10-Q: Healthy Extracts Reports Q2 2026 Results, Faces Going Concern Doubt

Healthy Extracts Inc. reported a net loss for Q2 2026, with revenue increasing significantly year-over-year, but the company continues to face substantial going concern risks.

Summary

• Healthy Extracts Inc. filed its Form 10-Q for the quarterly period ended June 30, 2026.
• The company reported revenues of $2,067,212 for the three months ended June 30, 2026, a 113% increase from $968,656 in the prior year period.
• For the six months ended June 30, 2026, revenues were $3,677,956, a 94% increase from $1,899,935 in the prior year period.
• Despite revenue growth, the company reported a net loss of $129,389 for the three months ended June 30, 2026, and a net loss of $329,486 for the six months ended June 30, 2026.
• The company has an accumulated deficit of $20,450,948 as of June 30, 2026.
• Management has expressed doubt about the company's ability to continue as a going concern within one year.
• The company's cash on hand as of June 30, 2026, was $189,958.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the company's continued net losses, significant accumulated deficit, and the explicit statement of doubt regarding its ability to continue as a going concern, despite revenue growth.

Positives

• Significant year-over-year revenue growth, with a 113% increase in the three-month period and a 94% increase in the six-month period.
• Cost of revenue as a percentage of revenues decreased from 39% to 30% for the three-month period and from 46% to 34% for the six-month period, indicating improved cost management relative to sales.
• Positive net cash from operating activities of $411,983 for the six months ended June 30, 2026, compared to $77,236 in the prior year period.
• Acquisition of Adli Gummies Inc. in May 2026, which is expected to accelerate revenue growth and increase gross profit.
• Acquisition of Gummy USA in October 2025, adding contract manufacturing and formulation services.

Negatives

• The company reported a net loss of $129,389 for the three months ended June 30, 2026, and $329,486 for the six months ended June 30, 2026.
• The accumulated deficit has increased to $20,450,948 as of June 30, 2026.
• Management has stated there is doubt about the entity's ability to continue as a going concern within one year.
• Total liabilities increased significantly from $3,795,099 as of December 31, 2025, to $10,173,158 as of June 30, 2026.
• General and administrative expenses increased by 115% for the three-month period and 129% for the six-month period compared to the prior year.
• The company's cash on hand ($189,958) is low relative to its liabilities and ongoing operational needs.

Risks

• The company's ability to continue as a going concern is dependent on its ability to raise additional capital through debt or equity financing.
• Financing will likely be dilutive to existing stockholders.
• The company has a significant accumulated deficit and has incurred net losses since inception.
• The company's disclosure controls and procedures were not effective at the reasonable assurance level due to material weaknesses identified.
• Adli Gummies, Inc. has a concentration of sales to one customer representing 58% of sales for the period.
• The company's products have not been evaluated by the FDA or any similar regulatory body for safety and efficacy.

Future Outlook

The company expects revenue growth to increase as its direct consumer sales and marketing efforts continue to perform. However, the company anticipates needing to fund operations through raising capital from the sale of its stock and debt financings until cash flows from operations consistently satisfy its needs.

Management Comments

• "Our mission is to acquire or create products with health and performance benefits that have mass consumer appeal."
• "We are a platform for acquiring, developing, patenting, marketing, and distributing plant-based nutraceuticals."
• "Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business."
• "Our auditors report reflects that our ability to continue as a going concern is dependent upon our ability to raise additional capital from the sale of common stock or other means and, ultimately, the achievement of significant operating revenues."
• "If we are unable to continue as a going concern, our business will fail and stockholders will lose their investment in our company."
• "No assurance can be given that such financing will be available or, if available, that it will be on commercially favorable terms."
• "Moreover, financing will likely be dilutive to our stockholders."

Industry Context

StockSavvy.ai notes that Healthy Extracts operates in the growing nutraceuticals market, which includes plant-based supplements for health and wellness. The company's strategy involves acquiring and developing brands in high-growth categories like heart, brain, and immune health, as well as functional beauty and wellness gummies. The recent acquisitions of Gummy USA and Adli Gummies Inc. indicate a strategy to expand manufacturing capabilities and product lines, positioning the company at the intersection of nutraceutical manufacturing and precision formulation.

Comparison to Industry Standards

• The company's revenue growth of 94-113% for the six and three months ended June 30, 2026, respectively, is strong, but needs to be viewed in the context of its small revenue base and significant operating losses.
• The improvement in cost of revenue as a percentage of revenue (from 46% to 34% for six months) suggests better operational efficiency, which is a positive trend in the competitive nutraceutical market.
• However, the substantial increase in general and administrative expenses (129% for six months) outpaced revenue growth, contributing to the net loss and raising concerns about cost control.
• The company's reliance on external financing and the explicit mention of going concern doubt are significant deviations from industry standards for established, profitable companies.

Management Changes

Legal Proceedings

• No updates to previously disclosed legal proceedings.
• The company is involved in various pending or threatened legal actions in the ordinary course of business, but management believes these are not expected to have a material adverse effect on financial position or results of operations.

Related Party Transactions

• Accrued interest payable - related party was $116,113 as of June 30, 2026, compared to $76,401 as of December 31, 2025.
• Notes payable - related party - non-current was $125,276 as of June 30, 2026, compared to $156,835 as of December 31, 2025.
• Donald Swanson, Director and CEO, loaned 3,000,000 shares of common stock back to the company on May 15, 2026, valued at $5,400,000, recorded as unsecured debt Q.
• The company assumed two unsecured loans totaling $531,338 from Adli Gummies, Inc. acquisition, with an average interest rate of 7.45%.

Stakeholder Impact

• Shareholders: Potential dilution from future capital raises, risk of investment loss if the company fails to continue as a going concern, but also potential upside from revenue growth and acquisitions.
• Creditors: Increased liabilities raise concerns about repayment, especially given the going concern issues.
• Employees: Recent resignations of key executives (President, COO, Chief Brand Officer) may create uncertainty and impact operations.
• Suppliers: Continued operations depend on successful financing and revenue generation.

Next Steps

• Continue to seek funding through debt and equity financing.
• Focus on increasing revenue and maintaining margins.
• Generate positive cash flow from existing operations.
• Develop and market plant-based nutraceutical products.
• Integrate acquired businesses (Gummy USA, Adli Gummies Inc.) to accelerate revenue growth and expand capabilities.

Key Dates

Recommendation

The company's persistent net losses, substantial accumulated deficit, and explicit statement of doubt regarding its ability to continue as a going concern are critical red flags. While revenue growth is positive, it is outpaced by rising operating expenses, and the company's reliance on future financing, which is expected to be dilutive, presents significant risk to existing shareholders. The recent executive departures further add to the uncertainty.

Keywords

Healthy Extracts, Form 10-Q, Nutraceuticals, Gummy USA, Adli Gummies, Revenue Growth, Net Loss, Going Concern