innovativefood8k022916.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K
 


CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 23, 2016
 
Innovative Food Holdings, Inc.
(Exact name of registrant as specified in its charter)
 
 
Florida 0-9376 20-1167761
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)
 
28411 Race Track Road, Bonita Springs, Florida
34135
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:  (239) 596-0204

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 
 
Item 2.01.  Completion of Acquisition or Disposition of Assets.

On February 23, 2016 we closed a transaction to sell 90% of our ownership in The Fresh Diet, Inc. (“TFD”) to New Fresh Co., LLC, a Florida limited liability company controlled by the former founder of TFD who was appointed Interim CEO of TFD on February 9, 2016.  The consideration to Innovative Food Holdings consisted primarily of a restructuring of our loans, which includes the ability to convert to additional amounts of TFD under certain circumstances.

Item 9.01.  Financial Statements and Exhibits.
 
(b)       Pro Forma Financial Information
 
Exhibit Number   Description
99.1   Unaudited condensed combined pro forma information
 
 
 

 
 
SIGNATURES

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
  INNOVATIVE FOOD HOLDINGS, INC.  
       
Dated:  February 29, 2016
By:
/s/ Sam Klepfish  
    Sam Klepfish, CEO  
       
       

 

 
ex99-1.htm
Exhibit 99.1
 
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
   
The unaudited pro forma condensed balance sheets at September 30, 2015  and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2015, and for the year ended December 31, 2014 presented herein are based on the historical financial statements of Innovative Food Holdings, Inc.  (“Innovative”) and The Fresh Diet, Inc.  (“The Fresh Diet”)  after giving effect to Innovative’s sale  of The Fresh Diet (the “Sale”) and the assumptions and adjustments described in the accompanying notes to these unaudited pro forma condensed financial information.

The unaudited condensed combined pro forma balance sheet data at September 30, 2015 assumes that the Sale took place on September 30, 2015.
 
The unaudited pro forma condensed combined statement of operations data for the nine months ended September 30, 2015 presents the historical unaudited statement of operations of Innovative without including the results of  The Fresh Diet for the nine months ended September 30, 2015, giving effect to the Sale as if it occurred on January 1, 2015.
 
The unaudited pro forma condensed combined statement of operations data for the twelve months ended December 31, 2014 presents the historical unaudited statement of operations of Innovative without including the results of  The Fresh Diet for the twelve months ended December 31, 2014, giving effect to the Sale as if it occurred on January 1, 2014.

The unaudited pro forma condensed combined financial information does not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated costs that may be associated with the Sale. The unaudited pro forma condensed financial information  also does not include loss of any efficiencies or estimated future transaction costs.  In addition, as explained in more detail in the notes to the unaudited pro forma condensed combined financial information, the fair values of the identifiable assets and liabilities disposed reflected in the unaudited pro forma condensed financial information are subject to adjustment to reflect, among other things, the actual closing date, and may vary significantly from the actual amounts that will be recorded upon completion of the Sale.
 
The historical financial information has been adjusted to give effect to events that are directly attributable to the Sale, factually supportable and, with respect to the statements of operations, expected to have a continuing impact on the results of the combined company. These unaudited pro forma financial information  should be read in conjunction with Innovative’s historical financial statements and accompanying notes appearing in its periodic SEC filings including the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and its Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2015. The adjustments that are included in the following unaudited pro forma condensed combined financial information  are described in Note 2 below, which includes the numbered notes that are marked in those financial information.
 
 
 

 
 
Innovative Food Holdings, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2015
 
   
Consolidated
     
Pro Forma
   
Pro Forma
 
   
(As Reported)
     
Adjustments
   
De-consolidation
 
ASSETS
                   
Current assets
                   
Cash and cash equivalents
  $ 2,365,040   (2)   $ 10     $ 2,081,580  
          (1)     (283,470 )        
Accounts receivable net
    1,598,240         -       1,598,240  
Inventory
    1,046,237   (1)     (180,636 )     865,601  
Other current assets
    471,201   (1)     (410,860 )     60,341  
Due from related parties
    461,241   (1)     (461,241 )     -  
Total current assets
    5,941,959                 4,605,762  
                           
