout recorded in 2024 but paid in 2025, and the elimination of accrued liabilities related to the divestiture of eCommerce
operations. | |
| 
| 
| 
| |
| 
| 
| 
Operating
lease liability: Decreased by $246 thousand due to lease payments made during the period. | |
| 
| 
| 
| |
| 
| 
| 
Accrued
separation cost related parties: Decreased by $283 thousand due to periodic payments made. | |
| 
| 
| 
Investing
Activities: Used $187 thousand due to the acquisition and disposition of property and equipment. | |
| 
| 
| 
Proceeds
from Sale of Assets: $54 thousand from the sale of warehouse equipment. | |
| 
| 
| 
| |
| 
| 
| 
Acquisition
of Property and Equipment: $242 thousand. | |
| 
| 
| 
Financing
Activities: Used $645 thousand. Key financing activities included: | |
| 
| 
| 
Principal
payments on debt: $180 thousand. | |
| 
| 
| 
| |
| 
| 
| 
Payment
for taxes related to net share settlement of equity awards: $276 thousand. | |
| 
| 
| 
| |
| 
| 
| 
Principal
Payments on Financing Leases: $189 thousand. | |
19
[Table of Contents](#TableOfContents)
**Future
Capital Needs**
IVFH
anticipates significant capital expenditures in the coming years to support its growth initiatives and operational improvements. Key
areas of investment include:
| 
| 
| 
Expansion
of Distribution Facilities: Upgrading and expanding warehouse and distribution facilities to accommodate increased demand and
improve operational efficiency. | |
| 
| 
| 
Technology
Investments: Enhancing the companys digital platforms and IT infrastructure to support e-commerce growth and improve customer
experience. | |
| 
| 
| 
Product
Development: Investing in new product lines and innovations to meet changing customer preferences and expand market share. | |
The
Company plans to finance these capital needs through a combination of internal cash flows, debt financing, and potential equity offerings.
IVFH is committed to maintaining a strong balance sheet and ensuring sufficient liquidity to support its strategic initiatives.
****
**Cash
Management Strategies**
IVFH
employs several cash management strategies to ensure adequate liquidity and optimize financial performance:
| 
| 
| 
Cash
Flow Forecasting: Regularly updating cash flow projections to anticipate and manage cash needs effectively. | |
| 
| 
| 
Working
Capital Management: Implementing strategies to optimize inventory levels, manage accounts receivable, and extend payment terms
with suppliers. | |
| 
| 
| 
Credit
Facilities: Maintaining access to credit lines and other financing options to provide flexibility in managing short-term cash
needs. | |
| 
| 
| 
Investment
of Excess Cash: Investing surplus cash in short-term, low-risk instruments to generate returns while preserving liquidity. | |
**Outlook**
****
| 
| 
| 
Growth
Opportunities: IVFH aims to continue its growth trajectory by focusing on stabilizing the business, growing the direct-to-chef
specialty foodservice platform, diversifying the drop ship business, and expanding the specialty food distribution business. The
company is well-positioned to capitalize on growth opportunities in the specialty foodservice market. | |
| 
| 
| 
Strategic
Initiatives: The Company plans to invest in digital transformation, enhance its e-commerce capabilities, and expand its distribution
network. These initiatives are expected to drive revenue growth and improve profitability. | |
****
**Risk
Factors**
IVFH
faces several risks that could impact its financial performance. These include:
| 
| 
| 
Dependence
on Major Customers: The Company has historically derived a substantial portion of its revenue from one client, U.S. Foods, Inc.,
and if this relationship were to change materially, it could significantly impact IVFHs operations. | |
| 
| 
| 
Economic
Conditions: Changes in economic conditions can affect consumer confidence and spending, which in turn can impact IVFHs
sales. | |
| 
| 
| 
Competition:
The specialty food and foodservice industries are highly competitive, and IVFH competes against other providers of quality foods,
some of which have significantly greater resources. | |
| 
| 
| 
Supply
Chain Disruptions: IVFH relies on outside vendors and shippers for its specialty food products, and any interruption in the supply
of these products or failure to adhere to quality standards could negatively impact the companys revenues. | |
| 
| 
| 
Regulatory
Compliance: Changes in government regulation and supervision could impair IVFHs sources of revenue and limit its ability
to expand its business. | |
20
[Table of Contents](#TableOfContents)
**Off-Balance
Sheet Arrangements**
IVFH
has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition,
changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources that
are material to investors.
**Critical Accounting Policies and Estimates**
Our consolidated financial statements are prepared
in accordance with U.S. generally accepted accounting principles. In preparing our consolidated financial statements, we make assumptions,
judgments, and estimates that can have a significant impact on amounts reported in our consolidated financial statements. We evaluate
our estimates and assumptions on an ongoing basis. We base our assumptions, judgments, and estimates on historical experience and various
other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under
different assumptions or conditions.
Our significant accounting policies are described
in Part II, Item 8, Nature of Activities and Summary of Significant Accounting Policies, Note 1, Business and Summary
of Significant Accounting Policies, in the notes to consolidated financial statements. An accounting policy is deemed to be critical
if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate
is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially
impact the financial statements. We believe that of all our significant accounting policies, the following accounting policies and specific
estimates involve a greater degree of judgment and complexity. Accordingly, these are the accounting policies we believe are the most
critical to aid in fully understanding and evaluating our financial condition and results of operations.
**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. Option 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 at December 31, 2025 and 2024:
| 
| | 
December 31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
Black-Scholes model variables: | | 
| | | 
| | |
| 
Volatility | | 
| 77.84-205.63 | % | | 
| 86.8-131.55 | % | |
| 
Dividends | | 
| 0.0 | % | | 
| 0.0 | % | |
| 
Risk-free interest rates | | 
| 3.48-4.10 | % | | 
| 3.66-4.71 | % | |
| 
Term (years) | | 
| 1.00-2.00 | | | 
| 2.00-2.75 | | |
**Allowance
for Credit Losses**
The
Company maintained an allowance in the amount of $218,319 and $40,002 for credit losses at December 31, 2025 and 2024, 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.
**Income
Taxes**
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 recognizes interest and penalties
related to uncertain tax positions in income tax expense. Accrued interest and penalties are included within income taxes payable in the
consolidated balance sheet
At December 31, 2025, the Company has a net operating
loss carryforward of approximately $21,256,747.
**Leases**
The
Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets (ROU assets) and short-term
and long-term lease liabilities are included on the face of the condensed consolidated balance sheet. Finance lease ROU assets are presented
within long term assets, and finance lease liabilities are presented within accrued liabilities. The Company used our incremental borrowing
rate of 6.75% in calculating the value of the ROU assets and liabilities.
21
[Table of Contents](#TableOfContents)
**ITEM
8. Financial Statements and Supplementary Data**
| 
| 
CBIZ
CPAs P.C.
500
W. Monroe Street 
Suite
2000
Chicago,
IL 60661
P:
312.632.5000 | |
**Report of Independent Registered Public Accounting
Firm**
To the Stockholders and Board of Directors of
Innovative Food Holdings, Inc.
**Opinion on the Financial Statements**
****
We have audited the accompanying consolidated
balance sheet of Innovative Food Holdings, Inc. (the Company) as of December 31, 2025, the related consolidated statements
of operations, changes in stockholders equity and cash flows for the year ended December 31, 2025, and the related notes to the
consolidated financial statements (collectively referred to as the financial statements). In our opinion, based on our audit,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and
the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally
accepted in the United States of America.
**Basis for Opinion**
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
****
**Critical Audit Matters**
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there are no critical audit matters.
*
CBIZ CPAs P.C.
We have served as the Companys auditor
since 2025.
Chicago, Illinois
March 31, 2026
F-1
Table of Contents
****
**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM**
To the Stockholders and Board of Directors
Innovative Food Holdings, Inc.
**Opinion on the Financial Statements**
We have audited the accompanying consolidated
balance sheets of Innovative Food Holdings, Inc. and Subsidiaries (the Company) as of December 31, 2024 and the related consolidated statements
of operations, stockholders equity and cash flows for the year ended December 31, 2024 and the related consolidated notes (collectively
referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2024 and the results of its operations and its cash flows for the year ended December 31, 2024,
in conformity with accounting principles generally accepted in the United States of America.
**Basis for Opinion**
These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements
based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
**Critical Audit Matters**
The critical audit matters communicated below
are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to
the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions
on the critical audit matters or on the accounts or disclosures to which they relate.
We did not identify any critical audit matters
that need to be communicated.
We
have served as the Companys auditor since 2022
Coral Springs, Florida
March 20, 2025 except for Note 3
which is dated March 27, 2026
**ASSURANCE
DIMENSIONS, LLC**
**also
d/b/a McNAMARA and ASSOCIATES, LLC**
**TAMPA
BAY**:4920 W Cypress Street, Suite 102 |Tampa, FL 33607 |Office: 813.443.5048|Fax: 813.443.5053
**JACKSONVILLE**:7800
Belfort Parkway, Suite 290 |Jacksonville, FL 32256 |Office: 888.410.2323 |Fax: 813.443.5053
**ORLANDO:**
1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053
**SOUTH
FLORIDA**: 3111 N. University Drive, Suite 621 |Coral Springs, FL 33065 | Office: 754.800.3400 |Fax: 813.443.5053
www.assurancedimensions.com
Assurance
Dimensions is the brand name under which Assurance Dimensions, LLC including its
subsidiary McNamara and Associates, LLC (referred together as AD LLC) and AbitOs
Advisors, LLC (AbitOs Advisors), provide professional services. AD LLC and
AbitOs Advisors practice as an alternative practice structure in accordance with the AICPA
Code of Professional Conduct and applicable laws, regulations, and professional standards. AD LLC is
a licensed independent CPA firm that provides attest services to its clients, and AbitOs Advisors provide
tax and business consulting services to their clients. AbitOs Advisors, and its subsidiary
entities are not licensed CPA firms.
F-2
Table of Contents
****
**Innovative
Food Holdings, Inc.**
**Consolidated
Balance Sheets**
| 
| | 
December31, | | | 
December31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
| | 
| | | 
| | |
| 
ASSETS | | 
| | | 
| | |
| 
Current assets | 
| | 
| | |
| 
Cash and cash equivalents | | 
$ | 927,468 | | | 
$ | 1,278,088 | | |
| 
Cash, restricted | | 
| 507,517 | | | 
| 859,781 | | |
| 
Accounts receivable, net | | 
| 5,300,190 | | | 
| 5,862,445 | | |
| 
Inventory, net | | 
| 3,473,604 | | | 
| 3,508,488 | | |
| 
Other current assets | | 
| 144,143 | | | 
| 235,125 | | |
| 
Assets held for sale discontinued operations | | 
| 6,144,793 | | | 
| 5,941,933 | | |
| 
Other current assets - discontinued operations | | 
| 281,699 | | | 
| 6,204,514 | | |
| 
Total current assets | | 
| 16,779,414 | | | 
| 23,890,374 | | |
| 
| | 
| | | | 
| | | |
| 
Property and equipment, net | | 
| 1,273,310 | | | 
| 1,271,811 | | |
| 
Right of use assets - operating leases, net | | 
| 512,389 | | | 
| 705,476 | | |
| 
Right of use assets - finance leases, net | | 
| 205,340 | | | 
| 83,348 | | |
| 
Amortizable intangible assets, net | | 
| 338,059 | | | 
| 424,372 | | |
| 
Indefinite-lived intangible assets | | 
| 217,000 | | | 
| 217,000 | | |
| 
Other noncurrent assets | | 
| 40,000 | | | 
| - | | |
| 
Non-current assets - discontinued operations | | 
| 215,509 | | | 
| 753,992 | | |
| 
Total assets | | 
$ | 19,581,021 | | | 
$ | 27,346,373 | | |
| 
| | 
| | | | 
| | | |
| 
LIABILITIES AND STOCKHOLDERS EQUITY | | 
| | | | 
| | | |
| 
Current liabilities | | 
| | | | 
| | | |
| 
Accounts payable and accrued liabilities | | 
$ | 3,035,799 | | | 
$ | 4,436,042 | | |
| 
Accrued separation costs - related parties, current | | 
| 109,236 | | | 
| 334,532 | | |
| 
Accrued interest | | 
| - | | | 
| 18,866 | | |
| 
Stock appreciation rights liability | | 
| 16,143 | | | 
| 1,353,150 | | |
| 
Notes payable, current portion | | 
| 66,026 | | | 
| 82,191 | | |
| 
Lease liability - operating leases, current | | 
| 285,534 | | | 
| 239,660 | | |
| 
Lease liability - finance leases, current | | 
| 48,866 | | | 
| 60,519 | | |
| 
Contingent liability, current | | 
| - | | | 
| 54,430 | | |
| 
Current liabilities - discontinued operations | | 
| 8,877,624 | | | 
| 2,834,800 | | |
| 
Total current liabilities | | 
| 12,439,228 | | | 
| 9,414,190 | | |
| 
| | 
| | | | 
| | | |
| 
Note payable non-current, net of discount | | 
| 216,947 | | | 
| 282,793 | | |
| 
Accrued separation costs - related parties, non-current | | 
| 400,000 | | | 
| 457,692 | | |
| 
Lease liability - operating leases, non-current | | 
| 234,963 | | | 
| 467,569 | | |
| 
Lease liability - finance leases, non-current | | 
| 52,683 | | | 
| 139,591 | | |
| 
Noncurrent liabilities - discontinued operations | | 
| - | | | 
| 8,409,881 | | |
| 
Total liabilities | | 
| 13,343,821 | | | 
| 19,171,716 | | |
| 
| | 
| | | | 
| | | |
| 
Commitments & Contingencies (see Note 23) | | 
| - | | | 
| - | | |
| 
Stockholders equity | | 
| | | | 
| | | |
| 
Common stock: $0.0001 par value; 500,000,000 shares authorized; 57,493,776 and 56,009,032 shares issued, and 54,649,479 and 53,164,735 shares outstanding at December 31, 2025 and 2024, respectively | | 
| 5,746 | | | 
| 5,598 | | |
| 
Common stock to be issued 0 and 738,032 shares at December 31, 2025 and 2024, respectively | | 
| - | | | 
| 74 | | |
| 
Additional paid-in capital | | 
| 45,647,902 | | | 
| 45,520,121 | | |
| 
Treasury stock: 2,644,297 shares outstanding at December 31, 2025 and 2024 | | 
| (1,141,372 | ) | | 
| (1,141,372 | ) | |
| 
Accumulated deficit | | 
| (38,275,076 | ) | | 
| (36,209,764 | ) | |
| 
Total stockholders equity | | 
| 6,237,200 | | | 
| 8,174,657 | | |
| 
| | 
| | | | 
| | | |
| 
Total liabilities and stockholders equity | | 
$ | 19,581,021 | | | 
$ | 27,346,373 | | |
See
notes to consolidated financial statements.
F-3
Table of Contents
**Innovative
Food Holdings, Inc.**
**Consolidated
Statements of Operations**
****
| 
| | 
For the | | | 
For the | | |
| 
| | 
Year Ended | | | 
Year Ended | | |
| 
| | 
December31, | | | 
December31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
| | 
| | | 
| | |
| 
Revenue | | 
$ | 60,678,166 | | | 
$ | 59,448,427 | | |
| 
Cost of goods sold | | 
| 45,049,103 | | | 
| 44,427,644 | | |
| 
Gross margin | | 
| 15,629,063 | | | 
| 15,020,783 | | |
| 
| | 
| | | | 
| | | |
| 
Selling, general and administrative expenses | | 
| 12,993,435 | | | 
| 13,748,613 | | |
| 
Total operating expenses | | 
| 12,993,435 | | | 
| 13,748,613 | | |
| 
| | 
| | | | 
| | | |
| 
Operating income (loss) | | 
| 2,635,628 | | | 
| 1,272,170 | | |
| 
| | 
| | | | 
| | | |
| 
Other income (expense): | | 
| | | | 
| | | |
| 
Interest income (expense), net | | 
| (30,306 | ) | | 
| 41,530 | | |
| 
Gain on sale of assets | | 
| - | | | 
| 2,816,616 | | |
| 
Gain on sale of subsidiary | | 
| - | | | 
| 21,126 | | |
| 
Other leasing income | | 
| 2,512 | | | 
| - | | |
| 
Total other income (expense) | | 
| (27,794 | ) | | 
| 2,879,272 | | |
| 
| | 
| | | | 
| | | |
| 
Net income before taxes | | 
| 2,607,834 | | | 
| 4,151,442 | | |
| 
| | 
| | | | 
| | | |
| 
Income tax expense | | 
| 80,787 | | | 
| - | | |
| 
| | 
| | | | 
| | | |
| 
Net income from continuing operations | | 
$ | 2,527,047 | | | 
$ | 4,151,442 | | |
| 
| | 
| | | | 
| | | |
| 
Net income (loss) from discontinued operations | | 
$ | (4,592,359 | ) | | 
$ | (1,539,928 | ) | |
| 
| | 
| | | | 
| | | |
| 
Consolidated net income (loss) | | 
| (2,065,312 | ) | | 
$ | 2,611,514 | | |
| 
| | 
| | | | 
| | | |
| 
Net income per share from continuing operations - basic | | 
$ | 0.046 | | | 
$ | 0.082 | | |
| 
| | 
| | | | 
| | | |
| 
Net income per share from continuing operations - diluted | | 
$ | 0.046 | | | 
$ | 0.081 | | |
| 
| | 
| | | | 
| | | |
| 
Net income (loss) per share from discontinued operations - basic | | 
$ | (0.084 | ) | | 
$ | (0.030 | ) | |
| 
| | 
| | | | 
| | | |
| 
Net income (loss) per share from discontinued operations - diluted | | 
$ | (0.084 | ) | | 
$ | (0.030 | ) | |
| 
| | 
| | | | 
| | | |
| 
Weighted average shares outstanding - basic | | 
| 54,582,651 | | | 
| 50,563,992 | | |
| 
| | 
| | | | 
| | | |
| 
Weighted average shares outstanding - diluted | | 
| 54,582,651 | | | 
| 51,315,879 | | |
See
notes to consolidated financial statements.
