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Innovative Food Holdings, Inc. Reports Financial Results for Fourth Quarter and Full Year of 2019 and Provides Business Update Related to COVID-19

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BONITA SPRINGS, Fla., May 15, 2020 (GLOBE NEWSWIRE) -- Innovative Food Holdings, Inc. (OTCQB:IVFH) ("IVFH" or the "Company"), an interconnected data driven 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 fourth quarter and twelve months of 2019 and provided an update on the business related to the impact of the COVID-19 pandemic.

"The COVID-19 pandemic has had an unprecedented impact on the country and our industry.  Our thoughts are with everyone who has been impacted," stated Sam Klepfish, CEO of Innovative Food Holdings.

"The e-commerce strategy we have been pursuing over the past two years has enabled IVFH to handle a significant influx of direct-to-consumer orders, as monthly e-commerce orders surged in March and April and increased over 150%, and over 400%, respectively. Furthermore, our unique multi-channel infrastructure provided us with the flexibility and resources to seamlessly offer a wide variety of foodservice products and other specialty grocery products directly to consumers, while providing a high level of customer service."

"I believe that March and April's orders demonstrate the unique capabilities and robust scalability of our growing e-commerce centric platform. In addition, the recent surge in e-commerce orders demonstrates the growing awareness of our direct-to-consumer brands. Consumers are increasingly seeking high-quality specialty grocery products, as well as specialty food themed kits, curated gifts and monthly subscriptions, which we believe provides significant opportunities for continued growth," continued Mr. Klepfish. 

Recent Developments

  • The COVID-19 pandemic has caused revenue to shift towards e-commerce channels and we have quickly expanded e-commerce offerings and shifted resources from our foodservice business to keep up with recent specialty food and grocery demands
  • Monthly e-commerce orders increased over 150% in March and over 400% in April 2020, compared to the prior year periods
  • Growth in e-commerce orders surged across all online channels, including www.igourmet.com and www.mouth.com as well as specialty grocery products offered through our offerings on www.amazon.com, www.walmart.com, and www.ebay.com
  • We quickly pivoted foodservice resources and products to direct-to-consumer offerings, while launching new products developed by our e-commerce teams specifically tailored for the current market environment
  • Recent product launches, including virtual tasting partnerships, are receiving positive national media coverage
  • Our e-commerce customer base has expanded significantly as unique e-commerce customers in April were over 31,000, an increase of over 290% over the prior year period
  • Safely and seamlessly handled significant increases in order levels across multiple sales channels and fulfilled 35,000 orders for the month of April, a 350% increase compared to 7,500 from the prior year period
  • IVFH plans on further expanding its data driven digital marketing efforts, launching new specialty food and grocery products, and partnerships throughout 2020 to drive e-commerce opportunities and capitalize on growing interest from both e-commerce consumers and traditional foodservice-oriented businesses

Mr. Klepfish continued, "Strong direct-to-consumer sales are partially offsetting lower specialty foodservice distribution revenue due to the significant impact the COVID-19 pandemic has had on the restaurant, travel and hospitality industries.  We are encouraged by early indications of improving weekly trends in our foodservice business as state and local municipalities re-start their economies and allow businesses to re-open. We continue to manage the items under our control, and we are focused on expanding our foodservice partnerships and channels. In addition, as we leverage our multi-channel platform and specialty foodservice expertise, we believe we are well positioned to grow as the foodservice industry recovers."

"We expect direct-to-consumer and e-commerce trends are likely to continue to accelerate as consumers become increasingly comfortable with purchasing food online. We believe we are well positioned to capitalize on these growing trends within the food industry as a result of the investments we have made in our e-commerce centric specialty food platform over the last two years. Specifically, IVFH has created a strong, data-driven foundation for our specialty food e-commerce business which leverages our deep expertise in procurement, logistics, fulfillment, and digital marketing.  During 2020, we plan to further enhance and expand our platform and operations as we move into our recently purchased warehouse in Mountaintop, Pennsylvania, go live with new www.igourmet.com and www.ivfh.com websites, and continue expanding our products, services, partnerships, and channels.  I am encouraged with the progress we are making, the direction we are headed and the potential we have to create value for our shareholders in 2020 and beyond." 

"Finally, and most importantly, I want to share a special thank you to all IVFH employees who have worked extremely hard to safely provide our customers with essential products and services throughout this challenging period," concluded Mr. Kelpfish. 

