Eshbal Functional loses $2-million (U.S.) in Q2

Executive Summary

• Eshbal Functional Food Inc. reported its first consolidated financial results following its April 2025 reverse takeover (RTO), showing revenue growth and improved gross margins despite a net loss driven by non-recurring listing expenses.
• The company clarified that Fairfax Partners Inc. is unrelated and unaffiliated with Eshbal, having received no securities as compensation, correcting previous investor relations disclosures.
• The company noted that a previously announced letter of intent with GF Nation did not mature into a final agreement.

Key Details

• Q2 2025 Financials (Three months ended June 30, 2025):
  • Revenues: $2.97 million (U.S.), an increase of $413,000 (U.S.) from $2.55 million (U.S.) in Q2 2024.
  • Gross Profit: $628,000 (U.S.) (21.2% of revenues), up from $478,000 (U.S.) (18.7% of revenues) in Q2 2024.
  • Net Loss: $2.0 million (U.S.), significantly impacted by a $1.69 million (U.S.) non-recurring non-cash listing expense associated with the RTO.
• Six-Month Period 2025 (Ended June 30, 2025):
  • Revenues: $6.72 million (U.S.), up 12% from $5.99 million (U.S.) in the prior year.
  • Gross Profit: $1.73 million (U.S.) (25.7% of revenues), up from $1.39 million (U.S.) (23.1% of revenues) in the prior year.
  • Operating Income: $204,000 (U.S.).
  • Net Loss: $1.61 million (U.S.), also impacted by the $1.69 million (U.S.) non-recurring listing expense.
• Corporate Updates & Clarifications:
  • GF Nation Agreement: The letter of intent signed between Eshbal and GF Nation, announced in a July 3, 2025 news release, did not mature into a final agreement.
  • Fairfax Partners Clarification: The company explicitly stated that Fairfax Partners Inc. (Vancouver, B.C.) is unrelated and unaffiliated with Eshbal. Fairfax received no securities as compensation and has no interest in the company’s securities.
• Context:
  • These are the first consolidated statements post-RTO with Hakken Capital Corp., which listed on the TSX Venture Exchange on April 14, 2025.
  • Comparative periods in 2024 reflect only the stand-alone performance of Eshbal Israel (Agricultural Cooperative) Ltd.

Notable Quotes

• "The second quarter (Q2) of 2025 represents the company's first set of consolidated financial statements following completion of the RTO. As such, the Q2 2025 figures include the results of Eshbal Functional Food (following the RTO), together with its Israeli operating subsidiary, while the comparative period in 2024 reflects only the stand-alone performance of Eshbal Israel (Agricultural Cooperative) Ltd. Accordingly, year-over-year comparisons should be interpreted with caution."