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

Mr. Tomer Bar Meir reports ESHBAL REPORTS FIRST CONSOLIDATED FINANCIAL RESULTS FOLLOWING RTO AND PROVIDES CORPORATE UPDATE Eshbal Functional Food Inc. has released its first consolidated financial results, following completion of its April, 2025, reverse takeover (RTO), and provided a corporate update regarding continuing business activities. Financial results discussion (The following disclosure does not constitute full disclosure of the company's financial and operational condition, and is qualified by, and should be read in conjunction with, the company's management's discussion and analysis (MD&A), for the period ending June 30, 2025, and corresponding financial statements available on SEDAR+.) 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. For the three months ended June 30, 2025, the company reported revenues of $2.97-million (U.S.), an increase of $413,000 (U.S.) over $2.55-million (U.S.) in the corresponding prior-year period. Gross profit improved to $628,000 (U.S.) (21.2 per cent of revenues), compared with $478,000 (U.S.) (18.7 per cent of revenues) in Q2 2024, reflecting both higher absolute profit and stronger margins. For the six-month period ended June 30, 2025, revenues totalled $6.72-million (U.S.), up from $5.99-million (U.S.) in the first half of 2024, an increase of $725,000 (U.S.) (12 per cent). Gross profit rose to $1.73-million (U.S.) (25.7 per cent of revenues), compared with $1.39-million (U.S.) (23.1 per cent of revenues) in the prior year, representing an approximately 25-per-cent growth. Operating income for the six-month period ended June 30, 2025, was $204,000 (U.S.), remaining positive despite new public company costs introduced following the RTO. Net results for both Q2 2025 and the six-month period ended June 30, 2025, were significantly impacted by a non-recurring $1.69-million (U.S.) non-cash listing expense directly associated with the RTO transaction. As a result, the company reported a net loss of $2.0-million (U.S.) for Q2 2025 and $1.61-million (U.S.) for the six-month period ended June 30, 2025. In addition, the company notes that the news release, published on July 3, 2025, in which it announced the signing of a letter of intent between the company and GF Nation did not mature to a final agreement. Investor relations clarification The company wishes to provide expanded disclosure to its news release of June 28, 2025. The company advises that Fairfax Partners Inc., a company located in Vancouver, B.C., has not and will not receive any securities of the company as compensation, and that the company is unrelated and unaffiliated to Fairfax. Neither Farirfax nor any of its principals has an interest, directly or indirectly, in any securities of the company, or any right or intent to acquire such an interest. About Eshbal Functional Food Inc. Eshbal Functional Food is a developer and manufacturer of health-focused food and nutraceutical products. With extensive experience in food innovation, the company leverages proprietary R&D (research and development) and specialized production technologies to deliver gluten-free, vegan, low-carb, sugar-free and supplement-based solutions across a range of categories -- from baked goods and spreads to protein blends, cereals and dietary supplements. Eshbal serves a diverse mix of industrial, food service and retail clients in Israel and abroad, and is actively scaling its presence across the North American market. This expansion follows the completion of an RTO with Hakken Capital Corp., through which Eshbal became a publicly listed company on the TSX Venture Exchange as of April 14, 2025. The second quarter of 2025 represents the company's first set of consolidated financial statements, marking the beginning of its journey as a public entity with integrated reporting across its operations. Looking ahead, Eshbal continues to advance its strategic efforts in North America, focusing on organic growth initiatives, evaluating M&A (merger and acquisition) opportunities and expanding its presence in the growing better-for-you food category. The company remains committed to executing its plans efficiently and aligning its operations with long-term growth opportunities in the gluten-free and health-focused food markets. We seek Safe Harbor.