Functional Brands Inc. reported a modest increase in revenue for the fiscal year ended December 31, 2025, achieving $6.61 million compared to $6.57 million in 2024, marking a 1% rise. The company's gross profit, however, decreased by 3% to $3.48 million, primarily due to increased costs associated with inventory write-offs as the company transitioned away from its hemp product line. The cost of goods sold rose by 6% to $3.13 million, reflecting the challenges in managing inventory during this transition.
The company experienced significant changes in its operational structure, including the discontinuation of its hemp-derived product line and the launch of a new health platform, Tru2u.health, aimed at expanding its digital health services. This strategic shift is expected to enhance consumer engagement and create sustainable revenue streams. Additionally, Functional Brands underwent a restructuring, acquiring HTO Nevada, which is now a wholly-owned subsidiary, and completed a direct listing on the Nasdaq under the symbol "MEHA" in November 2025.
Operationally, the company reported an increase in sales and marketing expenses, which rose by 10% to $632,414, driven by heightened advertising efforts for the Tru2u platform. General and administrative expenses surged by 30% to $4.25 million, largely due to increased professional services and stock-based compensation. The company also reported a net income of $758,478, a significant turnaround from a net loss of $559,356 in the previous year, largely attributed to other income from debt forgiveness and changes in the fair value of derivative liabilities.
As of December 31, 2025, Functional Brands had approximately 1,763 record holders of its common stock and reported a total of 19,816,450 shares outstanding. The company has not declared any cash dividends and intends to retain earnings for operational growth. Looking ahead, the company aims to strengthen its market position by enhancing its product offerings and expanding its digital health initiatives, while also addressing the challenges posed by macroeconomic conditions and supply chain disruptions.
In terms of compliance, the company received a deficiency letter from Nasdaq regarding its stock price falling below the minimum bid requirement of $1.00 per share. Functional Brands has a compliance period until June 29, 2026, to regain compliance. The company is also focused on improving its internal controls over financial reporting, having identified several material weaknesses that it plans to address in the coming fiscal year.
About Functional Brands Inc.
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