Functional Brands Announces Fourth Quarter and Full-Year 2025 Financial Results

Fourth quarter net income improved to $0.9 million compared to a net loss of $0.3 million in the prior year period

Lake Oswego, Oregon--(Newsfile Corp. - March 30, 2026) - Functional Brands Inc. (NASDAQ: MEHA), a leading innovator in wellness and performance products, today announced financial results for the fourth quarter and full-year ended December 31, 2025.

Fourth Quarter 2025 highlights

Revenue of $1.50 million compared to $1.68 million in the prior year period, a decrease of approximately 11.0%. This decrease was primarily due to the shift in our Amazon business model from a reseller model to a direct-to-consumer approach through our own Amazon Seller's Central account. Gross profit was $0.67 million compared to $0.99 million in the prior year period. Gross margin of 44.9% was down 1400 basis points versus the prior year period due to changes in the Amazon business model and inventory adjustments related to our transition out of the hemp business. Net income of $0.9 million or $0.01 per diluted share compared to a net loss of $0.3 million and $(0.08) per diluted share in the prior year period.

Full Year 2025 highlights

Revenue of $6.61 million compared to $6.57 million in the prior year, an increase of approximately 0.7%, reflecting the inherent stability of the Kirkman business. Gross profit was $3.48 million compared to $3.61 million in the prior year. Gross margin of 52.7% was down 220 basis points versus the prior year due to inventory adjustments related to our transition out of the hemp business. Net income of $0.8 million or $0.01 per diluted share compared to a net loss of $0.6 million and $(0.08) per diluted share in the prior year.

"We were pleased to deliver another year of strong bottom-line results as we continue to transform our business model," 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 in the future. We achieved significant strategic breakthroughs that differentiate us in the marketplace and demonstrate our commitment to innovation across multiple fronts.

"In February, we launched Tru2u.health, our comprehensive digital health platform that integrates peptide solutions, GLP-1-based weight management programs, board-certified telehealth support, and clean supplements into a seamless consumer experience, providing us with a scalable, digitally native growth engine. We also expanded our Kirkman brand portfolio with two innovative product bundles - our Skin, Beauty & Anti-Aging Bundle in December and our Detox Aid Bundle in January. Additionally, we forged a strategic partnership with iHerb to make P2i by Kirkman available to international consumers across Asia, Europe, the Middle East, and Latin America, dramatically expanding our addressable market for the world's cleanest prenatal vitamin. These accomplishments demonstrate strong execution against our strategic goals and underscore our commitment to our mission of 'Making Everyone Healthy Again'."

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About Functional Brands Inc.

Functional Brands Inc. is a health and wellness company focused on acquiring and growing science-based consumer brands. With a portfolio that includes trusted names like Kirkman®, P2i by Kirkman®, Tru2u.Health™; Functional Brands is committed to providing high-quality, effective solutions that support healthier lives.

For more information, visit www.functionalbrandsinc.com and www.kirkmangroup.com, and www.Tru2u.health

Investor Relations Contact: [email protected]

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.

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 (AUDITED) (In U.S. dollars, except share data or otherwise noted)

December 31,
2025 December 31,
2024 Assets Current assets: Cash $ 2,726,696 $ 211,642 Accounts receivable, net 518,474 303,471 Inventories, net 1,549,511 1,709,458 Prepaid expenses and other current assets 392,999 45,112 Deferred offering costs - 588,641 Total current assets 5,187,680 2,858,324 Noncurrent assets: Property and equipment, net 37,379 49,564 Right-of-use assets, net 1,667,693 2,000,092 Intangible assets, net 1,397,411 1,443,541 Goodwill 818,139 818,139 Total non-current assets 3,920,622 4,311,336 Total assets $ 9,108,302 $ 7,169,660 Liabilities and stockholders' equity / (deficit) Current liabilities: Accounts payable and accrued liabilities $ 1,554,243 $ 1,956,165 Line of credit 8,109 32,235 SBA loan, current 3,595 3,436 Lease liabilities, current 371,272 291,213 Other current liabilities 41,828 35,332 Derivative liabilities 3,306,745 - Payable for acquisition, current - 2,342,366 Loans payable (related party), current 61,642 370,703 Loans payable 402,650 171,500 Total current liabilities 5,750,084 5,202,950 Non-current liabilities: Lease liabilities, net of current 1,435,505 1,844,819 SBA loan, net of current 136,873 140,468 Loan payable (related party), net of current 244,509 - Convertible debenture - 100,000 Total non-current liabilities 1,816,887 2,085,287 Total liabilities 7,566,971 7,288,237 Stockholders' equity / (deficit) Series A Preferred stock, par value $0.001 stated value $100, 100,000 and 0 shares authorized as of December 31, 2025 and 2024; 87,445 and 0 shares issued and outstanding, respectively 87 - Series B Preferred stock, par value $0.001 stated value $100, 80,000 and 0 shares authorized as of December 2025 and 2024; 28,475 shares issued and 0 outstanding, respectively 28 - Common stock, par value $0.00001, 220,000,000 shares authorized; 18,704,649 and 6,694,880 shares issued and outstanding at December 31, 2025 and 2024 187 67 Additional paid-in capital 8,522,354 7,542,286 Accumulated deficit (6,981,325 ) (7,660,930 ) Total stockholders' equity / (deficit) 1,541,331 (118,577 ) Total liabilities and stockholders' equity / (deficit) $ 9,108,302 $ 7,169,660

