Lake Oswego, Oregon--(Newsfile Corp. - May 18, 2026) - Functional Brands Inc. (NASDAQ: MEHA), a leading innovator in wellness and performance products, today announced financial results for the first quarter ended March 31, 2026.
First Quarter 2026 Financial Highlights
Revenue grew to $1.65 million, up 3.5% from $1.59 million in the prior year period, reflecting continued momentum across the Company's brand portfolio.
Gross profit increased to $0.96 million from $0.87 million in the prior year period and gross margin increased 390 basis points to 58.4%, driven by continued focus on higher margin channels.
Operating loss increased to $0.68 million from $0.03 million in the prior year period, largely reflecting expenses related to becoming a public company.
Net loss of $7.0 million reflected a $6.3 million of non-cash GAAP charge on equity exchange.
Strategic Highlights
Continued expansion of Kirkman® distribution across eCommerce, retail, and international channels.
Tru2u.health platform gaining traction with growing registered user base.
P2i™ Prenatal line achieving broader practitioner and retail placement following iHerb listing.
Strategic AI partnership with partnrup.ai driving qualified traffic acquisition for Tru2u.health.
Entered into a binding letter of intent regarding the acquisition of intellectual property and related blockchain-based assets.
Completed a capital structure simplification.
"Our recent results reflect important strategic and operational progress, including revenue growth, a 390 basis point expansion of gross margin, and the completion of a simplification of our capital structure," said Eric Gripentrog, CEO of Functional Brands Inc. "Over the past several months, we've executed a series of key initiatives that mark a pivotal period in the Company's evolution and establish a strong foundation for sustainable, profitable growth."
Financial Results for the Quarter Ended March 31, 2026:
Revenue
Net revenue for the three months ended March 31, 2026 was $1,645,524 compared to $1,590,256 for the three months ended March 31, 2025 representing an increase of approximately 3.5%. This increase of $55,268 in net revenue was primarily due to the increase in the demand from our direct-to-consumer sales channel.
Gross profit
Gross profit for the three months ended March 31, 2026 was $961,133 compared to 866,764 representing an increase of 11%. This increase of $94,369 was primarily due to the increase in demand from direct-to-consumer sales channel and operational efficiencies. Gross profit margin increased 390 basis points to 58.4%, driven by continued focus on higher margin channels.
Sales and marketing expenses
Sales and marketing expenses for the three months ended March 31, 2026, was $263,707 compared to $178,630 for the three months ended March 31, 2025, representing an increase of approximately 48%. This increase of $85,077 was primarily due to the increase in amazon referral fees and commissions moving from a wholesaler model to a Direct Seller's Central model.
General and administrative expenses
General and administrative expenses for the three months ended March 31, 2026 was $1,380,231, compared to $720,234 for the three months ended March 31, 2025, representing an increase of approximately 92%. This increase of $659,997 was primarily attributable to an increase professional fees and payroll.
Other income / (expenses)
Other income /expense for the three months ended March 31, 2026 was a negative $6,307,984 compared to a negative of $94,682 for the three months ended March 31, 2025. This increase of $6,213,302 was primarily due to the loss on issuance of preferred stock of $6,310,464, a reduction in interest expense of $69,290, and a change of fair value of derivative liability of $25,374.
About Functional Brands Inc.
Functional Brands Inc. (NASDAQ: MEHA) is a leading innovator in wellness and performance products dedicated to Making Everyone Healthy Again™. The Company's portfolio includes Kirkman®, one of the most trusted names in nutritional supplements for over 75 years with products available in more than 35 countries; P2i™ by Kirkman® Prenatal Multivitamin & Multimineral, the first prenatal supplement to align with FIGO standards and comply with California SB 646; and Tru2u.health, a consumer-facing telehealth and wellness platform. Functional Brands operates an FDA-registered, cGMP-compliant manufacturing facility in Oregon.
For more information, visit www.functionalbrandsinc.com and www.kirkmangroup.com, and www.Tru2u.health.
Investor Relations Contact:
Cautionary Note Regarding Forward-Looking Statements
This news release and statements of Functional Brands' management in connection with this news release or related events contain or may contain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements mean statements (including statements related to the closing, and the anticipated benefits to the Company, of the private placement described herein) related to future events, which may impact our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "potential," "will," "should," "could," "would," "optimistic" or "may" and other words of similar meaning. These forward-looking statements are based on information available to us as of the date of this news release and represent management's current views and assumptions. Forward-looking statements are not guarantees of future performance, events or results and involve significant known and unknown risks, uncertainties and other factors which may be beyond our control.
