These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties, and contingency, and many of which are with beyond the company control. Actual results including without limitation the results of our company's growth strategy operational plans, well as future potential results of operations or operating metrics and other measures addressed by our management, the conference call may differ materially and adversely from those expressed or implied by such forward looking statements. Factors that could cause results to differ materially included but are not limited to, the risk factors described in other disclosures contained in our files with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10 k and other filings with the SEC all of which are accessible on www.sec.gov except to the extent required by law, we assume no obligation to update statements as circumstances change. With that, I'd like to turn the call over to mister Bill Bennett. Please go ahead.

Hello, everyone, and good morning. I'm happy to welcome you to our q one twenty twenty five earnings call. You can read more detail about our results when we file our our 10 Q with the SEC later today. I also wanna make sure you're aware that we've posted a new investor presentation on our website, ivfh.com, which gives an overview of the company, the longer term strategy we are building. There are a number of strong points about this quarter's performance alongside several areas where we are not yet satisfied and are working to accelerate progress. Start with the strong points. First, our year over year revenue growth accelerated to 26% in Q1 from 19.2% in q four. Our recently completed acquisitions, net of our divestitures, contributed approximately three points to that growth. That means our organic growth, excluding the impact of m and a and divestitures, came in at 22.9%. This was the first full quarter in which our new retail cheese business was fully integrated. And it was the largest single contributor to our overall top line momentum. Looking across the rest of our portfolio, we continue to see growth in several key areas, including our Artisan platform, our Amazon channel, the new distribution partner we onboarded last spring, Cisco, and our airline catering partners, We also launched our new airline cheese business this quarter, and we continue to chase multiple additional growth opportunities both with cheese and with additional categories.

While the team has driven strong growth across many areas of the business this quarter, three areas remained an opportunity for us, and I wanted to highlight the actions we're taking to turn them into drivers of future revenue and profit growth. First, our digital channels business continued to decline by single digits as our US Foods business completed two years of declines. Their marketplace platform is seeing intensifying competition as they have expanded the number of sellers and items available on their marketplace. I'll tell you a bit more about the problem we're trying to solve here. In any marketplace strategy, catalog expansion is a core growth lever. This is why companies like Amazon and Walmart consistently focus on the breadth and depth of their offerings. We see this in our data as well. The catalog growth directly correlates to revenue growth. For most distributors, expanding a product catalog is a slow and costly process, But in our case, with an established drop ship infrastructure, we should be able to do it faster and at a lower cost. Unfortunately, our legacy systems have made this more difficult than it should be. Until recently, our vendor onboarding process relied on outdated tools including an Excel based template with over a 50 fields required for every new item set up.

This has understandably created friction, particularly for the smaller artisan vendors that should be a competitive strength for us. Historically, it took us six to twelve months to fully onboard a single vendor. That translated into an average of just 13 new SKUs added per week. Far too slow to drive catalog growth, especially when factoring in natural attrition and item discontinuation. We are now in the process of rebuilding our catalog management platform using AI driven third party tools. These tools will allow for concurrent processing by multiple team members, eliminate our reliance on the rigid Excel templates, and streamline the vendor onboarding experience. Vendors will now be able to upload any version of their catalog, and the AI will parse the data auto populate required fields, source additional data from public databases, resize and enhance images, and generate optimized product titles and descriptions. This transformation will reduce vendor onboarding time from six to twelve months down to a fraction of that time. This means our people can shift from tedious manual data entry to higher value activities like vendor sourcing and quality validation, further accelerating the flywheel. While this is still a work in progress, I look forward to updating you on our continued progress in future quarters.

The second area of opportunity this quarter relates to the profitability of our retail business, In Q1, we narrowed our loss from approximately $700,000 in Q4 to approximately 425,000. This represented some progress, we obviously still have work to do. Are a number of strong initiatives underway, which Brady will speak to in greater detail later in the call. We remain confident in a path to sustainable profitability but we know we have more work to do. The third area of opportunity is the integration of our recently acquired businesses We are still in the process of stabilizing the businesses after their purchase and the relocation of loco. As part of this process, we made the decision to exit a subset of legacy customers that did not meet our profitability or credit standards. We're now implementing standard operating procedures across all key functions and tracking daily progress. We've upgraded the talent on the team, including the recent hire of a full time accountant to replace the bookkeeping originally done by a contractor and the founder. And we're systematically building a scalable playbook. This playbook will help us much more quickly and efficiently integrate our next acquisitions with clear documentation around every key process in the operation.