For the twelve months of fiscal 2019, total revenue increased 9.4% to $57.9 million, compared to $52.9 million last year.  IVFH's revenue decreased to $17.7 million during the three months ended December 31, 2019, compared to $18.0 million for the three months ended December 31, 2018. Deferred revenue which includes revenues associated with the Company's e-commerce subscription services, including both Mouth and iGourmet, was $0.5 million at December 31, 2019, compared to $0.6 million at December 31, 2018.  At December 31, 2019, IVFH had approximately 100,000 active and unique e-commerce customers, in line with the same period a year ago. 

For the 2019 fourth quarter, selling and administrative ("SG&A") expense, as a percentage of net revenue, was 27.8% compared to 26.1% in the prior year quarter, and 27.9% in the 2019 third quarter.  For the twelve months of 2019, SG&A expense, as a percentage of net revenue, was 28.4% compared to 26.7% for 2018. The year-over-year increase in SG&A expenses included investments the Company continued 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 and increases in non-cash charges including depreciation and amortization.

For the 2019 fourth quarter, IVFH reported net income of $0.2 million, or $0.01 per diluted share, compared to net income of $0.8 million, or $0.02 per diluted share in the prior year's fourth quarter. Adjusting for amortization of intangibles and stock related expenses, 2019 fourth quarter net income was $0.5 million, or 0.015 per diluted share, compared to $1.0 million, or $0.03 per diluted share for the same period last year.

For the twelve months of 2019, net income was $0.2 million or $0.01 per diluted share, compared to $1.7 million, or $0.05 per diluted share for the twelve months of 2018. Adjusting for amortization of intangibles and stock related expenses, 2019 twelve-month net income was $1.5 million, or 0.045 per diluted share, compared to $2.6 million, or $0.08 per diluted share for the same period last year. 

Cash EBITDA for the 2019 fourth quarter was $0.7, compared to $1.1 million in the prior year quarter.  For the twelve months of 2019, Cash EBITDA was $2.0 million, compared to $3.1 million for the same period a year ago.

About Innovative Food Holdings, Inc. 
Innovative Food Holdings, Inc. is an interconnected data driven 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.ebay.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," "will," "anticipate," "believe," "intend," "plan," "might," "potentially" or "expect." Additional factors that could also cause actual results to differ materially relate to the global COVID-19 crisis. The Company does not intend to update these forward-looking statements. The content of the websites referenced above are not incorporated herein.


Innovative Food Holdings, Inc.

Consolidated Balance Sheets
(unaudited)

    December 31,     December 31,  
    2019     2018  
    (unaudited)          
ASSETS                
Current assets                
Cash and cash equivalents     3,966,050     $ 4,759,817  
Accounts receivable, net     3,358,938       3,039,756  
Inventory     2,350,622       2,301,377  
Other current assets     273,689       144,301  
Total current assets     9,949,299       10,245,251  
                 
Property and equipment, net     6,645,389       2,456,610  
Investments     435,225       339,525  
Right to use assets, operating leases, net     193,733       -  
Right to use assets, finance leases, net     174,631       -  
Other amortizable intangible assets, net     1,342,741       2,158,498  
Goodwill and other unamortizable intangible assets     2,183,065       2,183,065  
Total assets   $ 20,924,083     $ 17,382,949  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities                
Accounts payable and accrued liabilities     4,009,956     $ 3,689,868  
Accrued interest     16,973       16,402  
Deferred revenue     499,776       559,315  
Notes payable - current portion     727,766       928,857  
Lease liability - operating leases, current     133,296       -  
Lease liability - finance leases, current     29,832       -  
Contingent liability - current portion     187,000       472,876  
Total current liabilities     5,604,599       5,667,318  
                 
Lease liability - operating leases, non-current     60,437       -  
Lease liability - finance leases, non-current     154,905       -  
Contingent liability - long-term     156,600       357,600  
Note payable - long term portion     3,881,037       1,196,245  
Total liabilities     9,857,578       7,221,163  
                 