Important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the ability of the parties to negotiate final terms of a definitive acquisition agreement, the closing of the contemplated asset purchase agreement, including expected conditions to closing which are anticipated to include regulatory approvals, valuations, and future shareholder approvals; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the Company or BullionFX (collectively, the "LOI Parties") to terminate the LOI agreement; the effect of such termination; the outcome of any legal proceedings that may be instituted against LOI Parties or their respective directors or officers; the ability to obtain regulatory and other approvals and meet other closing conditions for the asset acquisition on a timely basis or at all, including the risk that any regulatory and other approvals required may not obtained on a timely basis or at all, or are obtained subject to conditions that are not anticipated or that could adversely affect the combined company or the expected benefits of the transaction; the ability to obtain any necessary approval by the Company's stockholders on the expected schedule of the transactions contemplated by the LOI; difficulties and delays in integrating BullionFX's assets in the Company; prevailing economic, market, regulatory or business conditions, or changes in such conditions, negatively affecting the parties; potential adverse reactions or changes to business relationships resulting from the announcement of the LOI and future expected acquisition; uncertainty as to the long-term value of the common stock of the Company following the acquisition; the significant dilution to the Company's stockholder in connection with the acquisition; the continued availability of capital and financing following the potential acquisition transaction; the business, economic and political conditions in the markets in which the LOI Parties operate; and the fact that the Company's reported earnings and financial position may be adversely affected by tax and other factors.
Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. Potential investors should review Functional Brands' Registration Statement filed with the SEC on Form S-1 on October 16, 2025 and the Company's Annual Report on Form 10-K filed with the SEC on March 27, 2026 for more complete information, including the risk factors that may affect future results, which are available for review at www.sec.gov. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results. We do not undertake to update our forward-looking statements to reflect events or circumstances that may arise after the date of this news release, except as required by law.
FUNCTIONAL BRANDS INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In U.S. dollars, except share data or otherwise noted)
March 31, | December 31, | ||||||
2026 | 2025 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 1,077,967 | $ | 2,726,696 | |||
Accounts receivable, net | 372,712 | 518,474 | |||||
Inventories, net | 1,591,548 | 1,549,511 | |||||
Prepaid expenses and other current assets | 355,096 | 392,999 | |||||
Total current assets | 3,397,323 | 5,187,680 | |||||
Noncurrent assets: | |||||||
Property and equipment, net | 32,797 | 37,379 | |||||
Right-of-use assets, net | 1,579,814 | 1,667,693 | |||||
Intangible assets, net | 1,385,879 | 1,397,411 | |||||
Goodwill | 818,139 | 818,139 | |||||
Total non-current assets | 3,816,629 | 3,920,622 | |||||
Total assets | $ | 7,213,952 | $ | 9,108,302 | |||
Liabilities and stockholders' equity / (deficit) | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 1,645,659 | $ | 1,554,243 | |||
Line of credit | - | 8,109 | |||||
SBA loan, current | 3,614 | 3,595 | |||||
Lease liabilities, current | 375,479 | 371,272 | |||||
Other current liabilities | 30,678 | 41,828 | |||||
Derivative liabilities, current | - | 3,306,745 | |||||
Liability with conditional timing | 450,000 | - | |||||
Loans payable (related party), current | 64,527 | 61,642 | |||||
Loans payable | 267,883 | 402,650 | |||||
Total current liabilities | 2,837,840 | 5,750,084 | |||||
Non-current liabilities: | |||||||
Lease liabilities, net of current | 1,340,313 | 1,435,505 | |||||
SBA loan, net of current | 135,957 | 136,873 | |||||
Convertible note | 837,800 | - | |||||
Derivative liabilities, noncurrent | 313,392 | - | |||||
Preferred shares liabilities | 6,032,160 | - | |||||
Loan payable (related party), net of current | 227,254 | 244,509 | |||||
Total non-current liabilities | 8,886,876 | 1,816,887 | |||||
Total liabilities | 11,724,716 | 7,566,971 | |||||
Stockholders' equity / (deficit) | |||||||
Series A Preferred stock, par value $0.001 stated value $100, 100,000 shares authorized in 2026 and 2025; 0 and 87,445 shares issued and outstanding, respectively | - | 87 | |||||
Series B Preferred stock, par value $0.001 stated value $100, 80,000 authorized in 2026 and 2025; 2,400 and 28,475 shares issued and outstanding, respectively | 2 | 28 | |||||