Despite all of this transition, these businesses remained profitable in q one, even while running out of two separate locations for much of the quarter and incurring costs that won't continue into the future. Once this integration is complete, we'll begin driving the growth levers we've previously outlined. Including cross selling opportunities across our digital platforms. Anticipate being well positioned to begin accelerating revenue and profit from these channels in the back half of the year. In summary, Q1 was a quarter of strong top line growth and clear progress, but also one of focused investment and transformation. We're seeing traction in key parts of the business and laying the foundation for long term value creation. Wanna thank our team for their focus and execution, and we look forward to updating you further in the quarters ahead. With that, I'll turn it over to Brady to talk through some of the specific actions we've taken in the operation of our business this quarter. Brady? Thanks, Bill, and good morning, everyone.

Today, I'll focus my comments mainly on our Pennsylvania based business.

As this was our first full quarter operating a substantial retail business out of this hub. And we only hit our fully scaled points of distribution in mid January. So far, our rollout has been roughly in line with internal expectations. Driving significant top line growth, while requiring some upfront investments to transform the operations. This program launched with long lead time imports, large volume buys, and no historical demand data. For all of our current active items, forecast had to be made before we launched. But importantly, upfront commitments from our customer helped derisk those inventory positions. So we were able to prioritize service levels out of the gate, which require significant working capital outlay upfront. Now with better visibility into demand, item variability, inventory into the quarter slightly down from its peak and is currently down more than 50% from its peak and approaching target levels. In some cases, partner funded promotions helped clear longer positions without impacting margin and have informed a stronger stronger demand management playbook for the future. We've also strengthened our cost structure. With scale, we've negotiated vendor cost reductions, mitigated some foreign exchange rate and tariff pressure. The rotational structure of this program also allows sourcing flexibility, to maintain price competitiveness.

Operationally, reducing trim has been a key focus. We now weigh every wheel and cut capture data in real time, and adjust specs by cheese type. We're building sales channels for each trim type, some routed into drop ship, others into airline formats. About a third of our retail products are also included in airline contracts already, enabling us to repurpose tram the sellable product. We've also reduced freight cost per unit by optimizing case packs and pallets and renegotiating freight carrier rates.

Our scale in retail is improving unit economics across the network including airlines, which is predominantly serviced out of the same Pennsylvania facility. The capabilities we're building are also unlocking new revenue streams. Within just the last sixty days, we have expanded cheese conversion for airline customers and one large importer. We see a need in the market for the types of services and products we can provide. And we are expanding cooler capacity to support future growth aspirations. Speaking of airlines, this business also continued steady year over year growth. While macro uncertainty exists, our gains are primarily driven by execution. Such as new items, more partners, and stronger reliability. As you can tell, we've been focused on launching retail and supporting the growth in airlines, while continuing to source new opportunities for the future. While we still have work ahead, operate with excellence and solidify our new partnerships, We remain bullish, the growth opportunities that lie ahead. And with that, I'll hand it over to Gary.

Thank you, Brady.

Hello, everyone. As we look back on the first quarter of twenty twenty five, I'm pleased to share the financial highlights and my perspective on our performance. As Bill stated, for the first quarter of twenty twenty five, we reported revenue of $19,500,000 representing a 20 per 26% increase compared to $15,500,000 in the same period last year. Our organic revenue growth excluding the effects of divestitures and acquisitions, was an impressive 23%. The cost of goods sold for the quarter increased by 28.6% to $15,100,000 compared to $11,700,000 last year. Our gross margin dropped by 157 basis points to 22.9% mainly due to expected changes in our sales mix as we expanded our cheese business. Cheese products sold to retail carriers retailers carry lower margins than other offerings and account for 19% of our Q1 sales compared to 0% the same period last year. Excluding cheese, gross margins improved 280 base two basis points, However, the cheese business is expected to grow to improve with better volume costing and operational efficiency. The margin decline was partially offset by lower shipping costs which declined two eighty basis points, representing 9.6% of revenue in 2025 compared to 12.4% last year. Our operating expenses saw some changes as well.