Commitments and contingencies     -       -  
                 
Stockholders' equity                
Common stock: $0.0001 par value; 500,000,000 shares authorized; 36,786,528 and 36,296,218 shares issued, and 34,198,948 and 33,708,638 shares outstanding at December 31, 2019 and December 31, 2018, respectively     3,677       3,627  
Additional paid-in capital     36,889859       36,132,065  
Treasury stock: 2,373,171 shares outstanding at December 31, 2019 and December 31, 2018     (1,141,370 )     (1,016,370 )
Accumulated deficit     (24,685,661 )     (24,957,536 )
Total stockholders' equity     11,066,505       10,161,786  
                 
Total liabilities and stockholders' equity   $ 20,924,083     $ 17,382,949  
                 

Innovative Food Holdings, Inc.
Consolidated Statements of Operations
(unaudited)

    For the Three Months Ended     For the Twelve Months Ended  
    December 31,     December 31,  
    2019     2018     2019       2018  
                                 
                                 
Revenue   $ 17,652,536     $ 17,965,489       57,902,966       $ 52,925,526  
Cost of goods sold     12,646,843       12,471,109       41,255,076         36,841,530  
Gross margin     5,005,693       5,494,380       16,647,890         16,083,996  
                                 
Selling, general and administrative expenses     4,903,290       4,699,551       16,464,128         14,128,662  
Total operating expenses     4,903,290       4,699,551       16,464,128         14,128,662  
                                 
Operating income     102,403       794,829       183,762         1,955,334  
                                 
Other (income) expense:                                
Other leasing income     (3,125 )             (3,125 )          
Gain on settlement of contingent liability     -       -       (132,300 )       (11,000 )
Gain on sale of fixed assets     (12,495 )     -       (12,495 )       -  
Interest expense, net     42,911       26,422       108,915         115,435  
Total other expense     30,416       26,422       (39,005 )       104,435  
                                 
Net income before taxes     194,917       768,407       222,767         1,850,899  
                                   
Income tax expense     -       -       -         155,000  
                                   
Net income   $ 194,917     $ 768,407       222,767       $ 1,695,899  
                                 
                                 
                                 
                                 
                                 
Net income per share – basic   $ 0.01     $ 0.02     $ 0.01       $ 0.05  
                                 
                                 
                                 
                                 
                                 
Net income per share – diluted   $ 0.01     $ 0.02     $ 0.01       $ 0.05  
                                 
                                 
                                 
                                 
                                 
Weighted average shares outstanding – basic     34,116,335       33,989,715       34,116,335         33,983,620  
                                 
                                 
                                 
                                 
                                 
Weighted average shares outstanding – diluted     34,116,335       33,989,715       34,116,335         33,983,620  
                                   


Innovative Food Holdings, Inc.

Consolidated Statements of Cash Flows
(unaudited)

    For the Twelve Months Ended
December 31,
 
    2019     2018  
                 
Cash flows from operating activities:                
Net income   $ 222,767     $ 1,695,899  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:                
Depreciation and amortization     1,234,098       1,082,224  
Amortization of right-of-use asset     187,254       -  
Amortization of prepaid loan fees     1,819       -  
Stock based compensation     414,178       67,405  
Gain on settlement of contingent liability     (132,300 )     (11,000 )
Gain on sale of fixed assets     (12,495 )     -  
Provision for doubtful accounts     36,037       5,099  
                 
Changes in assets and liabilities:                
Accounts receivable, net     (366,611 )     (821,735 )
Inventory and other current assets, net     (153,633 )     (1,246,310 )
Accounts payable and accrued liabilities     414,326       1,530,476  
Deferred revenue     (59,539 )     328,145  
Contingent liabilities     (4,000 )     (69,424 )
Operating lease liability     (187,254 )     -  
Net cash (used in) provided by operating activities     1,594,647       2,560,779  
                 
Cash flows from investing activities:                
Cash related to the iGourmet asset acquisition     -       (2,494,965 )
Cash related to the Mouth Foods asset acquisition     -       (208,355 )
Cash received from the sale of fixed assets     12,495       -  
Acquisition of property and equipment     (1,049,604 )     (480,582 )
Acquisition of intangible assets     (84,000 )     -  
Investment in food related companies     (60,200 )     (138,000 )
Net cash used in investing activities     (1,181,309 )     (3,321,902 )
                 
