Revenue Performance - Net revenue for the three months ended September 30, 2025, was $1,694,174, representing an increase of approximately 21% compared to $1,395,913 for the same period in 2024 [202]. - Net revenue for the nine months ended September 30, 2025, was $5,116,963, reflecting a 5% increase from $4,886,359 in the prior year [203]. Profitability Metrics - Gross profit margin for the three months ended September 30, 2025, improved to 57.7%, up from 54.7% in the same period of 2024 [206]. - Operating loss for the three months ended September 30, 2025, decreased to $(78,288), a 64% improvement from $(218,771) in the prior year [201]. Interest and Other Income - Interest expense for the three months ended September 30, 2025, increased by approximately 123% to $155,310, compared to $69,638 in the same period of 2024 [212]. - Other income for the three months ended September 30, 2025, surged to $492,599, primarily due to an Employee Retention Tax Credit reimbursement of $491,801 [214]. Cash Flow and Financing Activities - Net cash provided by operating activities for the nine months ended September 30, 2025, was $1,478,358, a significant increase of approximately 2,829% from $(54,178) in the prior year [218]. - Cash used in financing activities for the nine months ended September 30, 2025, was $676,164, representing an increase of approximately 891% from $68,206 in the same period of 2024 [220]. Debt and Obligations - The company owes $2,227,366 for the Kirkman acquisition as of September 30, 2025, with a forbearance agreement executed to postpone principal payments [216]. - On November 4, 2025, the company completed a private placement for gross proceeds of $8,000,000, netting approximately $7,360,000 after commissions [221]. - The Company executed a loan agreement for $150,000 with a 12.5% OID, totaling $171,500, and issued 37,500 warrants [223]. - A related party loan agreement was executed for $130,000 with a 20% annual interest rate, due March 11, 2031 [224]. - The Company entered a line of credit agreement for $300,000 with a 27% interest rate, settled in full on January 22, 2024 [224]. - An additional line of credit agreement was established for $100,000 with a 5% interest rate, settled in full on July 7, 2024 [225]. - A short-term debt facility was entered into for $247,634, which is non-interest-bearing and remains outstanding as of September 30, 2025 [226]. Inventory and Asset Management - As of September 30, 2025, the allowance for inventory obsolescence increased by $12,895, resulting in a reserve of $77,722 [228]. - The Company did not recognize impairment losses for long-lived assets during the nine months ended September 30, 2025, and 2024 [229]. Regulatory and Reporting Status - The Company adopted ASU 2023-07 effective December 31, 2024, requiring additional segment reporting disclosures [235]. - The Company is classified as an "emerging growth company" and a "smaller reporting company," with annual revenue less than $100 million [240][244]. - The Company may continue to rely on exemptions from certain disclosure requirements as a smaller reporting company [245].
Functional Brands(MEHA) - 2025 Q3 - Quarterly Report