10-Q: Healthy Extracts Inc. Reports Increased Revenue but Continues to Face Losses in Q1 2025

Healthy Extracts Inc. saw a 35% increase in revenue for Q1 2025 compared to Q1 2024, but the company still experienced a net loss.

Summary

• Healthy Extracts Inc. reported financial results for the three months ended March 31, 2025.
• Revenue increased by 35% to $931,280 compared to $688,786 in the same period of 2024.
• Cost of revenue increased by 81% to $506,295, compared to $280,428 in 2024.
• Gross profit increased slightly by 4% to $424,985 from $408,358.
• Operating expenses increased by 13% to $533,833.
• The company experienced a net loss of $398,860, or $(0.13) per share, compared to a net loss of $861,259, or $(0.30) per share, in the prior year period.
• The company's accumulated deficit increased to $19,639,204.
• The company's disclosure controls and procedures were not effective at the reasonable assurance level due to material weaknesses identified in the Annual Report on Internal Control Over Financial Reporting.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While revenue increased, the company still faces significant challenges, including net losses, a growing accumulated deficit, and the need to raise additional capital. The disclosure of ineffective internal controls is also a concern.

Positives

• Revenue increased by 35% compared to the same period last year.
• The net loss decreased significantly compared to the same period last year.
• The company had positive operating cash flows during the three months ended March 31, 2025.
• The company had positive net cash from operations for the year ended December 31, 2024.

Negatives

• The company continues to experience net losses.
• Cost of revenue increased significantly, impacting gross profit margin.
• The company's accumulated deficit continues to grow.
• Disclosure controls and procedures were not effective at the reasonable assurance level due to material weaknesses identified in the Annual Report on Internal Control Over Financial Reporting.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital and achieving significant operating revenues.
• Failure to raise additional capital could result in business failure and loss of investment.
• The company's products have not been evaluated by the FDA or any similar regulatory body for safety and efficacy.
• The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations.

Future Outlook

The company expects revenue growth to increase as direct consumer sales and marketing efforts continue to perform.

Management Comments

• Over the last year, we have focused on increasing revenue, maintaining our margins, and generating positive cash flow from our existing operations.
• In large part, we have been successful in meeting these objectives and our business has remained relatively unchanged.

Industry Context

The company operates in the multibillion-dollar nutraceuticals market, targeting high-growth categories such as heart, brain, and immune health.

Comparison to Industry Standards

• It is difficult to compare Healthy Extracts directly to industry standards without knowing specific competitors and their financial performance.
• However, the nutraceuticals industry is generally characterized by high growth potential but also significant competition and regulatory scrutiny.
• Comparable companies in the nutraceuticals space include Herbalife Nutrition, Nu Skin Enterprises, and USANA Health Sciences, but these are much larger companies with different business models.

Related Party Transactions

• For the months ended March 31, 2025 and the year ended December 31, 2024, the Company had expenses totaling $0 and $0 respectively, to an officer and director for salaries, which is included in general and administrative expenses on the accompanying consolidated statement of operations.
• The company has related party notes payable outstanding.

Stakeholder Impact

• Shareholders face the risk of dilution if the company raises additional capital through the sale of common stock.
• Employees' job security is dependent on the company's ability to continue as a going concern.
• Customers may be impacted if the company is unable to continue providing its products.
• Creditors face the risk of non-payment if the company is unable to generate sufficient cash flow.

Next Steps

• The company will continue to focus on increasing revenue and managing expenses.
• The company will seek additional funding through debt and equity financing.
• The company needs to address the material weaknesses in its internal control over financial reporting.

Key Dates

Keywords

revenue, net loss, financial results, nutraceuticals, Healthy Extracts, BergaMet, UBN, going concern, convertible debt, operating expenses