Series C Preferred stock, par value $0.001 stated value $1,000, 6,100 and 0 authorized in 2026 and 2025; 6,032 and 0 shares issued and outstanding, respectively | - | - | |||||
Common stock, $0.00001 par value, 220,000,000 shares authorized, 21,354,686 and 18,704,649 shares outstanding, and 5,190,171 and 0 shares to be issued respectively. | 267 | 187 | |||||
Additional paid-in capital | 9,538,131 | 8,522,354 | |||||
Accumulated deficit | (14,049,164 | ) | (6,981,325 | ) | |||
Total stockholders' equity / (deficit) | (4,510,764 | ) | 1,541,331 | ||||
Total liabilities and stockholders' equity / (deficit) | $ | 7,213,952 | $ | 9,108,302 | |||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
FUNCTIONAL BRANDS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In U.S. dollars, except share data or otherwise noted)
Three | Three | ||||||
March 31, | March 31, | ||||||
2026 | 2025 | ||||||
Revenue, net of returns | 1,645,524 | 1,590,256 | |||||
Cost of goods sold | 684,391 | 723,492 | |||||
Gross profit | 961,133 | 866,764 | |||||
Operating expenses | |||||||
Sales and marketing | 263,707 | 178,630 | |||||
General and administrative | 1,380,231 | 720,234 | |||||
Total operating expenses | 1,643,938 | 898,864 | |||||
Operating loss | (682,805 | ) | (32,100 | ) | |||
Other income / (expense) | |||||||
Interest income | 2,910 | 299 | |||||
Other income | - | 113 | |||||
Interest expense | (25,804 | ) | (95,094 | ) | |||
Change in fair value of derivative liabilities | 25,374 | - | |||||
Loss on issuance of preferred stock | (6,310,464 | ) | - | ||||
Total other income / (expense) | (6,307,984 | ) | (94,682 | ) | |||
Net loss | $ | (6,990,789 | ) | $ | (126,782 | ) | |
Net loss per share of common stock attributable to common stockholders | - | ||||||
Basic | $ | (0.36 | ) | $ | (0.02 | ) | |
Diluted | $ | (0.36 | ) | $ | (0.02 | ) | |
Weighted average shares used in computing net loss per share of common stock | |||||||
Basic | 19,594,102 | 6,917,226 | |||||
Diluted | 19,594,102 | 6,917,226 | |||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
FUNCTIONAL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(In U.S. dollars, except share data or otherwise noted)
Three | Three | ||||||
March 31, | March 31, | ||||||
2026 | 2025 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (6,990,789 | ) | $ | (126,782 | ) | |
Reconcile net loss to cash provided by operating activities | |||||||
Allowance for doubtful accounts receivable | - | (1,968 | ) | ||||
Allowance for inventory obsolescence | - | 18,464 | |||||
Depreciation of property and equipment | 4,582 | 6,225 | |||||
Amortization of right-of-use assets | 87,879 | 80,355 | |||||
Amortization of intangible assets | 11,532 | 11,532 | |||||
Stock-based compensation | 123,288 | 252,905 | |||||
Financing expense on warrants | - | 23,138 | |||||
Change in fair value of derivative liabilities | (25,374 | ) | - | ||||
Loss on issuance of preferred stock | 6,310,464 | - | |||||
Dividends | (77,050 | ) | - | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 145,762 | 5,841 | |||||
Inventories | (42,037 | ) | (111,142 | ) | |||
Prepaid expenses and other current assets | 37,903 | 17,029 | |||||
Accounts payable and accrued liabilities | 91,416 | 86,959 | |||||
Other current liabilities | (11,150 | ) | (7,065 | ) | |||
Lease liabilities | (90,985 | ) | (79,498 | ) | |||
Net cash provided by (used in) operating activities | (424,559 | ) | 175,993 | ||||
Cash flows from investing activities: | |||||||
Net cash used in investing activities: | - | - | |||||
Cash flows from financing activities: | |||||||
Deferred offering costs | - | (127,775 | ) | ||||
Payments for payable for acquisition | - | (44,999 | ) | ||||
Repayment of liability conditional timing | (450,000 | ) | - | ||||
Repayment of loans | (149,137 | ) | (1,685 | ) | |||
Buyback of preferred stock | (616,027 | ) | - | ||||
Proceeds from line of credit | - | 48,947 | |||||
Line of credit repayment | (8,109 | ) | (47,598 | ) | |||
SBA loan repayment | (897 | ) | (894 | ) | |||
Net cash used in financing activities | (1,224,170 | ) | (174,004 | ) | |||
Increase (decrease) in cash | (1,648,729 | ) | 1,989 | ||||
Cash beginning of period | 2,726,696 | 211,642 | |||||
Cash, end of period | $ | 1,077,967 | $ | 213,631 | |||
Supplemental disclosures of cash flow information | |||||||
Cash paid for interest | $ | 19,469 | $ | 71,980 | |||
Non-cash investing and financing activities | |||||||
Declaration of preferred stock dividend recorded as an increase in accrued liabilities | 77,050 | - | |||||
Extinguishment of Series A&B preferred shares | $ | (97 | ) | ||||
Derecognition of derivative liabilities upon extinguishment of Series A&B preferred shares | $ | (3,027,287 | ) | ||||
Issuance of Series C preferred shares | $ | (6,032,160 | ) | ||||
Recognition of Series C convertible notes | $ | (837,000 | ) | ||||
Recognition of derivative liabilities upon issuance of Series C preferred shares & convertible notes | $ | (529,854 | ) | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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