F-4
Table of Contents
**Innovative
Food Holdings, Inc.**
**Consolidated
Statement of Changes in Stockholders Equity**
**For
the Years Ended December 31, 2025 and 2024**
| 
| | 
Common Stock | | | 
Common Stock to be issued | | | 
AdditionalPaid-in | | | 
Treasury Stock | | | 
Accumulated | | | 
| | |
| 
| | 
Amount | | | 
Value | | | 
Amount | | | 
Value | | | 
Capital | | | 
Amount | | | 
Value | | | 
Deficit | | | 
Total | | |
| 
Balance - January 1, 2024 | | 
| 52,538,100 | | | 
$ | 5,251 | | | 
| - | | | 
$ | - | | | 
$ | 42,762,811 | | | 
| 2,623,171 | | | 
$ | (1,141,370 | ) | | 
$ | (38,821,278 | ) | | 
$ | 2,805,414 | | |
| 
Shares returned to treasury from sale of subsidiary | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| (21,124 | ) | | 
| 21,126 | | | 
| (2 | ) | | 
| - | | | 
| (21,126 | ) | |
| 
Fair value of shares under compensation plan | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| 437,339 | | | 
| - | | | 
| - | | | 
| - | | | 
| 437,339 | | |
| 
Shares earned under compensation plans | | 
| 2,029,513 | | | 
| 203 | | | 
| 738,032 | | | 
| 74 | | | 
| (203 | ) | | 
| - | | | 
| - | | | 
| - | | | 
| 74 | | |
| 
Shares withheld for taxes under compensation plans | | 
| (613,969 | ) | | 
| (61 | ) | | 
| - | | | 
| - | | | 
| (908,497 | ) | | 
| - | | | 
| - | | | 
| - | | | 
| (908,558 | ) | |
| 
Shares issue for cashless exercise of options | | 
| 24,138 | | | 
| 2 | | | 
| - | | | 
| - | | | 
| (2 | ) | | 
| - | | | 
| - | | | 
| - | | | 
| - | | |
| 
Shares sold for cash in private placement offering | | 
| 2,031,250 | | | 
| 203 | | | 
| - | | | 
| - | | | 
| 3,249,797 | | | 
| - | | | 
| - | | | 
| - | | | 
| 3,250,000 | | |
| 
Net income | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| 2,611,514 | | | 
| 2,611,514 | | |
| 
Balance - December 31, 2024 | | 
| 56,009,032 | | | 
$ | 5,598 | | | 
| 738,032 | | | 
$ | 74 | | | 
$ | 45,520,121 | | | 
| 2,644,297 | | | 
$ | (1,141,372 | ) | | 
$ | (36,209,764 | ) | | 
$ | 8,174,657 | | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Balance - January 1, 2025 | | 
| 56,009,032 | | | 
| 5,598 | | | 
| 738,032 | | | 
| 74 | | | 
| 45,520,121 | | | 
| 2,644,297 | | | 
| (1,141,372 | ) | | 
| (36,209,764 | ) | | 
| 8,174,657 | | |
| 
Fair value of shares under compensation plan | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| 404,032 | | | 
| - | | | 
| - | | | 
| - | | | 
| 404,032 | | |
| 
Shares earned under compensation plans | | 
| 1,400,718 | | | 
| 140 | | | 
| (738,032 | ) | | 
| (74 | ) | | 
| (66 | ) | | 
| - | | | 
| - | | | 
| - | | | 
| - | | |
| 
Shares issued in cashless conversion of options | | 
| 84,026 | | | 
| 8 | | | 
| - | | | 
| - | | | 
| (8 | ) | | 
| - | | | 
| - | | | 
| - | | | 
| - | | |
| 
Amount paid for taxes under compensation plans | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| (276,177 | ) | | 
| - | | | 
| - | | | 
| - | | | 
| (276,177 | ) | |
| 
Net income | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| - | | | 
| (2,065,312 | ) | | 
| (2,065,312 | ) | |
| 
Balance - December 31, 2025 | | 
| 57,493,776 | | | 
$ | 5,746 | | | 
| - | | | 
$ | - | | | 
$ | 45,647,902 | | | 
| 2,644,297 | | | 
$ | (1,141,372 | ) | | 
$ | (38,275,076 | ) | | 
$ | 6,237,200 | | |
See
notes to consolidated financial statements.
F-5
Table of Contents
**Innovative
Food Holdings, Inc.**
**Consolidated
Statements of Cash Flows**
| 
| | 
For the | | | 
For the | | |
| 
| | 
Year Ended | | | 
Year Ended | | |
| 
| | 
December31, | | | 
December31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
| | 
| | | 
| | |
| 
Cash flows used in operating activities: | | 
| | | 
| | |
| 
Net income (loss) | | 
$ | (2,065,312 | ) | | 
$ | 2,611,514 | | |
| 
Adjustments to reconcile net income (loss) to net cash used in operating activities: | | 
| | | | 
| | | |
| 
(Gain) loss on disposition of assets | | 
| 106,591 | | | 
| (2,816,616 | ) | |
| 
Gain on sale of subsidiaries | | 
| - | | | 
| (21,126 | ) | |
| 
Depreciation and amortization | | 
| 377,550 | | | 
| 273,084 | | |
| 
Amortization of right of use asset | | 
| 253,041 | | | 
| 54,609 | | |
| 
Amortization of discount on notes payable | | 
| 31,046 | | | 
| 5,136 | | |
| 
Stock based compensation | | 
| 404,032 | | | 
| 437,339 | | |
| 
Gain on derecognition of note payable and accrued interest | | 
| (39,154 | ) | | 
| - | | |
| 
Change in value of stock appreciation rights | | 
| (1,337,007 | ) | | 
| 1,098,130 | | |
| 
Inventory valuation adjustment associated with facility closure | | 
| 1,486,893 | | | 
| - | | |
| 
Provision for credit losses | | 
| 124,831 | | | 
| 4,599 | | |
| 
| | 
| | | | 
| | | |
| 
Changes in assets and liabilities: | | 
| | | | 
| | | |
| 
Accounts receivable, net | | 
| 3,417,539 | | | 
| (3,826,006 | ) | |
| 
Inventory, net | | 
| 1,329,991 | | | 
| (1,977,195 | ) | |
| 
Other current assets | | 
| (64,730 | ) | | 
| 41,002 | | |
| 
Accounts payable and accrued liabilities | | 
| (3,515,394 | ) | | 
| (850,125 | ) | |
| 
Accrued separation costs - related parties | | 
| (282,988 | ) | | 
| (462,713 | ) | |
| 
Deferred revenue | | 
| (7,600 | ) | | 
| (790,769 | ) | |
| 
Operating lease liability | | 
| (246,686 | ) | | 
| (52,856 | ) | |
| 
Net cash used in operating activities | | 
| (27,357 | ) | | 
| (6,271,993 | ) | |
| 
| | 
| | | | 
| | | |
| 
Cash flows from investing activities: | | 
| | | | 
| | | |
| 
Cash paid for acquisition of Golden Organics | | 
| - | | | 
| (1,231,379 | ) | |
| 
Cash received in acquisition of Loco Foods | | 
| - | | | 
| 42,000 | | |
| 
Cash paid for purchase of property and equipment | | 
| (242,322 | ) | | 
| (316,567 | ) | |
| 
Cash received from disposition of equipment | | 
| 54,500 | | | 
| - | | |
| 
Cash received from disposition of building, net of loan payoff | | 
| - | | | 
| 2,101,185 | | |
| 
Cash received from disposition of intangible assets, net of costs | | 
| - | | | 
| 617,000 | | |
| 
Net cash provided by (used in) investing activities | | 
| (187,822 | ) | | 
| 1,212,239 | | |
| 
| | 
| | | | 
| | | |
| 
Cash flows from financing activities: | | 
| | | | 
| | | |
| 
Cash received from sale of common stock, net of costs | | 
| - | | | 
| 3,250,000 | | |
| 
Payment for taxes related to net share settlement of equity awards, net | | 
| (276,177 | ) | | 
| (908,484 | ) | |
| 
Principal payments on debt | | 
| (180,143 | ) | | 
| (95,546 | ) | |
| 
Principal payments on financing leases | | 
| (188,684 | ) | | 
| (228,356 | ) | |
| 
Cash received from line of credit | | 
| 500,000 | | | 
| - | | |
| 
Principal payments on line of credit | | 
| (500,000 | ) | | 
| - | | |
| 
Net cash provided by (used in) financing activities | | 
| (645,004 | ) | | 
| 2,017,614 | | |
| 
| | 
| | | | 
| | | |
| 
Decrease in cash, cash equivalents, and restricted cash | | 
| (860,183 | ) | | 
| (3,042,140 | ) | |
| 
| | 
| | | | 
| | | |
| 
Cash, cash equivalents, and restricted cash at beginning of period | | 
| 2,380,195 | | | 
| 5,422,335 | | |
| 
| | 
| | | | 
| | | |
| 
Cash, cash equivalents, and restricted cash at end of period - continuing operations | | 
$ | 1,434,985 | | | 
$ | 2,137,869 | | |
| 
Cash, cash equivalents, and restricted cash at end of period - discontinued operations | | 
$ | 85,027 | | | 
$ | 242,326 | | |
| 
Cash, cash equivalents, and restricted cash at end of period | | 
$ | 1,520,012 | | | 
$ | 2,380,195 | | |
| 
| | 
| | | | 
| | | |
| 
Supplemental disclosure of cash flow information: | | 
| | | | 
| | | |
| 
Cash paid during the period for: | | 
| | | | 
| | | |
| 
Interest | | 
$ | 816,086 | | | 
$ | 896,709 | | |
| 
| | 
| | | | 
| | | |
| 
Taxes | | 
$ | 80,787 | | | 
$ | - | | |
| 
| | 
| | | | 
| | | |
| 
Non-cash investing and financing activities: | | 
| | | | 
| | | |
| 
Reclassify fixed assets as held for sale | | 
$ | - | | | 
$ | 5,941,933 | | |
| 
Principal and accrued interest paid from escrow to Maple Mark Bank | | 
$ | - | | | 
$ | 353,815 | | |
| 
Issuance of common stock under compensation plans | | 
$ | 140 | | | 
$ | - | | |
| 
Issuance of common stock from common stock to be issued | | 
$ | 74 | | | 
$ | - | | |
| 
Issuance of stock for cashless exercise of options | | 
$ | 8 | | | 
$ | 2 | | |
| 
Capitalized interest on financing lease | | 
$ | 2,845 | | | 
$ | - | | |
See
notes to consolidated financial statements.
F-6
Table of Contents
**INNOVATIVE
FOOD HOLDINGS, INC.**
**NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
**For
The Years Ended December 31, 2025 and 2024**
**1.
NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
Basis
of Presentation
The accompanying audited 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. All intercompany transactions have been eliminated
in consolidation. In the opinion of management, the audited consolidated financial statements reflect all adjustments, including normal
recurring adjustments, necessary for fair presentation of the interim periods presented.
Business
Activity
The
Company provides difficult-to-find specialty foods primarily to both Professional Chefs and Home Gourmets through the Companys
relationships with producers, growers, makers and distributors of these products worldwide. The distribution of these products primarily
originates from the Companys 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 Accounts
Standards Codification (ASC) 205-20,Presentation of Financial Statements**Discontinued
Operations,*in presenting the results of our discontinued operations. On February 26, 2024, the Company completed the sale
of its Haley subsidiary (see Note 5), 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. During the year ended December 31, 2024, the accounts
of the following entities are included in net loss from discontinued operations: GROW, Oasis, Haley, P Innovations, and Mouth. The only
remaining assets and liabilities on the Companys balance sheet at December 31, 2024 related to discontinued operations is cash
in the amount of $49,315 held by Mouth. 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 Companys logistics subsidiary (LII/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 our balance sheet: IFP, LII, and the activity of igourmet directly related to our cheese business. See Note 3.
Use
of Estimates
The
preparation of these 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.
F-7
[Table of Contents](#TableOfContents)
Reclassifications
Certain amounts presented in the financial statements
of the prior period have been reclassified to conform with the current period presentation of discontinued operations. See Note 3. In
addition, restricted cash has been included with unrestricted cash in the cash totals in the statement of cash flows.
Revenue
Recognition
The
Company recognizes revenue from product sales upon product delivery. All of its products are shipped either same day or overnight or
through longer shipping terms to the customer and the customer takes title to product and assumes risk and ownership of the product when
it is delivered. Shipping charges to customers and sales taxes collectible from customers, if any, are included in revenues.
For revenue from product sales (i.e., specialty foodservice
and e-commerce), the Company recognizes revenue in accordance with Financial Accounting Standards Board (FASB) Accounting
Standards Codification (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 logistic 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
is provided.
Disaggregation
of Revenue
The following table represents a disaggregation of
revenue by sales for the years ended December 31, 2025 and 2024:
| 
| | 
Year Ended | | |
| 
| | 
December 31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
Digital Channels | | 
$ | 32,499,215 | | | 
$ | 35,020,760 | | |
| 
National Distribution | | 
| 12,926,000 | | | 
| 12,337,767 | | |
| 
Local Distribution | | 
| 15,252,951 | | | 
| 12,089,900 | | |
| 
Total | | 
$ | 60,678,166 | | | 
$ | 59,448,427 | | |
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.
Selling,
General, and Administrative Expenses
The
Company has included in selling, general, and administrative expenses all other costs which support its operations, but which are not
includable as a cost of sales. These include primarily payroll, facility costs such as rent and utilities, selling expenses such as commissions
and advertising, amortization of intangible assets, depreciation, and other administrative costs including professional fees and costs
associated with non-cash stock compensation. Advertising costs are expensed as incurred.
Cash
and Cash Equivalents
Cash
equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate
obligations.
Restricted
Cash
Restricted
cash consists of cash that is contractually restricted as to withdrawal or usage. The Companys restricted cash primarily relates
to cash held by MapleMark Bank for the purpose of funding capital acquisitions.
F-8
[Table of Contents](#TableOfContents)
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. 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. At December 31, 2025 and 2024, trade receivables from the Companys largest
customer amounted to 18% and 10%, respectively, of total trade receivables. During the year ended December 31, 2025 and 2024, sales from
the Companys largest customer amounted to 42% and 52% of total sales, respectively.
The
Company maintains cash balances in excess of Federal Deposit Insurance Corporation limits. At December 31, 2025 and 2024, the total cash
in excess of these limits was $261,808 and $1,016,918, respectively.
Accounts
Receivable
The
Company provides an allowance for credit losses equal to the estimated uncollectible amounts pursuant to the guidance of Accounting Standards
Update (ASU) 2016-13, Financial Instruments Credit Losses (Topic 326) as codified in ASC 326, Financial Instruments
Credit Losses. Under ASC 326, the Company utilizes a current and expected credit loss (CECL) impairment model. The Companys
estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably
possible that the Companys estimate of the allowance for credit losses will change. Accounts receivable are presented net of an
allowance for credit losses of $218,319 and $40,002 at December 31, 2025, and 2024, respectively.
