Functional Brands Inc.: Form 10-K for the period ended Dec 31, 2025

Overview

Our company operates in the nutraceutical supplement industry. We are a manufacturer and distributor of supplements in categories such as pain, energy, prenatal, general health, bone and joint, gastro, immunity, cardiac, detox, mental clarity & focus, sleep, prenatal and urinary. Our end markets focus on end-consumers through different channels that include pharmacies, US wholesalers, international distributors and direct-to-consumers sales. Our products are sold over the counter, and consumers do not need a prescription to purchase our products. Our products are not approved by the FDA. Our principal business is the production, marketing, sales, and distribution of nutraceutical products through our Kirkman division. We ship our Kirkman products to throughout the United States and to 35 countries. Previously we sold hemp derived products under the Hemptown brand in certain states within the United States that permitted such sales, however, we have discontinued that product line.

Functional Brands Inc. was organized under the General Corporation Law in the State of Delaware on November 19, 2020, under the name HT Naturals Inc. HT Naturals Inc. changed its name to Functional Brands Inc. on March 23, 2023.

On July 3, 2019, HTO Holdings Inc. (“HTO Holdings”) a wholly owned subsidiary of HOC and the owner of all issued and outstanding stock of HTO Nevada, entered into an asset purchase agreement for assets of Kirkman Group Inc. a Nevada corporation, Kirkman Laboratories Inc., an Oregon corporation and Kirkman Group International, Inc. a Nevada corporation (collectively “Kirkman”) for a consideration equal to $5 million with payout in a business combination of cash and deferred consideration. The terms of the purchase agreement, as amended, were fully satisfied in November, 2025, and no further obligations to Kirkman remain.

As part of our restructuring initiatives, HTO Nevada, which was previously owned by HTO Holdings, was acquired by Functional Brands on May 19, 2023. This acquisition took place through a share exchange agreement involving HOC, HTO Holdings, and Functional Brands. This exchange resulted in HTO Nevada becoming a wholly-owned subsidiary of Functional Brands.

On July 22, 2025 we entered into Securities Purchase Agreements (each as amended, the “Securities Purchase Agreement”), and on November 5, 2025 we completed the sale in the aggregate 100,000 shares of our Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred”), with a stated value of $10,000,000, for aggregate gross proceeds of $8,000,000, before deducting placement agent fees and other offering related expenses (the “Private Placement”), together with, as a bonus, 80,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred’), with a stated value of $8,000,000.

On November 5, 2025, the Company completed the direct listing of shares of its common stock, par value $0.00001 per share, on the Nasdaq Stock Market LLC under the symbol “MEHA”.

Following the consummation of the direct listing, the holders of the Series A Preferred were entitled commencing on December 19, 2025 to convert such preferred stock into common stock at a price per share equal to the lowest of: (i) the price per share equal to a valuation of $56,000,000 (the “Valuation Cap”), (ii) 75% of the closing price of the common stock on the date of the direct listing, (iii) the closing price of the common stock on the day prior to any conversion; and (iv) a 25% discount to the lowest five (5) day volume weighted average price of the common stock prior to any such conversion, subject to a conversion floor price of $4.00 per share. The Series B Preferred is convertible into our common stock at any time at a conversion price equal to the lower of (i) the closing price of the stock on the day prior to conversion and (ii) the price per share of our common stock equal to the Valuation Cap.

For so long as the Series A Preferred remains outstanding, we are required to pay a cash dividend, monthly in arrears from the date of funding, at a rate of 5% per annum for months one through six, 10% per annum for months seven through twelve, 15% per annum for months thirteen through eighteen, and an additional 3% per month thereafter. The dividend may, at the investor’s option, be paid in common stock at the then applicable conversion price. For as long as the Series B Preferred is outstanding, if we raise additional capital, the holders of Series B Preferred may require us to use up to 25% of the proceeds from any financing to pay, in cash, a portion of any unconverted Series B Preferred. We are also required to offer this redemption opportunity to each holder of the Series B Preferred within one (1) business day from the closing of such financing, and such holder shall have one (1) business day to respond to us of its intention to redeem.

The foregoing summaries of the Securities Purchase Agreement and the rights and privileges of the Preferred Stock do not purport to be complete and are qualified in their entirety by reference to the Exhibits filed with our Current Report on Form 8-K filed with the SEC on November 6, 2025.

Recent Developments

Nasdaq Deficiency Letter

On December 30, 2025, the Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock had been below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

The Nasdaq deficiency letter has no immediate effect on the listing of the Company’s common stock, and its common stock will continue to trade on The Nasdaq Capital Market under the symbol “MEHA” at this time.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A) the Company has a compliance period of 180 calendar days, or until June 29, 2026, in which to regain compliance with the minimum bid price requirement. If the Company evidences a closing bid price of at least $1 per share for a minimum of 10 consecutive business days during the 180-day compliance period, the Company will automatically regain compliance. In the event the Company does not regain compliance with the $1.00 bid price requirement by June 29, 2026, the Company may be eligible for consideration of a second 180-day compliance period if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq’s Capital Market, other than the minimum bid price requirement. In addition, the Company would also be required to notify Nasdaq of its intent to cure the minimum bid price deficiency.

If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the compliance period (or the second compliance period, if applicable), the Company’s common stock will become subject to delisting. In the event that the Company receives notice that its common stock is being delisted, the Nasdaq listing rules permit the Company to appeal a delisting determination by the Staff to a hearings panel.

The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement, including initiating a reverse stock split. However, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules.

Partial Repurchase of Series A Preferred

On December 30, 2025, the Company entered into a Series A Convertible Preferred Stock Purchase Agreement (the “SPA”) with Helena Global Investment Opportunities 1 Ltd. (the “Seller”), pursuant to which the Company agreed to purchase from the Seller, and the Seller agreed to sell to the Company, all of the Seller’s shares of the Series A Preferred Stock, consisting of 12,022 shares (the “Purchase”).

The purchase price for the Purchase was $15.00 per share or an aggregate of $180,330, which the Company funded from its available working capital. The Purchase closed on December 31, 2025 (the “Closing”), upon the satisfaction of customary closing conditions set forth in the SPA, including delivery of the shares. The SPA included customary representations and warranties and covenants.

The foregoing description of the SPA does not purport to be complete and is qualified in its entirety by reference to the SPA, a copy of which was filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on January 5, 2026.

On February 5, 2026, the Company entered into a Series A Convertible Preferred Stock Purchase Agreement (the “SPA”) with Evergreen Capital Management LLC (the “Seller”), pursuant to which the Company agreed to purchase from the Seller, and the Seller agreed to sell to the Company, all of the Seller’s shares of the Company’s Series A Convertible Preferred Stock (the “Series A Preferred”), consisting of 12,445 shares (the “Purchase”).

The purchase price for the Purchase was $50.00 per share or an aggregate of $622,250, which the Company funded from its available working capital. The Purchase closed on February 6, 2026 (the “Closing”), upon the satisfaction of customary closing conditions set forth in the SPA, including delivery of the shares. The SPA includes customary representations and warranties and covenants.

The foregoing description of the SPA does not purport to be complete and is qualified in its entirety by reference to the form of the SPA, a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2026.

After the Closing, the shares of Series A Preferred so purchased by the Company were cancelled in accordance with the Company’s organizational documents and applicable law, and the Company caused the appropriate entries to be made in its books and records.

Bylaw Amendment

On February 1, 2026, the Company’s board of directors approved and adopted an amendment (the “Amendment”) to the Company’s bylaws (the “Bylaws”) which reduces the number of shares required to constitute a quorum at a stockholders meeting of the holders of shares of the outstanding capital stock of the Company to provide that stockholders holding thirty-three and four-tenths percent (33.4%) of the Company’s outstanding capital stock entitled to vote at such meeting shall constitute a quorum (Section 2.7 of the Bylaws).

Prior to the Amendment to the quorum requirements of the Bylaws as discussed above, the presence, in person or by proxy, of the holders of a majority of the outstanding capital stock entitled to vote at the meeting would constitute a quorum for the transaction of business at such meeting. The change to the quorum requirement for stockholder meetings was made to improve the Company’s ability to hold stockholder meetings when called.

The foregoing description of the Amendment to the Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which was attached as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2026.

Exchange of Series A and B Convertible Preferred Stock

On March 9, 2026, the Company entered into an Exchange and Amendment Agreement with certain investors, pursuant to which such investors exchanged all of their outstanding shares of the Company’s Series A and Series B Convertible Preferred Stock for a combination of newly issued Series C Convertible Preferred Stock, cash, senior secured convertible promissory notes and shares of the Company’s common stock. For purposes of the exchange, the remaining stated value of the Series A Convertible Preferred Stock was valued at 80% of stated value and the Series B Convertible Preferred Stock at 100%, resulting in an aggregate assigned value of approximately $8.38 million.

The Series C Convertible Preferred Stock has a stated value of $1,000 per share and is convertible into shares of the Company’s common stock at fixed conversion prices of $0.30, $0.35 and $0.41 per share, applied to 50%, 25% and 25% of the stated value, respectively, subject to customary anti-dilution adjustments and beneficial ownership limitations. The Series C Convertible Preferred Stock does not accrue dividends unless an event of default occurs under the governing documents.

The senior secured convertible promissory notes bear interest at 12% per annum, matures 17 months from issuance and begins amortizing in equal monthly installments beginning one year after issuance. The notes are convertible into shares of the Company’s common stock at a price equal to 120% of the closing price of the Company’s common stock immediately prior to the exchange date, subject to certain adjustments. The notes are secured by a pledge and security agreement granting the Investors a first-priority security interest in substantially all of the Company’s assets.

The foregoing descriptions of the exchange, the Series C Convertible Preferred Stock and the senior secured convertible promissory notes do not purport to be complete and are qualified in their entirety by reference to the Exhibits filed with the Company’s Current report on Form 8-K filed with the SEC on March 13, 2026.

Discontinuance of Hemp Products

Subsequent to December 31, 2025 the Company determined it to be in the best interest of the Company and its stockholders that we discontinue all lines of business related to hemp or that contain CBD products or its derivatives.

Tru2u.Health Launch

In February 2026, we launched Tru2u.health, a new digitally native health platform that expands the Company’s strategic footprint from traditional dietary supplement manufacturing into integrated supported wellness services. The platform represents an extension of the Company’s operations, designed to support sustainable, recurring revenue models and broaden consumer engagement in the fast-growing digital health market.

Our Products

Kirkman Brand

Our “Kirkman” brand products are manufactured in our FDA registered, cGMP certified facility in Lake Oswego, Oregon. Established in 1949, Kirkman specializes in manufacturing nutritional supplements and is one of the oldest companies dedicated to serving the special needs community.

Our Kirkman brand offers more than 150 products, including probiotics, enzymes, vitamins, multivitamins, amino acids, antioxidants, immune support, essential fatty acids, preconception, prenatal supplements, personal care products and other specialty products. Kirkman treats patients with autism spectrum disorders and special dietary needs through an established network of over 2,000 doctors in over 40 countries. Our Kirkman brand operates in 95% of the major subsegments in the supplement industry. Kirkman has a long-standing loyal customer and consumer base due to the rigorous testing of products in compliance with FDA requirements.

Our products under the Kirkman brand include, but are not limited to, the following:

Our products under the Kirkman brand are focused on:

Digestive enzymes: Over the counter oral digestive enzyme supplements are a combination of proteases, which aid protein digestion; lipases, which aid in fat digestion; and amylases, which aid in carbohydrate digestion. These may be prescribed by a doctor in some cases, when the pancreas does not make enough digestive enzymes on its own. People are increasingly taking over the counter (“OTC”) digestive enzymes in lower doses to support general gut health.

Essential fatty acids: Also called omega-3 fatty acids, essential fatty acids are important digestive chemicals that the body cannot make on its own.

P2i (prenatal) Brand

We launched a certified prenatal vitamin in April 2024 for expectant mothers under the ‘P2i by Kirkman’ brand. These vitamins have been specially formulated by our company to provide essential nutrients for both the mother and the developing fetus. The International Federation of Gynecology and Obstetrics (“FIGO”) published a position statement about toxic chemicals and environmental contaminants in prenatal vitamins. FIGO’s recommendation from the October 2023 position statement highlights that patients should only consume, and clinicians should only prescribe, vitamins and supplements that have been independently assessed to make certain they do not contain contaminants. Manufacturers should be held to a standard of production that assures safety and minimizes contaminants and certification of all prenatal vitamins becomes the standard of care. The FIGO Committee report on Climate Change and Toxic Environmental Exposures brought together global scientists to review reputable reference sources for chemicals that have the potential to impact maternal and newborn health, including the USA Environmental Protection Agency, the European Union, and the California EPA. The group of experts recommended several approaches, including:

• Establishing a list of toxic chemicals and contaminants that should be screened for in prenatal vitamins and reduced to de minimis levels; and
• Conducting assays of existing vitamins to assess ongoing risk to maternal and newborn health. This work can extend to personal exposure risk by offering women testing for the presence of potentially toxic environmental chemicals. Mass spectrometry currently offers the most comprehensive measurement.

This first publication of a list of toxic chemicals and contaminants represents the most comprehensive testing available at present but does not purport to identify or eliminate all potential sources of toxicity.

We are currently the only certified prenatal vitamin in the market that aligns to the FIGO position statement. We have formulated and produced a prenatal vitamin called P2i by Kirkman. There are approximately 3.6 million pregnancies alone in the United States (https://www.cdc.gov/nchs/fastats/births.htm) and the initial market focus for this product will be the United States with the expectation to expand globally since FIGO’s position statement reaches all countries.

The P2i by Kirkman prenatal vitamin has been certified by The FORUM, a nonprofit 501(c)(3) organization dedicated to promoting low-toxicity standards for prenatal healthy products. The FORUM operates under a Memorandum of Understanding (MOU) with FIGO, a globally recognized organization of obstetricians and gynecologists. This MOU establishes a shared objective to reduce environmental toxicity in prenatal products.

The certification process involves rigorous testing and evaluation to ensure compliance with The FORUM’s low-toxicity standards, which align with FIGO’s objectives for maternal and fetal health. These standards include:

• Analysis of 24 heavy metals, ensuring levels are below stringent safety thresholds;
• Testing for the presence of 120 toxic chemicals, such as pesticides and endocrine disruptors, with strict limits to prevent potential harm; and
• Utilization of ISO 17025-accredited laboratories for all testing to ensure reliability and reproducibility of results.

Purity Labs, an ISO 17025-accredited laboratory, as directed by The FORUM, conducted testing, which confirmed the product’s compliance with The FORUM’s criteria. Based on this testing, The FORUM issued its certification, indicating that Kirkman’s prenatal vitamin meets its standards for low toxicity and safety.

Tru2u.Health

The Company has launched a health & wellness platform that includes the marketing of supplements and an outsourced partnership with CareValidate. There are currently 10 supplements utilizing existing formulations that will be sold under the Tru2u brand. The supplements are the following:

5 www.Tru2u.health (http://www.Tru2u.health) is a consumer-facing telehealth and wellness platform that combines board-certified clinical support with personalized treatment plans, medication-based therapies, and the Company’s existing portfolio of science-backed nutraceutical products. The platform is structured to onboard patients nationwide in compliance with applicable state telehealth and prescribing regulation.