Notes  receivable
        (2)     8,700,000       8,700,000  
Reserve for notes receivable
        (2)     (8,700,000 )     (8,700,000 )
Property and equipment, net
    3,184,263   (1)     (1,040,935 )     2,143,328  
Investment
    150,000         -       150,000  
Intangible assets, net
    5,010,627   (1)     (3,997,711 )     1,012,916  
Total assets
  $ 14,286,849               $ 7,912,006  
                           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                         
Current liabilities
                         
Accounts payable and accrued liabilities
  $ 4,000,549   (1)     (2,526,193 )   $ 1,474,356  
Deferred revenue
    3,870,851   (1)     (3,870,851 )     -  
Accrued liabilities - related parties
    319,712   (1)     (159,562 )     160,150  
Accrued interest
    624,307   (1)     (5,758 )     618,549  
Accrued interest - related parties
    100,179   (1)     (46,029 )     54,150  
Revolving credit facilities
    1,394,167   (1)     (14,167 )     1,380,000  
Notes payable, current portion, net of discount
    1,822,922   (1)     (570,322 )     1,252,600  
Notes payable - related parties, current portion
    110,500         -       110,500  
Deferred tax liability
    1,069,200   (1)     (1,069,200 )     -  
Contingent liabilities
    570,000   (1)     (450,000 )     120,000  
Total current liabilities
    13,882,387                 5,170,305  
                           
Note payable - long term portion, net of discount
    1,286,207   (1)     (86,524 )     1,199,683  
Notes payable - related parties, long term portion
    2,199,970   (1)     (2,199,970 )     -  
Total liabilities
    17,368,564                 6,369,988  
                           
Stockholders' equity (deficit)
                         
Common stock
    2,391                 2,391  
Additional paid-in capital
    31,223,061                 31,223,061  
Treasury stock
    (160,099 )               (160,099 )
Accumulated deficit
    (34,146,708 ) (1)     4,623,373       (29,523,335 )
Total Innovative Food Holdings, Inc's stockholders' equity
                1,542,018  
Noncontrolling interest in variable interest entity
    (360 ) (1)     360       -  
Total stockholder's equity (deficit)
    (3,081,715 )               1,542,018  
                           
Total liabilities and stockholders' equity (deficit)
  $ 14,286,849               $ 7,912,006  
 
See notes to unaudited pro forma condensed combined financial information.
 
 
 

 
 
Innovative Food Holdings, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2015
 
    Consolidated      
Pro Forma
   
Pro Forma
 
   
(As Reported)
     
Adjustments
   
De-consolidation
 
                     
                     
Revenue
 
$
35,844,020
 
(3)
   
(13,607,750
)
 
$
22,236,270
 
Cost of goods sold
   
26,170,250
 
(3)
   
(10,504,109
)
   
15,666,141
 
Gross margin
   
9,673,770
               
6,570,129
 
                           
Selling, general and administrative expenses
   
16,308,810
 
(3)
   
(9,863,263
)
   
6,445,547
 
Total operating expenses
   
16,308,810
               
6,445,547
 
                           
Operating income (loss)
   
(6,635,040
)
             
124,582
 
                           
Other (income) expense:
                         
         
(4)
   
(150,000
)
       
Interest expense, net
   
508,744
 
(3)
   
(64,920
)
   
293,824
 
Other (income)
   
(5,400
)
             
(5,400
)
Total other (income) expense
   
503,344
               
288,424
 
                           
Net loss before taxes
   
(7,138,384
)
             
(163,842
)
                           
Income tax expense
   
-
                   
                           
Net loss
 
$
(7,138,384
)
           
$
(163,842
)
                           
Less net income attributable to noncontrolling interest
 in variable interest entities
   
(1,544
)
(3)
   
1,544
     
-
 
                           
Net loss attributable to Innovative Food Holdings, Inc.
 