Cash flows from financing activities:                
Sales of common stock     250,000       -  
Cash paid for acquisition of treasury stock     (125,000 )      
Loan fees related to building acquisition financing     (72,916 )      
Purchase of stock options from officers, directors, and employees     -       (167,000 )
Cash received from exercise of stock options     -       35,000  
Cash paid in settlement of contingent liabilities to do acquisitions     (350,576 )     (189,000 )
Borrowings on term loan     -       1,500,000  
Proceeds from line of credit     -       391,558  
Purchase of treasury stock     -       (24,057 )
Principal payments on debt     (880,752 )     (1,147,533 )
Principal payments capital leases     (27,861 )     (11,463 )
Net cash (used in) provided by financing activities     (1,207,105 )     387,505  
                 
Decrease in cash and cash equivalents     (793,767 )     (373,618 )
                 
Cash and cash equivalents at beginning of period     4,759,817       5,133,435  
                 
Cash and cash equivalents at end of period   $ 3,966,050     $ 4,759,817  
                 
Supplemental disclosure of cash flow information:                
                 
Cash paid during the period for:                
Interest   $ 112,291     $  122,232  
                 
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   $ 338,581     $  -  
Fair value of 19,048 shares of common stock issued for services   $ 10,405     $ -  
Increase in right of use assets & liabilities   $ 193,734     $  -  
Investment in food related company   $ 60,500     $  -  
Return of equipment & reduction in amount due under equipment financing loan   $ 33,075     $  -  
Capital lease for purchase of fixed assets   $ 81,223     $  -  
Note payable for acquisition of building   $ 3,600,000     $  -  
               

The following table sets forth IVFH's revenue by business category for the three and twelve months ended December 31, 2019 and December 31, 2018 (unaudited):

  Three Months Ended
  December 31,
2019

  % of Net
Sales

  December 31,
2018

  % of Net
Sales

  %
Change
Specialty Foodservice $ 11,835,000   67 %   $ 11,761,000   66 %   0.6 %
E-Commerce   5,253,000   30 %     5,634,000   31 %   -6.8 %
National Brand Management   389,000   2 %     570,000   3 %   -31.6 %
Warehouse and Logistic Services   176,000   1 %     -   -     -  
Total IVFH $ 17,653,000   100 %   $ 17,965,000   100 %   -1.7 %


  Year Ended Months Ended
  December 31,
2019

  % of Net
Sales

  December 31,
2018

  % of Net
Sales

  %
Change
Specialty Foodservice $ 45,377,000   78 %   $ 41,500,000   78 %   9.3 %
E-Commerce   10,705,000   19 %     9,252,000   18 %   15.7 %
National Brand Management   1,645,000   3 %     2,174,000   4 %   -24.3 %
Warehouse and Logistic Services   176,000   0 %     -   -     -  
Total IVFH $ 57,903,000   100 %   $ 52,926,000   100 %   9.4 %


  Three Months Ended
(unaudited)
  Twelve Months Ended
(unaudited)
  December 31,
2019
  December 31,
2018
  December 31,
2019
  December 31,
2018
Adjusted Net Income and EPS (4)              
Revenue $ 17,652,536   $ 17,965,489   $ 57,902,966   $ 52,925,526
Net Income   194,917     768,407     222,767     1,695,899
Amortization of intangible assets (1)   210,031     236,824     899,757     885,001
Stock related expenses (2)   121,818     19,709     414,178     67,405
Adjusted Net Income
$   526,766   $   1,024,940   $   1,536,702   $   2,648,305
Weighted Avg. Shares Outstanding Diluted (3)
  34,116,335     33,983,620     34,116,335     33,983,620
Adjusted Fully Diluted EPS $   0.015   $   0.030   $   0.045   $   0.078
               
  Three Months Ended
(unaudited)
  Twelve Months Ended
(unaudited)
  December 31,
2019
  December 31,
2018
  December 31,
2019
  December 31,
2018
Cash EBITDA (4)              
Net Income $ 194,917   $ 768,407   $ 222,767   $ 1,695,899
Interest expense, taxes   55,406     26,422     108,915     259,435
Depreciation & amortization   313,003     287,938     1,234,099     1,082,223
Stock related expenses (2)   121,818     19,709     414,178     67,405
Cash EBITDA $   685,143   $   1,102,476   $   1,979,959   $   3,104,962

(1) Includes non-cash amortization charges related to assets acquired
(2) Includes stock and options-based compensation and expenses
(3) Full Year GAAP weighted fully diluted share count
(4) non-GAAP measures (not to be relied upon in substitution for GAAP measures)

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

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