The platform’s core service components include:

• Board-Certified Telehealth Support: Virtual clinical consultations and ongoing medical oversight provided by licensed physicians experienced in weight-management and metabolic health.
• Medication-Based Wellness Protocols: Clinically guided GLP-1 weight management programs and other peptide-based treatment protocols offered under physician supervision where appropriate.
• Clean Supplement Integration: Access to the Company’s premium, science-based nutritional supplement products as part of comprehensive treatment and wellness plans.

Tru2u.health will provide personalized plans based on the consumer needs, with an emphasis on convenience, regulatory compliance, and transparency. The platform’s go-to-market strategy includes digital acquisition and awareness initiatives supported by external influencers with substantial combined audience reach to drive national awareness and consumer engagement.

The launch of www.Tru2u.health (http://www.Tru2u.health) aligns with broader consumer trends toward integrated, digitally delivered health solutions that combine clinical oversight with convenient access to therapeutic and supplemental products. The platform is intended to augment the Company’s existing direct-to-consumer channels, strengthen its recurring revenue streams, and extend its competitive positioning within the evolving health and wellness ecosystem.

To facilitate the telehealth and wellness protocols within the wellness platform, we have entered into a commercial services agreement with CareValidate. CareValidate delivers HIPAA-compliant digital workflows and automated care coordination that support the entire patient journey — from eligibility and intake through scheduling, medication routing, lab orders, and follow-up communications — helping reduce administrative burden, improve accuracy, and enhance the patient experience. CareValidate’s solutions are built to support regulated healthcare use cases while delivering a consistent, secure, and compliant digital experience for both providers and patients

Competitive Strengths

The Kirkman brand has been in business for over 70+ years with a loyal and repeat consumer base. We believe that this loyalty is a direct response to our high purity and quality standards that we maintain. As a result:

• We source all materials from high quality suppliers.
• We test finished goods in certified laboratories with state-of-the-art equipment and manufacture our supplements in US-based cGMP certified and FDA Selling facility located in Lake Oswego, Oregon.
• The FDA requires that we conduct at least one appropriate test or examination to verify and identify any component that is a dietary ingredient.
• We conduct ingredient testing by verifying the identity through ISO certified 3rd party laboratories.
• We test for the presence of residual solvents and pesticides (where applicable) of up to 24 heavy metals and microbial contamination that could lead to illness or death. Microbial tests can include, but are not limited to, aerobic plate count, yeast & mold, coliforms, E. coli, pseudomonas, staphylococcus aureus, bile tolerant gram negative, salmonella, aflatoxins and listeria.
• Heavy metals testing includes beryllium, aluminum, vanadium, chromium, manganese, cobalt, nickel, copper, zinc, arsenic, selenium, molybdenum, palladium, silver, cadmium, tin, antimony, barium, tungsten, platinum, thallium, lead, uranium and mercury.
• For incoming raw ingredients, we ID using a variety of methods. The FDA requires that a finished batch of the dietary supplement meets product specifications for identity, purity, strength, composition, and for limits on those types of contamination that may adulterate or that may lead to adulteration of the finished batch of the dietary supplement. This can be conducted for a subset of finished dietary supplement batches through a sound statistical sampling plan (or for every finished batch). For our business, we test every batch of products to ensure heavy metals are below California’s Pop 65 limits. In addition, every batch is tested for microbial contamination.

The Kirkman brand’s 70+ year history in the industry, along with our rigorous material testing, allows Kirkman to use statistical sampling to ensure the identity, purity and strength of each product is met. Our formulations use proprietary blends. The FDA does not require any testing on dietary supplements whereas we test for approximately 90 metals and toxins in our raw materials.

Industry

According to Grand View Research, the Global Nutritional Supplements Market is valued at approximately $517.09B in 2025 and is expected to expand at a compound annual growth rate (CAGR) of 6.6% from 2026 to 2033. Market growth is driven by rising health awareness, increasing demand for preventive healthcare, and growing adoption of functional foods and dietary supplements across all age groups.

According to Grand View Research projections U.S. Nutritional Supplements Market is valued at approximately $112.6 billion in 2024 and is expected to expand at a compound annual growth rate (CAGR) of 4.9% from 2025 to 2030. The growing awareness and prioritization of health and wellness among consumers fuels the demand for nutritional supplements. This includes approaching proactive ways such as improving their well-being, which leads to purchasing supplements that address nutritional deficiencies and obesity and enhance immunity, energy levels, and mental health. E-commerce has become a significant distribution channel, allowing consumers easier access to a wide range of products. Therefore, the market is poised for substantial expansion as consumer awareness of health and preventive care continues to rise.

* Source: Grand View Research

According to Grand View Research, the U.S. Dietary Supplement Market is valued at approximately $68.7 billion in 2025 and is expected to expand at a compound annual growth rate (CAGR) of 5.7% from 2024 to 2030. The market is primarily driven by rising health consciousness, an aging population, an increasing prevalence of lifestyle-related conditions, and a growing focus on preventive healthcare. Consumers are proactively seeking ways to boost immunity, improve mental well-being, manage stress, and support overall health, especially after the COVID-19 pandemic. In addition, the popularity of fitness and wellness culture, coupled with greater access to health information through digital platforms, has empowered individuals to take control of their nutritional needs. The expansion of e-commerce, advancements in personalized nutrition, and the availability of innovative product formats like gummies and functional beverages have further fueled market growth.

Nutraceuticals are active components that offer various health benefits. Owing to their safety profile, nutritional benefits, and therapeutic effects, nutraceutical products have gained recognition across the globe. They are known to provide nutrition, support therapy for treatment, prevent a wide range of diseases, and reduce side effects caused by cancer radiotherapy and chemotherapy.

According to Grand View Research, the global prenatal vitamin supplement market was valued at USD 542.8 million in 2023 and is projected to grow at a CAGR of 8.5% from 2024 to 2030. Increasing awareness about healthy eating habits and proper medication among pregnant women is the major factor driving the market. The overweight and sedentary lifestyle of pregnant women increases the deficiency of minerals and vitamins. In addition, malnutrition in infants, increasing incidence of other congenital disabilities, and increasing awareness about the benefits of prenatal supplements are some of the factors driving the market. The U.S. prenatal vitamin supplements market has been identified as a potentially lucrative market. Strong endorsements and guidelines from healthcare providers such as the CDC and ACOG bolster confidence in the efficacy and necessity of prenatal vitamins among expectant mothers, driving widespread adoption and market growth in the U.S. According to the American College of Obstetricians and Gynecologists (ACOG), during pregnancy, essential nutrients such as iron, folic acid, choline, calcium, omega-3 fatty acids, vitamin D, B vitamins, and vitamin C are crucial for fetal development and maternal health. A balanced diet rich in sources such as leafy greens, dairy, lean meats, fortified foods, and a prenatal vitamin containing folic acid ensures adequate intake to support both mother and baby’s needs.

Growth Strategy

We aim to be a leader in the nutraceutical space by manufacturing products held to the highest standard of quality in terms of toxins, metals, and other impurities. Our goal is to build a well-rounded portfolio of products including mushroom-based supplements which are specially formulated to support a broad range of everyday health needs. These products are intended to include functional blends and single-ingredient offerings featuring clinically relevant mushroom species—such as lion’s mane, reishi, cordyceps, chaga, and turkey tail—positioned across key consumer segments including daily wellness, prenatal support, athletic performance, and recovery, among others. We plan to do this by:

• Strengthening our existing 70-year-old Kirkman brand with its established base of consumers in the autism community by curating our product mix to cater to their specific needs;
• Investing heavily into our sales and marketing activities as well as business development, such as Tru2u.health, in order to increase sales and distribution;
• Launching multiple brands, broad as well as niche, including P2i by Kirkman which is the only certified prenatal vitamin supporting FIGO’s October 2023 position statement, to allow us to increase our market share;
• Modernizing our manufacturing capabilities by reorganizing the space and introducing new and efficient machinery and equipment to significantly enhance our output; and
• Identify key companies with synergistic strengths for partnerships or acquisitions.

MAHA Movement

The “Make America Healthy Again” (MAHA) movement reflects a growing national focus on preventive health, nutritional transparency, and reducing reliance on reactive healthcare interventions. As consumers increasingly seek science-based nutritional solutions to support long-term wellness, brands that emphasize clean ingredients, rigorous quality standards, and targeted health support are well positioned to contribute to this shift. The Kirkman® brand aligns closely with these priorities through its long-standing commitment to hypoallergenic formulations, strict quality control, and clinically informed nutritional products designed to support sensitive populations. By delivering trusted, high-quality supplements that prioritize safety, purity, and efficacy, Kirkman helps advance the broader objective of improving population health through accessible nutritional support and preventive wellness strategies.

Marketing

We market our products through various sales channels, primarily trade shows and through print and digital advertisements, focusing on several customer types. These customers include consumers, wholesalers, distributors, and those seeking private label products. We repeatedly test new marketing venues, platforms and approaches and measure results to improve the cost-effectiveness of our efforts.

Trade Shows

We participate in a variety of trade shows each year with differing attendee focuses. These include health and wellness shows, Autism conferences, OBGYN conferences, convenience and grocery stores, consumer product distribution, and private labels.

Digital and Printed Advertisements

We utilize sophisticated digital tools to place ads primarily through Google and Facebook (now Meta) that target potential customers and those showing interest in our products. In addition, we have recently begun to place traditional print ads in journals and magazines focused on convenience stores, distributors, and private label products.

In addition to new prospect acquisition programs, our marketing team produces newsletters that are distributed to our contacts with the goal of keeping our company top-of-mind, and this newsletter has historically resulted in conversion of contacts into current customers.

Market Performance Group

Functional Brands has engaged Market Performance Group (“MPG”) in a strategic eCommerce marketing arrangement to accelerate growth across its Direct-to-Consumer (“DTC”) and Amazon channels. Under this arrangement, MPG will lead the development and execution of Kirkman’s digital commerce strategy, with a focus on scalable revenue growth, improved customer acquisition efficiency, and enhanced brand visibility across key digital platforms.

MPG will oversee and optimize several core areas, including paid media strategy and execution, Amazon growth and optimization, DTC acceleration, and strategic growth initiatives, all aimed at driving measurable revenue growth for Kirkman. MPG will implement full-funnel paid media campaigns across key digital platforms, customer acquisition and retargeting efforts, managing media budget to optimize return-on-ad-spend, and performance analytics and attribution modeling. Additionally, we intend to have MPG enhance Kirkman’s Amazon presence through paid advertising, listing optimization (SEO, content, and A+ content enhancements), competitive positioning and keyword strategies, while pushing for revenue acceleration through promotions. DTC strategies will focus on traffic growth through performance marketing channels, conversion rate optimization, and lifecycle marketing to improve customer lifetime value and acquisition costs. Strategic growth initiatives will include new customer acquisition strategies, channel expansion opportunities, and detailed performance reporting. MPG aims to strengthen Kirkman’s competitive positioning in the supplement category, enhance its digital footprint, and establish a scalable eCommerce infrastructure.

Furthermore, as Kirkman transitions from a reseller approach to managing its own Amazon Seller’s Central account, we expect the brand to gain advantages such as pricing and margin optimization, improved brand control, direct advertising management, enhanced data ownership, and greater stability in inventory and buy box positioning, all of which are expected to positively influence enterprise valuation. This arrangement reinforces MPG’s role as an integral extension of the Kirkman brand, ensuring alignment with brand integrity and long-term value creation.

Customers and Markets

We sell our Kirkman branded supplements to 45 countries through international distributors that have partnered with the Kirkman brand for two decades. We have recurring consumers that purchase Kirkman brand products via our website at www.kirkmangroup.com (http://www.kirkmangroup.com), as well as through Amazon. Our core B2B customers are iHerb, Emerson and FullScript. We also have several hundred direct customers, classified as professionals, where we sell our supplements. These customers include doctors, chiropractors, and practitioners who sell our products to their patients. In addition, we plan to focus our commercial efforts for P2i by Kirkman prenatal to OBGYN’s and expectant mothers.

Competition

• There are several competitors in the supplement space. Within the vitamin segment, 66% of vitamins purchased are classified as multivitamins, as indicated by Nielsen Retail Measurement Data. Market leaders in the multi-vitamin segment are ‘private label store brands’ followed by Nature Made, Centrum, One-A-Day and Nature’s Bounty, respectively.
• Minerals remain a steady category, and they include Calcium, Magnesium and Iron as the main mineral categories. Private Label brands, again, lead the way, followed by Nature Made, Caltrate, Citracal and Nature’s Bounty.
• Supplement growth outpaces the vitamin and minerals categories (Source: Nielsen). The segments within the supplement category include, but are not limited to, Digestive Health, General Health, Heart Health, Energy, and Sleep Aids. The leaders within this space are Nature’s Bounty, Nature Made, Emergen-C, Baush+Lomb and Airbourne. 91% of the supplement revenue (Nielsen Homescan Panel Data) is generated within the following four sales channels: Warehouse Club, Grocery, Super Centers and Drug Stores.
• There are several product delivery methods for vitamins, minerals and supplements. These delivery methods could be tablets, capsules, liquids, effervescent tablets, and powders. Kirkman has the ability to produce capsules, tablets, liquids and powders to properly compete with core competitors.
• Within the special needs category, competition includes New Beginnings, Claire Labs, Houston Enzymes and Lifetrients. These companies primarily focus on the dietary sensitivities of their respective consumers.

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Technology & Intellectual Property

The following is a list of our current trademark registrations:

Regulation

Trade Regulations

Our suppliers generally source or manufacture finished goods in parts of the world that may be affected by the imposition of duties, tariffs or other import regulations in the U.S. We believe that our redundant network of suppliers provides sufficient capacity to mitigate any dependency risks on a single supplier.

We buy necessary components or ingredients for our products from suppliers or factories both domestically and internationally. We do not depend on any single supplier. However, if we are unable to continue to obtain our finished products from international locations or if our suppliers are unable to source raw materials, it could significantly disrupt our business. Further, we are affected by economic, political and other conditions in the U.S. and internationally, including those resulting in the imposition or increase of import duties, tariffs and other import regulations and widespread health emergencies, which could have a material adverse effect on our business.

Laws and Regulations Relating to Our Products

Nutraceutical

The dietary supplement industry is regulated on a federal level in the U.S. by the Food and Drug Administration (“FDA”) and the Federal Trade Commission (“FTC”) as well as by government agencies in each of the 50 states. FDA regulates both finished dietary supplement products and dietary ingredients. FDA regulates dietary supplements under a different set of regulations than those covering “conventional” foods and drug products. Under the Dietary Supplement Health and Education Act of 1994 (DSHEA):

Manufacturers and distributors of dietary supplements and dietary ingredients are prohibited from marketing products that are adulterated or misbranded. That means that these firms are responsible for evaluating the safety and labeling of their products before marketing to ensure that they meet all the requirements of the Federal Food, Drug, and Cosmetic Act as amended by DSHEA and FDA regulations. The FDA has the authority to take action against any adulterated or misbranded dietary supplement product after it reaches the market. Most dietary supplement manufacturing, labeling and marketing is covered by extensive regulations issued and enforced by the FDA and the FTC. The FDA has regulatory authority under the Federal Food, Drug and Cosmetic Act as amended in 1994 by the Dietary Supplement Health and Education Act (DSHEA) and in 2006 by the Dietary Supplement and Nonprescription Drug Consumer Protection Act. Under the DSHEA, dietary supplements are regulated as a category of food. The FDA regulates both finished dietary supplement products and dietary ingredients. By law, it is illegal to manufacture or market dietary supplement products that are adulterated or misbranded, and the FDA has regulatory authority to remove such products from the marketplace.