Assets
Held for Sale 
Assets
held for sale include the net book value of property and equipment that the Company plans to sell within the next year. Long-lived assets
that meet the held for sale criteria are held for sale and reported at the lower of their carrying value or fair value, less estimated
costs to sell. If the determination is made that the Company no longer expects to sell an asset within the next year, the asset is reclassified
out of assets held for sale.
Property
and Equipment
Property and equipment are valued at cost. Depreciation
is provided over the estimated useful lives using the straight-line method. Leasehold improvements are depreciated on a straight-line
basis over the lesser of the lease term or useful life.
The
estimated service lives of property and equipment are as follows:
| 
Computer
and Office Equipment | 
3 years | |
| 
Warehouse
Equipment | 
5-10 years | |
| 
Furniture
and Fixtures | 
5 years | |
| 
Vehicles | 
5 years | |
| 
Buildings | 
30 years | |
| 
Leasehold
Improvements | 
Term
of lease | |
Inventory
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. This provision reduces the carrying value of inventory to its net realizable value.
Income
Taxes
The
Company accounts for income taxes under the asset and liability method in accordance with ASC 740. The Company recognizes deferred tax
liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax
returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
The components of the deferred tax assets and liabilities are classified as current and non-current based on their characteristics. A
valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets
through future operations.
The Company accounts for uncertain tax positions
in accordance with ASC 740. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits
recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood
of being realized upon ultimate settlement.The Company classifies interest and penalties related to unrecognized tax benefits as a component
of income tax expense in the accompanying statements of operations.
F-9
[Table of Contents](#TableOfContents)
Fair
Value of Financial Instruments
The
carrying amount of the Companys cash and cash equivalents, accounts receivable, notes payable, line of credit, accounts payable
and accrued expenses, none of which is held for trading, approximates their estimated fair values due to the short-term maturities of
those financial instruments.
The
Company adopted ASC 820-10, Fair Value Measurements, which provides a framework for measuring fair value under GAAP. ASC
820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. ASC 820-10 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.
Long-Lived
Assets
The
Company reviews its property and equipment and any identifiable intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount
of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or
fair value less costs to sell.
Basic
and Diluted Income Per Share
Basic
net earnings per share is based on the weighted average number of shares outstanding during the period, while fully diluted net earnings
per share is based on the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding
during the period using the treasury stock method. Potentially dilutive securities consist of stock options and restricted stock awards
(RSAs).
Stock
options and RSAs for which the exercise or vesting 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.
| 
| | 
Year Ended | | |
| 
| | 
December31, 2025 | | | 
December31, 2024 | | |
| 
Numerator: | | 
| | | 
| | |
| 
Income from continuing operations | | 
$ | 2,527,047 | | | 
$ | 4,151,442 | | |
| 
Denominator: | | 
| | | | 
| | | |
| 
Weighted average shares outstanding - basic | | 
| 54,582,651 | | | 
| 50,563,992 | | |
| 
Dilutive effect of stock issuable under compensation plan | | 
| - | | | 
| 751,887 | | |
| 
Weighted average shares outstanding - diluted | | 
| 54,582,651 | | | 
| 51,315,879 | | |
| 
| | 
| | | | 
| | | |
| 
Income per share from continuing operations - basic | | 
$ | 0.046 | | | 
$ | 0.082 | | |
| 
Income per share from continuing operations - diluted | | 
$ | 0.046 | | | 
$ | 0.081 | | |
**Dilutive
shares at December 31, 2025:**
Stock
Options
All
stock options outstanding at December 31, 2024 have been exercised or expired as of December 31, 2025. 
Restricted
Stock Awards
The Company measures stock-based compensation cost
at fair value on the date of grant for all share-based awards and recognizes compensation expense over the service period that the awards
are expected to vest. The Company has elected to recognize compensation cost for graded-vesting awards subject only to a service condition
over the requisite service period of the entire award. For performance awards, the Company begins recognizing expense in the period in
which vesting becomes probable. The Company accounts for forfeitures as they occur.
At
December 31, 2025, 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. The fair value of these
RSAs at the date of the grants will be charged to operations upon vesting. At December 31, 2025, none of these RSAs were vested. There
was no charge to operations for these RSAs during the year ended December 31, 2025.
F-10
[Table of Contents](#TableOfContents)
The Company also has in place share-based incentive
plans for its executive team (the Executive Stock Plans). See Note 19.
When
shares are granted under the Companys 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 Companys stock on the date the award is granted.
Stock-based
Compensation
During the year ended December 31, 2025, the Company
charged the amount of $404,032 to operations in connection with Executive Stock Plans. See Note 19.
At
December 31, 2025, there were no shares of common stock which have vested and are issuable pursuant to Executive Stock Plans.
**Dilutive
shares at December 31, 2024:**
Stock
Options
The
following table summarizes the options outstanding and the related prices for the options to purchase shares of the Companys common
stock issued by the Company at December 31, 2024:
| | | | | | | Weighted | | |
| | | | | | | Average | | |
| | | | | | | Remaining | | |
| Exercise | | | Number | | | Contractual | | |
| Price | | | of Options | | | Life (years) | | |
| $ | 1.00 | | | | 50,000 | | | | 1.50 | | |
| | 1.25 | | | | 130,000 | | | | 1.50 | | |
| | 1.75 | | | | 130,000 | | | | 0.99 | | |
| $ | 1.42 | | | | 310,000 | | | | 1.41 | | |
Restricted
Stock Awards
At
December 31, 2024, there were 300,000 unvested RSAs remaining from grants in a prior year. Those 300,000 RSAs will vest as follows: 125,000
RSA 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 RSAs will vest contingent upon the attainment of a stock price of $3.00 per share for 20 straight trading days.
The Company also has in place Executive Stock Plans
for its executive team. See Note 19.
When
shares are granted under the Companys 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 Companys stock on the date the award is granted.
Stock-based
Compensation
During the year ended December 31, 2024, the Company
charged the amount of $404,804 to operations in connection with the Executive Stock Plans. See Note 19.
At
December 31, 2024, there were a total of 1,450,314 shares of common stock which have vested and are issuable pursuant to the Executive
Stock Plans.
Leases
The
Company accounts for leases in accordance with 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.
F-11
[Table of Contents](#TableOfContents)
ROU assets represent the right of use to an underlying
asset for the lease term and lease liabilities represent the Companys 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. 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 Companys
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 Companys
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.
Recently
Adopted Accounting Pronouncements
In December 2023, the FASB issuedASU 2023-09, Income Taxes
(Topic 740). This update requires public business entities to annually disclose specific categories within the income tax rate
reconciliation, and provide additional information for reconciling items that meet a certain quantitative threshold. Additionally, the
amendments in this update require entities to disclose certain information about income taxes paid, income tax disaggregation, disclosures
around unrecognized tax benefits, and the removal of disclosures related to temporary differences surrounding deferred tax liabilities
to enhance the transparency and decision usefulness of income tax disclosures. This update is effective for fiscal years beginning after
December 15, 2024 and early adoption is permitted. The Company adopted this update prospectively as of January 1, 2025 (see Note 22).
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 year ended December 31, 2025, and there was no impact to our income tax expense or effective
income tax rate.
New Accounting Pronouncements Not Yet Adopted
In November 2024, theFASBissuedASU
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. Early adoption is permitted. The Company is evaluating the standard and its potential effect on its consolidated
financial statements and segment disclosures.
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 credit losses and its consolidated
financial statements.
**2. REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS**
We have revised amounts reported in previously issued
financial statements for the periods presented in this Annual Report on Form 10-K 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.
We evaluated the aggregate effects of the errors to
our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and 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 our Annual Reports on Form 10-K for the year ended December 31, 2024 and for any quarterly periods included therein or through our
Quarterly Report on Form 10-Q for the quarterly periods ended September 30, 2025, June 30, 2025, and March 31, 2025.
F-12
[Table of Contents](#TableOfContents)
The following tables present the effects of the aforementioned
revisions on our consolidated statements of operations for the quarterly periods ended September 30, 2025, June 30, 2025, and March 31,
2025 and the year ended December 31, 2024 and for the quarterly periods included therein.
| 
| | 
Three months ended | | | 
Nine months ended | | |
| 
| | 
September 30, 2025 (Unaudited) | | | 
September 30, 2025 (Unaudited) | | |
| 
| | 
As Reported | | | 
Adjustments | | | 
As Adjusted | | | 
As Reported | | | 
Adjustments | | | 
As Revised | | |
| 
Revenue | | 
$ | 16,423,716 | | | 
$ | (684,948 | ) | | 
$ | 15,738,768 | | | 
$ | 49,247,466 | | | 
$ | (1,906,863 | ) | | 
$ | 47,340,603 | | |
| 
Cost of goods sold | | 
$ | 12,567,437 | | | 
$ | (684,948 | ) | | 
$ | 11,882,489 | | | 
$ | 37,192,111 | | | 
$ | (1,906,863 | ) | | 
$ | 35,285,248 | | |
| 
| | 
Three months ended | | | 
Six months ended | | |
| 
| | 
June 30, 2025 (Unaudited) | | | 
June 30, 2025 (Unaudited) | | |
| 
| | 
As Reported | | | 
Adjustments | | | 
As Adjusted | | | 
As Reported | | | 
Adjustments | | | 
As Revised | | |
| 
Revenue | | 
$ | 21,103,134 | | | 
$ | (642,097 | ) | | 
$ | 20,461,037 | | | 
$ | 40,651,700 | | | 
$ | (1,221,915 | ) | | 
$ | 39,429,785 | | |
| 
Cost of goods sold | | 
$ | 16,669,281 | | | 
$ | (642,097 | ) | | 
$ | 16,027,184 | | | 
$ | 31,732,040 | | | 
$ | (1,221,915 | ) | | 
$ | 30,510,125 | | |
| 
| | 
Three months ended | | |
| 
| | 
March 31, 2025 (Unaudited) | | |
| 
| | 
As Reported | | | 
Adjustments | | | 
As Revised | | |
| 
Revenue | | 
$ | 19,548,566 | | | 
$ | (579,818 | ) | | 
$ | 18,968,748 | | |
| 
Cost of goods sold | | 
$ | 15,062,759 | | | 
$ | (579,818 | ) | | 
$ | 14,482,941 | | |
| 
| | 
Year Ended | | |
| 
| | 
December 31, 2024 | | |
| 
| | 
As Reported | | | 
Adjustments | | | 
As Revised | | |
| 
Revenue | | 
$ | 62,519,394 | | | 
$ | (3,070,967 | ) | | 
$ | 59,448,427 | | |
| 
Cost of goods sold | | 
$ | 47,498,611 | | | 
$ | (3,070,967 | ) | | 
$ | 44,427,644 | | |
| 
| | 
Three months ended | | | 
Nine months ended | | |
| 
| | 
September 30, 2024 (Unaudited) | | | 
September 30, 2024 (Unaudited) | | |
| 
| | 
As Reported | | | 
Adjustments | | | 
As Revised | | | 
As Reported | | | 
Adjustments | | | 
As Revised | | |
| 
Revenue | | 
$ | 17,009,771 | | | 
$ | (767,608 | ) | | 
$ | 16,242,163 | | | 
$ | 49,398,874 | | | 
$ | (2,352,630 | ) | | 
$ | 47,046,244 | | |
| 
Cost of goods sold | | 
$ | 12,725,537 | | | 
$ | (767,608 | ) | | 
$ | 11,957,929 | | | 
$ | 37,312,903 | | | 
$ | (2,352,630 | ) | | 
$ | 34,960,273 | | |
| 
| | 
Three months ended | | | 
Six months ended | | |
| 
| | 
June 30, 2024 (Unaudited) | | | 
June 30, 2024 (Unaudited) | | |
| 
| | 
As Reported | | | 
Adjustments | | | 
As Revised | | | 
As Reported | | | 
Adjustments | | | 
As Revised | | |
| 
Revenue | | 
$ | 16,658,990 | | | 
$ | (742,892 | ) | | 
$ | 15,916,098 | | | 
$ | 32,389,103 | | | 
$ | (1,585,022 | ) | | 
$ | 30,804,081 | | |
| 
Cost of goods sold | | 
$ | 12,691,567 | | | 
$ | (742,892 | ) | | 
$ | 11,948,675 | | | 
$ | 24,587,366 | | | 
$ | (1,585,022 | ) | | 
$ | 23,002,344 | | |
| 
| | 
Three months ended | | |
| 
| | 
March 31, 2024 (Unaudited) | | |
| 
| | 
As Reported | | | 
Adjustments | | | 
As Revised | | |
| 
Revenue | | 
$ | 15,730,113 | | | 
$ | (842,130 | ) | | 
$ | 14,887,983 | | |
| 
Cost of goods sold | | 
$ | 11,895,799 | | | 
$ | (842,130 | ) | | 
$ | 11,053,669 | | |
**3.
DISCONTINUED OPERATIONS**
****
On February 26, 2024, the Company completed the sale
of its Haley subsidiary (see Note 5), 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. During the year ended December 31, 2024, the accounts
of the following entities are included in net loss from discontinued operations: GROW, Oasis, Haley, P Innovations, and Mouth. The only
remaining assets and liabilities on the Companys balance sheet at December 31, 2024 related to discontinued operations is cash
in the amount of $49,315 held by Mouth.
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 Companys logistics subsidiary (LII/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 our balance sheet: IFP, LII, and the
activity of igourmet directly related to our cheese business.
F-13
[Table of Contents](#TableOfContents)
Accordingly,
the operating results and related assets and liabilities of the retail specialty cheese business, including igourmet, along with the
Companys logistics subsidiary (LII / 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:
| 
| | 
December31, | | | 
December31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
| | 
| | | 
| | |
| 
Current assets - discontinued operations: | | 
| | | 
| | |
| 
Cash | | 
$ | 85,027 | | | 
$ | 242,326 | | |
| 
Accounts receivable | | 
| 196,672 | | | 
| 3,180,188 | | |
| 
Inventory | | 
| - | | | 
| 2,782,000 | | |
| 
Assets held for sale | | 
| 6,144,793 | | | 
| 5,941,933 | | |
| 
Total current assets - discontinued operations | | 
$ | 6,426,492 | | | 
$ | 12,146,447 | | |
| 
| | 
| | | 
| | |
| 
Noncurrent assets - discontinued operations: | | 
| | | 
| | |
| 
ROU assets financing leases, net | | 
$ | 215,509 | | | 
$ | 440,925 | | |
| 
Property and equipment, net | | 
| - | | | 
| 313,067 | | |
| 
Total noncurrent assets - discontinued operations | | 
$ | 215,509 | | | 
$ | 753,992 | | |
| 
| | 
| | | 
| | |
| 
Current liabilities - discontinued operations: | | 
| | | 
| | |
| 
Accounts payable and accrued liabilities | | 
$ | 40,884 | | | 
$ | 2,217,580 | | |
| 
Deferred revenue | | 
| 342,000 | | | 
| 349,600 | | |
| 
Accrued interest | | 
| 64,084 | | | 
| 72,481 | | |
| 
Lease Liability | | 
| - | | | 
| 87,278 | | |
| 
Notes payable, net | | 
| 8,430,656 | | | 
| 107,861 | | |
| 
Total current liabilities - discontinued operations | | 
$ | 8,877,624 | | | 
$ | 2,834,800 | | |
| 
Noncurrent liabilities - discontinued operations: | | 
| | | 
| | |
| 
Notes payable, net | | 
$ | - | | | 
$ | 8,409,881 | | |
| 
Total noncurrent liabilities - discontinued operations | | 
$ | - | | | 
$ | 8,409,881 | | |
The
following information presents the major classes of line items constituting the after-tax loss from discontinued operations in the consolidated
statements of operations:
| 
| | 
Year Ended | | |
| 
| | 
December31, | | | 
December31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
Revenue | | 
$ | 10,061,776 | | | 
$ | 9,924,585 | | |
| 
Cost of goods sold | | 
| 11,057,349 | | | 
| 8,039,204 | | |
| 
Gross margin | | 
| (995,573 | ) | | 
| 1,885,381 | | |
| 
| | 
| | | | 
| | | |
| 
Selling, general, and administrative expenses | | 
| 2,680,924 | | | 
| 2,695,273 | | |
| 
Other expense | | 
| 915,862 | | | 
| 730,036 | | |
| 
Loss from discontinued operations, net of tax | | 
$ | (4,592,359 | ) | | 
$ | (1,539,928 | ) | |
F-14
[Table of Contents](#TableOfContents)
The
following information presents the major classes of line items constituting significant operating, investing and financing cash flow
activities in the consolidated statements of cash flow relating to discontinued operations:
| 
| | 
Year Ended | | |
| 
| | 
December31, | | | 
December31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
Operating activities: | | 
| | | 
| | |
| 
Adjustments to reconcile net loss to cash | | 
| | | 
| | |
| 
Net cash provided by (used in) operating activities | | 
| | | 
| | |
| 
Inventory valuation adjustment associated with facility closure | | 
$ | 1,486,893 | | | 
$ | - | | |
| 
Loss on disposition of assets | | 
| 106,591 | | | 
| 834,463 | | |
| 
Depreciation and amortization | | 
| 123,838 | | | 
| 158,218 | | |
| 
Changes in assets and liabilities: | | 
| | | | 
| | | |
| 
Accounts receivable, net | | 
| 2,983,516 | | | 
| (3,170,397 | ) | |
| 
Inventory, net | | 
| 1,295,107 | | | 
| (2,771,015 | ) | |
| 
Accounts payable and accrued liabilities | | 
| (2,176,696 | ) | | 
| (1,965,888 | ) | |
| 
| | 
| | | | 
| | | |
| 
Investing activities: | | 
| | | | 
| | | |
| 
Cash paid for purchase of property and equipment | | 
| (101,977 | ) | | 
| (199,838 | ) | |
| 
Cash received from disposition of equipment | | 
| 54,500 | | | 
| - | | |
| 
| | 
| | | | 
| | | |
| 
Financing activities: | | 
| | | | 
| | | |
| 
Principal payments on notes payable | | 
| (87,278 | ) | | 
| (114,359 | ) | |
| 
Principal payments on financing lease | | 
| (77,473 | ) | | 
| (85,536 | ) | |
**4.
SALE OF ASSETS**
****
On
February 14, 2024, the Company sold its property located at 28411 Race Track Road, Bonita Springs, Florida, for net cash proceeds of
$2,101,185, net of the payoff of principal and interest in the amount of $356,215 on Maple Mark Term Loan 2. A gain in the amount of
$1,807,516 was recorded on this transaction.