FUNCTIONAL BRANDS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (In U.S. dollars, except share data or otherwise noted)

(UNAUDITED)
Three Months Ended
December 31, (AUDITED)
Year Ended
December 31, 2025 2024 2025 2024 Revenue, net of returns $ 1,494,521 $ 1,680,096 $ 6,611,484 $ 6,566,455 Cost of goods sold 823,766 690,623 3,127,518 2,959,609 Gross profit 670,755 989,473 3,483,966 3,606,846 Operating expenses Sales and marketing 169,869 121,601 632,414 576,315 General and administrative expenses 1,633,636 1,003,619 4,250,124 3,259,623 Total operating expenses 1,803,505 1,125,220 4,882,538 3,835,938 Operating income / (loss) (1,132,750 ) (135,747 ) (1,398,572 ) (229.092 ) Interest expense (80,982 ) (142,284 ) (402,398 ) (331.836 ) Other income - ERTC refund - - 419,947 - Other income - - 112 - Interest income 1,352 281 74,696 1,572 Change in fair value of derivative liabilities 7,358,935 - 7,358,935 - Loss on issuance of preferred stock derivative liability (5,294,242 ) - (5,294,242 ) - Total other income / (expenses) 1,985,063 (142,003 ) 2,157,050 (330.264 ) Net income / (loss) $ 852,313 $ (277,750 ) $ 758,478 $ (559,356 ) Net income (loss) per share of common stock attributable to common stockholders Basic $ 0.08 $ (0.08 ) $ 0.08 $ (0.08 ) Diluted $ 0.01 $ (0.08 ) $ 0.01 $ (0.08 ) Weighted average shares used in computing net loss per share of common stock Basic 8,241,266 6,694,880 8,241,266 6,694,880 Diluted 85,120,861 6,694,880 85,120,861 6,694,880

FUNCTIONAL BRANDS INC.

CONSOLIDATED STATEMENTS OF CASH FLOW (AUDITED)

(In U.S. dollars, except share data or otherwise noted)

Year Ended
December 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ 758,478 $ (559,356 ) Reconcile net income (loss) to cash (used in) provided by operating activities Allowance for doubtful accounts receivable (3,796 ) (32,491 ) Allowance for inventory obsolescence 53,855 (14,206 ) Depreciation of property and equipment 20,698 48,371 Amortization of right-of-use assets 332,399 306,935 Amortization of intangible assets 46,130 46,130 Financing expense on warrant issuance 45,413 - Stock-based compensation 543,068 414,900 Change in fair value of derivative liabilities (7,358,935 ) - Loss on issuance of preferred stock of derivative liabilities 5,294,242 - Issuance of shares for note extension 80,500 - Issuance of common stock for convertible debenture 122,331 - Issuance of shares for financing expense 50,629 - Changes in operating assets and liabilities: Accounts receivable (211,207 ) (100,042 ) Inventories 106,092 (1,233 ) Prepaid expenses and other current assets (347,887 ) 27,329 Accounts payable and accrued liabilities (480,795 ) 132,161 Other current liabilities 6,496 (5,493 ) Lease liabilities (329,255 ) (261,015 ) Net cash (used in) provided by operating activities (1,271,544 ) 1,990 Cash flows from investing activities: Purchase of property and equipment (8,513 ) (1,881 ) Net cash used in investing activities: (8,513 ) (1,881 ) Cash flows from financing activities: Deferred offering costs (1,721,228 ) (163,125 ) Proceeds from loans 489,324 301,500 Payments for payable for acquisition (2,342,366 ) (255,002 ) Proceeds from debt facilities 99,733 180,662 Repayment of loans (422,727 ) (6,931 ) Proceeds from issuance of preferred stock 8,000,000 - Buyback of preferred stock (180,330 ) - Line of credit repayment (123,859 ) (216,742 ) SBA loan repayment (3,436 ) (3,264 ) Net cash provided by (used in) financing activities 3,795,111 (162,902 ) Increase (decrease) in cash 2,515,054 (162,793 ) Cash beginning of period 211,642 374,435 Cash, end of period $ 2,726,696 $ 211,642 Supplemental disclosures of cash flow information Cash paid for interest $ 401,411 $ 224,428 Non-cash investing and financing activities Recognition of derivative liability of preferred stock $ 13,294,242 $ - Conversion of preferred stock resulting in a non-cash reduction of the derivative liability recorded to APIC 2,628,242 - Fair value adjustment decreasing derivative liability 7,358,935 Change in Preferred Stock 115 - Conversion of preferred stock 112 - Deferred offering costs (2,309,869 ) - Declaration of preferred stock dividend recorded as an increase in accrued liabilities 78,873 - Common stock issued for convertible note payable and accrued interest 122,331 - Loan payable, related party $ 225,000 $ -

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