Key Regulations

Responsible companies in the dietary supplement industry abide by extensive regulations that cover manufacturing, labeling, quality control, safety, post-market surveillance and more.

New Dietary Ingredient Notifications

The Food Drug & Cosmetic Act, as amended by the Dietary Supplement Health and Education Act (DSHEA), established that dietary supplements that were in commerce prior to 1994 have a history of safe use, and therefore, can remain on the market without additional safety review. All new ingredients marketed after that date, however, must submit a formal 75-day notice along with evidence that the product is reasonably expected to be safe. This is referred to as a new dietary ingredient (NDI) notification. If the FDA has concerns about the ingredient or its safety profile, the agency has clear authority to request more information or to reject the notification and deny the product’s entry into the market.

Dietary Supplement Labeling Requirements

The following are the minimum labeling requirements:

1. Statement of Identity

The statement must include the product name and identify itself as a dietary supplement. Although you may replace the term dietary with the type of ingredients that are in the product, having one of them on the product label is a mandatory requirement. The product must be labeled either as conventional foods and beverages or dietary supplement based on its actuals.

2. Net Quantity of Contents

The net quantity of content informs consumers of the amount of dietary supplement that is in the container or package. The net quantity of content must be located on the product label as a distinct item in the bottom 30 percent of the principal display panel in lines generally parallel to the base of the container.

3. Supplements Chart

The supplement facts must contain the list of names and quantities of dietary ingredients present in the product’s serving size and servings per container.

4. Ingredients List

The list of ingredients must be displayed in descending order of predominance by weight. If all source ingredients are listed in the supplement facts panel, and there are no other ingredients, such as excipients or fillers, an ingredient statement is not needed.

5. Other Details

Other details required include manufacturer, packer, or distributor name and address, and domestic U.S. mail address and phone number to which a consumer can report a serious adverse event. If an adverse event is reported, the company must notify the FDA.

Good Manufacturing Practices

Good manufacturing practices (“GMPs”) for dietary supplements are specific rules for the manufacturing processes of vitamins, minerals, herbs and botanicals, amino acids and all other supplements. Finalized in 2007, these rigorous practices impose higher standards on dietary supplements than food GMPs applied to conventional foods. Dietary supplement GMPs include thorough requirements for identity testing for all ingredients as they arrive at the manufacturer’s site. Manufacturers must qualify their suppliers before receiving goods, incoming ingredients must be quarantined until their identity is confirmed using scientifically valid methods of analysis, and all components of dietary supplements must meet specifications established by the manufacturer regardless of where the ingredient was sourced.

Manufacturers are accountable to the FDA for the manufacturing process as well as the ingredients. During an inspection, the FDA has access to all the manufacturers’ records, including access to the country of origin of all supplement ingredients. The existing bioterrorism law already requires all parties in the production and distribution of dietary ingredients to keep records of suppliers and customers (“one up and one down”) that permit the agency to trace the pedigree of ingredients back to their original source. In addition, the GMP rules examine sanitation, batch records for production, employee training, validation of the manufacturing procedures, and testing final products for conformance with the label.

Adverse Event Reporting

In 2006, Congress passed The Dietary Supplement and Nonprescription Drug Consumer Protection Act, commonly referred to as the “adverse event reporting law.” The passage of this law was strongly supported by CRN and others in the industry as it provides an important regulatory tool for the FDA to protect consumers. Under this law, dietary supplement companies are required to report serious adverse events to the FDA no later than 15 business days after the company receives the report.

This post-market surveillance program alerts the FDA to possible signals or potential patterns of a problem, enabling the agency to identify concerns with ingredient safety, manufacturing issues, contamination (of either raw ingredients or finished products), tampering, and even bioterrorism. However, adverse events do not demonstrate a causal relationship between the product and the event.

Since the law went into effect, the dietary supplement industry’s track record demonstrates a strong safety profile for the industry’s products both in comparison to other FDA-regulated industries and considering that more than 170 million Americans take dietary supplements. In 2016, the FDA announced it would make data from the FDA Adverse Event Reporting System (FAERS) public.

Additional Safety Protections

Once a dietary supplement enters the stream of commerce, the FDA may remove a product if it is “adulterated” or “misbranded.” A product is considered adulterated if it contains unlisted ingredients or is not prepared or packaged under good manufacturing conditions. It is misbranded if its labeling is false or misleading. In either case, the agency has enforcement authority to seize and destroy the product, impose fines or even imprisonment. In addition, the FDA can remove a product from the market if it “presents a significant or unreasonable risk of illness or injury” under conditions of use recommended in its labeling. A separate provision gives the FDA authority to declare a product “an imminent hazard to public health or safety.” In less dramatic situations, the FDA can request manufacturers to modify products and claims or to provide warnings to consumers. The Food Safety & Modernization Act, signed into law in 2011, gave the FDA additional authority to issue a mandatory recall when a company fails to voluntarily recall an unsafe food (including dietary supplements) after being asked to by the FDA.

Food Safety Regulations

Title 21 Code of Federal Regulations, Part 111: Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements

This regulation applies to manufacturers, packagers, labelers, or holders and includes importers as well. The manufacturing facilities of certain types of human food including dietary supplements are required to have a production and process control system in place.

A California law known as Proposition 65 requires a specific warning to appear on any product containing a component listed by the state as having been found to cause cancer or birth defects. The state maintains lists of these substances and periodically adds other substances to these lists. Proposition 65 exposes all food and beverage producers to the possibility of having to provide warnings on their products in California because it does not provide for any generally applicable quantitative threshold below which the presence of a listed substance is exempt from the warning requirement. Consequently, the detection of even a trace amount of a listed substance can subject an affected product to the requirement of a warning label. However, Proposition 65 does not require a warning if the manufacturer of a product can demonstrate that the use of that product exposes consumers to a daily quantity of a listed substance that is:

• below a “safe harbor” threshold that may be established;
• naturally occurring;
• the result of necessary cooking; or
• subject to another applicable exemption.

In January 2019, New York State’s governor announced the “Consumer Right to Know Act,” a proposed law that would impose similar and potentially more stringent labeling requirements than California Proposition 65. The law has not yet been adopted, and to our knowledge California Proposition 65 remains the most onerous state-level chemical exposure labeling statutory scheme. However, due in part to the large size of California’s market, promotional products sold or distributed anywhere in the United States may be subject to California Proposition 65.

We are unable to predict whether a component found in a product that we assisted a client in producing might be added to the California list in the future. Furthermore, we are also unable to predict when or whether the increasing sensitivity of detection methodology may become applicable under this law and related regulations as they currently exist, or as they may be amended.

We are subject to various federal, state and local laws and regulations, including but not limited to, laws and regulations relating to labor and employment, U.S. customs and consumer product safety, including the Consumer Product Safety Improvement Act, or the “CPSIA.” The CPSIA created more stringent safety requirements related to lead and phthalates content in children’s products. The CPSIA regulates the future manufacture of these items and existing inventories and may cause us to incur losses if we offer for sale or sell any non-compliant items. Failure to comply with the various regulations applicable to us may result in damage to our reputation, civil and criminal liability, fines and penalties and increased cost of regulatory compliance. These current and any future laws and regulations could harm our business, results of operations and financial condition.

Legal requirements apply in various jurisdictions in the United States and overseas requiring deposits or certain taxes or fees be charged for the sale, marketing and use of certain non-refillable beverage containers. The precise requirements imposed by these measures vary. Other types of beverage container-related deposit, recycling, tax and/or product stewardship statutes and regulations also apply in various jurisdictions in the United States and overseas. We anticipate additional, similar legal requirements may be proposed or enacted in the future at local, state and federal levels, both in the United States and elsewhere.

New legislation or regulation, the application of laws from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and e-commerce generally could result in significant additional taxes on our business. Further, we could be subject to fines or other payments for any past failures to comply with these requirements. The continued growth and demand for e-commerce is likely to result in more laws and regulations that impose additional compliance burdens on e-commerce companies.

Laws and Regulations Relating to Data Privacy

In the ordinary course of our business, we might collect and store in our internal and external data centers, cloud services and networks sensitive data, including our proprietary business information and that of our customers, suppliers and business collaborators, as well as personal information of our customers and employees. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. The number and sophistication of attempted attacks and intrusions that companies have experienced from third parties has increased over the past few years. Despite our security measures, it is impossible for us to eliminate this risk.

A number of states in the U.S. have enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, financial information and other sensitive personal information. For example, all 50 states and several U.S. territories now have data breach laws that require timely notification to affected individuals, and at times regulators, credit reporting agencies and other bodies, if a company has experienced the unauthorized access or acquisition of certain personal information. Other state laws, particularly the California Consumer Privacy Act, as amended (“CCPA”), among other things, contain disclosure obligations for businesses that collect personal information about residents in their state and afford those individuals new rights relating to their personal information that may affect our ability to collect and/or use personal information. The Virginia Consumer Data Protection Act (“CDPA”) also establishes rights for Virginia consumers to control how companies use individuals’ personal data. The CDPA dictates how companies must protect personal data in their possession and respond to consumers exercising their rights, as prescribed by the law, regarding such personal data. The CDPA went into effect on January 1, 2023. Further, the California Privacy Rights Act (CPRA) was recently voted into law by California residents. The CPRA significantly amends the CCPA and imposes additional data protection obligations on covered companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. It also creates a new California data protection agency specifically tasked to enforce the law, which would likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security. The substantive requirements for businesses subject to the CPRA went into effect on January 1, 2023, and became enforceable on July 1, 2023. Meanwhile, several other states and the federal government have considered or are considering privacy laws like the CCPA. We will continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.

Outside of the U.S., data protection laws, including the EU General Data Protection Regulation (the “GDPR”), also might apply to some of our operations or business collaborators. Legal requirements in these countries relating to the collection, storage, processing and transfer of personal data/information continue to evolve. The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer personal data/information of persons located in the European Union (EU), a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of €20 million or 4% of total company revenue). Other governmental authorities around the world have enacted or are considering similar types of legislative and regulatory proposals concerning data protection.

The interpretation and enforcement of the laws and regulations described above are uncertain and subject to change, and may require substantial costs to monitor and implement and maintain adequate compliance programs. Failure to comply with United States and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business.

Environmental Regulations

We use certain plastic, glass, fabric, metal and other products in our business which may be harmful if released into the environment. In view of the nature of our business, compliance with federal, state, and local laws regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has had no material effect upon our operations or earnings, and we do not expect it to have a material impact in the foreseeable future.

Tax Laws and Regulations

Changes in tax laws or regulations in the jurisdictions in which we do business, including the U.S., or changes in how the tax laws are interpreted, could further impact our effective tax rate, further restrict our ability to repatriate undistributed offshore earnings, or impose new restrictions, costs or prohibitions on our current practices and reduce our net income and adversely affect our cash flows.

We are also subject to tax audits in the United States and other jurisdictions and our tax positions may be challenged by tax authorities. Although we believe that our current tax provisions are reasonable and appropriate, there can be no assurance that these items will be settled for the amounts accrued, that additional tax exposures will not be identified in the future or that additional tax reserves will not be necessary for any such exposures. Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions could result in a material adverse effect on our business, results of operations and financial condition.

Other Regulations

We are subject to international, federal, national, regional, state, local and other laws and regulations affecting our business, including those promulgated under the Occupational Safety and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission, the Food, Drug, and Cosmetic Act, the Foreign Corrupt Practices Act of 1977 (FCPA), various securities laws and regulations including but not limited to the Securities Exchange Act of 1934, as amended, the Securities Exchange Act of 1933, as amended, and the NASDAQ Rules, various labor, workplace and related laws, and environmental laws and regulations. Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations.

Implications of Being an Emerging Growth Company and a Smaller Reporting Company

Upon the completion of this offering, we will qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

• Have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);
• Comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
• Submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and
• Disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1.235 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act,”) which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (i) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (ii) scaled executive compensation disclosures; and (iii) the requirement to provide only two years of audited financial statements, instead of three years.

Challenges, Risks and Limitations

Our ability to utilize our competitive advantages in order to strengthen and expand our business and achieve our growth plan is subject to a number of risks and uncertainties more fully discussed under “Risk Factors” in this Annual report. As discussed in our financial statements, we have suffered recurring losses from operations and have a significant accumulated deficit. In addition, we continue to experience negative cash flows from operations. This limited working capital capability may delay or make the accomplishment of our growth plans difficult. In assessing the likelihood of our future success, investors in this offering should note our history of losses and the likelihood of our operating profitably in the future. Because the type, timing, and impact of such regulations remain uncertain, we cannot give any assurance that such actions will not have a material adverse effect on this emerging business and our strategy.

Corporate Information

We are currently incorporated and in good standing in the State of Delaware. Our registered address is 6400 SW Rosewood Street, Lake Oswego, Oregon 97035 where we lease a 24,000 square foot facility. Our telephone number is (800) 245-8282. We maintain the following websites: https://functionalbrandsinc.com, www.tru2u.health (http://www.tru2u.health), and https://kirkmangroup.com. Information available on our websites is not incorporated by reference in and is not deemed a part of this annual report, and you should not consider any information contained on, or that can be accessed through, our website as part of this annual report or in deciding whether to purchase our common stock.

Investing in our securities involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this annual report, before purchasing our securities. We have listed below (not necessarily in order of importance or probability of occurrence) what we believe to be the most significant risk factors applicable to us, but they do not constitute all of the risks that may be applicable to us. Any of the following factors could harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of your investment. Some statements in this annual report, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section titled “Cautionary Statement Regarding Forward-Looking Statements”.

We may not be successful in preventing the material adverse effects that any of the following risks and uncertainties may cause. These potential risks and uncertainties may not be a complete list of the risks and uncertainties facing us. There may be additional risks and uncertainties that we are presently unaware of, or presently consider immaterial, that may become material in the future and have a material adverse effect on us. You could lose all or a significant portion of your investment due to any of these risks and uncertainties.

Risks Related to our Financial Condition and Capital Requirements

Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern.

Our auditor’s report on our 2025 audited financial statements expresses an opinion that doubt exists as to whether we can continue as an ongoing business. Our recurring losses, negative cash flows and accumulated deficit raise doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

It is critical that we meet our sales goals and increase sales going forward as our operating plan already reflects prior significant cost containment measures and may make it difficult to achieve top-line growth if further significant reductions become necessary. If we do not meet our sales goals, our available cash and working capital will decrease and our financial condition and results of operation will be negatively impacted. These factors raise substantial doubt about our ability to continue as a going concern.

We may be unable to effectively manage future growth.

We may be subject to growth-related risks, including capacity constraints and pressure on our internal systems and controls. Our ability to manage growth effectively will require us to continue to implement and improve our operational and financial systems and to expand, train and manage our employee base. Rapid growth of our business may significantly strain our management, operations and technical resources. If we are successful in obtaining large orders for our products, we will be required to deliver large volumes of products to our customers on a timely basis and at a reasonable cost. We may not obtain large-scale orders for our products and if we do, we may not be able to satisfy large-scale production requirements on a timely and cost-effective basis. Our inability to deal with this growth may have a material adverse effect on our business, financial condition, results of operations and prospects.