****
On
August 30, 2024, the Company sold certain intangible assets of igourmet including but not limited to copyrights, trademarks, tradenames,
and customer lists for net cash proceeds of $617,000. The buyer also assumed certain liabilities in the net amount of $309,463. A gain
in the amount of $834,463 was recorded on this transaction.
On
October 8, 2024, we sold substantially all of the assets of Mouth including copyrights, trademarks, tradenames, and customer lists; these
assets were fully amortized at the time of the sale. In addition, the buyer assumed the liability for deferred revenue in the amount
of $174,637. A gain in the amount of $174,637 was recorded on this transaction. ****
****
**5.
SALE OF SUBSIDIARY**
On
February 26, 2024, the Company sold100% of the equity interests in Haley for the return of21,126shares of the Companys
common stock held by the buyer. Haley had no assets or liabilities at the time of the sale. The Company valued the21,126shares
of common stock at the market price on the date of the acquisition of $1.00per share and recorded a gain in the amount of $21,126on
this transaction.
F-15
[Table of Contents](#TableOfContents)
**6.
ACQUISITIONS**
****
Golden
Organics, Inc. 
On
October 14, 2024, the Company entered into an asset purchase agreement (the GO APA) with Golden Organics, Inc., a wholesaler
of bulk organic and other related food products. Pursuant to the GO APA, the Company acquired substantially all the properties, business,
and assets of Golden Organics, Inc. for an aggregate purchase price of $1,580,000, subject to net accounts receivable and accounts payable
adjustments. The Company accounted for the GO APA pursuant to the guidance of ASC 805 Accounting for Business Combinations (ASC
805). The $1,580,000 purchase price consisted of a cash payment of $1,230,000 at closing and a promissory note in the amount of
$350,000 bearing interest at the rate of 6% per annum and payable in 60 equal monthly installments. At December 31, 2024, the Company
had made cash payments in the aggregate amount of $1,231,379 on the GO APA and recorded ROU operating assets and liabilities of $731,566;
intangible assets of $198,593; property and equipment of $131,250; accounts receivable of $611,132; inventory of $1,102,536, and other
current assets of $84,000; accounts payable of $546,132; and note payable of $350,000.
LoCo
Foods
On December 20, 2024, the
Company through its subsidiary, Golden Organics, Inc., entered into an asset purchase agreement (the LoCo APA) with LoCo
Food Distribution LLC, a Colorado limited liability company (LoCo), a wholesaler of food related products, and Elizabeth
G. Mozer and Benjamin Mozer (each an Owner, collectively, the Owners and together with LoCo, collectively,
the Seller Parties). The Company accounted for the LoCo APA pursuant to the guidance of ASC 805. Pursuant to the LoCo APA,
the Company acquired substantially all of LoCos properties, business, and assets used and/or useful in the operation of LoCos
business of sourcing and wholesaling food products, and agreed to assume certain liabilities of LoCo for an aggregate purchase price
of $304,269, which is payable to LoCos lenders for all outstanding and unpaid indebtedness of LoCo. The Company also entered into
an earnout agreement with LoCo in the amount of $54,430, payable by Golden Organics to the Owners based upon twelve month revenue and
earnings targets. At December 31, 2024, the Company had recorded the following assets and liabilities pursuant to the LoCo APA: Cash
received of $42,000; intangible assets of $232,972; property and equipment of $252,000; accounts payable and accrued liabilities of $1,008,590;
and contingent liability payable of $54,430. During the year ended December 31, 2025, the Company released the liability as the targets
were not met.
**7.
ACCOUNTS RECEIVABLE**
At
December 31, 2025 and 2024, accounts receivable consisted of:
| 
| | 
2025 | | | 
2024 | | |
| 
Accounts receivable from customers | | 
$ | 5,518,509 | | | 
$ | 5,902,447 | | |
| 
Allowance for credit losses | | 
| (218,319 | ) | | 
| (40,002 | ) | |
| 
Accounts receivable, net | | 
$ | 5,300,190 | | | 
$ | 5,862,445 | | |
During
the years ended December 31, 2025 and 2024, the Company charged the amount of $106,010 and $4,599, respectively, to bad debt expense.
**8.
INVENTORY**
Inventory
consists of specialty food products. At December 31, 2025 and 2024, inventory consisted of the following:
| 
| | 
2025 | | | 
2024 | | |
| 
Finished goods inventory | | 
$ | 3,473,604 | | | 
$ | 3,508,488 | | |
F-16
[Table of Contents](#TableOfContents)
**9.
PROPERTY AND EQUIPMENT**
A
summary of property and equipment at December 31, 2025 and 2024 is as follows:
| 
| | 
December31, 2025 | | | 
December31, 2024 | | |
| 
| | 
| | | 
| | |
| 
Land | | 
$ | 208,140 | | | 
$ | 208,140 | | |
| 
Building and leasehold improvements | | 
| 951,101 | | | 
| 833,712 | | |
| 
Computer and Office Equipment | | 
| 262,769 | | | 
| 218,439 | | |
| 
Warehouse Equipment | | 
| 451,432 | | | 
| 449,186 | | |
| 
Furniture and Fixtures | | 
| 694,715 | | | 
| 694,843 | | |
| 
Vehicles | | 
| 286,509 | | | 
| 286,509 | | |
| 
Total before accumulated depreciation | | 
| 2,854,666 | | | 
| 2,690,829 | | |
| 
Less: accumulated depreciation | | 
| (1,581,356 | ) | | 
| (1,419,018 | ) | |
| 
Total | | 
$ | 1,273,310 | | | 
$ | 1,271,811 | | |
Depreciation
expense for property and equipment amounted to $167,413 and $173,021 for the years ended December 31, 2025 and 2024, respectively, which
is recorded in selling, general and administrating expenses on the Companys statement of operations.
**10.
PROPERTY AND EQUIPMENT CLASSIFIED AS HELD FOR SALE**
****
Assets
held for sale include the net book value of property and equipment the Company plans to sell within the next year. Long lived assets
that meet the criteria are held for sale and reported at the lower of their carrying value or fair value less estimated cost to sell.
As
of December 31, 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. The net book value of these assets consisted of the following at December 31, 2025 and 2024:
| 
| | 
December31, | | | 
December31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
Equipment | | 
$ | 202,860 | | | 
$ | - | | |
| 
Land | | 
| 871,372 | | | 
| 871,372 | | |
| 
Building | | 
| 5,070,561 | | | 
| 5,070,561 | | |
| 
Total | | 
$ | 6,144,793 | | | 
$ | 5,941,933 | | |
**11.
RIGHT OF USE ASSETS AND LEASE LIABILITIES** **OPERATING LEASES**
The
Company has operating leases for offices, warehouses, vehicles, and office equipment. The Companys leases have remaining lease
terms of 1 year to 3 years, some of which include options to extend.
The
Companys lease expense for the years ended December 31, 2025 and 2024 was entirely comprised of operating leases and amounted
to $280,616 and $62,686, respectively. The Companys ROU asset amortization for the years ended December 31, 2025 and 2024 was
$253,041 and $54,609, respectively. The difference between the lease expense and the associated ROU asset amortization consists of interest.
F-17
[Table of Contents](#TableOfContents)
The weighted-average discount rate of the operating
leases was 7.00% and 7.00% at December 31, 2025 and 2024, respectively. The lease rates were estimated based upon the Companys
incremental borrowing rate at the time of the inception of the leases.
The weighted-average lease term of the operating
leases was 2.16 years and 2.85 years at December 31, 2025 and 2024, respectively.
Right
of use assets operating leases are summarized below:
| 
| | 
December31, 2025 | | | 
December31, 2024 | | |
| 
| | 
| | | 
| | |
| 
Building | | 
$ | 411,060 | | | 
$ | 565,931 | | |
| 
Vehicles | | 
| 101,329 | | | 
| 128,158 | | |
| 
Warehouse equipment | | 
| - | | | 
| 7,950 | | |
| 
Office equipment | | 
| - | | | 
| 3,437 | | |
| 
Right of use assets, net | | 
$ | 512,389 | | | 
$ | 705,476 | | |
Operating
lease liabilities are summarized below:
| 
| | 
December31, 2025 | | | 
December31, 2024 | | |
| 
| | 
| | | 
| | |
| 
Building | | 
$ | 419,168 | | | 
$ | 567,684 | | |
| 
Vehicles | | 
| 101,329 | | | 
| 128,158 | | |
| 
Warehouse equipment | | 
| - | | | 
| 7,950 | | |
| 
Office equipment | | 
| - | | | 
| 3,437 | | |
| 
Lease liability | | 
$ | 520,497 | | | 
$ | 707,229 | | |
| 
Less: current portion | | 
| (285,534 | ) | | 
| (239,660 | ) | |
| 
Lease liability, non-current | | 
$ | 234,963 | | | 
$ | 467,569 | | |
Maturity
analysis under these lease agreements are as follows for the year ended December 31:
| 
2026 | | 
$ | 313,062 | | |
| 
2027 | | 
| 201,164 | | |
| 
2028 | | 
| 34,950 | | |
| 
2029 | | 
| 8,736 | | |
| 
Total | | 
$ | 557,912 | | |
| 
Less: Present value discount | | 
| (37,415 | ) | |
| 
Lease liability | | 
$ | 520,497 | | |
During
the year ended December 31, 2025, the Company recorded an increase in the right of use asset and operating lease liability in the amount
of $59,954 on the building lease associated with the acquisition of Golden Organics.
During
the year ended December 31, 2024, the Company recorded an operating lease of a building in the amount of $599,116 and an operating lease
of vehicles in the amount of $132,451 in connection with the acquisition of Golden Organics.
**12.
RIGHT OF USE ASSETS** **FINANCING LEASES**
The
Company has financing leases for vehicles and warehouse equipment. Right of use asset financing leases are summarized below:
| 
| | 
December31, 2025 | | | 
December31, 2024 | | |
| 
| | 
| | | 
| | |
| 
Vehicles | | 
$ | 404,858 | | | 
$ | 214,405 | | |
| 
Warehouse equipment | | 
| 200,097 | | | 
| - | | |
| 
Total before accumulated depreciation | | 
| 604,955 | | | 
| 214,405 | | |
| 
Less: accumulated depreciation | | 
| (399,615 | ) | | 
| (131,057 | ) | |
| 
Total | | 
$ | 205,340 | | | 
$ | 83,348 | | |
F-18
[Table of Contents](#TableOfContents)
Depreciation
expense on right of use assets for the years ended December 31, 2025 and 2024 was $31,637 and $92,870, respectively. During the year
ended December 31, 2024, the Company recorded right of use assets and lease liabilities in the amount of $180,740 related to warehouse
equipment. There were no additions to right of use assets and lease liabilities financing leases during the year ended December
31, 2025.
The weighted-average interest rate of the financing
leases was 5.77% and 5.83% at December 31, 2025 and 2024, respectively. The lease rates were estimated based upon the Companys
incremental borrowing rate at the time of the inception of the leases.
The weighted-average lease term of the financing leases
was 2. years and 2.80 years December 31, 2025 and 2024, respectively.
Financing
lease liabilities are summarized below:
| | | December31, 2025 | | | December31, 2024 | | |
| | | | | | | | |
| 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 year ended December 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $23,933 and $2,324, respectively. During the year ended December 31, 2024, the Company made principal and interest payments on this lease obligation in the amount of $22,669 and $3,588, respectively. | | $ | 29,616 | | | $ | 53,549 | | |
| | | | | | | | | | |
| Financing lease obligation under a lease agreement for a truck dated August 23, 2019 in the original amount of $80,413 payable in eighty-four monthly installments of $1,148 including interest at the rate of 5.0%. During the year ended December 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $13,025 and $751, respectively. During the year ended December 31, 2024, the Company made principal and interest payments on this lease obligation in the amount of $12,293 and $1,385, respectively. | | $ | 7,904 | | | $ | 20,929 | | |
| | | | | | | | | | |
| 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 year ended December 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $64,030 and $1,580, respectively, and capitalized interest in the amount of $2,845. During the year ended December 31, 2024, the Company made principal and interest payments on this lease obligation in the amounts of $55,108and $2,154, respectively. | | $ | 64,029 | | | | 125,632 | | |
| | | | | | | | | | |
| Total | | $ | 101,549 | | | $ | 200,110 | | |
| | | | | | | | | | |
| Current portion | | $ | 48,866 | | | $ | 60,519 | | |
| Long-term maturities | | | 52,683 | | | | 139,591 | | |
| Total | | $ | 101,549 | | | $ | 200,110 | | |
Aggregate
maturities of lease liabilities financing leases as of December 31, 2025 are as follows:
| 
For the period ended December 31, | | 
| | |
| 
2026 | | 
$ | 48,866 | | |
| 
2027 | | 
| 21,009 | | |
| 
2028 | | 
| 17,692 | | |
| 
2029 | | 
| 13,982 | | |
| 
2030 | | 
| - | | |
| 
Total | | 
$ | 101,549 | | |
F-19
[Table of Contents](#TableOfContents)
**13.
INTANGIBLE ASSETS**
The
Company acquired certain intangible assets pursuant to the acquisitions of Artisan and Golden Organics. These assets include trade names
and customer lists.
**Amortizable
Intangible Assets**
The
following table represents the balances of other amortizable intangible assets as of December 31, 2025 and 2024:
| 
| | 
December 31, 2025 | | |
| 
| | 
| | | 
Accumulated | | | 
| | |
| 
| | 
Gross | | | 
Amortization | | | 
Net | | |
| 
Customer Lists | | 
$ | 431,565 | | | 
$ | 93,506 | | | 
$ | 338,059 | | |
| 
| | 
December 31, 2024 | | |
| 
| | 
| | | 
Accumulated | | | 
| | |
| 
| | 
Gross | | | 
Amortization | | | 
Net | | |
| 
Customer Lists | | 
$ | 431,565 | | | 
$ | 7,193 | | | 
$ | 424,372 | | |
Total
amortization expense for the years ended December 31, 2025 and 2024 was $86,313 and $7,193, respectively.
Remaining
amortization expense for intangible assets as of December 31, 2025 is as follows:
| 
For the period ended December 31, | | 
| | |
| 
2026 | | 
$ | 86,313 | | |
| 
2027 | | 
| 86,313 | | |
| 
2028 | | 
| 86,313 | | |
| 
2029 | | 
| 79,120 | | |
| 
2030 | | 
| - | | |
| 
| | 
$ | 338,059 | | |
**Indefinite-lived
Intangible Assets**
Indefinite-lived
intangible assets consist of Trade Names in the amount of $217,000 held by Artisan.
