Innovative Food Holdings, Inc. Reports Financial Results for Second Quarter and First Half of 2019

Second Quarter Revenue Increased 16% to $13.9 Million
Specialty Foodservice Revenue Up 17% to $11.7 Million
e-commerce Revenue Up Over 29% to $1.8 Million

BONITA SPRINGS, Fla., Aug. 14, 2019 (GLOBE NEWSWIRE) -- Innovative Food Holdings, Inc. (OTCQB: IVFH), (“IVFH” or “the Company”) an interconnected platform of specialty food companies that provides chefs and consumers direct access to the highest quality unique specialty food products across the U.S., today reported its financial results for the second quarter and first half of 2019.

Sam Klepfish, CEO of Innovative Food Holdings stated, “IVFH experienced strong growth across both our specialty foodservice and e-commerce channels during the 2019 second quarter, reflecting increasing customer awareness of our product offerings, as well as successfully leveraging the resources of our interconnected platform. Our continued emphasis on providing customers with new, exciting, and unique products that reflect the latest food trends helped drive strong second quarter results.”

“We continue to make strategic investments to support current and future growth opportunities across our business and during the second quarter we added a new e-commerce focused corporate VP of Operations and expanded our accounting capabilities and staff. In addition, we recently announced a new independent board member and signed an agreement to purchase a 200,000 square-foot fulfillment facility that adds significant growth capacity and will support both our national e-commerce and northeast specialty foodservice distribution businesses.

“IVFH’s focus on unique specialty foods supports growing consumer preferences to smaller, high-quality, digitally-driven suppliers. As a result, we are experiencing higher levels of demand and interest from current and potential customers. I am excited by our growth opportunities for the remainder of 2019 and beyond,” concluded. Mr. Klepfish.

IVFH’s revenue increased to $13.9 million during the three months ended June 30, 2019, compared to $12.0 million for the three months ended June 30, 2018. The primary drivers of the 16% increase in second quarter revenue was due to strong growth in the Company’s specialty foodservice and e-commerce businesses. For the first half of fiscal 2019, total revenue increased 17% to $26.8 million, compared to $22.9 million last year.

Deferred revenue which includes revenues associated with the Company’s e-commerce subscription services, including both Mouth and iGourmet, increased to $281,000 at June 30, 2019, compared to $26,000 at June 30, 2018. For the 2019 second quarter, IVFH had over 21,650 active and unique e-commerce customers, which is an increase of approximately 17% from the same period last year.

The following table sets forth IVFH’s revenue by business category for the three and six months ended June 30, 2019 and June 30, 2018:

	Three Months Ended
	June 30, 2019		% of Net Sales	June 30, 2018		% of Net Sales	% Change
Specialty Foodservice.	$	11,670,000	84%	$	10,013,000	83%	17%
E-commerce		1,784,000	13%		1,384,000	12%	29%
National Brand Management		471,000	3%		592,000	5%	-20%
Total IVFH	$	13,925,000	100%	$	11,989,000	100%	16%

	Six Months Ended
	June 30, 2019		% of Net Sales	June 30, 2018		% of Net Sales	% Change
Specialty Foodservice	$	21,968,000	82%	$	19,258,000	84%	14%
E-commerce		3,880,000	15%		2,435,000	11%	59%
National Brand Management		937,000	3%		1,213,000	5%	-23%
Total IVFH	$	26,785,000	100%	$	22,906,000	100%	17%

For the 2019 second quarter, selling and administrative (“SG&A”) expense, as a percentage of net revenue, was 28.9% compared to 25.6% in the prior year quarter. SG&A expenses increased as a result of investments the Company continues to make to support growth including investments associated with procurement, accounting, and systems, as well as the expansion of fulfillment capabilities within the iGourmet warehouse for both e-commerce and specialty foodservice. For the 2019 first six months, SG&A expense, as a percentage of net revenue, was 29.1% compared to 26.5% for 2018.

For the 2019 second quarter, net income was $22,000, or $0.00 per diluted share, compared to $330,000, or $0.01 per diluted share in the prior year’s second quarter. For the 2019 first six months, net income was $185,000, or $0.01 per diluted share, compared to $779,000, or $0.02 per diluted share for the 2018 first six months.

Cash EBITDA for the 2019 second quarter was $467,000, compared to $785,000 in the prior year quarter. For the 2019 first six months, Cash EBITDA was $1.1 million, compared to $1.5 million for the same period a year ago.

IVFH’s balance sheet remains strong with $3.2 million of cash and cash equivalents, and the full availability of over $2 million in commercial credit including the Company’s $2 million commercial credit line which was extended through August 2021.