We will need additional financing in the future, which may not be available when needed or may be costly and dilutive.

We will require additional financing to support our working capital needs in the future. The amount of additional capital we may require, the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including our strategic initiatives and operating plans, the performance of our business and the market conditions for debt or equity financing. Additionally, the amount of capital required will depend on our ability to meet our sales goals and otherwise successfully execute our operating plan. We believe it is imperative that we meet these sales objectives in order to lessen our reliance on external financing in the future. We intend to continually monitor and adjust our operating plan as necessary to respond to developments in our business, our markets and the broader economy. Although we believe various debt and equity financing alternatives will be available to us to support our working capital needs, financing arrangements on acceptable terms may not be available to us when needed. Additionally, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing stockholders. Any such financing alternatives may not provide us with sufficient funds to meet our long-term capital requirements. If necessary, we may explore strategic transactions that we consider to be in our best interest of our company and the best interest of our stockholders, which may include, without limitation, public or private offerings of debt or equity securities, a rights offering, and other strategic alternatives; however, these options may not ultimately be available or feasible when needed.

Functional Brands Inc. has a limited operating history, and we may not be able to successfully operate our business or execute our business plan.

We are a development stage company and are therefore subject to many of the risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, and other resources and lack of revenue. Given our limited operating history, it is hard to evaluate our proposed business and prospects. Our proposed business operations will be subject to numerous risks, uncertainties, expenses and difficulties associated with early- stage enterprises. There is no assurance that we will be successful in achieving a return on stockholders’ investment, and the likelihood of success must be considered in light of the early stage of our hemp operations.

We may incur significant debt to finance our operations.

There is no assurance that we will not incur debt in the future, that we will have sufficient funds to repay our indebtedness, or that we will not default on our debt, jeopardizing our business viability. Furthermore, we may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to conduct our business.

Risk Factors Relating to Our Business and Industry.

We compete in an industry that is brand-conscious, so brand name recognition and acceptance of our products are critical to our success.

Our business is substantially dependent upon awareness and market acceptance of our products and brands by our target market. In addition, our business depends on acceptance by our independent distributors and retailers of our brands that have the potential to provide incremental sales growth. If we are not successful in the growth of our brand and product offerings, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers. Any failure of our brands to maintain or increase acceptance or market penetration would likely have a material adverse effect on our revenues and financial results.

Our brand and image are keys to our business and any inability to maintain a positive brand image could have a material adverse effect on our results of operations.

Our success depends on our ability to maintain the brand image for our existing products and effectively build up a brand image for new products and brand extensions. We cannot predict whether our advertising, marketing and promotional programs will have the desired impact on our products’ branding and on consumer preferences. In addition, negative public relations and product quality issues, including negative perceptions regarding the nutraceutical industry, whether real or imagined, could tarnish our reputation and image of the affected brands and could cause consumers to choose other products. Our brand image can also be adversely affected by unfavorable reports, studies and articles, litigation, or regulatory or other governmental action, whether involving our products or those of our competitors.

Competition from traditional and large, well-financed product manufacturers or distributors may adversely affect our distribution relationships and may hinder the development of our existing markets, as well as prevent us from expanding our markets.

The supplements industry is highly competitive. We compete with other supplement companies, manufacturers, and distributors, not only for consumer acceptance, but also for shelf space in retail outlets and for marketing focus by our wholesalers and professional accounts. Our products are sold over the counter and do not require a doctor’s prescription since they are not FDA approved. Our products compete with other nutraceutical products, many of which are marketed by companies with substantially greater financial resources than ours. Our direct competition in the supplement industry includes domestic and international traditional nutraceutical companies and distributors as well as regional or niche companies. These national and international competitors have advantages such as lower production costs, larger marketing budgets, greater financial and other resources and more developed and extensive distribution networks than ours. We may not be able to increase our volumes or maintain our selling prices, whether in existing markets or as we enter new markets.

We compete in an industry characterized by rapid changes in consumer preferences and public perception, so our ability to continue developing new products to satisfy our consumers’ changing preferences will determine our long-term success.

Failure to introduce new brands, products or product extensions into the marketplace as current ones mature and to meet our consumers’ changing preferences could prevent us from gaining market share and achieving long-term profitability. Product lifecycles can vary, and consumers’ preferences and loyalties change over time. We may not succeed at innovating new products to introduce to our consumers. Customer preferences also are affected by factors other than taste, such as health and nutrition considerations, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product and pricing pressures. Sales of our products may be adversely affected by the negative publicity associated with these issues. If we do not adequately anticipate or adjust to respond to these and other changes in customer preferences, we may not be able to maintain and grow our brand image and our sales may be adversely affected.

We may be unable to respond effectively to technological changes in our industry, which could reduce the demand for our products.

Our future business success will depend upon our ability to maintain and enhance our product portfolio with respect to advances in technological improvements for certain products and market products that meet customer needs and market conditions in a cost-effective and timely manner. Maintaining and enhancing our product portfolio may require significant investments in licensing fees and royalties. We may not be successful in gaining access to new products that successfully compete or are able to anticipate customer needs and preferences, and our customers may not accept one or more of our products. If we fail to keep pace with evolving technological innovations or fail to modify our products and services in response to customers’ needs or preferences, then our business, financial condition and results of operations could be adversely affected.

We may experience a reduced demand for some of our products due to health concerns and legislative initiatives.

Consumers are concerned about health and wellness; public health officials and government officials are increasingly vocal about such concerns. Additional or revised regulatory requirements, whether labeling, tax or otherwise, in respect of nutraceutical products could have a material adverse effect on our financial condition and results of operations.

Our business depends on compliance by third-party pharmacy partners

Our pharmaceutical fulfillment operations rely on third-party pharmacy partners. Although such partners represent that they comply with HIPAA and other applicable healthcare laws and regulations, any failure by these partners to maintain compliance, licensure, or data security safeguards could expose us to reputational harm, regulatory scrutiny, contractual liability, and potential litigation. Additionally, changes in healthcare regulations, pharmacy licensing requirements, or enforcement priorities could adversely affect our ability to continue offering pharmaceutical-related services.

Legislative or regulatory changes that affect our products, including new taxes, could reduce demand for products or increase our costs.

Taxes imposed on the sale of certain of our products by federal, state, and local governments in the United States, or other countries in which we operate could cause consumers to shift away from purchasing our products. These taxes could materially affect our business and financial results.

International expansion efforts would likely significantly increase our operational expenses.

We may in the future expand into other geographic areas, which could increase our operational, regulatory, compliance, reputational and foreign exchange rate risks. The failure of our operating infrastructure to support such expansion could result in operational failures and regulatory fines or sanctions. Future international expansion could require us to incur a number of up-front expenses, including those associated with obtaining regulatory approvals, as well as additional ongoing expenses, including those associated with infrastructure, staff and regulatory compliance. We may not be able to successfully identify suitable acquisition and expansion opportunities or integrate such operations successfully with our existing operations.

Our reliance on distributors, retailers and brokers could affect our ability to efficiently and profitably distribute and market our products, maintain our existing markets and expand our business into other geographic markets.

Our ability to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to establish and maintain successful relationships with reliable distributors, retailers and brokers strategically positioned to serve those areas. Most of our distributors, retailers and brokers sell and distribute competing products, and our products may represent a small portion of their business. The success of our distribution network will depend on the performance of the distributors, retailers, and brokers in our network. There is a risk they may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities that may not be receptive to our product. Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition from other companies who have greater resources than we do. To the extent that our distributors, retailers and brokers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, including re-stocking the retail shelves with our products, our sales and results of operations could be adversely affected. Furthermore, such third parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities.

Our ability to maintain and expand our distribution network and attract additional distributors, retailers and brokers will depend on a number of factors, some of which are outside our control. Some of these factors include:

• the level of demand for our brands and products in a particular distribution area;
• our ability to price our products at levels competitive with those of competing products; and
• our ability to deliver products in the quantity and at the time ordered by distributors, retailers and brokers.

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We may not be able to successfully manage all or any of these factors in any of our current or prospective geographic areas of distribution. Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results.

We incur significant time and expense in attracting and maintaining key distributors, and a loss of distributors or retails accounts would harm our business.

Our marketing and sales strategy depends in large part on the availability and performance of our independent distributors. We currently do not have, nor do we anticipate in the future that we will be able to establish, long-term contractual commitments from some of our distributors. We may not be able to maintain our current distribution relationships or establish and maintain successful relationships with distributors in new geographic distribution areas. Moreover, there is the additional possibility that we may have to incur additional expenditures to attract and maintain key distributors in one or more of our geographic distribution areas in order to profitably exploit our geographic markets.

We currently have approximately thirteen distributors who service numerous retail accounts. If we were to lose any of our distributors, or if they were to lose national, regional or larger retail accounts, our financial condition and results of operations could be adversely affected. While we continually seek to expand and upgrade our distributor network, we may not be able to maintain our distributor or retailer base. The loss of any of our distributors, or their significant retail accounts, could have adverse effects on our revenues, liquidity and financial results, could negatively impact our ability to retain our relationships with our other distributors and our ability to expand our market, and would place increased dependence on our other independent distributors and national accounts.

Any pandemic, such as the COVID-19 pandemic, has and could continue to negatively affect various aspects of our business, make it more difficult for us to meet our obligations to our customers, and result in reduced demand for our products and services, which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, and it has since spread throughout other parts of the world, including the United States. Any outbreak of contagious diseases or other adverse public health developments could have a material adverse effect on our business operations. These impacts to our operations have included and could again in the future include disruptions or restrictions on the ability of our employees and customers to travel or our ability to pursue collaborations and other business transactions, travel to customers and/or promote our products at conferences or other live events, oversee the activities of our third-party manufacturers and suppliers. We may also be impacted by the temporary closure of the facilities of suppliers, manufacturers or customers.

In an effort to halt the outbreak of COVID-19, a number of countries, including the United States, placed significant restrictions on travel and many businesses announced extended closures. These travel restrictions and business closures adversely impacted our operations locally and worldwide, including our ability to manufacture, market, sell or distribute our products. Such restrictions and closure have caused or may cause temporary closures of the facilities of our suppliers, manufacturers or customers. A disruption in the operations of our employees, suppliers, customers, manufacturers or access to customers would likely impact our sales and operating results. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and likely impact our operating results.

We rely on suppliers, manufacturers and contractors, and events adversely affecting them would adversely affect us.

Any significant interruption, negative change in the availability or economics of the supply chain or increase in the prices for the ingredients in our products provided by any such third-party suppliers, manufacturers and contractors could materially impact our business, financial condition, results of operations and prospects. Any inability to secure required supplies or to do so on appropriate terms could have a materially adverse impact on our business, financial condition, results of operations and prospects.

We have one customer that accounts for a substantial portion of our revenues, and our business would be harmed were we to lose this customer.

We have a purchase agreement in place with our largest customer, iHerb, since June 28, 2011. This agreement provides us with a license to commercialize and re-sell Kirkman products with set minimum order requirements. Our customer iHerb accounts for approximately 34% of the Company’s total revenue for the year ended December 31, 2025, and approximately 26% for the year ended December 31, 2024. If we lose this customer, the company will lose a significant portion of our total revenues.

We may sustain losses that cannot be recovered through insurance or other preventative measures.

There is no assurance that we will not incur uninsured liabilities and losses as a result of the conduct of its business. While we currently have some liability insurance coverage, but the policy does not provide a high level of coverage. We plan to continue to review our liability coverage in the light of our expanding operations in order to insure against potential major insurable liabilities. Should uninsured losses occur, stockholders could lose their invested capital.

We may be subject to product liability claims and other claims of our customers and partners.

The sale of our products to consumers involves a certain level of risk of product liability claims and the associated adverse publicity. We could also be named as co-parties in product liability suits that are brought against manufacturing partners that produce our products, packaging for those products, or the ingredients in those products.

In addition, our customers and partners may bring suits against us alleging damages for the failure of our products to meet stated specifications or other requirements. Any such suit, even if not successful, could be costly, disrupt the attention of our management and damage our negotiations with distributors and/or customers. Any attempt by us to limit our product liability in our contracts may not be enforceable or may be subject to exceptions. While we do have product liability insurance, our amounts of coverage may be inadequate to cover all potential liability claims. Insurance coverage is expensive, and additional coverage may be difficult to obtain. Also, additional insurance coverage may not be available in the future on acceptable terms and may not be sufficient to cover potential claims. We cannot be sure that our contract manufacturers or manufacturing partners, will have adequate insurance coverage themselves to cover against potential claims. If we experience a large insured loss, it may exceed any insurance coverage limits we have at that time, or our insurance carrier may decline to cover us or may raise our insurance rates to unacceptable levels, any of which could impair our financial position and potentially cause us to go out of business.

If we encounter product recalls or other product quality issues, our business may suffer.

Product quality issues, real or imagined, or allegations of product contamination, even when false or unfounded, could tarnish our image and could cause consumers to choose other products. In addition, because of changing government regulations or implementation thereof, or allegations of product contamination, we may be required from time to time to recall products entirely or from specific markets. Product recalls could affect our profitability and could negatively affect brand image.

If we do not adequately manage our inventory levels, our operating results could be adversely affected.

We need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis. Our inventory supply depends on our ability to correctly estimate demand for our products. Our ability to estimate demand for our products is imprecise, particularly for new products, seasonal promotions and new markets. If we materially underestimate demand for our products or are unable to maintain sufficient inventory of raw materials, we might not be able to satisfy demand on a short-term basis. If we overestimate distributor or retailer demand for our products, we may end up with too much inventory, resulting in higher storage costs, increased trade spend and the risk of inventory spoilage. If we fail to manage our inventory to meet demand, we could damage our relationships with our distributors and retailers and could delay or lose sales opportunities, which would unfavorably impact our future sales and adversely affect our operating results. In addition, if the inventory of our products held by our distributors and retailers is too high, they will not place orders for additional products, which would also unfavorably impact our sales and adversely affect our operating results.

Increases in costs or shortages of raw materials could harm our business and financial results.

Manufacturing costs are subject to fluctuation. Substantial increases in the prices of ingredients, raw materials and packaging materials, used to produce our products, to the extent that they cannot be recouped through increases in the prices of our products, would increase our operating costs and could reduce our profitability. If the supply of these raw materials is impaired or if prices increase significantly, it could affect the affordability of our products and reduce sales.

If we or any contract manufacturers we may use are unable to secure sufficient ingredients or raw materials, we might not be able to satisfy demand for our products on a short-term basis. Should shortages could occur from time to time in the future, which could interfere with and delay production of our products and could have a material adverse effect on our business and financial results.

In addition, suppliers could fail to provide ingredients or raw materials on a timely basis, or fail to meet our performance expectations, for a number of reasons, including, for example, disruption to the global supply chain as a result of the COVID-19 pandemic or hostile military actions, which caused serious disruption to our business, increased our costs, decreased our operating efficiencies and had a material adverse effect on our business, results of operations and financial condition.