**14.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**
Accounts
payable and accrued liabilities at December 31, 2025 and 2024 are as follows:
| 
| | 
December31, 2025 | | | 
December31, 2024 | | |
| 
| | 
| | | 
| | |
| 
Trade payables and accrued liabilities | | 
$ | 2,956,240 | | | 
$ | 4,087,343 | | |
| 
Accrued payroll and commissions | | 
| 79,559 | | | 
| 348,699 | | |
| 
Total | | 
$ | 3,035,799 | | | 
$ | 4,436,042 | | |
F-20
[Table of Contents](#TableOfContents)
**15.
ACCRUED SEPARATION COSTS** **RELATED PARTIES**
On February 3, 2023, the Company entered into a Severance
Note, an Agreement and General Release, and a Side Letter thereto (the SK Agreements) with Sam Klepfish its prior CEO and
a previous board member. The SK Agreements provide, among other things, for Mr. Kelpfishs resignation from all positions with the
Company and its subsidiaries on February 28, 2023, except that Mr. Klepfish will remain a director and member of the board of the Company,
confidentiality and non-disparagement conditions, nomination of Mr. Klepfish for future election to the board of directors at least through
the 2024 general meeting of shareholders based on certain minimum stock ownership and Board Observer rights when Mr. 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. The $1,000,000 portion is in the form of an unsecured, non interest-bearing note
payable to Mr. Klepfish. The SK Agreements also call for the delivery of 400,000 shares of the Companys common stock valued at
$168,000 based upon the closing price of the Companys common stock on Mr. Klepfishs separation date of February 28, 2023,
which were delivered to Mr. Klepfish on April 26, 2023; in addition, for delivery on June 1, 2027 of additional shares of the Companys
common stock equal to the greater of (i) the number of shares with an aggregate fair market value of $400,000 on such date, or (ii) 266,666
shares. The Company also agreed to pay a total of $1,199 of Consolidated Omnibus Reconciliation Act (COBRA) insurance costs
on behalf of Mr. Klepfish over eighteen months. The total amount accrued in connection with the SK Agreements was $1,819,199.
On
February 6, 2024, the Company entered into a separation agreement with Richard Tang, its Chief Financial Officer (the Tang Separation
Agreement) effective as of December 31, 2023. Pursuant to the Tang Separation Agreement, the Company will pay to Mr. Tang, in
equal installments over a five-month period, the gross sum of $113,918. In addition, Mr. Tang may submit for reimbursement up to $4,000
of legal expenses connected with the review of this separation agreement. The severance payment will be made in the following installments:
(i) $25,890 to be paid the week of March 4, 2024; (ii) $5,178 to be paid each successive week for seventeen weeks beginning the week
of March 11, 2024, until the Severance Payment is completed. In addition, if Mr. Tang timely elects to continue his group health insurance
benefits under the Consolidated Omnibus Reconciliation Act (COBRA), the Company will reimburse Mr. Tangs group health
insurance premiums (COBRA Premiums) for the lesser of: (a) the period of time Employee is eligible to continue his group
health insurance benefits under COBRA and (b) the five-month period immediately following the Separation Date. Reimbursements will be
paid within thirty days of when Mr. Tang submits a request for reimbursement and supporting documentation.
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 Chief Executive Officer of the Company, effective
October 3, 2025. Pursuant to the Bennett Separation Agreement, the Company shall (i) pay Mr. Bennett severance payments consisting of
salary continuation and bonus payable through December 31, 2025, in the total gross amount of $115,501, payable in installments on the
Companys regular payroll dates; and (ii) reimbursement of Mr. Bennetts 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 year ended December 31, 2025, the Company
paid cash in the amount of $115,501 and Cobra payments in the amount of $9,322 under the Bennett Separation Agreement.
During
the years ended December 31, 2025 and 2024, the Company paid cash in the amount of $332,165 and $333,333, respectively, to Mr. Klepfish
in connection with the SK Agreements.
During
the years ended December 31, 2025 and 2024, the Company made the following payments in connection with the Wiernasz Separation Agreement:
The Company made Cobra payments on behalf of Mr. Wiernasz in the amount of $0 and $967, respectively.
During
the years ended December 31, 2025 and 2024, the Company made the following payments in connection with the Tang Separation Agreement:
The Company made cash payments 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.
F-21
[Table of Contents](#TableOfContents)
The
following table represents the amounts accrued, paid, and outstanding on these agreements as of December 31, 2025:
| 
| | 
Total | | | 
Paid / Issued | | | 
Balance | | | 
Current | | | 
Non-current | | |
| 
Mr. Klepfish: | | 
| | | 
| | | 
| | | 
| | | 
| | |
| 
Cash through March 6, 2026 | | 
$ | 1,000,000 | | | 
$ | (941,140 | ) | | 
$ | 58,860 | | | 
$ | 58,860 | | | 
$ | - | | |
| 
Cash upon agreement execution | | 
| 250,000 | | | 
| (250,000 | ) | | 
| - | | | 
| - | | | 
| - | | |
| 
Stock June 1, 2027 | | 
| 400,000 | | | 
| - | | | 
| 400,000 | | | 
| - | | | 
| 400,000 | | |
| 
Stock Issued in April 2023 | | 
| 168,000 | | | 
| (168,000 | ) | | 
| - | | | 
| - | | | 
| - | | |
| 
Cobra over eighteen months | | 
| 1,199 | | | 
| - | | | 
| 1,199 | | | 
| 1,199 | | | 
| - | | |
| 
Total Mr. Klepfish | | 
$ | 1,819,199 | | | 
$ | (1,359,140 | ) | | 
$ | 460,059 | | | 
$ | 60,059 | | | 
$ | 400,000 | | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Mr. Tang: | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Cash over seventeen weeks | | 
$ | 113,918 | | | 
$ | (113,918 | ) | | 
$ | - | | | 
$ | - | | | 
$ | - | | |
| 
Cobra over five months | | 
| 14,495 | | | 
| (14,495 | ) | | 
| - | | | 
| - | | | 
| - | | |
| 
Total Mr. Tang | | 
$ | 128,413 | | | 
$ | (128,413 | ) | | 
$ | - | | | 
$ | - | | | 
$ | - | | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Mr. Bennett: | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Cash installments through December 31, 2025 | | 
$ | 142,485 | | | 
$ | (110,170 | ) | | 
$ | 32,315 | | | 
$ | 32,315 | | | 
$ | - | | |
| 
Cobra installments through September 30, 2026 | | 
| 31,515 | | | 
| (14,653 | ) | | 
| 16,862 | | | 
| 16,862 | | | 
| - | | |
| 
Total Mr. Bennett | | 
$ | 174,000 | | | 
$ | (124,823 | ) | | 
$ | 49,177 | | | 
$ | 49,177 | | | 
$ | - | | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Total Company | | 
$ | 2,121,612 | | | 
$ | (1,612,376 | ) | | 
$ | 509,236 | | | 
$ | 109,236 | | | 
$ | 400,000 | | |
**16.
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. The Smallwood SARs were
valued utilizing the Black-Scholes valuation model, and had an aggregate fair value of $9,794 upon issuance; this amount was charged to
operations and credited to stock appreciation rights liability. The Smallwood SARs are revalued each quarter, and any gain or loss in
the fair value is charged to non-cash compensation expense. At December 31, 2025, the Smallwood SARs had a fair value of $16,143; the
decrease in fair value in the amount of $1,337,007 was charged to selling, general and administrative expenses on the Companys
statement of operations during the year ended December 31, 2025.
The
change in valuation of the Smallwood SARs is summarized in the table below:
| 
| | 
SAR Liability | | |
| 
December 31, 2023 -fair value | | 
$ | 255,020 | | |
| 
(Gain) Loss on revaluation | | 
| 1,098,130 | | |
| 
December 31, 2024 - fair value | | 
$ | 1,353,150 | | |
| 
(Gain) Loss on revaluation | | 
| (1,337,007 | ) | |
| 
December 31, 2025 - fair value | | 
$ | 16,143 | | |
The
following assumption were utilized in the valuation of the Smallwood SARs:
| 
| | 
December 31, | | |
| 
| | 
2025 | | | 
2024 | | |
| 
Black-Scholes model variables: | | 
| | | 
| | |
| 
Volatility | | 
| 77.84-205.63 | % | | 
| 86.58-131.55 | % | |
| 
Dividends | | 
| 0.0 | % | | 
| 0.0 | % | |
| 
Risk-free interest rates | | 
| 3.48-4.10 | % | | 
| 3.66-4.71 | % | |
| 
Term (years) | | 
| 1.00-2.00 | | | 
| 2.00-2.75 | | |
The
price of the Companys common stock on the date of the grant of the SARs was$0.41. The exercise prices at the date of the
grant were $1.50 and $2.00.
F-22
[Table of Contents](#TableOfContents)
**17.
LINE OF CREDIT**
| | | December31, 2025 | | | December31, 2024 | | |
| | | | | | | | | | |
| 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 atthe 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 year ended December 31, 2025, the Company borrowed the amount of $500,000under the MapleMark Revolver, and repaid the amount of $500,000. During the year ended December 31, 2025, the Company paid interest in the amount of $1,804on the MapleMark Revolver. During the year ended December 31, 2024, the Company did not draw on the MapleMark Revolved and no interest was incurred. | | $ | - | | | $ | - | | |
**18.
NOTES PAYABLE**
| | | December31, 2025 | | | December31, 2024 | | |
| | | | | | | | |
| 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 years ended December 31, 2025 and 2024, the Company accrued interest on this note in the amount of $288 and $378, respectively. 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 $39,154was recorded during the year ended December 31, 2025. 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 year ended December 31, 2025. | | $ | - | | | $ | 20,000 | | |
| | | | | | | | | | |
| A note payable in the amount of $350,000 issued in connection with the GO Acquisition (the GO Note). The GO Note is payable in 60 equal monthly instalments of $6,766 and bears interest at the rate of 6.0%. During the year ended December 31, 2025, the Company made interest payments on the GO note in the amount of $20,138. During the year ended December 31, 2025, the Company made principal payments on the GO note in the amount of $62,011. | | | 282,973 | | | | 344,984 | | |
| Total | | $ | 282,973 | | | $ | 364,984 | | |
| | | | | | | | | | |
| Current portion | | $ | 66,026 | | | $ | 82,191 | | |
| Long-term maturities, net of discount | | | 216,947 | | | | 282,793 | | |
| Total | | $ | 282,973 | | | $ | 364,984 | | |
Accrued
interest on notes payable was $0 and $91,347 at December 31, 2025 and 2024, respectively.
F-23
[Table of Contents](#TableOfContents)
Aggregate
maturities of notes payable as of December 31, 2025 are as follows:
For
the period ended December 31,
| 
2026 | | 
$ | 66,026 | | |
| 
2027 | | 
| 70,099 | | |
| 
2028 | | 
| 74,422 | | |
| 
2029 | | 
| 72,426 | | |
| 
Thereafter | | 
| - | | |
| 
Total | | 
$ | 282,973 | | |
**19.
EQUITY**
Common
Stock
As
of December 31, 2025, total number of shares of common stock issued and outstanding was 57,493,776 and 54,649,479, respectively. As of
December 31, 2024, total number of shares of common stock issued and outstanding was 56,009,032 and 53,164,735, respectively. At December
31, 2025 and 2024, a total of 2,844,297 shares of common stock were deemed issued but not outstanding. At December 31, 2025 and 2024,
an additional 0 and 738,032 shares, respectively, were classified as common stock to be issued. These shares represent shares of common
stock vested under the Companys Executive Stock Plans, and are in the process of being administratively issued.
For
the year ended December 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.
On
February 26, 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 Bill Bennett, predecessor CEO; 133,632 shares were issued to Brady Smallwood, COO; and 73,735
shares were issued to its Gary Schubert, successor CEO, pursuant to the Prior CFO Stock Plan. These shares were classified as shares
to be issued on the Companys balance sheet at December 31, 2024. There was no gain or loss recorded on this transaction.
On
June 2, 2025, the Company issued 273,026 shares of common stock to Bill Bennett, predecessor 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 Gary Schubert, successor CEO pursuant to the Prior CFO Stock Plan.
There was no gain or loss recorded on this transaction.
On
July 3, 2025, the Company issued 82,952 shares of common stock to Brady Smallwood, COO pursuant to an executive compensation plan. There
was no gain or loss recorded on this transaction.
Effective
December 31, 2025, the Company issued 214,530 shares of common stock to Bill Bennett, its predecessor CEO pursuant to an executive compensation
plan. There was no gain or loss recorded on this transaction.
On
December 31, 2025, the Company reduced the number of shares to be issued by 136,205 due to a reduction in the estimate in the number
of shares to be withheld for the payment of income taxes pursuant to the Executive Stock Plans. Of this amount, 64,518 were due to Brady
Smallwood under the COO Stock Plan, and 71,687 were due to Gary Schubert under the Prior CFO Stock Plan. There were no remaining shares
to be issued as of December 31, 2025.
F-24
[Table of Contents](#TableOfContents)
For
the year ended December 31, 2024:
On
February 26, 2024, the Company sold 100% of the equity interests in Haley for the return of 21,126 shares of the Companys common
stock held by the buyer (see Note 5). 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 share and recorded a gain in the amount of $21,126 on
this transaction.
On
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 by
a previous CFO 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.
On
July 9, 2024, the Company issued a total of 1,415,544 shares of common stock pursuant to the Companys Executive Stock Plans. These
shares were recorded at the aggregate par value of $142; there was no gain or loss recorded on these transactions as the shares were
issued pursuant to the terms of the compensation plans.
On
November 29, 2024, pursuant to a private placement, the Company sold 1,906,250 shares of common stock and on December 4, 2024 the Company
sold an additional 125,000 shares of common stock (a total of 2,031,250 shares) at a price of $1.60 per share for total proceeds of $3,250,000.
On
December 31, 2024, the Company issued the following shares pursuant to Executive Stock Plans: 517,429 shares of common stock were issued
to its predecessor CEO, net of 455,991 shares withheld for the payment of taxes in the amount of $664,431; 133,631 shares of common stock
were issued to Mr. Smallwood, net of 112,151 shares withheld for the payment of taxes in the amount of $163,763; and 73,735 shares were
issued to its successor CEO pursuant to the Prior CFO Stock Plan, net of 57,350 shares withheld for the payment of taxes in the amount
of $80,290.
On
February 15, 2024, the Company issued 150,000 shares of common stock to a previous director for options previously exercised. These shares
were recorded as issued on the Companys balance sheet effective December 31, 2023.
Stock
Appreciation Rights 
Effective
May 15, 2023, the Company issued 1,500,000 stock appreciation rights (the Smallwood SARs) to Brady Smallwood, its Chief
Operating Officer. 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 Companys intention to settle the Smallwood SARs in cash.
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 non-cash compensation and credited to a current liability on the Companys balance sheet. The Smallwood
SARs will be revalued each reporting period and any change in value will be charged to compensation expense. At December 31, 2024, the
Smallwood SARs had a fair value of $1,353,150; the increase in value during the year ended December 31, 2024 in the amount of $1,098,130
was charged to compensation expense. At December 31, 2025, the Smallwood SARs had a fair value of $16,143; the decrease in fair value
in the amount $1,337,007 was charged to non-cash compensation during the year ended December 31, 2025.
See
Note 16.
F-25
[Table of Contents](#TableOfContents)
Executive
Stock Plans
*Predecessor
CEO Stock Plan*
On
February 3, 2023, the Company entered into an employment agreement with Bill Bennett to become the Companys then CEO. Pursuant
to this agreement, Mr. Bennett was provided with an incentive compensation plan (the Predecessor CEO Stock Plan) whereby
Mr. Bennett would be granted shares of the Companys 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: | | |
| 
Stock | | | 
Number of Shares Issued | | | 
Maximum | | |
| 
Price | | | 
and Outstanding on | | | 
Number of | | |
| 
Target | | | 
Grant Date Multiplied by: | | | 
Shares | | |
| 
$ | 0.60 | | | 
| 2.00 | % | | 
| 975,133 | | |
| 
$ | 0.80 | | | 
| 1.50 | % | | 
| 731,350 | | |
| 
$ | 1.00 | | | 
| 1.00 | % | | 
| 487,567 | | |
| 
$ | 1.20 | | | 
| 0.75 | % | | 
| 365,675 | | |
| 
$ | 1.40 | | | 
| 0.75 | % | | 
| 365,675 | | |
| 
$ | 1.60 | | | 
| 0.50 | % | | 
| 243,783 | | |
| 
$ | 1.80 | | | 
| 0.50 | % | | 
| 243,783 | | |
| 
$ | 2.00 | | | 
| 0.50 | % | | 
| 243,783 | | |
The
Predecessor CEO Stock Plan had a fair value of $660,541 at inception (see Stock Plan Valuation section below). This amount
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, 2024, the price targets of $0.80, $1.00, $1.20, $1.40, and $1.60 were achieved, and Mr. Bennett became eligible
to receive an additional total of 2,194,050 shares. A total of 1,218,917 shares were issued to Mr. Bennett, and an additional 530,665
shares were recorded as to be issued to Mr. Bennett, net of 444,468 shares withheld for taxes; at December 31, 2024, 487,566 shares were
unearned.