Total cash operating expenses increased by $835,000 reflecting growth in our national distribution channels and M and A activity in Q4. This represents an increase from 22.8 to 22.4%. Of total revenue. Although payroll and related cost rose $377,000 to 2,900,000.0 a result of higher headcount to support our national distribution business and employees added through distribute through acquisition, we saw a decrease as a percentage of revenue to 14.9% from 16.1% last year. Professional and legal fees increased by $472,000 to $762,000. Approximately $288,000 attributable to various legal and transactional activities related to acquisitions, and other corporate actions. Representing 1.8% of total revenue. Additionally, we incurred $72,000 in auditor expenses that were pulled forward into Q1. Partially due to the acquisitions, but largely due to renegotiated contract which shifted more of the annual engagement into q one. This brings the total professional fees professional and legal fees 3.9% of total revenue compared to 1.9% last year. Turning to profitability. We experienced a GAAP net loss from continuing operations of $430,000 compared to net income of $1,900,000 last year. This translates to a GAAP net loss from continuing operations per fully diluted share of 0.8¢ compared to a a net income of $0.028 in 02/2024.

Adjusting for nonrecurring items and noncash expenses, our Q1 adjusted net income from continuing operations was $46,000 a slight decrease compared to the $161,000 in 02/2024. This results in an adjusted net income per fully diluted share of 0.1¢ compared to 0.3¢ in 2024. Now let's delve into the cash flows which is a critical area of focus for our financial health and operational sustainability. Net cash used in operating activities was $977,000 for the first quarter of twenty twenty five. This was primarily driven by changes in working capital [indiscernible] Accounts receivable decreased by $1,500,000 reflecting collection of receivables related to elevated cheese sales in q four twenty twenty four. Inventory increased by $617,000 to support anticipated demand from new retailer from new retail and airline customers and replenish depleted inventory levels associated with newly acquired loco food distributions business. Accounts payable and accrued liabilities decreased by $1,800,000 primarily due to the pay downs of inventory purchases related to elevated Q4 twenty twenty four cheese sales. Which were settled in q one of twenty twenty five. Net cash used in investing activities was $163,000 primarily related to the purchases of property and equipment These investments included equipment for cheese cutting operations and warehouse and improvements to support the consolidation of local foods and gold Organics acquired in Q4 of twenty twenty four.

In summary, our cash flow activities reflect our strategic investments and adjustments to support future growth. The net cash used in operating activities highlights our efforts to manage working capital effectively, particularly in response to the elevated cheese sales and the integration of our newly acquired businesses. The investments in property and equipment are aimed to enhance our operational capabilities and support consolidation of our recent acquisitions. Looking ahead, I'm excited to share an update of our uplisting journey. We plan to start with a name change, the Harvest Group Holdings within the next month. Along with this and after thorough analysis, we'll also redomicile to the state of Texas. Shortly after, we'll file a Nasdaq application announced reverse stock split close closer to the uplisting. We do not have we do not currently have concrete dates to share publicly. But we continue to make progress, and we'll provide updates as we progress along the way. In conclusion, we are pleased with the revenue growth in strategic progress we have made in expanding our market presence and customer base. We remain committed to driving shareholder value through disciplined financial management and strategic investments. Thank you for your attention. And with that, I'll hand it back to Bill to share his thoughts and lead us through the Q and A. Bill, over to you.

Thanks, Gary. Lots of good things happening across the business with several areas of intense focus as we continue on our strategic journey. With that said, we're happy to take some q and a. I'll turn it back to Ronit to moderate that q and a for us.

We'll now move to the q and a section of the call. If you'd like to ask a question, please use the Zoom function Please limit your comments to one question and one follow-up if needed. And keep your comments professional and respectful. We've allocated a approximately twenty minutes to this portion of the call.

Ernie, we have a couple, questions coming through the chat that I can hit on since we don't have any raised hands. So first off, from Ian Castle, have a question about the cheese retail business. Can you become profitable at the current scale, or do you have to grow it significantly to get to breakeven? So we do think that we can get to profitability at the current scale. Know, it's it's hard, I know, for investors who only get a quarterly snapshot of our financials. But I'd encourage you to just remember that we only finished the ramp up of this retail business in January with that additional rollout that we had announced at that point. And so, you know, really, we only had a a partial quarter of this business at full scale, and we continue to learn every single day on how to be more efficient with the process. We're already getting improved costs that haven't yet showed up in the financials. I actually just visited the Pennsylvania facility this week, and witnessed some new processes they have in place that is that are reducing labor by, upwards of 30%. Per unit. We continue to find efficiencies in our shipping capabilities and in contracts.