Increases in costs of energy and increased regulations may have an adverse impact on our gross margin.

Over the past few years, volatility in the global oil markets has resulted in high fuel prices, which many shipping companies have passed on to their customers by way of higher base pricing and increased fuel surcharges. If fuel prices increase, we expect to experience higher shipping rates and fuel surcharges, as well as energy surcharges on our raw materials. It is hard to predict what will happen in the fuel markets and beyond. Due to the price sensitivity of our products, we may not be able to pass such increases on to our customers.

Disruption within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition and results of operations.

Our ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to make, move and sell products is critical to our success. Damage or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion, military actions or hostilities among nations or groups, terrorism, pandemics such as COVID-19, influenza, and other viruses, labor strikes or other reasons, could impair the manufacture, distribution and sale of our products. Many of these events are outside of our control. Failure to take adequate steps to protect against or mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations.

If we are unable to attract and retain key personnel, our efficiency and operations would be adversely affected; in addition, staff turnover causes uncertainties and could harm our business.

Our success depends on our ability to attract and retain highly qualified employees in such areas as finance, sales, marketing and product development and distribution. We compete to hire new employees, and, in some cases, must train them and develop their skills and competencies. We may not be able to provide our employees with competitive salaries, and our operating results could be adversely affected by increased costs due to increased competition for employees, higher employee turnover or increased employee benefit costs.

If we lose the services of our executive officers, our future operations could be impaired until such time as a qualified replacement can be found.

Our business plan relies significantly on the continued services of Eric Gripentrog, our Chief Executive Officer and Tariq Rahim, our Chief Financial Officer. If we were to lose the services of Mr. Gripentrog and/or Mr. Rahim, our ability to obtain new business and new strategic partners, as well as our ability to manage our operations and finances, could be materially impaired.

We are required to indemnify our directors and officers.

Our Articles of Incorporation and Bylaws provide that we will indemnify our officers and directors to the maximum extent permitted by Delaware law, provided that the officer or director did not act in bad faith or breach his or her duty to us or our stockholders, or that it is more likely than not that it will ultimately be determined that the officer or director has met the standards of conduct which make it permissible for under Delaware law for us to indemnify the officer or director. If we were called upon to indemnify an officer or director, then the portion of its assets expended for such purpose would reduce the amount otherwise available for our business.

If we fail to protect our trademarks and trade secrets, we may be unable to successfully market our products and compete effectively.

We rely on a combination of trademark and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights. Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks and trade secrets, could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, particularly our trademarks and trade secrets, as crucial to our business and our success. However, the steps taken by us to protect these proprietary rights may not be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade secrets or similar proprietary rights. In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs.

Disruptions to our information technology systems due to cyber-attacks or our failure to upgrade and adjust our information technology systems, may materially impair our operations, hinder our growth and materially and adversely affect our business and results of operations.

We believe that appropriate information technology, or IT, infrastructure is important in order to support our daily operations and the growth of our business. If we experience difficulties in implementing new or upgraded information systems or experience significant system failures, or if we are unable to successfully modify our management information systems or respond to changes in our business needs, we may not be able to effectively manage our business, and we may fail to meet our reporting obligations. Additionally, if our current arrangements and plans are not operated as planned, we may not be able to effectively recover our information system in the event of a crisis, which may materially and adversely affect our business and results of operations.

In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error. High-profile security breaches at other companies and in government agencies have increased in recent years, and security industry experts and government officials have warned about the risks of hackers and cyber-attacks targeting businesses such as ours. Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulently induce employees, customers, or others to disclose information or unwittingly provide access to systems or data. We can provide no assurance that our current IT system or any updates or upgrades thereto and the current or future IT systems of our potential distributors use or may use in the future, are fully protected against third-party intrusions, viruses, hacker attacks, information or data theft or other similar threats. Legislative or regulatory action in these areas is also evolving, and we may be unable to adapt our IT systems or to manage the IT systems of third parties to accommodate these changes. We have experienced and expect to continue to experience actual or attempted cyber-attacks of our IT networks. Although none of these actual or attempted cyber-attacks has had a material adverse impact on our operations or financial condition, we cannot guarantee that any such incidents will not have such an impact in the future.

Our business is subject to many regulations and noncompliance is costly.

The production, marketing and sale of our nutraceutical products, including contents, labels, and containers, are subject to the rules and regulations of various federal, provincial, state and local health agencies. If a regulatory authority finds that a current or future product or production batch or “run” is not in compliance with any of these regulations, we may be fined, or production may be stopped, which would adversely affect our financial condition and results of operations. Similarly, any adverse publicity associated with any noncompliance may damage our reputation and our ability to successfully market our products. Furthermore, the rules and regulations are subject to change from time to time and while we closely monitor developments in this area, we cannot anticipate whether changes in these rules and regulations will impact our business adversely. Additional or revised regulatory requirements, whether labeling, environmental, tax or otherwise, could have a material adverse effect on our financial condition and results of operations.

Significant additional labeling or warning requirements may inhibit sales of affected products.

These types of requirements, if they become applicable to one or more of our products under current or future environmental or health laws or regulations, may inhibit sales of such products.

Our industry may become subject to expanded regulation and increased enforcement by the Food and Drug Administration (“FDA”) and the Federal Trade Commission (“FTC”).

The FDA under the Federal Food, Drug, and Cosmetic Act regulates the formulation, manufacturing, packaging, labeling, and distribution of food, dietary supplements, drugs, cosmetics, medical devices, biologics, and tobacco products. Our products are subject to law and regulation by the FDA. Moreover, the regulatory status of our products is currently in a state of flux as the FDA attempts to determine the appropriate manner in which to regulate these products. Thus, the regulatory approach is still evolving, and we may be required to seek the FDA’s approval to market our products. It is also possible that the FDA may simply issue a regulation setting forth the conditions in which such products may be marketed, or it may simply prohibit these products.

Because the FDA’s regulatory process is subject to change, we cannot predict the likely outcome. In addition, the FTC under the Federal Trade Commission Act (“FTC Act”) requires that product advertising be truthful, substantiated and not misleading. We believe that our advertising meets these requirements. However, the FTC may bring a challenge at any time in evaluating our compliance with the FTC Act. In addition, most states where our products are legal provide their own regulatory guidelines and regulations in connection with cigarette or other smokable product sales. Any failure by us to remain current on state regulatory changes could negatively affect our ability to operate our business.

At the moment, our dietary supplement products are produced in an FDA registered and cGMP facility strictly following SOPs to ensure consumer safety and consistency and reliability batch to batch. Our supplement product packaging, labeling, and marketing collateral make no disease claims that would run afoul of the Dietary Supplement Heath and Education Act (DSHEA). Additionally, we design our product packaging to appeal to adults, not children. By taking these actions, we are substantially reducing the risk of any FDA enforcement because these are two primary areas of FDA enforcement.

FDA regulates both finished dietary supplement products and dietary ingredients. FDA regulates dietary supplements under a different set of regulations than those covering “conventional” foods and drug products. Under the Dietary Supplement Health and Education Act of 1994 (DSHEA):

• Manufacturers and distributors of dietary supplements and dietary ingredients are prohibited from marketing products that are adulterated or misbranded. That means that these firms are responsible for evaluating the safety and labeling of their products before marketing to ensure that they meet all the requirements of the Federal Food, Drug, and Cosmetic Act as amended by DSHEA and FDA regulations.
• FDA has the authority to take action against any adulterated or misbranded dietary supplement product after it reaches the market.7

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Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.

We may become party to litigation claims and legal proceedings. Litigation involves significant risks, uncertainties and costs, including distraction of management attention away from our business operations. We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates. Our policies and procedures require strict compliance by our employees and agents with all U.S. and local laws and regulations applicable to our business operations, including those prohibiting improper payments to government officials. Nonetheless, our policies and procedures may not ensure full compliance by our employees and agents with all applicable legal requirements. Improper conduct by our employees or agents could damage our reputation or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines, as well as disgorgement of profits.

Climate change may negatively affect our business.

There is growing concern that a gradual increase in global average temperatures may cause an adverse change in weather patterns around the globe resulting in an increase in the frequency and severity of natural disasters. Changing weather patterns could have a negative impact on agricultural productivity, which may limit availability or increase the cost of certain ingredients used in our products. Also, increased frequency or duration of extreme weather conditions may disrupt the productivity of our facilities, the operation of our supply chain or impact demand for our products. In addition, the increasing concern over climate change may result in more regional, federal and global legal and regulatory requirements and could result in increased production, transportation and raw material costs. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.

Our business and operations would be adversely impacted in the event of a failure or interruption of our information technology infrastructure or as a result of a cybersecurity attack.

The proper functioning of our own information technology (IT) infrastructure is critical to the efficient operation and management of our business. We may not have the necessary financial resources to update and maintain our IT infrastructure, and any failure or interruption of our IT system could adversely impact our operations. In addition, our IT is vulnerable to cyberattacks, computer viruses, worms and other malicious software programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our computer systems. We believe that we have adopted appropriate measures to mitigate potential risks to our technology infrastructure and our operations from these IT-related and other potential disruptions. However, given the unpredictability of the timing, nature and scope of any such IT failures or disruptions, we could potentially be subject to downtimes, transactional errors, processing inefficiencies, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.

Our results of operations may fluctuate from quarter to quarter for many reasons, including seasonality.

Our sales may be seasonal, and we experience fluctuations in quarterly results as a result of many factors. We expect to generate a greater percentage of our revenues during the warm weather months of April through September. The timing of customer purchases will vary each year, and sales can be expected to shift from one quarter to another. As a result, management believes that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance period comparisons or results expected for the fiscal year.

In addition, our operating results may fluctuate due to a number of other factors including, but not limited to:

• Our ability to maintain, develop and expand distribution channels for current and new products, develop favorable arrangements with third party distributors of our products and minimize or reduce issues associated with engaging new distributors and retailers, including, but not limited to, transition costs and expenses and down time resulting from the initial deployment of our products in each new distributor’s network;
• Unilateral decisions by distributors, mass merchandisers and other customers to discontinue carrying all or any of our products that they are carrying at any time;
• Our ability to manage our resources to sufficiently support general operating activities, promotion allowances and slotting fees, promotion and selling activities, and capital expansion, and our ability to sustain profitability;
• Our ability to meet the competitive response by much larger, well-funded and established companies currently operating in our industry, as we introduce new competitive products; and
• Competitive products and pricing pressures and our ability to gain or maintain share of sales in the marketplace as a result of actions by competitors.

Due to these and other factors, our results of operations have fluctuated from period to period and may continue to do so in the future, which could cause our operating results in a particular quarter to fail to meet market expectations.

Changes in our effective tax rate may impact our results of operations.

We are subject to taxes in the U.S. and other jurisdictions. Tax rates in these jurisdictions may be subject to significant change due to economic and/or political conditions. A number of other factors may also impact our future effective tax rate including:

• the jurisdictions in which profits are determined to be earned and taxed;
• the resolution of issues arising from tax audits with various tax authorities;
• changes in valuation of our deferred tax assets and liabilities;
• increases in expenses not deductible for tax purposes, including write-offs of acquired intangibles and impairment of goodwill in connection with acquisitions;
• changes in availability of tax credits, tax holidays, and tax deductions;
• changes in share-based compensation; and
• changes in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles.

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Although we believe our income tax liabilities are reasonably estimated and accounted for in accordance with applicable laws and principles, an adverse resolution by one or more taxing authorities could have a material impact on the results of our operations. Further, we may be unable to utilize our net operating losses in the event a change in control is determined to have occurred.

Global economic, political, social and other conditions, may continue to adversely impact our business and results of operations.

The nutraceutical industry can be affected by macro-economic factors, including changes in national, regional, and local economic conditions, unemployment levels and consumer spending patterns, which together may impact the willingness of consumers to purchase our products as they adjust their discretionary spending. Adverse economic conditions may adversely affect the ability of our distributors to obtain the credit necessary to fund their working capital needs, which could negatively impact their ability or desire to continue to purchase products from us in the same frequencies and volumes as they have done in the past. If we experience similar adverse economic conditions in the future, sales of our products could be adversely affected, collectability of accounts receivable may be compromised, and we may face obsolescence issues with our inventory, any of which could have a material adverse impact on our operating results and financial condition.

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between the United Staes, Israel and Iran, Russia and Ukraine and the continuing hostilities worldwide. Our business may be materially adversely affected by any negative impact on the global economy and capital markets resulting from such conflicts or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict among the United States, Israel and Iran as well as the continuing conflict between Russia and Ukraine. Although the length and impact of these ongoing military conflicts is highly unpredictable, any such conflict could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situation in the Middle East and globally and assessing the potential impact on our business.

Further, the continued hostilities in the Middle East and the potential for additional hostilities among Israel, Iran, United States and other nations all contribute to geopolitical instability and economic uncertainty and may negatively affect the credit and capital markets.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.

The United States generally accepted accounting principles and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, stock-based compensation, inventory, revenue recognition, trade spend and promotions, and income taxes are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could adversely affect our reported financial results.

The use and effects of tariffs to address the current administration’s policy goals, could materially impact the macroeconomic framework in which we operate.

The Trump administration has issued numerous executive orders, and has utilized the threat of tariffs and has imposed specific tariffs on products imported to the United States by various countries, including Canada, in connection with the implementation of its domestic policies. Any trade wars, through the implementation of tariffs or otherwise, could materially and adversely affect us, directly and indirectly, including by adversely impacting the supply chains for our operations, and increasing the costs of services we provide and utilize. Moreover, a possible change of control in the House of Representatives and United States Senate, creates regulatory uncertainty and it remains unclear as to what governmental actions may be taken with respect to certain programs and initiatives.

For the fiscal year ended December 31, 2025, The Company incurred supplier costs of approximately $971,585. During that period the Company sourced approximately one third of its raw materials from the United States, approximately one third from the People’s Republic of China and the remaining third from a variety of other global jurisdictions. The status of current trade negotiations with China and other nations is uncertain and, therefore, the tariff level on imports from China and such nations is extremely volatile and unpredictable.

As of December 31, 2025, the Company has incurred some increased costs due to changes in tariff levels. The Company intends to offset increased costs attributable to tariffs, to the full extent reasonably practicable, by increasing prices or by instituting cost cutting measures such that Company margins are protected and maintained. With planning and coordination with our suppliers we did not have any disruptions to our supply chain.

Risks Related to This Offering and Ownership of Our Common Stock.

The public price of our common stock following the listing also could be subject to wide fluctuations in response to the risk factors described in this annual report and others beyond our control, including:

• changes in the industries in which we operate;
• variations in our operating performance and the performance of our competitors in general;
• actual or anticipated fluctuations in our quarterly or annual operating results;
• publication of research reports by securities analysts about us or our competitors or our industry;
• the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
• our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;
• additions and departures of key personnel;
• changes in laws and regulations affecting our business;
• commencement of, or involvement in, litigation involving us;
• changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
• the volume of shares of our common stock available for public sale; and
• general economic and political conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism.

In addition, securities exchanges have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner often unrelated to the operating performance of those companies. These fluctuations may be even more pronounced in the trading market for our common stock shortly following the listing of our common stock on Nasdaq as a result of the supply and demand forces described above. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and harm our business, results of operations and financial condition.

