NAPLES, Fla., Aug. 24, 2006 (PRIMEZONE) -- Innovative Food Holdings, Inc. (Pink Sheets:IVFH) announced its financial results for the second quarter of 2006 and reported record revenues of $1,868,889, a 41% increase from $1,325,814 for the comparable quarter in 2005. Sequentially revenues increased approx 14% by $227,843 from $1,641,046 in the previous quarter.
Selected Highlights of the Quarter include:
Strong Gross margin improvement
Gross margins improved significantly for the quarter to 25.4% from 21.9 % in last year's second quarter.
EBITDA Improvement
EBITDA (Earnings before income tax, depreciation and amortization -- a popular, though non-GAAP, financial measurement) improved to ($7,846) in the quarter compared to ($107,151) in the second quarter of 2005. In addition, in the 2nd quarter of 2006 we incurred expenses related to Pasta Italiana and without those additional expenses we would have reported positive EBITDA for the quarter.
Launch/growth of Specialty Customized Menu Food Business
During the second quarter and continuing into the third quarter, we received initial orders from various large restaurants and hotel chains for custom designed high-end gourmet menu products. This is an area that the Company believes could be a new segment for growth.
Comments on the Quarter
Our COO, Z Zackary Ziakas, noted, "This quarter was a historical quarter for the company, as we experienced record strong growth across all areas of the company and are growing brand awareness. We continue to see demand for our existing products and receive requests for new products that follow emerging trends in the culinary industry."
Corporate Update:
U.S. Foods
As outlined in the previously released 10-QSB for the second quarter, our contract with our primary customer, Next Day Gourmet, L.P., a wholly-owned subsidiary of U.S. Foods, representing approximately 90% of our revenues, is due to expire in September. We have initiated discussion with representatives of U.S. Foods to extend the contract on essentially the same terms as the current contract. We believe that we will be successful in this endeavor, but if not, the loss of U.S. Foods as a customer will have a materially adverse impact on our revenues, cash flows and business prospects. At this time we can give no assurances that we will be successful in extending the contract.
Pasta Italiana
During the second quarter we extended an additional $10,000 to Pasta Italiana. In addition to the $10,000 extended, Pasta Italiana required unexpected significant additional funding and unexpected conditions for closing on their acquisition were demanded. IVFH felt it strategically prudent to discontinue further funding unless certain conditions requested by IVFH were met. As a result of these conditions not being met, our option to acquire Pasta Italiana was not exercised and we have allowed the option to lapse. Our current focus is on the full return to us of our loans, plus interest, by Pasta Italiana.
Investor Relations
The company initiated efforts to improve communication with the investor community. In the most recent quarter the Company launched a dedicated Investor Relations Line (1-239-449-3249) and email address (IR@foodinno.com). It is the intention of the Company that communications directed through the email and phone number will be responded to within 48 hours.
CEO
The company is currently in discussions with several potential candidates. As the Company previously indicated, our COO, Mr. Ziakas, is continuing his existing function of operating the Company. As the Company believes that marketing and positioning will have the potential to be a future growth catalyst for the Company, the function of the new CEO is expected to be sales and marketing oriented.
This press release contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates and projections about IVFH's business based partly on assumptions made by its management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such statements due to numerous factors, including, but not limited to, those described above, adverse economic conditions, loss of a material contract, inability to attract prospective new customers or retain existing customers resulting in a declining revenue base, intense competition including entry of new competitors and services, adverse federal, state and local government regulation, unexpected costs and operating deficits, lower sales and revenues than forecast, default on leases or other indebtedness, loss of suppliers, price increases for capital, supplies and materials, inadequate capital and/or inability to raise financing, the risk of litigation and administrative proceedings involving the Company and its employees, higher than anticipated labor costs, the possible acquisition of new businesses that result in operating losses or that do not perform as anticipated, resulting in unanticipated losses, the possible fluctuation and volatility of the Company's operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be alluded to in this release or in reports filed by us with SEC. The forward-looking statements contained herein speak only as of the date on which they are made, and IVFH undertakes no obligation to update any of them to reflect events or circumstances after the date of this release.