About Innovative Food Holdings, Inc.
Innovative Food Holdings, Inc. is an interconnected platform of small, specialty food companies serving business and consumer customers. The platform offers efficient, cost effective, and transparent sourcing of over 7,000 specialty food products including proprietary branded products. Sales channels on the platform include specialty foodservice channels and data driven DTC e-commerce channels including leading specialty food direct-to-consumer e-commerce websites www.igourmet.com and www.mouth.com as well as a strong specialty food omnichannel offering via www.amazon.com, www.jet.com and www.walmart.com

Forward-Looking Statements
This release contains certain forward-looking statements and information relating to Innovative Food Holdings, Inc. (the “Company”) that are based on the current beliefs of the Company’s management, as well as assumptions made by, and information currently available to, the Company. Such statements reflect the current views of the Company with respect to future events and are subject to certain assumptions, including those described in this release. Should one or more of these underlying assumptions prove incorrect, actual results may vary materially from those described herein as “should,” “could,” “anticipate,” “believe,” “intend,” “plan,” “might,” “potentially” or “expect.” The Company does not intend to update these forward-looking statements. The content of the websites referenced above are not incorporated herein.

Company Contact:	Investor and Media Contact:
Ronit Wallerstein	Andrew M. Berger
Investor Relations	Managing Director
Innovative Foods Holdings, Inc.	SM Berger & Company, Inc.
(718) 645-1755	(216) 464-6400
rwallerstein@IVFH.com	andrew@smberger.com

Innovative Food Holdings, Inc.
Consolidated Balance Sheets

	June 30,			December 31,
	2019			2018
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	3,158,853		$	4,759,817
Accounts receivable, net		3,018,700			3,039,756
Inventory		2,217,174			2,301,377
Other current assets		197,583			144,301
Total current assets		8,592,310			10,245,251

Property and equipment, net		2,235,416			2,456,610
Investments		395,025			339,525
Right of use assets, operating leases, net		268,638			-
Right of use assets, finance leases, net		122,619			-
Other amortizable intangible assets, net		1,702,301			2,158,498
Goodwill and other unamortizable intangible assets		2,183,065			2,183,065
Total assets	$	15,499,374		$	17,382,949

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	2,043,215		$	3,689,868
Accrued interest		18,378			16,402
Deferred revenue		280,928			559,315
Notes payable - current portion		901,728			928,857
Lease liability - operating leases, current		197,014			-
Lease liability - finance leases, current		20,605			-
Contingent liability - current portion		519,108			472,876
Total current liabilities		3,980,976			5,667,318

Lease liability - operating leases, non-current		71,624			-
Lease liability - finance leases, non-current		97,959			-
Contingent liability - long-term		247,600			357,600
Note payable - long term portion		464,047			1,196,245
Total liabilities		4,862,206			7,221,163

Commitment and contingencies (see note 16)		-			-

Stockholders' equity

Common stock: $0.0001 par value; 500,000,000 shares authorized; 36,427,354 and 36,296,218 shares issued, and 33,839,774 and 33,708,638 shares outstanding at June 30, 2019 and December 31, 2018, respectively		3,640			3,627
Additional paid-in capital		36,421,970			36,132,065
Treasury stock: 2,373,171 shares outstanding at June 30, 2019 and December 31, 2018		(1,016,370	)		(1,016,370	)
Accumulated deficit		(24,772,072	)		(24,957,536	)
Total stockholders' equity		10,637,168			10,161,786

Total liabilities and stockholders' equity	$	15,499,374		$	17,382,949

Innovative Food Holdings, Inc.
Consolidated Statements of Operations

	For the Three		For the Three			For the Six		For the Six
	Months Ended		Months Ended			Months Ended		Months Ended
	June 30,		June 30,			June 30,		June 30,
	2019		2018			2019		2018


Revenue	$	13,925,451	$	11,989,003		$	26,784,666	$	22,905,547
Cost of goods sold		9,862,369		8,409,485			18,743,749		15,846,916
Gross margin		4,063,082		3,579,518			8,040,917		7,058,631

Selling, general and administrative expenses		4,017,829		3,070,979			7,806,826		6,074,796
Total operating expenses		4,017,829		3,070,979			7,806,826		6,074,796

Operating income		45,253		508,539			234,091		983,835

Other (income) expense:
Gain on settlement of contingent liability		-		(11,000	)		-		(11,000	)
Interest expense, net		23,149		34,296			48,627		61,044
Total other expense		23,149		23,296			48,627		50,044