We may not be able to satisfy listing requirements of NASDAQ or obtain or maintain a listing of our common stock on NASDAQ.

If our common stock is listed on NASDAQ, we must meet certain financial and liquidity criteria to maintain such listing. If we violate NASDAQ’s listing requirements, or if we fail to meet any of NASDAQ’s listing standards, our common stock may be delisted. In addition, our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock from NASDAQ may materially impair our stockholders’ ability to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. The delisting of our common stock could significantly impair our ability to raise capital and the value of your investment.

Listing our common stock on a securities exchange will increase our regulatory burden.

Our common stock is currently listed on NASDAQ under the symbol “MEHA”. Our compliance with the continuous and timely disclosure requirements of exchange rules, regulations and policies of NASDAQ is essential to maintaining our listing. We are working with our legal, accounting and financial advisors to identify those areas in which changes should be made to our financial management control systems to manage our obligations as a public company listed on NASDAQ. These areas include corporate governance, corporate controls, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas, including our internal controls over financial reporting. However, we cannot assure holders of our shares that these and other measures that we might take will be sufficient to allow us to satisfy our obligations as a public company listed on NASDAQ on a timely basis and that we will be able to achieve and maintain compliance with applicable listing requirements. In addition, compliance with reporting and other requirements applicable to public companies listed on NASDAQ will create additional costs for us and will require the time and attention of management. We cannot predict the amount of the additional costs that we might incur, the timing of such costs or the effects that management’s attention to these matters will have on our business.

The market price of our common stock may fluctuate significantly, and you could lose all or part of your investment.

The market price for our common stock has been highly volatile. In addition, the market price of our common stock may fluctuate significantly in response to several factors, most of which we cannot control, including:

• conversion of outstanding preferred stock;
• actual or anticipated variations in our periodic operating results;
• increases in market interest rates that lead investors of our common stock to demand a higher investment return;

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• changes in earnings estimates;
• changes in market valuations of similar companies;
• actions or announcements by our competitors;
• adverse market reaction to any increased indebtedness we may incur in the future;
• additions or departures of key personnel;
• actions by shareholders;
• speculation in the media, online forums, or investment community; and
• our ability to maintain the listing of our common stock on NASDAQ.

Volatility in the market price of our common stock may result in a loss in any investment in the Company.

Future sales of common stock by our stockholders could cause our share price to decline.

There can be no assurance that existing stockholders will not sell all of their shares of common stock, resulting in an oversupply of our common stock on Nasdaq. Further, institutional investors may be discouraged from purchasing our common stock if they are unable to purchase a block of our common stock in the open market due to a potential unwillingness of our existing stockholders to sell a sufficient amount of common stock at the price offered by such institutional investors and the greater influence individual investors have in setting the trading price. If institutional investors are unable to purchase our common stock, the market for our common stock may be more volatile without the influence of long-term institutional investors holding significant amounts of our common stock. In the case of a lack of market demand for our common stock, the trading price of our common stock could decline significantly and rapidly. An active, liquid and orderly trading market for our common stock may not develop or be sustained, which could significantly depress the public price of our common stock and/or result in significant volatility, which could affect your ability to sell your shares of common stock.

You may be diluted by future issuances of preferred stock or additional common stock in connection with our incentive plans, acquisitions or otherwise; future sales of such shares in the public market, or the expectations that such sales may occur, could lower our stock price.

We may adopt an amended and restated certificate of incorporation which will authorize us to issue shares of common stock and options, rights, warrants and appreciation rights relating to our common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion. We could issue a significant number of shares of common stock in the future in connection with investments or acquisitions. Any of these issuances could dilute our existing stockholders, and such dilution could be significant. Moreover, such dilution could have a material adverse effect on the market price for the shares of our common stock.

The future issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of shares of our common stock, either by diluting the voting power of our common stock if the preferred stock votes together with the common stock as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote, even if the action were approved by the holders of our shares of our common stock.

The future issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price, causing economic dilution to the holders of common stock.

Because we have no current plans to pay cash dividends on our common stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We currently intend to retain all available funds and any future earnings to fund the development, commercialization and growth of our business, and therefore we do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant. Our future ability to pay cash dividends on our common stock may also be limited by the terms of any future debt securities or credit facility. As a result, capital appreciation, if any, of the common stock you purchase in this offering will be your sole source of gain for the foreseeable future.

We are an emerging growth company and a smaller reporting company, and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) having the option of delaying the adoption of certain new or revised financial accounting standards, (iii) reduced disclosure obligations regarding executive compensation in this annual report and our periodic reports and proxy statements and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these exemptions until such time that we are no longer an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. Further, pursuant to Section 107 of the JOBS Act, we have elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.

We will remain an emerging growth company until the earliest of (i) December 31, 2028, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates was $700.0 million or more as of the last business day of the second fiscal quarter of such year or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is $250 million or more measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is $700 million or more measured on the last business day of our second fiscal quarter.

It is possible that some investors will find our common stock less attractive as a result of the foregoing, which may result in a less active trading market for our common stock and higher volatility in our stock price.

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our common stock could be negatively affected.

Any trading market for our common stock may be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our common stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our common stock could be negatively affected.

Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our common stock to decline and would result in the dilution of your holdings.

Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our common stock to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our common stock. In all events, future issuances of our common stock would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lockups expire, could adversely affect the market price of our common stock.

Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock.

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our common stock. Moreover, if we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of common stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our common stock must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our common stock.

We are authorized to issue “blank check” preferred stock without stockholder approval, which could adversely impact the rights of holders of our common stock.

Our articles of incorporation authorize us to issue shares of “blank check” preferred stock, meaning our board of directors can designate the rights and preferences of classes or series of such preferred stock without shareholder approval. Any preferred stock that we issue in the future may rank ahead of our common stock in terms of dividend priority or liquidation premiums and may have greater voting rights than our common stock. In addition, such preferred stock may contain provisions allowing those shares to be converted into shares of common stock, which could dilute the value of common stock to current stockholders and could adversely affect the market price, if any, of our common stock. In addition, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our company. Although we have no present intention to issue any shares of authorized preferred stock, there can be no assurance that we will not do so in the future.

If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.

The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on NASDAQ or another national securities exchange and if the price of our common stock is less than $5.00, our common stock could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.

We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our stockholders could receive less information than they might expect to receive from more mature public companies.

As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”). An emerging growth company may take advantage of reduced disclosure and reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

• being permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in our periodic reports and registration statements, including this annual report;
• not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) on the effectiveness of our internal controls over financial reporting;
• reduced disclosure obligations regarding executive compensation arrangements in our periodic reports, proxy statements and registration statements, including this annual report; and
• exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

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We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (ii) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of the completion of this offering.

We have taken advantage of the reduced disclosure obligations in this annual report is a part and intend to elect to take advantage of other reduced disclosure and reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue is less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company when we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Reports on Form 10-K and, like emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Risk Management and Strategy

We monitor our websites and online accounts frequently to manage risks associated with cyber-security risks. Our website is monitored by a third party to check if the website or email server is secure. Our webmaster informs us of any issues that may arise in the cyber sector. We are prepared to inform all parties necessary if any breach of cyber-security were it to happen. We have never had this problem and so we have never had to inform consultants, auditors, or other third parties.

We have never had a breach of cyber-security at any point in our past. The risk to us of cybersecurity threats is in data storage of customer questions and emails. A breach of customers data could negatively affect our public trust and could result in loss of customers and revenue.

Governance

Our board of directors has no specific processes for monitoring cybersecurity within the Company. There is no subcommittee specifically for monitoring cybersecurity in the Company.

Our management monitors our websites and online accounts frequently to manage risks associated with cyber-security risks. Our management has more than 20 years of experience working in the technology industry, which enables it to identify cybersecurity risks associated with the Company. Our management communicates with our board on matters of cybersecurity but, has not had to inform them of any breaches thus far.

We lease a 24,000 square foot facility located in Lake Oswego, OR. This facility houses our manufacturing operation, warehouse, back-end offices and fulfillment center.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

Trailer Park Boys

On November 13, 2025, Trailer Park Boys Inc. (“TPB”) commenced a civil claim against the Company and certain other defendants alleging breach of contract. On February 27, 2026, the Company filed a Statement of Defense denying the allegations advanced by TPB. The Company has also filed a Statement of Counterclaim against TPB asserting claims for breach of contract and negligent misrepresentation in connection with the same agreement. The litigation is at an early stage. The Company intends to vigorously defend the TPB claim and pursue its counterclaim.

True Health

On May 25, 2021, True Health Medical Center, S.C. (“True Health”) amended an existing complaint against Kirkman Group, Inc. (“Kirkman”), James Hall and David Humphries to assert claims against HTO Nevada, Inc. and HTO Holdings, Inc. (collectively, HTO Nevada, Inc. and HTO Holdings, Inc. are referred to as the “HTO Parties”). Kirkman was the seller of certain assets to the HTO Parties and is a separate legal entity. Affiliates of the HTO Parties were first named in the lawsuit on September 23, 2020. The case is pending in the Circuit Court for the Eighteenth Judicial Circuit, DuPage County, Illinois. Kirkman had terminated a royalty agreement prior to selling its assets to the HTO Parties but the royalty agreement has a provision that allows True Health to continue to receive royalties after the termination of the agreement. True Health claims that Kirkman underpaid the royalties due to True Health prior to the sale of assets to the HTO Parties. There is no dispute that Kirkman stopped paying royalties to True Health around the time it terminated the agreement and that the HTO Parties have never paid royalties to True Health. True Health contends that as the purchaser of certain Kirkman assets, the HTO Parties should be bound by the terms of the royalty agreement. There is no certain amount at this time in connection with the alleged in the damages claim against the HTO Parties. It is not possible to predict the outcome of this proceeding at this time. To date, the parties have engaged in some discovery including a limited number of depositions. True Health has filed a motion for summary judgment that addresses its claims against Kirkman, but does not address any claim against the HTO Parties. Briefing is not yet complete on the summary judgment motion and a ruling is likely more than 60 days away. Regardless of how the court rules on summary judgment, there will be remaining claims in the case and it is likely that additional discovery will be conducted. No trial date has been scheduled at this time.

The following discussion and analysis summarize the significant factors affecting our operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this annual report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this annual report, particularly in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements”.

OUR COMPANY

Overview

Our company operates in the nutraceutical supplement industry. We are a manufacturer and distributor of supplements in categories such as pain, energy, prenatal, general health, bone and joint, gastro, immunity, cardiac, detox, mental clarity & focus, sleep, prenatal and urinary. Our end markets focus on end-consumers through different channels that include pharmacies, US wholesalers, international distributors and direct-to-consumers sales. Our products are sold over the counter, and consumers do not need a prescription to purchase our products. Our products are not approved by the FDA. Our principal business is the production, marketing, sales, and distribution of nutraceutical products through our Kirkman division. We ship our Kirkman products to throughout the United States and to 35 countries. Previously we sold hemp derived products under the Hemptown brand in certain states within the United States that permitted such sales, however, we have discontinued that product line.

Functional Brands Inc. was organized under the General Corporation Law in the State of Delaware on November 19, 2020, under the name HT Naturals Inc. HT Naturals Inc. changed its name to Functional Brands Inc. on March 23, 2023.

On July 3, 2019, HTO Holdings Inc. (“HTO Holdings”) a wholly owned subsidiary of HOC and the owner of all issued and outstanding stock of HTO Nevada, entered into an asset purchase agreement for assets of Kirkman Group Inc. a Nevada corporation, Kirkman Laboratories Inc., an Oregon corporation and Kirkman Group International, Inc. a Nevada corporation (collectively “Kirkman”) for a consideration equal to $5 million with payout in a business combination of cash and deferred consideration. The terms of the purchase agreement, as amended, were fully satisfied in November, 2025, and no further obligations to Kirkman remain.

As part of our restructuring initiatives, HTO Nevada, which was previously owned by HTO Holdings, was acquired by Functional Brands on May 19, 2023. This acquisition took place through a share exchange agreement involving HOC, HTO Holdings, and Functional Brands. This exchange resulted in HTO Nevada becoming a wholly-owned subsidiary of Functional Brands.

On July 22, 2025 we entered into Securities Purchase Agreements ( each as amended, the “Securities Purchase Agreement”), and on November 5, 2025 we completed the sale in the aggregate 100,000 shares of our Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred”), with a stated value of $10,000,000, for aggregate gross proceeds of $8,000,000, before deducting placement agent fees and other offering related expenses (the “Private Placement”), together with, as a bonus, 80,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred’), with a stated value of $8,000,000.

On November 5, 2025, the Company completed the direct listing of shares of its common stock, par value $0.00001 per share, on the Nasdaq Stock Market LLC under the symbol “MEHA”.

Subsequent to December 31, 2025 the Company determined it to be in the best interest of the Company and its stockholders that we discontinue all lines of business related to hemp or that contain CBD products or its derivatives.

In February 2026, we launched Tru2u.health, a new digitally native health platform that expands the Company’s strategic footprint from traditional dietary supplement manufacturing into integrated supported wellness services. The platform represents an extension of the Company’s operations, designed to support sustainable, recurring revenue models and broaden consumer engagement in the fast-growing digital health market.

Macroeconomic Conditions

Our business and financial performance are affected by broader macroeconomic conditions. Global macroeconomic challenges, including geopolitical conflicts such as the ongoing war between Russia and Ukraine and tensions in the Middle East, supply chain disruptions, tariffs and trade disputes, inflationary pressures, fluctuations in interest rates, and volatility in foreign exchange markets, may create uncertainty in the global economic environment and adversely impact our operations and financial results.

Adverse economic conditions, including recessionary pressures or reduced consumer spending, may decrease consumer demand for nutritional supplements and related products. In periods of economic uncertainty, consumers may reduce discretionary spending, which could negatively affect demand for our products.

In addition, unfavorable macroeconomic conditions may increase the cost of raw materials, manufacturing, labor, transportation, and other inputs used in the production and distribution of our products. Disruptions to global supply chains or financial markets could also affect our ability to obtain materials, manage costs, or access capital on favorable terms, which could adversely affect our liquidity, operating results, and overall financial condition.

Key Components of Our Results of Operations

Revenue

We derive substantially all of our revenue from the sale of nutraceutical dietary supplements, including products sold under our Kirkman brand and other related brands. Our products are sold through multiple channels, including domestic and international distributors, professional healthcare practitioners, wholesalers, e-commerce platforms such as Amazon, and direct-to-consumer sales through our websites.

Revenue may fluctuate based on changes in consumer demand, distributor purchasing patterns, product launches, marketing initiatives, and the expansion of our direct-to-consumer and digital health channels.

Cost of Goods Sold

Cost of goods sold consists primarily of costs associated with the manufacturing, sourcing, and distribution of our nutraceutical products. These costs include raw materials and ingredients, packaging materials, third-party laboratory testing, manufacturing labor, facility costs, freight and shipping, and other production-related expenses.

Cost of goods sold also include inventory write-downs, freight surcharges, and other supply chain costs associated with the procurement and delivery of finished products.

Operating Expenses

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of salaries, commissions, benefits, and other related costs for personnel engaged in sales, marketing, and business development activities. These expenses also include digital advertising, trade show participation, promotional activities, influencer marketing, marketing agency costs, and other brand-building initiatives.

