Mr. Tomer Bar Meir reports

ESHBAL REPORTS FINANCIAL RESULTS FOR Q3 AND PROVIDES CORPORATE UPDATE

Eshbal Functional Food Inc. has released its consolidated financial results for the three- and nine-month periods ended Sept. 30, 2025. The financial statements and MD&A (management's discussion and analysis) are available on SEDAR+ under the company's profile.

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 MD&A for the period ending Sept. 30, 2025, and corresponding financial statements, available on SEDAR+.

2025 third quarter financial results

All figures are in U.S. dollars unless otherwise indicated.

Strong revenue growth, significant margin expansion and continued progress toward North American market entry

Revenue and gross margin

For the third quarter, the three months ended Sept. 30, 2025, the company reported revenues of $3.38-million, an increase of $673,000, a 25-per-cent increase compared with $2.7-million in the corresponding prior-year period. Gross profit improved to $995,000 (29 per cent of revenues), compared with $596,000 (22 per cent of revenues) in Q3 (third quarter) 2024.

For the nine months ended Sept. 30, 2025, the company reported revenues of $10.1-million, an increase of $1.4-million, a 16-per-cent increase compared with $8.7-million in the corresponding prior-year period. Gross profit improved to $2.7-million (27 per cent of revenues), compared with $2-million (22.8 per cent of revenues) in the corresponding prior-year period.

For the nine months ended Sept. 30, 2025, the company reported EBITDA (earnings before interest, taxes, depreciation and amortization) of $679,000.

Operating and net profit

Operating income for the nine-month period ended Sept. 30, 2025, was $127,000, remaining positive despite new public company costs introduced following the RTO (reverse takeover), in comparison with the prior-period results, where Eshbal was a private company. Net results for the nine-month period ended Sept. 30, 2025, were significantly impacted by a non-recurring $2-million non-cash listing expense directly associated with the RTO transaction that accrued in April, 2025. As a result, the company reported a net loss of $507,000 for Q3 2025 and $2.1-million for the nine-month period ended Sept. 30, 2025.

Eshbal Israel, the company's operating subsidiary, remained profitable during the period, demonstrating strong year-over-year improvement across all key lines -- with revenues in New Israeli Shekels increasing by approximately 10 per cent, gross margin expanding to 25 per cent and net profit rising by more than 50 per cent in local-currency terms to approximately 6 per cent of revenue.

Management views the reported net loss during this period as not representative of future results but rather a one-time loss as a result of the accounting impact of the listing transaction.

Business update

Eshbal continues to advance its North American expansion strategy. Key developments include:

• Definitive agreement signed to acquire a majority interest in D2BD Foods (New York), providing initial distribution access in key U.S. retail channels upon closing;
• Strengthened commercial presence in North America, supported by the company's senior commercial leadership and dedicated broker relationships for bringing Eshbal's flagship gluten-free pita bread and additional products to market;
• Preparation for local manufacturing, expected to commence in Q1 (first quarter) 2026, to support scale, logistics and cost-efficiency for North American operations.

These operational steps reflect the company's long-term strategy to enter the North American market with a scalable product platform and established demand.

Tomer Bar Meir, chief executive officer of Eshbal, stated:

"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.

"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."

Outlook

The company is prioritizing continued development of its Israeli operations with an emphasis on scale, margin optimization and product expansion. In North America, management will focus on advancing manufacturing arrangements, launching initial gluten-free products and progressing strategic integration initiatives. These efforts are intended to support sustainable long-term growth and strengthen the company's position in the better-for-you category.

About Eshbal Functional Food Inc.

Eshbal Functional Food is an innovative and profitable food technology company with over 300 SKUs (stock-keeping units) in the gluten-free and better-for-you categories. Eshbal generated more than $11-million in revenue in 2024 and is seeking to consolidate companies in the artisanal, gluten-free market.

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.

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