So all of those things, continue to push on and expect that we can get to profitability within our current scale. But that said, like Brady mentioned, also continue to chase additional top line opportunities, and just having these capabilities in place opens up so many doors that we just didn't have access to before. So, hopefully, that answers your question. The second question I have in the chat is from JD Abushar. What lessons have you learned from the recent acquisitions? Yeah. Great question. And, you know, it's I said this at the outset, right, that we had a lot to learn. It was why we didn't want to, you know, pursue additional acquisitions too quickly, and and we're definitely living through that now. So one of the things I think has has been really interesting to learn is that with acquiring a small business like this, there's a lot of work that has to be done on the processes. Right? Like, the historically, the founder wore most of the hats in the building. And and, frankly, is typically overworked and and doesn't have enough bandwidth to tackle all the different things that need to be handled. So, you know, you have people shouting over walls to, you know, handle a a missed invoice or something like that.

We really you know, especially now that they're part of a public company, we have to get all of those controls in place that you would expect a public company to have. So I would say so far, that's been more challenging than we anticipated. And it's why, as I mentioned in my comments, we're just getting you know, more and more granular and into the weeds as we see the the level of detail that's needed to to sort of set up those processes and build the right habits with the team. So we've identified now probably 15 different core operational processes around the facility. That we've now written a standard operating procedure for. We we then actually plug those all into our our activity tracking tool, and we keep track of those daily. In my conversations with our president there, and, and it's helping us make tremendous progress in in pushing forward to the objectives that we have. So that's one big thing is just the importance of process and then making sure that we've got the right talent in place. Implement those processes. A second thing that I would say is that you know, I think so many decisions are made a small operation like these by gut.

And, you know, of course, we just don't want to operate that way. So of the other things we're doing with them is building out scalable tools that we'll be able to leverage in other parts of the business.

So example of this is just the inventory ordering process. Historically, in in these two businesses that we acquired, POs were placed for new inventory literally by walk through the warehouse and looking at which items seemed to be low. On inventory. There was no formal forecasting process. Was no you know, if you know anything about operations management and reorder points and, you know, managing by standard deviation of demand, all of those, you know, good kind of business school concepts aren't really in place in an operation like this. And so we're now building out tools that can know, really make the business turnkey from an operational standpoint. And and that's why I say, you know, when we make another acquisition at some point in the future, it's gonna be so much easier to go through integration because we're gonna literally have the entire playbook written. Here's how you accept an order. You need three signatures on invoice before it's passed into the warehouse. Here's how you place a PO on new inventory. You have to have a forecast in place. You have to have your reorder point established, etcetera. Right? So as we get through each of those processes, I'm confident that we're gonna get those businesses to where we need them to be.

But it is definitely a learning process. Alright. I can I I just keep getting more questions here in the chat, so I'm just gonna keep going there? Next one is from Brian Harper. You describe the process for cheese fulfillment? Is it standard and the same for each store? Is it customized? Are you cutting individual portions, or is that done at store level? Yeah. So one of the key pieces of value that we're adding in this cheese relationship with Sam's Club is that we do all the processing centrally. Right? So there's no in store labor for them. To be able to, still offer this fresh cut cheese. So by by doing all of the cutting, wrapping, everything in a central way, that's what enables us to then invest in the machinery and automation to do it as efficiently as possible and even know, save additional cost over what it would take to do those processes in store. Now the the offering that that the retailers asked us for is a what's called a fixed weight program. So each piece of cheese is exactly the same weight as the next. A lot of retailers do what's called a variable weight program.

Right? Every cheese is a little bit weight, and you charge by the pound. So because of that, we we've that that's been part of the learning curve we've gone through on that retail business. Is figuring out how to reduce trim as much as possible so that we can get to those precise cuts of cheese that, that Sam's Club has asked for. So I think that answers each of your questions there. And the last piece I'll say is we do distribute not to their stores directly, but to their DCs. So, that definitely helps on our efficiency and enables us to hit the cost structure that we need to for them. Alright. Got another one from Ian Castle. You mentioned the focus on increasing the velocity of new products into your catalog. What is the current weekly number compared to last year's number you mentioned in your prepared remarks? And where would you like it to be in twelve months? Yeah. So we haven't implemented this system that I've talked about. So far. Right? Like, we're still sort of under development of this AI platform that will accelerate the pace for us. So year to date, we're on about the same pace that we were on last year.