We expect sales and marketing expenses to increase in the foreseeable future as we expand our marketing programs, increase brand awareness, grow our direct-to-consumer and e-commerce channels, and support the continued rollout and promotion of new products and platforms, including Tru2u.health.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, benefits, and other related costs for personnel in executive, finance, operations, and human resources functions. These expenses also include professional fees for legal, accounting, consulting, tax, and audit services, insurance costs, facility-related expenses, information technology costs, and other corporate overhead.

We expect general and administrative expenses to increase as we continue to expand our operations and support our obligations as a publicly traded company. These increases may include additional personnel, enhanced internal controls and compliance infrastructure, regulatory and reporting costs associated with Nasdaq and SEC requirements, director and officer insurance premiums, and investor relations activities.

From time to time, we may record changes in the fair value of derivative instruments or other financial instruments associated with certain financing arrangements. These instruments are recorded at fair value and remeasured at each reporting date, with changes in fair value recognized in our consolidated statements of operations.

Interest Expense

Interest expense consists primarily of interest incurred on outstanding debt obligations, including loans and lease.

Other Income

Other income for the year ended December 31, 2025 consists of debt forgiveness from the ERTC loan, change in fair value derivative liabilities, and loss on issuance of preferred stock.

Results of Operations

For the Year Ended December 31, 2025, compared to the Year Ended December 31, 2024

Net revenue for the year ended December 31, 2025 was $6,611,484 compared to $6,566,455 for the year ended December 31, 2024 representing an increase of approximately 1%. This increase of $45,029 in net revenue was primarily due to the increase in the demand from our direct-to-consumer sales channel.

Cost of goods sold

Cost of goods sold for the year ended December 31, 2025 was $3,127,518 compared to $2,959,609 for the year ended December 31, 2024 representing an increase of approximately 6%. This increase of $167,909 in net revenue was primarily due to the write off inventory as we transition out of the Hemp business.

Gross profit

Gross profit for the year ended December 31, 2025 was $3,483,966 compared to 3,606,846 representing a decrease of 3%. The decrease of $122,880 was primarily due to the write off of inventory as stated above in cost of goods sold.

Sales and marketing expenses

Sales and marketing expenses for the year ended December 31, 2025, was $632,414 compared to $576,315 for the year ended December 31, 2024, representing an increase of approximately 10%. This increase of $56,099 was primarily due to the increase in advertising and promotional items for going to market with Tru2U and Amazon managing services.

General and administrative expenses

General and administrative expenses for the year ended December 31, 2025 was $4,250,124, compared to $3,259,623 for the year ended December 31, 2024, representing an increase of approximately 30%. This increase of $990,501 was primarily attributable to an increase in stock-based compensation of $128,168, professional services of $685,466, a bonus accrual of $293,333, and offset by decreases in licenses of approximately $89,685, $24,341 in shipping services and maintenance expenses of $3,364.

Interest expense

Interest expense for the year ended December 31, 2025 was $402,398, compared to $331,836 for the year ended December 31, 2024, representing an increase of approximately 21%. This increase of $70,562 in interest expense was primarily the result of increased loans.

Other income

Other income for the year ended December 31, 2025 and 2024, was $2,559,418 and $1,572 representing an increase of approximately 162715%. This increase of $2,557,876, in other income was primarily the result of an Employee Retention Tax Credit (“ERTC”) reimbursement of $419,947, interest income received on the ERTC of $71,854, and change in fair value of derivative liabilities of 7,358,935 offset by a loss on issuance of preferred stock derivative liability of $5,294,242.

Liquidity and Capital Resources

Sources and Uses of Cash for the year ended December 31, 2025 and 2024

The table below, for the periods indicated, provides selected cash flow information:

Use of cash

The change in net cash used in financing activities was primarily the result of the payment for payable acquisition as well as line of credit repayment.

Source of cash

Cash Flows from Operating Activities

During the year ended December 31, 2025, we used $1,271,544 in operating activities as a result of our net income of $758,478, offset primarily by stock-based compensation of 543,068, amortization of right-of-use assets of $332,399, loss on issuance of preferred stock derivative liability of $5,294,242 offset by change in fair value of derivative liabilities of $7,358,935, and net changes in operating assets and liabilities of $(1,256,556).

During the year ended December 31, 2024, our operating activities provided $1,990 of cash as a result of our net loss of $559,356, offset primarily by stock-based compensation of $414,900, amortization of right-of-use assets of $306,935, and net changes in operating assets and liabilities of $(208,293).

Cash Flows from Investing Activities

During the year ended December 31, 2025, we used $8,513 in investing activities related to the purchase of property and equipment.

During the year ended December 31, 2024, we used $1,881 in investing activities related to the purchase of property and equipment.

Cash Flows from Financing Activities

During the year ended December 31, 2025, our financing activities provided $3,795,111 of cash in proceeds resulting primarily from issuances of preferred stock $8,000,000, offset by payments of payable for the acquisition of $2,342,366 and deferred offering costs of 1,721,228.

During the year ended December 31, 2024, we used $162,902 in financing activities primarily as a result of repayment of lines of credit of $216,742, payments of payable for acquisition of Kirkman of $255,002, offset by proceeds from loans of $301,500 and proceeds from debt facilities of $180,662.

Sources of cash

On November 5, 2025 the company entered into a loan agreement with a third party whereby the company received approximately $169,048. The terms of the loan are for 10 months, with a 7.0% interest rate over the term of the loan.

On November 4, 2025, Functional Brands Inc. completed a private placement to six institutional investors for gross proceeds of $8,000,000, and net of commissions the Company received proceeds of approximately $7,360,000. In exchange the investors were issued a total of 100,000 Series A preferred shares and 80,000 Series B preferred shares

On August 29, 2025 the Company entered into a loan agreement with a third party whereby the Company received approximately $95,277. The terms of the loan were for 10 months, with a 7.5% interest rate over the term of the loan.

On August 21, 2025, the Company entered into two lines of credit agreements with a third-party whereby the Company received a total of $26,354. The term of the loans were for six months, with a 9% contract interest rate. The loans are to be repaid in Feb 2026.

On April 29, 2025, the Company entered into a loan agreement with a third-party whereby the Company received $100,000. The term of the loan is for 1 year with a 22.95% finance charge.

On March 10, 2025, the Company executed a loan agreement with a related party in the amount of $225,000, with an annual interest rate of 18% and a due date of March 7, 2029.

During the year ended December 31, 2024 the Company entered into multiple lines of credit agreements with third parties to finance invoices to satisfy multiple vendors of which were repaid during the year ended December 31, 2025.

On June 18, 2024, the Company executed a loan agreement with a lender in the amount of $150,000. The payment terms are 12.5% OID, initial principal amount consisting of a $150,000 loan plus $21,500 OID totaling $171,500. In addition, the loan required the Company to issue 37,500 warrants with anti-dilution protection as well as an equity interest in the amount of 2,045 shares of the Company’s stock with reverse split protection through the Senior Exchange Listing. Loan is to mature the earlier of six months from execution, completion of a senior exchange listing of the Company or as mutually agreed, with an interest rate of the higher of 12% or WSJ Prime plus 4% guaranteed.

On March 11, 2024, the Company executed a loan agreement with a related party in the amount of $130,000, with an annual interest rate of 20% and a due date of March 11, 2031.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of our operations is based on our audited consolidated financial statements and accompanying notes, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain amounts included in or affecting the audited consolidated financial statements presented in this Form 10-K and related disclosure must be estimated, requiring management to make assumptions with respect to values or conditions which cannot be known with certainty at the time the audited consolidated financial statements are prepared. Management believes that the accounting policies set forth below comprise the most important “critical accounting policies” for the Company. A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results of operations and that involves difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management evaluates such policies on an ongoing basis, based upon historical results and experience, consultation with experts and other methods that management considers reasonable in the particular circumstances under which the judgments and estimates are made, as well as management’s forecasts as to the manner in which such circumstances may change in the future.

The judgements made in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements include:

• Obsolescence of inventories;
• Recoverability of the carrying value of long-lived assets including property and equipment, and intangible assets;
• Recoverability of carrying value of goodwill;
• Discount rate used to calculate present value of future minimum lease payments for right-of-use asset and liabilities;
• Recognition and measurement of provisions and contingencies; and
• Valuation of deferred income tax assets.

Inventories, net

The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions, including forecasted demand compared to quantities on hand, as well as other factors such as potential excess or aged inventories based on product shelf life, and other factors that affect inventory obsolescence. As of December 31, 2025, the allowance for inventory obsolescence decreased by $53,855 resulting in a reserve of $10,972. As of December 31, 2024 the inventory reserve was $64,827.

Long-Lived Assets

Long-lived assets consist primarily of property and equipment. Long-lived assets are tested for impairment when events and circumstances indicate the assets might be impaired by first comparing the estimated future undiscounted cash flows of the asset or asset group to the carrying value. If the carrying value exceeds the estimated future undiscounted cash flows, an impairment loss is recognized based on the amount that the carrying value exceeds the fair value of the asset or asset group. The Company did not recognize impairment losses during the years ended December 31, 2025, and 2024.

Fair value of financial instruments

The Company determines the fair value of financial assets and liabilities using the fair value hierarchy established in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The hierarchy describes three levels of inputs that may be used to measure fair value, as follows:

• Level 1 — Observable inputs, such as quoted prices in active markets for identical assets and liabilities.
• Level 2 — Observable inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Application within the Company’s Financial Statements

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, accrued liabilities, related-party loans, line of credit, government loans, loans payable, convertible debentures (prior to conversion), and warrants issued in connection with financing arrangements. Management believes that, unless otherwise noted, the carrying amounts of these instruments approximate their fair values due to their short-term nature or because they bear interest at market rates.

The following items required fair value measurement or valuation analysis during the periods presented:

• Convertible Debenture
• Warrants Issued in Financing Transactions
• Equity Instruments Issued for Services and Financing
• Business Combination and Intangible Assets (Historical)
• Financial Instruments Carried at Amortized Cost

During the year ended December 31, 2025, the Company primarily applied fair value measurement to equity-linked financing instruments (warrants and stock issued for services), and historically, to convertible debt and business combination accounting. The majority of the Company’s remaining financial instruments are short-term or bear market-rate interest and therefore approximate fair value.

Derivative liabilities

Accounting for Convertible Preferred Stock and Embedded Derivative Liabilities

The Company issued Series A and Series B convertible preferred stock that contain complex conversion features. The accounting for these instruments requires significant judgment in the application of U.S. GAAP, including ASC 480 – Distinguishing Liabilities from Equity, ASC 815 – Derivatives and Hedging, and ASC 820 – Fair Value Measurement. Management evaluates the contractual terms of these instruments to determine the appropriate classification and measurement of the preferred stock and any embedded features.

Classification of Preferred Stock

Management evaluates whether preferred stock instruments should be classified as liabilities or equity under ASC 480. Instruments are classified as liabilities if they are mandatorily redeemable, require the issuer to repurchase shares by transferring assets, or obligate the issuer to issue a variable number of shares with a fixed or predominantly fixed monetary value.

The Company’s Series A and Series B preferred stock do not contain mandatory redemption provisions, holder put rights, or other obligations requiring the Company to transfer cash or other assets to the holders. Accordingly, management concluded that the preferred stock represents equity instruments and the host contracts are classified within stockholders’ equity.

Embedded Conversion Features

The preferred stock includes conversion features that allow holders to convert the preferred shares into common stock at variable conversion prices that are subject to market-based adjustments, reset provisions, and anti-dilution protections.

Management evaluates these features under ASC 815 to determine whether they must be separated from the host instrument and accounted for as derivatives. This assessment requires judgment regarding whether the features:

• Meet the definition of a derivative under ASC 815
• Are clearly and closely related to the host contract
• Qualify for equity classification under ASC 815-40

The Company concluded that the embedded conversion features meet the definition of derivatives because they are based on the Company’s stock price, involve a notional amount representing the shares issuable upon conversion, require minimal initial investment, and permit net settlement through the issuance of publicly traded shares.

Management further concluded that the conversion features are not clearly and closely related to the equity host instrument and do not qualify for equity classification because the variable conversion pricing and reset mechanisms cause the features to fail the “indexed to the Company’s own stock” requirement under ASC 815-40. Accordingly, the embedded conversion features are bifurcated and recorded separately as derivative liabilities.

Initial Measurement and Allocation of Proceeds

At issuance, the derivative liabilities are measured at fair value. The Company determined the fair value of the embedded conversion features using a Monte Carlo simulation model, which incorporates assumptions regarding expected stock price volatility, expected term, risk-free interest rates, and the impact of contractual reset and floor provisions.

The proceeds received from the issuance of the preferred stock are allocated between the derivative liability and the preferred stock host instrument using the residual method. Under this method, the derivative liability is recorded at fair value and the remaining amount of the proceeds is allocated to the preferred stock. Because the stated value of the preferred shares exceeds the amount allocated to the host instrument, the Company records the difference as a contra-equity discount within stockholders’ equity.

Subsequent Measurement

After initial recognition, the derivative liabilities are remeasured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations. The preferred stock host instrument remains classified within equity and is not subsequently remeasured.

Upon conversion of preferred shares into common stock, the Company derecognizes the associated portion of the derivative liability and adjusts the related equity discount accordingly.

Fair Value Measurements and Significant Estimates

The valuation of the derivative liabilities involves the use of significant unobservable inputs and requires substantial management judgment. Key assumptions used in the valuation model include:

• Expected volatility of the Company’s common stock
• Expected term of the instruments
• Risk-free interest rates
• Expected conversion behavior and the impact of contractual reset provisions

Because these assumptions are not directly observable in the market, the derivative liabilities are classified as Level 3 measurements within the fair value hierarchy under ASC 820.

Changes in these assumptions or market conditions could materially affect the estimated fair value of the derivative liabilities and result in significant non-cash gains or losses in future reporting periods.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure as well as the title and position of the chief operating decision maker (“CODM”). The new standard also requires interim disclosures related to reportable segment profit or loss and assets that had previously only been disclosed annually. The Company adopted ASU 2023-07 effective December 31, 2024 on a retrospective basis.

Income taxes

The Company must exercise judgment in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities and contingencies for expected tax audit issues based on the Company’s current understanding of the tax law. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability including the related interest and penalties in the current tax provision.

In addition, the Company recognizes deferred tax assets relating to tax losses carried forward to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same taxable entity against which the unused tax losses can be utilized. However, utilization of the tax losses also depends on the ability of the taxable entity to satisfy certain tests at the time the losses are recouped.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company,” as defined in the Jump Start Our Business Startups Act of 2012 (“JOBS Act”). As an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting and disclosure requirements that are applicable to public companies that are not emerging growth companies, and we have elected to take advantage of those exemptions. For so long as we remain an emerging growth company, we will not be required to:

• have an auditor attestation report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);
• submit certain executive compensation matters to Member advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding Member vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding Member vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; or
• disclose certain executive compensation related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

In addition, the JOBS Act provides that an emerging growth company may take advantage of an extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. This means that an emerging growth company can delay adopting certain accounting standards until such standards are otherwise applicable to private companies. We have elected to take advantage of the extended transition period. Since we will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies, our financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. If we were to subsequently elect to comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.