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 Chief Executive Officer 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 December 31, 2025.
F-26
[Table of Contents](#TableOfContents)
*COO
Stock Plan*
On
April 14, 2023, the Company entered into an employment agreement with Brady Smallwood to become the Companys COO effective May
15, 2023. Pursuant to this agreement, Mr. Smallwood was provided with an incentive compensation plan (the COO Stock Plan)
whereby Mr. Smallwood would be granted shares of the Companys 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: | | |
| 
Stock | | | 
Number of Shares Issued | | | 
Maximum | | |
| 
Price | | | 
and Outstanding on | | | 
Number of | | |
| 
Target | | | 
Grant Date Multiplied by: | | | 
Shares | | |
| 
$ | 0.87 | | | 
| 0.40 | % | | 
| 196,627 | | |
| 
$ | 1.16 | | | 
| 0.30 | % | | 
| 147,470 | | |
| 
$ | 1.45 | | | 
| 0.20 | % | | 
| 98,313 | | |
| 
$ | 1.74 | | | 
| 0.15 | % | | 
| 73,735 | | |
| 
$ | 2.03 | | | 
| 0.15 | % | | 
| 73,735 | | |
| 
$ | 2.32 | | | 
| 0.10 | % | | 
| 49,157 | | |
| 
$ | 2.61 | | | 
| 0.10 | % | | 
| 49,157 | | |
| 
$ | 2.90 | | | 
| 0.10 | % | | 
| 49,157 | | |
The
COO Stock Plan had a fair value of $199,951 at inception (see Stock Plan Valuation section below). This amount is being
amortized over the 31.5-month life of the plan. During the years ended December 31, 2025 and 2024, $76,172 and $76,172 of this amount
was charged to operations, respectively.
During
the year ended December 31, 2024, the price targets of $0.87, $1.16, and $1.45 were achieved, and Mr. Smallwood became eligible to receive
a total of 442,410 shares. During the year ended December 31, 2024, a total of 196,627 shares were issued to Mr. Smallwood, and 245,783
shares were recorded as to be issued.
During
the year ended December 31, 2025, the price targets of $1.74 and $2.03 were achieved, and Mr. Smallwood became eligible to receive an
additional 147,470 shares. During the year ended December 31, 2025, a total of 225,811 shares were issued to Mr. Smallwood, net of 176,669
shares withheld for taxes. At December31, 2025, a total of 147,471 shares remain unvested under the COO Stock Plan. There are no shares
due to Mr. Smallwood at December 31, 2025.
*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 Companys
Chief Executive Officer (the CEO Employment Agreement). The CEO Employment Agreement provides for the grant of 1,350,000
shares of the Company (the Successor CEO Stock Plan) common stock, subject to a vesting schedule, no later than March 31,
2026. These shares had not been granted as of December 31, 2025. The CEO Employment Agreement and Successor CEO Stock Plan replaced Mr.
Schuberts executive compensation plan that was in place during his role as the Companys CFO (the Prior CFO Stock
Plan.
F-27
[Table of Contents](#TableOfContents)
*Prior
CFO Stock Plan*
On
December 29, 2023, the Company entered into an employment agreement with Gary Schubert to become the Companys CFO effective January
1, 2024. Pursuant 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 Companys 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: | | |
| 
Stock | | | 
Number of Shares Issued | | | 
Maximum | | |
| 
Price | | | 
and Outstanding on | | | 
Number of | | |
| 
Target | | | 
Grant Date Multiplied by: | | | 
Shares | | |
| 
$ | 1.23 | | | 
| 0.40 | % | | 
| 131,085 | | |
| 
$ | 1.63 | | | 
| 0.30 | % | | 
| 98,313 | | |
| 
$ | 2.04 | | | 
| 0.20 | % | | 
| 65,542 | | |
| 
$ | 2.45 | | | 
| 0.15 | % | | 
| 49,157 | | |
| 
$ | 2.86 | | | 
| 0.15 | % | | 
| 49,157 | | |
| 
$ | 3.27 | | | 
| 0.10 | % | | 
| 32,771 | | |
| 
$ | 3.68 | | | 
| 0.10 | % | | 
| 32,771 | | |
| 
$ | 4.08 | | | 
| 0.10 | % | | 
| 32,771 | | |
The
Prior CFO Stock Plan had a fair value of $238,747 at inception (see Stock Plan Valuation section below). This amount will
be amortized over the 30-month life of the plan beginning January 1, 2024. During the year ended December 31, 2025 and 2024, $95,499
and $95,500 of this amount was charged to operations, respectively.
During
the year ended December 31, 2024, the price targets of $1.23 and $1.63 were achieved, and Mr. Schubert became eligible to receive a total
of 229,398 shares; 131,085 of these shares were approved for issuance and 98,313 were recorded as shares to be issued.
During
the year ended December 31, 2025, the price target of $2.04 was achieved, and Mr. Schubert became eligible to receive an additional 65,542
shares. During the year ended December 31, 2025, a total of 165,903 shares were issued to Mr. Schubert, net of 129,037 shares withheld
for taxes. At December 31, 2025, a total of 196,627 shares remain unvested under the Prior CFO Stock Plan. There are no shares due to
Mr. Schubert at December 31, 2025.
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:
| 
| 
| 
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., prevesting forfeiture assumption) are assumed to be zero given the Holders 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 riskfree rate. | |
The
Executive Stock Plans were not valued during the year ended December 31, 2025 and 2024.
Stock
Options
For
the year ended December 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.
F-28
[Table of Contents](#TableOfContents)
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.
For
the year ended December 31, 2024:
The
Company issued 130,000 options with an exercise price of $1.25 per share and a grant date fair value of $20,847 to an employee. These
options vested upon issuance and will expire on June 30, 2026.
The
Company issued 130,000 options with an exercise price of $1.75 per share and a grant date fair value of $11,688 to an employee. These
options vested upon issuance and will expire on June 30, 2026.
Transactions
involving stock options are summarized as follows:
| 
| | 
Number of Shares | | | 
Weighted Average Exercise Price | | |
| 
Options outstanding at December 31, 2023 | | 
| 350,000 | | | 
$ | 0.93 | | |
| 
Granted | | 
| 260,000 | | | 
| 1.50 | | |
| 
Exercised | | 
| (50,000 | ) | | 
| 0.60 | | |
| 
Cancelled / Expired | | 
| (250,000 | ) | | 
| 0.46 | | |
| 
Options outstanding at December 31, 2024 | | 
| 310,000 | | | 
$ | 1.42 | | |
| 
Granted | | 
| - | | | 
| - | | |
| 
Exercised | | 
| (310,000 | ) | | 
| 1.42 | | |
| 
Cancelled / Expired | | 
| -- | | | 
| -- | | |
| 
| | 
| | | | 
| | | |
| 
Options outstanding at December 31, 2025 | | 
| -- | | | 
$ | -- | | |
Aggregate
intrinsic value of options outstanding and exercisable at December 31, 2025 and 2024 was $0 and $111,800, respectively. Aggregate intrinsic
value represents the difference between the Companys closing stock price on the last trading day of the fiscal period, which was
$0.43 and $1.78 as of December 31, 2025 and 2024, respectively, and the exercise price multiplied by the number of options outstanding.
During
the years ended December 31, 2025 and 2024, the Company charged $0 and $32,535, respectively, to operations related to recognized stock-based
compensation expense for stock options.
The
exercise price at grant dates in relation to the market price during 2025 and 2024 are as follows:
| 
| 
| 
2025 | 
| 
| 
2024 | 
| |
| 
Exercise
price lower than market price | 
| 
- | 
| 
| 
- | 
| |
| 
| 
| 
| 
| 
| 
| 
| |
| 
Exercise
price equal to market price | 
| 
| 
- | 
| 
| 
| 
- | 
| |
| 
| 
| 
| 
| 
| 
| 
| 
| 
| |
| 
Exercise
price exceeded market price | 
| 
$ | 
| 
| 
| 
$ | 
1.25-1.75 | 
| |
As
of December 31, 2025, and 2024, there were no non-vested options outstanding.
Accounting
for stock options
The
Company valued stock options using the Black-Scholes valuation model utilizing the following variables:
| | | December31, | | |
| | | 2024 | | |
| Volatility | | | 69.96 | % | |
| Dividends | | | 0.0 | % | |
| Risk-free interest rates | | | 4.64 | % | |
| Term (years) | | | 2.36 | | |
F-29
[Table of Contents](#TableOfContents)
**20.
SEGMENTS**
****
The
CODM has determined that the Company operates in one reportable segment: the delivery of specialty foods. This determination was made
based upon the characteristics of our business and the information used by the CODM in order to monitor the business and allocate resources.
The
analysis of the Companys segments is determined by the Chief Operating Decision Maker (CODM). The Companys
CODM is Gary Schubert, CEO.
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 our target markets.
The
following table presents our segment results:
| 
| | 
December 31, | | | 
December 31, | | | 
| | | 
| | |
| 
| | 
2025 | | | 
2024 | | | 
| | | 
| | |
| 
| | 
Amount | | | 
% | | | 
Amount | | | 
% | | | 
$ Change | | | 
% Change | | |
| 
Revenue: | | 
| | | 
| | | 
| | | 
| | | 
| | | 
| | |
| 
Digital Channels | | 
$ | 32,499,215 | | | 
| 53.6 | % | | 
$ | 35,020,760 | | | 
| 58.9 | % | | 
$ | (2,521,545 | ) | | 
| -7.2 | % | |
| 
National distribution | | 
$ | 12,926,000 | | | 
| 21.3 | % | | 
$ | 12,337,767 | | | 
| 20.8 | % | | 
$ | 588,233 | | | 
| 4.8 | % | |
| 
Local distribution | | 
$ | 15,252,951 | | | 
| 25.1 | % | | 
$ | 12,089,900 | | | 
| 20.3 | % | | 
$ | 3,163,051 | | | 
| 26,2 | % | |
| 
Total revenue | | 
$ | 60,678,166 | | | 
| 100.0 | % | | 
$ | 59,448,427 | | | 
| 100.0 | % | | 
$ | 1,229,739 | | | 
| 2.1 | % | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Cost of sales | | 
$ | 45,049,103 | | | 
| 74.2 | % | | 
$ | 44,427,644 | | | 
| 74.7 | % | | 
$ | 621,459 | | | 
| 1.4 | % | |
| 
Gross margin | | 
$ | 15,629,063 | | | 
| 25.8 | % | | 
$ | 15,020,783 | | | 
| 25.3 | % | | 
$ | 608,280 | | | 
| 4.0 | % | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Cash OpEx: | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Payroll & related costs | | 
$ | 9,370,719 | | | 
| 15.4 | % | | 
$ | 8,609,501 | | | 
| 14.5 | % | | 
$ | 761,218 | | | 
| 8.8 | % | |
| 
Computer and IT | | 
$ | 461,261 | | | 
| 0.8 | % | | 
$ | 392,615 | | | 
| 0.7 | % | | 
$ | 68,646 | | | 
| 17.5 | % | |
| 
Office, facility, vehicles | | 
$ | 1,385,106 | | | 
| 2.3 | % | | 
$ | 614,653 | | | 
| 1.0 | % | | 
$ | 770,453 | | | 
| 125.3 | % | |
| 
Insurance | | 
$ | 527,020 | | | 
| 0.9 | % | | 
$ | 607,872 | | | 
| 1.0 | % | | 
$ | (80,852 | ) | | 
| -13.3 | % | |
| 
Travel & entertainment | | 
$ | 146,664 | | | 
| 0.2 | % | | 
$ | 198,741 | | | 
| 0.3 | % | | 
$ | (52,077 | ) | | 
| -26.2 | % | |
| 
Advertising & marketing | | 
$ | 31,409 | | | 
| 0.1 | % | | 
$ | 3,957 | | | 
| 0.0 | % | | 
$ | 27,452 | | | 
| 693.8 | % | |
| 
Banking and credit card processing | | 
$ | 16,437 | | | 
| 0.0 | % | | 
$ | 10,785 | | | 
| 0.0 | % | | 
$ | 5,652 | | | 
| 52.4 | % | |
| 
Professional fees | | 
$ | 1,405,306 | | | 
| 2.3 | % | | 
$ | 1,514,790 | | | 
| 2.6 | % | | 
$ | (109,484 | ) | | 
| -7.2 | % | |
| 
| | 
$ | 13,343,922 | | | 
| 22.0 | % | | 
$ | 11,952,914 | | | 
| 20.1 | % | | 
$ | 1,391,008 | | | 
| 11.6 | % | |
| 
Non-cash OpEx: | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Credit loss expense | | 
$ | 106,010 | | | 
| 0.2 | % | | 
$ | 4,599 | | | 
| 0.0 | % | | 
$ | 101,411 | | | 
| 2205.1 | % | |
| 
Share based compensation | | 
$ | (932,975 | ) | | 
| -1.6 | % | | 
$ | 1,529,413 | | | 
| 2.6 | % | | 
$ | (2,462,388 | ) | | 
| -161.0 | % | |
| 
Depreciation & amortization | | 
$ | 253,726 | | | 
| 0.4 | % | | 
$ | 114,866 | | | 
| 0.2 | % | | 
$ | 138,860 | | | 
| 120.9 | % | |
| 
Taxes & fees | | 
$ | 222,752 | | | 
| 0.4 | % | | 
$ | 146,821 | | | 
| 0.2 | % | | 
$ | 75,931 | | | 
| 51.7 | % | |
| 
| | 
$ | (350,487 | ) | | 
| -0.6 | % | | 
$ | 1,795,699 | | | 
| 3.0 | % | | 
$ | (2,146,186 | ) | | 
| -119.5 | % | |
| 
Non-Operating (Income) Expense: | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Interest expense | | 
$ | 30,306 | | | 
| 0.0 | % | | 
$ | (41,530 | ) | | 
| -0.1 | % | | 
$ | 71,836 | | | 
| 173.0 | % | |
| 
(Gain) loss on sale of subsidiaries | | 
$ | - | | | 
| 0.0 | % | | 
$ | (21,126 | ) | | 
| 0.0 | % | | 
$ | 21,126 | | | 
| -100.0 | % | |
| 
(Gain) loss on sale of assets | | 
$ | - | | | 
| 0.0 | % | | 
$ | (2,816,616 | ) | | 
| -4.7 | % | | 
$ | 2,816,616 | | | 
| -100.0 | % | |
| 
Other (income) expense | | 
$ | (2,512 | ) | | 
| 0.0 | % | | 
$ | - | | | 
| 0.0 | % | | 
$ | (2,512 | ) | | 
| | | |
| 
Total other (income) expense | | 
$ | 27,794 | | | 
| 0.0 | % | | 
$ | (2,879,272 | ) | | 
| -4.8 | % | | 
$ | 2,907,066 | | | 
| -101.0 | % | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Income tax expense | | 
| 80,787 | | | 
| 0.1 | % | | 
| - | | | 
| 0.0 | % | | 
| 80,787 | | | 
| | | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Net income (loss) from continuing operations | | 
$ | 2,527,047 | | | 
| 4.3 | % | | 
$ | 4,151,442 | | | 
| 7.0 | % | | 
$ | (1,624,395 | ) | | 
| -37.2 | % | |
| 
| | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Other segment disclosures: | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | | 
| | | |
| 
Segment assets | | 
$ | 19,581,021 | | | 
| | | | 
$ | 27,346,373 | | | 
| | | | 
| | | | 
| | | |
| 
Expenditures for segment assets | | 
$ | 242,322 | | | 
| | | | 
$ | 316,567 | | | 
| | | | 
| | | | 
| | | |
F-30
[Table of Contents](#TableOfContents)
****
**21.
RELATED PARTY TRANSACTIONS**
****
Appointment
of Chief Executive Officer
On
October 3, 2025, the Company entered into the CEO Employment Agreement whereby Gary 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 Companys
Board of Directors. Pursuant 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 Companys adjusted free cash flow over
the previous calendar year, beginning in calendar year 2026.