$
(7,136,840
)
           
$
(163,842
)
                           
Net loss per share - basic
 
$
(0.324
)
           
$
(0.007
)
                           
Net loss per share - diluted
 
$
(0.324
)
           
$
(0.007
)
                           
Weighted average shares outstanding - basic
   
22,042,357
               
22,042,357
 
                           
Weighted average shares outstanding - diluted
   
22,042,357
               
22,042,357
 
 
See notes to unaudited pro forma condensed combined financial information.
 
 
 

 
 
Innovative Food Holdings, Inc.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Year Ended December 31, 2014
 
    Consolidated      
Pro Forma
   
Pro Forma
 
   
(As Reported)
     
Adjustments
   
De-consolidation
 
                     
Revenue
 
$
30,800,858
 
(3)
   
(4,917,030
)
 
$
25,883,828
 
Cost of goods sold
   
22,691,387
 
(3)
   
(4,827,969
)
   
17,863,418
 
Gross margin
   
8,109,471
               
8,020,410
 
                           
Selling, general and administrative expenses
   
11,025,083
 
(3)
   
(3,324,970
)
   
7,700,113
 
Total operating expenses
   
11,025,083
               
7,700,113
 
                           
Operating income
   
(2,915,612
)
             
320,297
 
                           
Other (income) expense:
                         
         
(4)
   
(200,000
)
       
Interest expense, net
   
824,070
 
(3)
   
(35,124
)
   
588,946
 
Other (income)
   
(8,734
)
(3)
   
7,034
     
(1,700
)
Total other (income) expense
   
815,336
               
587,246
 
                           
Net loss before income taxes
   
(3,730,948
)
             
(266,949
)
                           
Income tax expense
   
-
               
-
 
                           
Net loss
 
$
(3,730,948
)
           
$
(266,949
)
                           
Less net income attributable to noncontrolling interest
 in variable interest entities
   
1,184
 
(3) 
   
(1,184
)
   
-
 
                           
Net loss attributable to Innovative Food Holdings, Inc.
 
$
(3,732,132
)
           
$
(266,949
)
                           
Net loss per share - basic
 
$
(0.320
)
           
$
(0.023
)
                           
Net loss per share - diluted
 
$
(0.320
)
           
$
(0.023
)
                           
Weighted average shares outstanding - basic
   
11,421,690
               
11,421,690
 
                           
Weighted average shares outstanding - diluted
   
11,421,690
               
11,421,690
 
 
See notes to unaudited pro forma condensed combined financial information.

 
 

 
 
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
1. Sales Price
 
Pursuant to the terms of a Stock Purchase Agreement (the “Stock Purchase Agreement”), Innovative Food Holdings, Inc. (“Innovative”) sold The Fresh Diet, Inc. (“The Fresh Diet”) effective February 23, 2016.  The sales price under the terms of the Stock Purchase Agreement was $8,700,010, consisting of notes in the amount of $8,700,000 and $10 cash. A reserve in the amount of $8,700,000 is reflected against these notes in the pro forma condensed balance sheets as of September 30, 2015 and December 31, 2014:
 
Cash
 
$
10
 
Notes receivable
   
8,700,000
 
Reserve
   
(8,700,000
)
Net sales price
 
$
10
 
         
Assets disposed
 
$
6,374,853
 
Liabilities disposed
   
(10,998,216
Net assets and liabilities disposed
   
(4,623,363
)
 
2. Pro Forma Adjustments
 
The pro forma condensed combined financial statements are based upon the historical consolidated financial statements of Innovative and The Fresh Diet and certain adjustments which Innovative believes are reasonable to give effect to the Fresh Diet sale. These adjustments are based upon currently available information and certain assumptions, and therefore the actual adjustments will likely differ from the pro forma adjustments.
 
The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet and statements of operations:
 
 
(1)
To record the disposition of the  assets and of liabilities of The Fresh Diet.
 
(2)
To record the consideration received by Innovative in the sale of The Fresh Diet.  For pro forma presentation purposes, the Company has presented a full reserve related to the $8,700,000 note receivable received as a result of the transaction.
 
(3)
To remove the revenue and expenses of The Fresh Diet from the consolidated financial statements of Innovative.
 
(4)
To record interest income on the note receivable received as partial consideration for the Sale.