8-K: Healthy Extracts Acquires Gummy USA, Appoints New President and CEO

Healthy Extracts Inc. has completed the acquisition of Gummy USA LLC, a custom gummy nutritional supplement manufacturer, issuing 13,075,920 shares of common stock to Gummy USA's sole member, Donald Swanson, who now holds 77.5% of Healthy Extracts' outstanding shares and assumes roles as President and Chairman.

Summary

• Healthy Extracts Inc. acquired 100% of the outstanding membership interests of Gummy USA LLC, making it a wholly-owned subsidiary.
• The purchase consideration involved issuing 13,075,920 shares of Healthy Extracts' common stock to Donald Swanson, Gummy USA's sole member.
• Post-transaction, Donald Swanson's shares represent 77.5% of Healthy Extracts' issued and outstanding common stock.
• Donald Swanson was granted anti-dilution rights to maintain his 77.5% ownership percentage in the event of the exercise of any of the 154,306 outstanding options and warrants.
• Donald Swanson was appointed to Healthy Extracts' Board of Directors as the fourth director, Chairman, and President, effective July 19, 2025.
• Kevin Duke Pitts, the former President, was appointed as Chief Executive Officer.
• Robert Madden, Healthy Extracts' Secretary and Chief Financial Officer, was appointed as the Manager of Gummy USA LLC.
• Gummy USA LLC's financial statements (unaudited profit and loss for 2023 and 2024, and interim P&L/balance sheet for Q1 2025) and pro forma financial information will be filed in an amendment within 71 days of the 8-K filing date.
• The shares issued to Donald Swanson were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, with Swanson being an accredited and sophisticated shareholder.
• Donald Swanson owns the Intellectual Property used by Gummy USA's business, which is subject to a royalty-free, worldwide, perpetual lease to Gummy USA LLC, ensuring uninterrupted use.

Sentiment

Score: 6

Explanation: The acquisition is a significant strategic move with potential for growth and brings in experienced leadership. However, the substantial dilution for existing shareholders and the change in control dynamics introduce elements of uncertainty that warrant a cautious outlook.

Positives

• Acquisition of Gummy USA LLC expands Healthy Extracts' business into custom gummy nutritional supplements, a growing market segment.
• Donald Swanson, Gummy USA's founder and former CEO, brings over eight years of deep experience in pharmaceutical-grade manufacturing and gummy innovation, including proprietary processes and state-of-the-art production facilities.
• Gummy USA has secured significant purchase orders and is positioned to set new industry benchmarks for quality, regulatory compliance, and supply chain efficiency.
• The IP Lease arrangement ensures Gummy USA has perpetual, royalty-free rights to use critical intellectual property owned by Donald Swanson, without additional consideration or adverse effects on validity.

Negatives

• The issuance of 13,075,920 shares to Donald Swanson results in significant dilution for existing Healthy Extracts shareholders, as it represents 77.5% of the post-transaction outstanding common stock.
• The change in control, with Donald Swanson holding a dominant ownership stake and assuming key leadership roles (President, Chairman), fundamentally alters the company's governance structure.

Risks

• The success of the acquisition depends on the effective integration of Gummy USA LLC's operations and the realization of anticipated synergies.
• Future financial performance of Gummy USA LLC is not yet fully disclosed, as required financial statements and pro forma information are to be filed later.
• The concentration of ownership and control with Donald Swanson could impact corporate decision-making and shareholder influence.
• Reliance on the IP Lease for Gummy USA's core intellectual property, while perpetual and royalty-free, means the IP itself is not owned by Healthy Extracts Inc.

Future Outlook

Gummy USA LLC, under Donald Swanson's leadership, is positioned to set new industry benchmarks for quality, regulatory compliance, and supply chain efficiency, leveraging its expertise in automated controls, advanced fluid dynamics, and blockchain-enabled product authentication.

Management Comments

• Donald Swanson brings over eight years of deep experience in pharmaceutical-grade manufacturing and gummy innovation.
• Mr. Swanson has successfully designed and implemented state-of-the-art production facilities across multiple international locations, and his proprietary processes deliver unmatched precision.
• Under Mr. Swanson's leadership, Gummy USA has not only secured significant purchase orders but also positioned itself to set a new industry benchmark for quality, regulatory compliance, and supply chain efficiency.

Industry Context

This acquisition signifies Healthy Extracts' strategic expansion into the rapidly growing custom gummy nutritional supplement market, aligning with broader trends in the health and wellness sector towards convenient and palatable delivery methods for dietary supplements. It positions the company to capitalize on the increasing consumer demand for gummy formats.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• No unresolved actions, suits, mediations, investigations, inquiries, claims, or other legal proceedings pending or threatened against Gummy USA LLC, and none filed during the past five years.

Related Party Transactions

• The acquisition of Gummy USA LLC from its sole member, Donald Swanson, constitutes a related party transaction.
• Donald Swanson's appointment as President, Chairman, and Board member, along with his significant ownership, establishes him as a key related party.
• The royalty-free, worldwide, perpetual IP Lease from Donald Swanson to Gummy USA LLC is a related party arrangement.

Stakeholder Impact

• Shareholders: Experience significant dilution due to the issuance of 77.5% of outstanding shares to Donald Swanson, and a change in corporate control.
• Employees: Kevin Duke Pitts transitions to CEO, Robert Madden becomes Manager of Gummy USA, and Gummy USA employees are now part of Healthy Extracts Inc.
• Customers: Gummy USA's existing customer relationships are now under the Healthy Extracts umbrella, potentially benefiting from broader corporate resources.
• Suppliers: Gummy USA's supplier relationships are now integrated into Healthy Extracts' operations.
• Creditors: The acquisition and associated financial restructuring may impact the company's overall financial leverage and credit profile, pending full financial disclosures.

Next Steps

• Healthy Extracts Inc. will file an amendment to the Current Report within 71 days to include the financial statements of Gummy USA LLC and pro forma financial information.

Key Dates

Recommendation

The acquisition of Gummy USA LLC represents a strategic expansion into the custom gummy nutritional supplement market, potentially leveraging Donald Swanson's extensive industry experience and proprietary processes. However, the issuance of 13,075,920 shares, constituting 77.5% of the post-transaction outstanding common stock to a single individual, Donald Swanson, results in substantial dilution for existing shareholders and a significant change in corporate control. While the anti-dilution rights for Swanson protect his ownership percentage, the full financial impact and integration success of Gummy USA are yet to be seen, pending the filing of required financial statements. The unique IP lease arrangement also warrants careful monitoring. Given the strategic potential balanced against the significant dilution and control shift, a 'hold' recommendation is appropriate to assess the integration and future financial performance.

Keywords

Healthy Extracts, Gummy USA, acquisition, nutritional supplements, gummies, common stock, anti-dilution, corporate governance, management change, intellectual property, SEC filing, 8-K