What will really change once we can accelerate this pace of of catalog additions is that we can start to go after vendors in a much more aggressive way. Interesting. Our our sourcing team today has to be extremely selective in terms of which vendors they put in the pipeline because they know it's gonna take a long time. And we do a lot of, you know, trying to convince these vendors to stick with us and, hey. You know, it's gonna be worth it. You're gonna get on this US Foods platform. It's you know, the sales are going to come, but we just we need your help filling out this 50 column spreadsheet. And we know it's painful, but but we'll get there. And, and in the future, we're just we're not gonna have to put so much scrutiny on, you know, which vendors get into the pipeline.

Course, want the right vendors and the right items, but my point is there are hundreds of vendors that I would love to have on the platform that we can't do today because of these manual processes. So you know, even as we've as we've talked through this with US Foods in particular, they are incredibly excited about the the pace that we'll be able to accelerate with them. And, they've even talked about pushing some of the smaller vendors that they would like to do business with but can't justify setting up on their platform, pushing those vendors to us to actually set up into our catalog. We've talked about, you know, how as we make additional acquisitions, that this will be able to grow our catalog even faster. And that's something they're excited about. So it's even reinforcing their relationship with US Foods that, as I mentioned, is, of course, a a key part of getting that business back to growth. And then one more follow-up Ian. Can you give some more color on the potential of further growth in cheese retail versus airlines? What other categories could become potential opportunities? Yeah. So, you know, we continue to look at how else we could expand these businesses both within Sam's Club as well as across other retailers across the landscape.

And, you know, I think the most natural extensions are into sort of adjacent categories to gourmet cheese. So things like cured meats, or, you know, olives or, you know, other gourmet sort of shelf stable products that can go alongside the gourmet cheese. We've also talked about opportunities in fresh seafood and fresh beef. Where we have connections with, artisanal vendors that could really bring something unique whether it's to Sam's Club or to other retailers. So all of those opportunities are things that we're pursuing. Like I've said many times, any kind of b to b sales process is long. And, you know, most retailers don't reset their shelves more than once or twice a year. And so, you know, the the actual selling process for a a new addition could be six to twelve months out from when the shelf actually gets reset and the sales start to flow. So we'll continue to keep you updated as you know, as we hear more back from the different sales opportunities that we're pursuing. But, definitely don't have anything new to announce at this time.

Alright. That's actually, no. I've just got one more in the chat. From Alan Abel. Hey, Bill. What financial metrics do you do you or will you consider the most important in potential acquisitions going forward? What makes targets look good to you? Yeah. Good question. So I don't know that I have anything super creative here other than sales and profit. I mean, you know, the the way we looked at both of these acquisitions was that we felt like we had synergies that we could bring to them that they couldn't achieve on their own. Which, of course, as I've said before, we didn't bake into the valuation model. Right? Like, we we paid a fair value for these businesses as stand alone entities. And so that's why it's so important that as we get them back to growth, and then, and then generating additional profit, those will be the two two key things that we look for. Now the the levers to pull to get there are, are maybe kind of the next set of KPIs that maybe have more even strategic importance to us than the actual dollars that we'll generate out of the revenue and profit.

Because that's what will dictate our you know, our ability and and desire to go after more acquisitions. So things like you know, how how fast can we scale Golden Organics catalog onto US Foods and actually get meaningful revenue and profit out of it. How fast can we find new retailers that look of food distribution can sell to. And, and ultimately how broad is the desire for Colorado made products. Right? So those sort of somewhat qualitative and somewhat quantitative KPIs will be important for us to watch to be able to justify pursuing additional acquisitions in the future. Alright. That's all the questions I have in the chat. I don't see any hands raised.

Okay.

Thanks for for moderating. Appreciate that. Everyone, for your questions today and for your attendance and engagement on the call. Always great to see the level of interest in Innovative Food Holdings. Always, I'm happy to make myself and my leadership team available to connect with investors who have further about publicly available data. Please reach out to Gary Shubert, whose contact info is included in our press release if you'd like to schedule a touch base. Take care, and we look forward to continuing to update you on the progress of our strategy at our q two update later this summer. Thanks all, and have a great day.