Resignation
of Predecessor CEO
On
October 4, 2025, the Company entered into a separation agreement and general release (the Separation Agreement) with Bill
Bennett, pursuant to which Mr. Bennett resigned from his position as the Chief Executive Officer and Board Member of the Company, effective
October 3, 2025.
Pursuant
to the Separation Agreement, the Company shall (i) pay Mr. Bennett a severance payment in installments for a total gross amount of $115,501
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.
Mr. Bennett has agreed to provide consultancy services to the Company as a consultant and independent contractor from January 1, 2026
until March 31, 2026 for $25,000, which is to be paid in installments.
Payments
to Prior Executive Officers under Separation Agreements
*For
the year ended December 31, 2025*
**
The
Company made the following payments in connection with the SK Agreements: The Company paid cash in the amount of $332,165 to Mr. Klepfish.
The
Company made the following payments in connection with the Bennett Separation Agreement: The Company paid cash in the amount of $124,823
to Mr. Bennett.
*For
the year ended December 31, 2024*
The
Company made the following payments in connection with the SK Agreements: The Company paid cash in the amount of $333,333 to Mr. Klepfish.
The
Company made the following payments in connection with the Wiernasz Separation Agreement: The Company made Cobra payments on behalf of
Mr. Wiernasz in the amount of $967.
The
Company made the following payments in connection with the Tang Separation Agreement: The Company made cash payments to Mr. Tang in the
amount of $113,918, and Cobra payments on behalf of Mr. Tang in the amount of $14,495.
F-31
[Table of Contents](#TableOfContents)
**22.
INCOME TAXES**
****
The
components of income before provision for income taxes are as follows:
| 
Years Ended December31, | | 
2025 | | | 
2024 | | |
| 
Domestic | | 
$ | (1,984,525 | ) | | 
$ | 2,611,514 | | |
| 
Foreign | | 
| - | | | 
| - | | |
| 
Total | | 
$ | (1,984,525 | ) | | 
$ | 2,611,514 | | |
The
components of the provision for income taxes are as follows:
| 
Years Ended December31, | | 
2025 | | | 
2024 | | |
| 
Current income tax expense (benefit) | | 
| | | | 
| | | |
| 
Federal | | 
$ | - | | | 
$ | - | | |
| 
Foreign | | 
| - | | | 
| - | | |
| 
State and local | | 
| 80,787 | | | 
| - | | |
| 
Total current income tax expense | | 
| 80,787 | | | 
| - | | |
| 
Deferred income tax expense (benefit) | | 
| | | | 
| | | |
| 
Federal | | 
| - | | | 
| - | | |
| 
Foreign | | 
| - | | | 
| - | | |
| 
State and local | | 
| - | | | 
| - | | |
| 
Total deferred income tax expense | | 
| - | | | 
| - | | |
| 
Total income tax expense | | 
$ | 80,787 | | | 
$ | - | | |
The
following table shows the principal reasons for the difference between the effective income tax rate and the statutory federal income
tax rate:
| 
| | 
2025 | | |
| 
Years Ended December31, | | 
Amount | | | 
Percent | | |
| 
U.S. federal statutory tax rate | | 
$ | (416,750 | ) | | 
| 21.00 | % | |
| 
State and local income taxes, net of federal income tax effect (1) | | 
| 63,823 | | | 
| -3.22 | % | |
| 
Changes in valuation allowances | | 
| 597,415 | | | 
| -30.19 | % | |
| 
Nontaxable or nondeductible items | | 
| | | | 
| | | |
| 
Stock Options | | 
| (313,131 | ) | | 
| 15.82 | % | |
| 
Officer Compensation Limitation | | 
| 147,070 | | | 
| -7.43 | % | |
| 
Other | | 
| 2,360 | | | 
| -0.06 | % | |
| 
Effective income tax rate | | 
$ | 80,787 | | | 
| -4.08 | % | |
| 
(1) | The states that contribute to the majority (greater than 50%)
of the tax effect in this category include California for 2025. | 
|
F-32
[Table of Contents](#TableOfContents)
Prior to the adoption of ASU 2023-09, the provision (benefit) for income
taxes differs from the amount of income tax determined by applying the applicable statutory income tax rate of 27.6% for the year ended
December 31, 2024,to the loss before taxes as a result of the following differences:
| 
| | 
2024 | | |
| 
Income (loss) before income taxes | | 
$ | 2,611,514 | | |
| 
Statutory tax rate, net | | 
| 27.6 | % | |
| 
Total tax (benefit) at statutory rate | | 
| 721,000 | | |
| 
| | 
| | | |
| 
Permanent difference | | 
| 5,000 | | |
| 
Other adjustments | | 
| 112,000 | | |
| 
Changes in valuation allowance | | 
| (838,000 | ) | |
| 
Income tax expense | | 
$ | - | | |
The effective income tax rate for 2025 was-4.08% and 0% in 2024.
The decrease in the effective income tax rate was primarily due to nondeductible stock compensation expense and changes in the valuation
allowance.
****
Significant components of deferred tax assets
and liabilities are as follows:
| 
At December31, | | 
2025 | | | 
2024 | | |
| 
Deferred tax assets | | 
| | | 
| | |
| 
Intangible assets | | 
$ | 23,358 | | | 
$ | 476,000 | | |
| 
Net operating loss carryforward | | 
| 4,863,473 | | | 
| 3,875,000 | | |
| 
Lease liabilities | | 
| 122,106 | | | 
| - | | |
| 
Disallowed interest expense | | 
| 330,934 | | | 
| - | | |
| 
Capitalized inventory costs | | 
| 269,625 | | | 
| - | | |
| 
Property, plant and equipment | | 
| - | | | 
| 282,000 | | |
| 
Stock compensation | | 
| 43,664 | | | 
| 422,000 | | |
| 
Allowance for doubtful accounts | | 
| 25,216 | | | 
| - | | |
| 
Other | | 
| 909 | | | 
| 11,000 | | |
| 
| | 
| 5,679,285 | | | 
| 5,066,000 | | |
| 
Valuation allowances | | 
| (5,091,498 | ) | | 
| (5,066,000 | ) | |
| 
Total deferred tax assets | | 
| 587,787 | | | 
| - | | |
| 
| | 
| | | | 
| | | |
| 
Deferred tax liabilities | | 
| | | | 
| | | |
| 
Property, plant and equipment | | 
| (59,622 | ) | | 
| - | | |
| 
Accounting method change | | 
| (407,961 | ) | | 
| - | | |
| 
Lease right-of-use assets | | 
| (120,204 | ) | | 
| - | | |
| 
Total deferred tax liabilities | | 
| (587,787 | ) | | 
| - | | |
| 
Net deferred tax liability | | 
$ | - | | | 
$ | - | | |
The
amounts of cash taxes paid are as follows:
| 
Years Ended December31, | | 
2025 | | |
| 
Federal | | 
$ | - | | |
| 
State | | 
| 51,622 | | |
| 
Foreign | | 
| - | | |
| 
Income taxes, net of amounts refunded | | 
| 51,622 | | |
F-33
[Table of Contents](#TableOfContents)
The company currently only operates within the
United States, and there are no undistributed earnings.
At December 31, 2025, the Company has a net operating
loss for income tax purposes of $21,256,747, of which $5,877,191 will begin to expire in 2036 and $15,379,556 may be carried forward indefinitely.
At December 31, 2025, there were no material uncertain
tax positions.
In assessing the potential for realization of
deferred tax assets, consisting primarily of net operating loss, management considers whether it is more likely than not that some portion
or all of the deferred tax assets will be realized upon the generation of future taxable income during the periods in which those temporary
differences become deductible. There is a valuation allowance of $5,091,498 and $5,066,000 as of December31, 2025 and 2024,
respectively. During 2025, the valuation allowance increased by $25,498.
The Company files income tax returns in the U.S.
federal jurisdiction and various state jurisdictions. U.S. and state jurisdictions have statutes of limitations that generally range from
3 to 4 years. The Company is not currently under examination.
**23. COMMITMENTS AND CONTINGENT LIABILITIES**
Litigation
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. 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
predicted.
**24.
MAJOR CUSTOMERS**
The Companys largest customer, U.S. Foods,
Inc. and its affiliates, accounted for approximately 36% and 52% of total consolidated sales in each of the years ended December 31, 2025
and 2024, respectively. In addition, Gate Gourmet, the leading global provider of airline catering solutions and provisioning services
for airlines, in partnership with igourmet, represented 14% and 16% of total consolidated sales for the year ended December 31, 2025 and
2024, respectively.
Discontinued Operations: Sams Club accounted for
approximately 12% and 8% of total consolidated sales in each of the years ended December 31, 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.
**25.
FAIR VALUE MEASUREMENTS**
****
Our
short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments without extended
maturities, the fair value of which, based on managements estimates, reasonably approximate their book value. The fair value of
the Companys stock options is determined using option pricing models.
As
a result of the adoption of ASC 815-40, the Company is required to disclose the fair value measurements required by ASC 820, Fair
Value Measurements and Disclosures. Hierarchical levels, defined by ASC 820 are directly related to the amount of subjectivity
associated with the inputs to fair valuations of these liabilities are as follows:
| 
| 
Level
1 | 
Inputs
are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; | |
| 
| 
| 
| |
| 
| 
Level
2 | 
Inputs
other than Level 1 inputs that are either directly or indirectly observable; and | |
| 
| 
| 
| |
| 
| 
Level
3 | 
Unobservable
inputs, for which little or no market data exist, therefore requiring an entity to develop its own assumptions. | |
F-34
[Table of Contents](#TableOfContents)
The
following summarizes the Companys derivative financial liabilities that are recorded at fair value on a recurring basis at December
31, 2025 and 2024.
| 
| | 
December 31, 2025 | | |
| 
| | 
Level 1 | | | 
Level 2 | | | 
Level 3 | | | 
Total | | |
| 
Stock Appreciation Rights | | 
$ | 16,143 | | | 
$ | - | | | 
$ | - | | | 
$ | 16,143 | | |
| 
| | 
December 31, 2024 | | |
| 
| | 
Level 1 | | | 
Level 2 | | | 
Level 3 | | | 
Total | | |
| 
Stock Appreciation Rights | | 
$ | 1,353,150 | | | 
$ | - | | | 
$ | - | | | 
$ | 1,353,150 | | |
**26.
SUBSEQUENT EVENTS**
****
Appointment
of Executive Vice President
On
January 6, 2026, the Company entered into an employment with Argie Liarakos (the Liarakos Agreement whereby which Mr. Liarakos
was appointed as Executive Vice President of Commercial Operations and Execution of the Company. Pursuant to the Liarakos Agreement,
Mr. Liarakos will receive an annual base salary of $260,000 as well as certain performance-based incentives, including an equity grant
of 150,000 shares of common stock.
Sale
of Facility
The Company, through its subsidiary Innovative
Properties, entered into an Agreement of Purchase and Sale, dated as of July 28, 2025, as amended on September 11, 2025, September 29,
2025 and November 13, 2025, with 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 was $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 closed on March 6, 2026, at which time Innovative
Properties received gross proceeds of $9.225 million. In connection with the closing, the debt associated with the property was repaid
and extinguished.
****
F-35
[Table of Contents](#TableOfContents)
****
**ITEM
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**
On
April 28, 2025, in conjunction with its exit from providing audit services to publicly traded companies, Assurance Dimensions, LLC (Assurance
Dimensions) resigned from its role as the independent registered public accounting firm for the Company. During the fiscal years
ended December 31, 2024 and December 31, 2023 and the subsequent interim period through April 28, 2025, (i) there were no disagreements
within the meaning of Item 304(a)(1)(iv) of Regulation S-K, between the Company and Assurance Dimensions on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or procedure, any of which that, if not resolved to Assurance
Dimensions satisfaction, would have caused Assurance Dimensions to make reference to the subject matter of any such disagreement
in connection with its reports for such years and interim period, and (ii) there were no reportable events within the meaning of Item
304(a)(1)(v) of Regulation S-K.
Following
Assurance Dimensions sale of its publicly traded companies business to Stephano Slack LLC (Stephano Slack), on April
28, 2025, the Company engaged Stephano Slack as its successor audit firm to review the Companys quarterly reports on Form 10-Q
for the quarterly periods ending March 31, 2025 and June 30, 2025 (the Interim Periods). In connection with the change
in audit firms, the Company initiated a request for proposal (RFP) process to evaluate various registered public accounting
firms for its ongoing audit needs.
Following
the completion of the RFP process, the Company dismissed Stephano Slack as its independent registered public accounting firm effective
as of September 17, 2025. During the Interim Periods and through September 17, 2025, (i) there were no disagreements within the meaning
of Item 304(a)(1)(iv) of Regulation S-K, between the Company and Stephano Slack on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, any of which that, if not resolved to Stephano Slacks satisfaction,
would have caused Stephano Slack to make reference to the subject matter of any such disagreement in connection with its reviews, and
(ii) there were no reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K.
On
September 22, 2025, the Company engaged CBIZ CPAs P.C. (CBIZ) as its new independent registered public accounting firm.
****
**ITEM
9A. Controls and Procedures**
**Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures**
****
Disclosure
controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including
our Chief Executive Officer (the Certifying Officer), or persons performing similar functions, as appropriate, to allow
timely decisions regarding required disclosure.
Under the supervision and with the participation
of our management, including our Certifying Officer, we carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our
Certifying Officer concluded that our disclosure controls and procedures were ineffective as of the end of the fiscal year ended December
31, 2025.
**Management****s
Annual Report on Internal Control over Financial Reporting**
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)
and 15d-(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with
U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:
| 
| 
(i) | 
pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our
assets; | |
| 
| 
| 
| |
| 
| 
(ii) | 
provide
reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements
in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our
management and directors; and | |
| 
| 
| 
| |
| 
| 
(iii) | 
provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the consolidated financial statements. | |
22
[Table of Contents](#TableOfContents)
**Managements
Evaluation of Disclosure Controls and Procedures**
****
The
Companys management, with the participation of its Chief Executive Officer, evaluated the effectiveness of the Companys
disclosure controls and procedures as of December 31, 2025. Disclosure controls and procedures are designed to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange
Commission.
Based
on this evaluation, and because of the material weaknesses in internal control over financial reporting described below, management concluded
that the Companys disclosure controls and procedures were not effective as of December 31, 2025.
**Managements
Report on Internal Control Over Financial Reporting**
Management
is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as defined in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with policies or procedures may deteriorate.
Management
conducted an evaluation of the effectiveness of the Companys internal control over financial reporting as of December 31, 2025
using the criteria established in the Internal ControlIntegrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.
Based
on this evaluation, management concluded that the Companys internal control over financial reporting was not effective as of December
31, 2025 due to the material weaknesses described below.
**Material
Weaknesses in Internal Control Over Financial Reporting**
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is
a reasonable possibility that a material misstatement of the Companys annual or interim financial statements will not be prevented
or detected on a timely basis.
During
managements evaluation of internal control over financial reporting, management identified material weaknesses related to information
technology general controls over certain applications that support the Companys financial reporting processes.
Management identified material weaknesses related
to information technology general controls over certain applications that support the Companys financial reporting processes. Specifically,
management identified deficiencies associated with (a) effective user access controls to appropriately segregate duties and adequately
restrict user and privileged access, (b) effective controls to monitor, document and approve application changes, and (c) effective controls
related to monitoring of critical jobs. As a result of these deficiencies and certain account reconciliation and review controls that
were not effectively designed in fully mitigating the related risks, automated process- level and manual controls within the financial
reporting cycles that rely on information generated from such financially relevant systems were not considered effective.
Accordingly,
management determined that these deficiencies constituted material weaknesses in internal control over financial reporting as of December
31, 2025.
The
material weaknesses identified above did not result in any material misstatements in our financial statements or disclosures, and there
were no changes to previously released financial results. Our management concluded that the consolidated financial statements included
in this Annual Report on Form 10-K, present fairly, in all material respects, our financial position, results of operations, and cash
flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or U.S.
GAAP.
23
[Table of Contents](#TableOfContents)
**Remediation
Plan**
Management
has begun implementing measures designed to remediate the material weaknesses described above. These remediation efforts include:
| 
| Formalizing information
technology governance procedures related to user access administration, periodic access reviews, and application change management for
systems supporting financial reporting; | 
|
| 
| Enhancing documentation,
approval, testing, and tracking procedures for application changes; | 
|
| 
| Reviewing user
roles and access permissions within relevant applications and implementing additional role-based access governance procedures, as appropriate; | 
|
| 
| Enhancing the documentation,
retention, and review of system change logs and other relevant system activity logs; and | 
|
| 
| Strengthening documentation
of existing monitoring controls related to system interfaces, application functionality, and data validation processes. | 
|
Management
will continue to evaluate the design and operating effectiveness of these remediation efforts. The material weaknesses will not be considered
remediated until the applicable controls have been fully implemented, tested, and determined to be operating effectively for a sufficient
period of time.