Net income before taxes		22,104		485,243			185,464		933,791

Income tax expense		-		155,000			-		155,000

Net income	$	22,104	$	330,243		$	185,464	$	778,791

Net income per share - basic	$	0.001	$	0.010		$	0.005	$	0.023

Net income per share - diluted	$	0.001	$	0.010		$	0.005	$	0.023

Weighted average shares outstanding - basic		33,947,817		34,007,519			34,001,294		33,966,497

Weighted average shares outstanding - diluted		33,947,817		34,007,519			34,001,294		33,966,497

Innovative Food Holdings, Inc.
Consolidated Statements of Cash Flows

	For the Six			For the Six
	Months Ended			Months Ended
	June 30,			June 30,
	2019			2018


Cash flows from operating activities:
Net income	$	185,464		$	778,791
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		631,026			500,027
Amortization of right-of-use asset		88,644			-
Stock based compensation		196,252			23,408
Gain on settlement of contingent liability		-			(11,000	)
Provision for (recovery of) doubtful accounts		(2,779	)		-

Changes in assets and liabilities:
Accounts receivable		(6,665	)		(428,976	)
Inventory and other current assets, net		30,921			(526,246	)
Accounts payable and accrued liabilities		(1,551,011	)		22,865
Deferred revenue		(278,387	)		25,565
Contingent liabilities		(63,768	)		-
Operating lease liability		(88,644	)		-
Net cash (used in) provided by operating activities		(858,947	)		384,434

Cash flows from investing activities:
Cash related to the igourmet asset acquisition		-			(2,409,437	)
Cash paid for website development		(23,500	)		-
Acquisition of property and equipment		(85,829	)		(99,804	)
Investment in food related company		(25,000	)		(50,000	)
Net cash used in investing activities		(134,329	)		(2,559,241	)

Cash flows from financing activities:
Purchase of stock options from officers, directors, and employees		-			(167,000	)
Cash received from exercise of warrants		-			35,000
Cash paid in settlement of contingent liability - Oasis acquisition		-			(189,000	)
Borrowings on term loan		-			1,500,000
Purchase of treasury stock		-			(24,057	)
Principal payments on debt		(594,877	)		(545,674	)
Principal payments capital leases		(12,811	)		(3,993	)
Net cash (used in) provided by financing activities		(607,688	)		605,276

Decrease in cash and cash equivalents		(1,600,964	)		(1,569,531	)

Cash and cash equivalents at beginning of period		4,759,817			5,133,435

Cash and cash equivalents at end of period	$	3,158,853		$	3,563,904

Supplemental disclosure of cash flow information:

Cash paid during the period for:
Interest	$	49,337		$	65,114

Taxes	$	-		$	155,000

Non-cash investing and financing activities:
Issuance of 131,136 shares of common stock previously accrued	$	93,666		$	-
Right to use assets and liabilities - operating, upon adoption of ASU 2016-02	$	388,581		$	-
Return of equipment and reduction in amount due under equipment financing loan	$	33,075		$	-
Increase in right of use assets and liabilities	$	18,701		$	-
Investment in food related company	$	30,500		$	-

	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Adjusted Net Income and EPS
Revenue	$	13,925,451	$	11,989,003	$	26,784,666	$	22,905,547
Net Income		22,104		330,243		185,464		778,791
Amortization of intangible assets⁽¹⁾		250,567		216,157		479,697		405,303
Stock related expenses ⁽²⁾		96,108		14,621		196,252		23,408
Adjusted Net Income	$	368,779	$	561,021	$	861,413	$	1,207,502
Weighted Avg. Shares Outstanding Diluted ⁽³⁾		33,947,817		34,007,519		34,001,294		33,966,497
Adjusted Fully Diluted EPS	$	0.011	$	0.016	$	0.025	$	0.036

	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Cash EBITDA
Net Income	$	22,104	$	330,243	$	185,464	$	778,791
Interest expense, taxes & other income		23,149		178,296		48,627		205,044
Depreciation & amortization		325,821		261,614		631,026		500,027
Stock related expenses ⁽²⁾		96,108		14,621		196,252		23,408
Cash EBITDA	$	467,182	$	784,774	$	1,061,369	$	1,507,270

Includes non-cash amortization charges related to assets acquired
Includes stock and options-based compensation and expenses
Full Year GAAP weighted fully diluted share count

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Innovative Food Holdings, Inc. Reports Financial Results for Second Quarter and First Half of 2019

Distribution channels: Business & Economy, Food & Beverage Industry

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