Eshbal Functional loses $507,000 (U.S.) in Q3

Executive Summary

• Eshbal Functional Food Inc. reported consolidated financial results for the three and nine months ended September 30, 2025, highlighting strong revenue growth and margin expansion in its core Israeli operations.
• The company reported a net loss of $2.1 million for the nine-month period, primarily driven by a $2 million non-cash, non-recurring listing expense associated with its recent Reverse Takeover (RTO).
• Management provided a corporate update on its North American expansion strategy, including a definitive agreement to acquire a majority interest in D2BD Foods and plans for local manufacturing to commence in Q1 2026.

Key Details

• Q3 2025 Revenue: $3.38 million, representing a 25% increase from $2.7 million in Q3 2024.
• Q3 2025 Gross Profit: $995,000 (29% of revenue), up from $596,000 (22% of revenue) in Q3 2024.
• Nine-Month 2025 Revenue: $10.1 million, a 16% increase from $8.7 million in the prior-year period.
• Nine-Month 2025 Gross Profit: $2.7 million (27% of revenue), up from $2 million (22.8% of revenue) in the prior-year period.
• Nine-Month 2025 EBITDA: $679,000.
• Nine-Month 2025 Operating Income: $127,000.
• Nine-Month 2025 Net Loss: $2.1 million, significantly impacted by a $2 million non-recurring non-cash listing expense from the RTO.
• Q3 2025 Net Loss: $507,000.
• Eshbal Israel (Subsidiary) Performance:
  • Revenues in New Israeli Shekels increased by approximately 10% year-over-year.
  • Gross margin expanded to 25%.
  • Net profit rose by more than 50% in local-currency terms to approximately 6% of revenue.
• North American Expansion Updates:
  • Signed a definitive agreement to acquire a majority interest in D2BD Foods (New York) to gain initial distribution access in key U.S. retail channels.
  • Strengthened commercial presence with senior leadership and dedicated broker relationships for gluten-free pita bread and other products.
  • Local manufacturing preparation is underway, expected to commence in Q1 2026 to support scale, logistics, and cost-efficiency.

Notable Quotes

• Tomer Bar Meir, CEO: "Q3 reinforces the strength of our core Israeli operation: Revenue is growing, production is more efficient and margins continue to improve. These results reflect real demand and operational efficiency and discipline."
• Tomer Bar Meir, CEO: "While consolidated results are influenced by currency fluctuations and listing-related accounting and one-time items, our underlying fundamentals remain strong. We are focused on expanding our North American footprint, enhancing operational efficiency and executing our M&A-driven growth strategy."