**Inherent
Limitations over Internal Controls**
Internal
control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent
limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an
effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that
the degree of compliance with the policies or procedures may deteriorate. Accordingly, our internal controls and procedures are designed
to provide reasonable assurance of achieving their objectives.
**Changes
in Internal Control over Financial Reporting**
We
have made no change in our internal control over financial reporting during the last fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting.
**Attestation
Report of the Registered Public Accounting Firm**
This
Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting. Managements report was not subject to attestation by our independent registered public accounting firm
as we are not a large accelerated filer or an accelerated filer.
**ITEM
9B. Other Information**
During
the three months ended December 31, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement
or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.
**ITEM
9C. Disclosures Regarding Foreign Jurisdictions That Prevent Inspections**
Not
applicable.
24
[Table of Contents](#TableOfContents)
**PART
III**
**The
information required by Part III is incorporated by reference to the Companys proxy statement to be filed for the 2026 Annual
Meeting.**
25
[Table of Contents](#TableOfContents)
**PART
IV**
**ITEM
15. Exhibits and Financial Statement Schedules**
| 
EXHIBIT
NUMBER | 
| 
| |
| 
| 
| 
| |
| 
3.1 | 
| 
Articlesof
Incorporation (incorporated by reference to exhibit 3.1 of the Companys annual report on Form 10-KSB for the year ended December
31, 2004 filed with the Securities and Exchange Commission on September 28, 2005) | |
| 
| 
| 
| |
| 
3.2 | 
| 
AmendedBylaws
of the Company (incorporated by reference to exhibit 3.2 of the Companys annual report Form 10-K for the year ended December
31, 2010 filed with the Securities and Exchange Commission on March 16, 2011) | |
| 
| 
| 
| |
| 
3.3 | 
| 
Amended Bylaws of the Company (incorporated by reference to exhibit 3.1 of the Companys current report Form 8-K filed with the Securities and Exchange Commission on January 31, 2012) | |
| 
| 
| 
| |
| 
3.4 | 
| 
AmendedBylaws
of the Company (incorporated by reference to exhibit 3.2 of the Companys current report Form 8-K filed with the Securities
and Exchange Commission on January 23, 2018) | |
| 
| 
| 
| |
| 
3.5 | 
| 
AmendedBylaws
of the Company (incorporated by reference to exhibit 3.1 of the Companys current report Form 8-K filed with the Securities
and Exchange Commission on September 14, 2021) | |
| 
| 
| 
| |
| 
3.6 | 
| 
Amended Bylaws of the Company (incorporated by reference to exhibit 3.1 of the Companys current report Form 8-K filed with the Securities and Exchange Commission on March 13, 2023) | |
| 
| 
| 
| |
| 
3.7 | 
| 
AmendedBylaws of the Company (incorporated by reference to exhibit
3.1 of the Companys current report Form 8-K filed with the Securities and Exchange Commission on May 23, 2023) | |
| 
| 
| 
| |
| 
4.1 | 
| 
Description
of Securities (incorporated by reference to exhibit 4.1 of the Companys annual report Form 10-K for the year ended December
31, 2024 filed with the Securities and Exchange Commission on March 20, 2025) | |
| 
| 
| 
| |
| 
10.1 | 
| 
LoanSale
Agreement dated as of January 10, 2018 between Food Funding, LLC, a subsidiary of the registrant and UPS Capital Business Credit
(incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on January 30, 2018) | |
| 
| 
| 
| |
| 
10.2 | 
| 
FifthAmendment
to Restated Loan Agreement dated February 28, 2018 between Fifth Third Bank and the registrant and its subsidiaries (incorporated
by reference to the Companys Form 10-K filed with the Securities and Exchange Commission on March 29, 2018). | |
| 
| 
| 
| |
| 
10.3 | 
| 
PromissoryNote
of the registrant and its subsidiaries in favor of Fifth Third Bank dated as of February 28, 2018 (incorporated by reference to the
Companys Form 10-K filed with the Securities and Exchange Commission on March 29, 2018). | |
| 
| 
| 
| |
| 
10.4 | 
| 
DrawPromissory
Note of the registrant and its subsidiaries in favor of Fifth Third Bank dated as of March 13, 2018 (incorporated by reference to
the Companys Form 10-K filed with the Securities and Exchange Commission on March 29, 2018). | |
| 
| 
| 
| |
| 
10.5 | 
| 
MasterLoan
and Security Agreement dated March 13, 2018 between Fifth Third Bank and the registrant and its subsidiaries (incorporated by reference
to the Companys Form 10-K filed with the Securities and Exchange Commission on March 29, 2018). | |
| 
| 
| 
| |
| 
10.6 | 
| 
Formof
Director Agreement dated as of January 28, 2019 (incorporated by reference to the Companys Form 8-K filed with the Securities
and Exchange Commission on February 1, 2019) | |
| 
| 
| 
| |
| 
10.7 | 
| 
EighthAmendment
to Restated Loan Agreement dated as of November 9, 2019 between Fifth Third Bank, National Association, and the Registrant and certain
of its subsidiaries (incorporated by reference to the Companys Form 10-Q filed with the Securities and Exchange Commission
on November 14, 2019). | |
| 
| 
| 
| |
| 
10.8 | 
| 
PromissoryNote
effective November 9, 2019 between Fifth Third Bank, National Association, and Innovative Food Properties, LLC, a wholly-owned subsidiary
of the Registrant (incorporated by reference to the Companys Form 10-Q filed with the Securities and Exchange Commission on
November 14, 2019). | |
| 
| 
| 
| |
| 
10.9 | 
| 
Mortgage,Assignment
of Leases, Fixture Filing and Security Agreement date as of November 9, 2019 between Fifth Third Bank, National Association, and
Innovative Food Properties, LLC, a wholly-owned subsidiary of the Registrant (incorporated by reference to the Companys Form
10-Q filed with the Securities and Exchange Commission on November 14, 2019). | |
26
[Table of Contents](#TableOfContents)
| 
| 
| 
| |
| 
10.10 | 
| 
Agreementfor
Purchase and Sale of Real Estate dated as of August 9, 2019 (incorporated by reference to the Companys Form 10-Q filed with
the Securities and Exchange Commission on August 14, 2019). | |
| 
| 
| 
| |
| 
10.11* | 
| 
SecuritiesPurchase
Agreement dated August 26, 2021 between the Company and each of JCP Investment Partnership LP, Bandera Master Fund L.P. and SV Asset
Management LLC (incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on August
31, 2021). | |
| 
| 
| 
| |
| 
10.12 | 
| 
LoanAgreement
dated as of June 6, 2022 between the Registrant, Innovative Food Properties, LLC and MapleMark Bank (FL, IL) (incorporated by reference
to the Companys Form 8-K filed with the Securities and Exchange Commission on June 14, 2022). | |
| 
| 
| 
| |
| 
10.13 | 
| 
LoanAgreement
dated as of June 6, 2022 between the Registrant, Innovative Food Properties, LLC and MapleMark Bank (PA) (incorporated by reference
to the Companys Form 8-K filed with the Securities and Exchange Commission on June 14, 2022). | |
| 
| 
| 
| |
| 
10.14 | 
| 
LoanAgreement
dated as of June 6, 2022 between the Registrant and MapleMark Bank (incorporated by reference to the Companys Form 8-K filed
with the Securities and Exchange Commission on June 14, 2022). | |
| 
| 
| 
| |
| 
10.15 | 
| 
BoardObserver
Agreement dated as of November 28, 2022 between the Registrant and Denver J. Smith (incorporated by reference to the Companys
Form 8-K filed with the Securities and Exchange Commission on November 29, 2022). | |
| 
| 
| 
| |
| 
10.16 | 
| 
Employment
Agreement with Robert William Bennett dated as of February 3, 2023 (incorporated by reference to the Companys Form 8-K filed
with the Securities and Exchange Commission on February 7, 2023) | |
| 
| 
| 
| |
| 
10.17 | 
| 
First
Amendment to the Employment Agreement with Robert William Bennett dated as of November 3, 2023 (incorporated by reference to the
Companys Form 8-K filed with the Securities and Exchange Commission on November 9, 2023) | |
| 
| 
| 
| |
| 
10.18 | 
| 
Employment
Agreement with Brady Smallwood dated as of April 14, 2023 (incorporated by reference to the Companys Form 8-K filed with the
Securities and Exchange Commission on May 17, 2023) | |
| 
| 
| 
| |
| 
10.19 | 
| 
Form
of Non-Plan Stock-Appreciation Right Award Grant Notice and Award Agreement with Brady Smallwood dated as of July 7, 2023 (incorporated
by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on July 12, 2023) | |
| 
| 
| 
| |
| 
10.20 | 
| 
Employment
Agreement with Gary Schubert dated as of December 29, 2023 (incorporated by reference to the Companys Form 8-K filed with
the Securities and Exchange Commission on January 3, 2024) | |
| 
| 
| 
| |
| 
10.21 | 
| 
Amended
and Restated Asset Purchase Agreement, dated August 30, 2024, between Innovative Gourmet LLC, iGourmet LLC and Innovative Gourmet
Group, Inc. (incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on September
4, 2024) | |
| 
| 
| 
| |
| 
10.22 | 
| 
Transition
Services Agreement, dated August 30, 2024, between Innovative Gourmet LLC, iGourmet LLC and Innovative Gourmet Group, Inc. (incorporated
by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on September 4, 2024) | |
| 
| 
| 
| |
| 
10.23 | 
| 
Asset
Purchase Agreement, dated October 14, 2024, by and among Innovative Food Holdings, Inc., Golden Organics, Inc. and David Rickard
(incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on October 18, 2024) | |
| 
| 
| 
| |
| 
10.24 | 
| 
Form
of Seller Financing Note (incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission
on October 18, 2024) | |
27
[Table of Contents](#TableOfContents)
| 
10.25 | 
| 
Purchase
Agreement by and between the Company and Gulf Coast Aluminum, dated December 12, 2023 (incorporated by reference to the Companys
Form 8-K filed with the Securities and Exchange Commission on February 16, 2024) | |
| 
| 
| 
| |
| 
10.26 | 
| 
Asset
Purchase Agreement by and between M Innovations LLC and M Specialty Foods Inc., dated October 31, 2024 (incorporated by reference to exhibit 10.26 of the Companys
Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 20, 2025) | |
| 
| 
| 
| |
| 
10.27 | 
| 
Innovative Food Holdings, Inc. 2025 Equity Incentive Plan (incorporated
by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on February 3, 2025) | |
| 
| 
| 
| |
| 
10.28 | 
| 
Agreement
of Purchase and Sale, dated July 28, 2025, by and between Innovative Food Properties LLC and Mountaintop Holdings, LLC.
(incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on August 1,
2025) | |
| 
| 
| 
| |
| 
10.29 | 
| 
First
Amendment to Agreement of Purchase and Sale, dated September 11, 2025, by and between Innovative Food Properties LLC and Mountaintop
Holdings, LLC (incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on September
16, 2025) | |
| 
| 
| 
| |
| 
10.30 | 
| 
Second Amendment to Agreement of Purchase and Sale, dated September
29, 2025, by and between Innovative Food Properties LLC and Mountaintop Holdings, LLC (incorporated by reference to the Companys
Form 8-K filed with the Securities and Exchange Commission on October 3, 2025) | |
| 
| 
| 
| |
| 
10.31 | 
| 
Executive Employment Agreement, dated October 3, 2025, by and between
the Company and Gary Schubert (incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission
on October 9, 2025) | |
| 
| 
| 
| |
| 
10.32 | 
| 
Separation Agreement and General Release, dated October 4, 2025, by
and between the Company and Bill Bennett (incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange
Commission on October 9, 2025) | |
| 
| 
| 
| |
| 
10.33 | 
| 
Third Amendment to Agreement of Purchase and Sale, dated September
29, 2025, by and between Innovative Food Properties LLC and Mountaintop Holdings, LLC (incorporated by reference to the Companys
Form 8-K filed with the Securities and Exchange Commission onNovember 14, 2025) | |
| 
| 
| 
| |
| 
14.1 | 
| 
Codeof
Ethical Conduct (incorporated by reference to exhibit 14.1 of the Companys Form 8-K filed with the Securities and Exchange
Commission on July 12, 2023) | |
| 
| 
| 
| |
| 
16.1 | 
| 
Letter from Assurance Dimensions, LLC addressed to the Audit Committee
of the Company dated April 28, 2025 (incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange
Commission on May 01, 2025) | |
| 
| 
| 
| |
| 
16.2 | 
| 
Letter from Stephano Slack LLC, dated September 22, 2025 (incorporated
by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on September 23, 2025) | |
| 
| 
| 
| |
| 
19.1 | 
| 
Insider
Trading Policy (incorporated by reference to exhibit 19.1 of the Companys Annual
Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 20, 2025) | |
| 
| 
| 
| |
| 
21 | 
| 
Subsidiariesof
the Company (incorporated by reference to exhibit 21 of the Companys Annual
Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 20, 2025) | |
28
[Table of Contents](#TableOfContents)
| 
31.1 | 
| 
Rule13a-14(a)
Certification of Chief Executive Officer | |
| 
| 
| 
| |
| 
31.2 | 
| 
Rule13a-14(a)
Certification of Principal Accounting Officer | |
| 
| 
| 
| |
| 
32.1 | 
| 
Rule1350
Certification of Chief Executive Officer | |
| 
| 
| 
| |
| 
97.1 | 
| 
Compensation
Recovery Policy (incorporated by reference to exhibit 97.1 of the Companys annual
report Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 20, 2025) | |
| 
| 
| 
| |
| 
101.INS | 
| 
Inline
XBRL Instance Document | |
| 
| 
| 
| |
| 
101.SCH | 
| 
Inline
XBRL Taxonomy Extension Schema | |
| 
| 
| 
| |
| 
101.CAL | 
| 
Inline
XBRL Taxonomy Extension Calculation Linkbase | |
| 
| 
| 
| |
| 
101.DEF | 
| 
Inline
XBRL Taxonomy Extension Definition Linkbase | |
| 
| 
| 
| |
| 
101.LAB | 
| 
Inline
XBRL Taxonomy Extension Label Linkbase | |
| 
| 
| 
| |
| 
101.PRE | 
| 
Inline
XBRL Taxonomy Extension Presentation Linkbase | |
| 
| 
| 
| |
| 
104 | 
| 
Cover
Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
| 
* | 
Certain
schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K under the Securities Act. The Company agrees to furnish
supplementally any omitted schedules to the Securities and Exchange Commission upon request. | |
29
[Table of Contents](#TableOfContents)
**SIGNATURES**
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
| 
INNOVATIVE
FOOD HOLDINGS, INC. | 
| |
| 
| 
| |
| 
By: | 
/s/
Gary Schubert | 
| |
| 
| 
Gary
Schubert | 
| |
| 
| 
Chief
Executive Officer | 
| |
| 
| 
(Principal
Executive Officer, Principal Financial and Accounting Officer) | 
| |
| 
| 
| |
| 
Dated:
March 31, 2026 | 
| |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
| 
Name | 
| 
Title | 
| 
Date | |
| 
| 
| 
| 
| 
| |
| 
/s/
Gary Schubert | 
| 
Chief
Executive Officer | 
| 
March
31, 2026 | |
| 
Gary
Schubert | 
| 
(Principal
Executive Officer, Principal Financial and Accounting Officer) | 
| 
| |
| 
| 
| 
| 
| 
| |
| 
/s/
James C. Pappas | 
| 
Chairman | 
| 
March
31, 2026 | |
| 
James
C. Pappas | 
| 
| 
| 
| |
| 
| 
| 
| 
| 
| |
| 
/s/
Brady Smallwood | 
| 
Director | 
| 
March
31, 2026 | |
| 
Brady
Smallwood | 
| 
| 
| 
| |
| 
| 
| 
| 
| 
| |
| 
/s/
Mark Schmulen | 
| 
Director | 
| 
March
31, 2026 | |
| 
Mark
Schmulen | 
| 
| 
| 
| |
| 
| 
| 
| 
| 
| |
| 
/s/
Denver J. Smith | 
| 
Director | 
| 
March
31, 2026 | |
| 
Denver
J. Smith | 
| 
| 
| 
| |
30