We will remain an emerging growth company for up to the last day of the fiscal year following the fifth anniversary of our Direct Listing, or until the earliest of: (i) the last date of the fiscal year during which we had total annual gross revenues of $1.235 billion or more; (ii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iii) the date on which we are deemed to be a “large accelerated filer” as defined under Rule 12b-2 under the Exchange Act.

We do not believe that being an emerging growth company will have a significant impact on our business. Also, even once we are no longer an emerging growth company, we still may not be subject to auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act unless we meet the definition of a large accelerated filer or an accelerated filer under Section 12b-2 of the Exchange Act.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue was less our annual revenue is less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to EGCs, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

(b) Not applicable.

(c) Issuer purchases of equity securities: None.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by FASB that are adopted by us as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our financial statements upon adoption.

Our Products

Kirkman Brand

Our “Kirkman” brand products are manufactured in our FDA registered, cGMP certified facility in Lake Oswego, Oregon. Established in 1949, Kirkman specializes in manufacturing nutritional supplements and is one of the oldest companies dedicated to serving the special needs community.

Our Kirkman brand offers more than 150 products, including probiotics, enzymes, vitamins, multivitamins, amino acids, antioxidants, immune support, essential fatty acids, preconception, prenatal supplements, personal care products and other specialty products. Kirkman treats patients with autism spectrum disorders and special dietary needs through an established network of over 2,000 doctors in over 40 countries. Our Kirkman brand operates in 95% of the major subsegments in the supplement industry. Kirkman has a long-standing loyal customer and consumer base due to the rigorous testing of products in compliance with FDA requirements.

Our products under the Kirkman brand include, but are not limited to, the following:

Our products under the Kirkman brand are focused on:

Digestive enzymes: Over the counter oral digestive enzyme supplements are a combination of proteases, which aid protein digestion; lipases, which aid in fat digestion; and amylases, which aid in carbohydrate digestion. These may be prescribed by a doctor in some cases, when the pancreas does not make enough digestive enzymes on its own. People are increasingly taking over the counter (“OTC”) digestive enzymes in lower doses to support general gut health.

Essential fatty acids: Also called omega-3 fatty acids, essential fatty acids are important digestive chemicals that the body cannot make on its own.

P2i (prenatal) Brand

We launched a certified prenatal vitamin in April 2024 for expectant mothers under the ‘P2i by Kirkman’ brand. These vitamins have been specially formulated by our company to provide essential nutrients for both the mother and the developing fetus. The International Federation of Gynecology and Obstetrics (“FIGO”) published a position statement about toxic chemicals and environmental contaminants in prenatal vitamins. FIGO’s recommendation from the October 2023 position statement highlights that patients should only consume, and clinicians should only prescribe, vitamins and supplements that have been independently assessed to make certain they do not contain contaminants. Manufacturers should be held to a standard of production that assures safety and minimizes contaminants and certification of all prenatal vitamins becomes the standard of care. The FIGO Committee report on Climate Change and Toxic Environmental Exposures brought together global scientists to review reputable reference sources for chemicals that have the potential to impact maternal and newborn health, including the USA Environmental Protection Agency, the European Union, and the California EPA. The group of experts recommended several approaches, including:

• Establishing a list of toxic chemicals and contaminants that should be screened for in prenatal vitamins and reduced to de minimis levels; and
• Conducting assays of existing vitamins to assess ongoing risk to maternal and newborn health. This work can extend to personal exposure risk by offering women testing for the presence of potentially toxic environmental chemicals. Mass spectrometry currently offers the most comprehensive measurement.

This first publication of a list of toxic chemicals and contaminants represents the most comprehensive testing available at present but does not purport to identify or eliminate all potential sources of toxicity.

We are currently the only certified prenatal vitamin in the market that aligns to the FIGO position statement. We have formulated and produced a prenatal vitamin called P2i by Kirkman. There are approximately 3.6 million pregnancies alone in the United States (https://www.cdc.gov/nchs/fastats/births.htm) and the initial market focus for this product will be the United States with the expectation to expand globally since FIGO’s position statement reaches all countries.

The P2i by Kirkman prenatal vitamin has been certified by The FORUM, a nonprofit 501(c)(3) organization dedicated to promoting low-toxicity standards for prenatal healthy products. The FORUM operates under a Memorandum of Understanding (MOU) with FIGO, a globally recognized organization of obstetricians and gynecologists. This MOU establishes a shared objective to reduce environmental toxicity in prenatal products.

The certification process involves rigorous testing and evaluation to ensure compliance with The FORUM’s low-toxicity standards, which align with FIGO’s objectives for maternal and fetal health. These standards include:

• Analysis of 24 heavy metals, ensuring levels are below stringent safety thresholds;
• Testing for the presence of 120 toxic chemicals, such as pesticides and endocrine disruptors, with strict limits to prevent potential harm; and
• Utilization of ISO 17025-accredited laboratories for all testing to ensure reliability and reproducibility of results.

Purity Labs, an ISO 17025-accredited laboratory, as directed by The FORUM, conducted testing, which confirmed the product’s compliance with The FORUM’s criteria. Based on this testing, The FORUM issued its certification, indicating that Kirkman’s prenatal vitamin meets its standards for low toxicity and safety.

Tru2u.Health

The Company has launched a health & wellness platform that includes the marketing of supplements and an outsourced partnership with CareValidate. There are currently 10 supplements utilizing existing formulations that will be sold under the Tru2u brand. The supplements are the following:

53 www.Tru2u.health (http://www.Tru2u.health) is a consumer-facing telehealth and wellness platform that combines board-certified clinical support with personalized treatment plans, medication-based therapies, and the Company’s existing portfolio of science-backed nutraceutical products. The platform is structured to onboard patients nationwide in compliance with applicable state telehealth and prescribing regulation.

The platform’s core service components include:

• Board-Certified Telehealth Support: Virtual clinical consultations and ongoing medical oversight provided by licensed physicians experienced in weight-management and metabolic health.
• Medication-Based Wellness Protocols: Clinically guided GLP-1 weight management programs and other peptide-based treatment protocols offered under physician supervision where appropriate.
• Clean Supplement Integration: Access to the Company’s premium, science-based nutritional supplement products as part of comprehensive treatment and wellness plans.

Tru2u.health will provide personalized plans based on the consumer needs, with an emphasis on convenience, regulatory compliance, and transparency. The platform’s go-to-market strategy includes digital acquisition and awareness initiatives supported by external influencers with substantial combined audience reach to drive national awareness and consumer engagement.

The launch of www.Tru2u.health (http://www.Tru2u.health) aligns with broader consumer trends toward integrated, digitally delivered health solutions that combine clinical oversight with convenient access to therapeutic and supplemental products. The platform is intended to augment the Company’s existing direct-to-consumer channels, strengthen its recurring revenue streams, and extend its competitive positioning within the evolving health and wellness ecosystem.

To facilitate the telehealth and wellness protocols within the wellness platform, we have entered into a commercial services agreement with CareValidate. CareValidate delivers HIPAA-compliant digital workflows and automated care coordination that support the entire patient journey — from eligibility and intake through scheduling, medication routing, lab orders, and follow-up communications — helping reduce administrative burden, improve accuracy, and enhance the patient experience. CareValidate’s solutions are built to support regulated healthcare use cases while delivering a consistent, secure, and compliant digital experience for both providers and patients

Competitive Strengths

The Kirkman brand has been in business for over 70+ years with a loyal and repeat consumer base. We believe that this loyalty is a direct response to our high purity and quality standards that we maintain. As a result:

• We source all materials from high quality suppliers.
• We test finished goods in certified laboratories with state-of-the-art equipment and manufacture our supplements in US-based cGMP certified and FDA Selling facility located in Lake Oswego, Oregon.
• The FDA requires that we conduct at least one appropriate test or examination to verify and identify any component that is a dietary ingredient.
• We conduct ingredient testing by verifying the identity through ISO certified 3rd party laboratories.
• We test for the presence of residual solvents and pesticides (where applicable) of up to 24 heavy metals and microbial contamination that could lead to illness or death. Microbial tests can include, but are not limited to, aerobic plate count, yeast & mold, coliforms, E. coli, pseudomonas, staphylococcus aureus, bile tolerant gram negative, salmonella, aflatoxins and listeria.
• Heavy metals testing includes beryllium, aluminum, vanadium, chromium, manganese, cobalt, nickel, copper, zinc, arsenic, selenium, molybdenum, palladium, silver, cadmium, tin, antimony, barium, tungsten, platinum, thallium, lead, uranium and mercury.
• For incoming raw ingredients, we ID using a variety of methods. The FDA requires that a finished batch of the dietary supplement meets product specifications for identity, purity, strength, composition, and for limits on those types of contamination that may adulterate or that may lead to adulteration of the finished batch of the dietary supplement. This can be conducted for a subset of finished dietary supplement batches through a sound statistical sampling plan (or for every finished batch). For our business, we test every batch of products to ensure heavy metals are below California’s Pop 65 limits. In addition, every batch is tested for microbial contamination.

The Kirkman brand’s 70+ year history in the industry, along with our rigorous material testing, allows Kirkman to use statistical sampling to ensure the identity, purity and strength of each product is met. Our formulations use proprietary blends. The FDA does not require any testing on dietary supplements whereas we test for approximately 90 metals and toxins in our raw materials.

We are exposed to market risks arising in the ordinary course of business, primarily including interest rate risk, foreign currency exchange risk, commodity and input cost risk, and equity price risk. We do not currently use derivative financial instruments to hedge these exposures.

Interest Rate Risk

Our exposure to interest rate risk relates primarily to our financing activities, including outstanding fixed-rate debt and prior preferred equity instruments with stated dividend obligations.

As of December 31, 2025, our debt instruments bear fixed interest rates, of approximately 7- 23%. Accordingly, changes in market interest rates do not materially affect current interest expense.

However, increases in prevailing interest rates could:

• Increase the cost of future debt financings
• Adversely affect our ability to obtain capital on favorable terms

A hypothetical 100 basis point increase in market interest rates would not have had a material impact on our results of operations for the year ended December 31, 2025, but could increase future borrowing costs.

Foreign Currency Exchange Risk

We are exposed to foreign currency exchange risk through:

• Sales to international distributors in approximately 45 countries
• Procurement of raw materials from foreign suppliers

A portion of our raw materials is sourced internationally, including from China and other jurisdictions.

Fluctuations in exchange rates may impact:

• The cost of imported materials
• The value of revenues generated from foreign markets

We do not currently hedge foreign currency exposures. A 10% adverse movement in foreign currency exchange rates could increase input costs and/or reduce international revenues; however, the overall impact is not expected to be material based on current exposure levels.

Commodity and Input Cost Risk

We are subject to risks associated with changes in the cost and availability of raw materials, including nutraceutical ingredients, packaging materials, and transportation inputs.

These costs are influenced by:

• Global supply chain dynamics
• Inflationary pressures
• Tariffs and trade policies, including U.S. import tariffs

For the year ended December 31, 2025, our sourcing was geographically diversified, with approximately one-third of raw materials obtained domestically, one-third from China, and the remainder from other international sources.

A 10% increase in raw material or logistics costs, if not offset through pricing or cost controls, could have a material adverse effect on gross margins.

Equity Price Risk

We are exposed to equity price risk due to:

• The market price volatility of our common stock
• Conversion features embedded in preferred stock and convertible instruments

The market price of our common stock has been volatile since listing and is influenced by factors beyond our control, including market conditions and investor sentiment.

Declines in our stock price may:

• Increase dilution from convertible securities
• Limit access to equity financing
• Adversely affect our valuation

We do not hold equity investments in other companies and therefore do not have direct exposure to changes in third-party equity prices.

Inflation and Macroeconomic Risk

Our operations are subject to broader macroeconomic conditions, including:

• Inflation
• Interest rate increases
• Geopolitical instability
• Supply chain disruptions

These factors may increase costs, reduce consumer demand, and adversely affect our distributors’ purchasing behavior. While we attempt to mitigate these risks through pricing and cost management strategies, we cannot assure that such measures will be effective.

Risk Management

We manage market risk through:

• Diversification of suppliers and sourcing regions
• Ongoing monitoring of input costs and pricing strategies
• Maintaining primarily fixed-rate financing structures

We currently do not utilize derivative instruments or hedging strategies.

Based on our current operations and capital structure, we do not believe that market risk exposures had a material effect on our financial condition or results of operations for the year ended December 31, 2025. However, adverse changes in interest rates, foreign currency exchange rates, input costs, or equity markets could have a material adverse effect in future periods.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective due to the existence of the material weaknesses in the Company’s internal control over financial reporting.

Notwithstanding the conclusion by our Chief Executive Officer and Chief Financial Officer that our disclosure controls and procedures as of December 31, 2025 were not effective, and notwithstanding material weaknesses in our internal control over financial reporting, management believes that the audited consolidated financial statements and related financial information included in this Report fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”).

Management’s Report on Internal Control Over Financial Reporting

As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company,

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The responsibility, estimates and judgments made by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States.

Our management assessed the effectiveness of our internal control over financial reporting as of and for the year ended December 31, 2025. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO 2013”) in Internal Control Integrated Framework. Based on the evaluation. The Company management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2025, and noted the following deficiencies that we believe to be a material weakness.

1. Management Override of Controls

Based on our understanding and testing of the journal entries, the Company did not have sufficient control in reviewing and approving manual journal entries. We recommend the Company to have both the CEO and CFO approve all journal entries before posting into the system.

2. Improving Financial Reporting Within the Organization

During our audit and based on our proposed adjustments in the consolidated financial statements and footnotes, the Company needs to hire additional accountants with expertise to handle more complex accounting topics such as business combination, stock compensation, derivative liability, etc. and enhance technical skills in preparing the financial report.

3. Insufficient Support for Revenue Recognition

The Company failed to retain and provide certain documentation, specifically proof of delivery of certain products when tested. The Company does not have documented retention policies and procedures (e.g. phone orders).

4. Inaccurate Presentation and Recording of Preferred Stock Series A and B

The Company did not consistently apply U.S. GAAP ASC 480, 815, and 820 when presenting and recording the valuation of its convertible Preferred Stock Series A and B. The Company did not recognize the proper derivative liability accounting and estimate of fair value on the embedded derivatives at issuance date and year end.

5. Inventory Allowance

We identified a material weakness in the Company’s internal control over financial reporting associated with inventory allowance. Specifically, management did maintain effective controls to support and review the assumptions and data used in estimating the inventory allowance. This deficiency resulted in inventory and cost of goods sold to be misstated as adjustments to reflect excess, obsolete, or slow-moving inventory may not be accurately or timely recorded.

6. Non-compliance with Contractual Details

The Company failed to follow all the details stipulated in its material contracts, which may result in improper accounting treatment of transactions and potential legal ramifications. This deficiency highlights a breakdown in contract management and compliance, which could lead to material misstatements in its financial reporting.

7. Improper accrual of expenses and liabilities

A significant material weakness has been identified in the Company’s financial reporting related to the accrual of expenses. It was discovered that certain expenses were not accrued in the correct accounting period, leading to an overstatement or understatement of expenses and the related liabilities. Specifically, some expenses were either not recorded in the appropriate period end in which they were incurred or were incorrectly allocated to future or prior periods.

Changes in Internal Controls Over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the fiscal year ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.