Overview

We are a provider of consumer health care, beauty, and lifestyle products. Our current brand portfolio consists of two core brands: FOCUSfactor, a clinically-tested brain health supplement that has been shown to improve memory, concentration and focus, and Flat Tummy, a lifestyle brand that provides a suite of nutritional products to help women achieve their weight management goals.

Our management’s discussion and analysis of our financial condition and results of operations are based on our current business and should be read in conjunction with our unaudited interim condensed consolidated financial statements and audited consolidated financial statements and accompanying notes. Key factors affecting our results of operations include revenues, cost of revenue, operating expenses and income and taxation.

Non-GAAP Financial Measures

We currently focus on EBITDA to evaluate our business relationships and our resulting operating performance and financial position. EBITDA is defined as net income plus interest expense, income tax expense, depreciation and amortization.

We believe that EBITDA, viewed in addition to, and not in lieu of, our reported results in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), provides useful information to investors.

EBITDA is considered a non-GAAP financial measure and our definition of EBITDA might not be comparable to similarly titled measures reported by other companies.

Results of Operations for the Years Ended December 31, 2024 and December 31, 2023

During both 2024 and 2023, we focused on developing our currently owned brands into new markets and by product extensions.

Revenue

For the year ended December 31, 2024, we had revenues of $34,834,243 from sales of our products, as compared to revenue of $42,777,633 for the year ended December 31, 2023. This is comprised of the following categories:

For the year ended December 31, 2024, our Nutraceuticals revenue consisted of $30,798,145 from our FOCUSfactor brand and $4,019,188 from our Flat Tummy brand, as compared to $37,202,521 and $5,550,531, respectively, for the year ended December 31, 2023.

The decrease in our Nutraceutical category was due to undertaking a rebranding and packaging upgrade for FOCUSfactor that resulted in customers selling through their existing inventory before bringing in the new packaging. The decrease in the Consumer Goods category is due to normalization of business after the 2019 launch of our online application.

Cost of Sales

For the year ended December 31, 2024, our cost of sales was $11,191,224. Our cost of sales for the year ended December 31, 2023 was $10,697,323. The increase in cost of sales was primarily due to a settlement with a supplier in 2023 resulting in a reduction in cost of sales for 2023.

Gross Profit

Gross profit was $23,643,019, or 68% of revenue for the year ended December 31, 2024, as compared to gross profit of $32,080,310 or 75% of revenue for the same period in 2023, a decrease of $8,437,291 or 26%. The decrease in gross profit is largely related to the decrease in net sales due to the rebranding of FOCUSfactor.

Operating Expenses

Selling and Marketing Expenses

For the year ended December 31, 2024, our selling and marketing expenses were $12,991,431 as compared to $15,188,528 for the year ended December 31, 2023. The decrease is due to management of expenses.

General and Administrative Expenses

For the year ended December 31, 2024, our general and administrative expenses were $4,717,006. For the year ended December 31, 2023, our general and administrative expenses were $6,051,703. The decrease is largely due to management of expenses.

Depreciation and Amortization Expenses

For the year ended December 31, 2024, our depreciation and amortization expenses were $133,334 as compared to $33,333 for the year ended December 31, 2023. The increase is due to full year of amortization on license fee during 2024.

Other Income and Expenses

The increase in other income in 2024 is related to Employee Retention Credits and an insurance claim on stolen goods. The decrease in interest expense in 2024 was due to reduction in interest rate upon loan consolidation.

Income tax expense

For the year ended December 31, 2024, we incurred income tax expense of $102,085. For the year ended December 31, 2023 we incurred income tax expense of $234,980. The decrease in 2024 relates to estimated future taxes.

Net Income

For the year ended December 31, 2024, our net income was $2,124,976. For the year ended December 31, 2023 our net income was $6,338,750. This decrease was due to lower revenue due to undertaking a rebranding and packaging upgrade for FOCUSfactor that resulted in customers selling through their existing inventory before bringing in the new packaging.

Liquidity and Capital Resources

Overview

As of December 31, 2024, we had $687,920 cash on hand and restricted cash of $100,000 which is held for credit card collateral.

In connection with preparing consolidated financial statements for the year ended December 31, 2024, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the consolidated financial statements are issued.

The Company considered the following:

• At December 31, 2024, the Company had an accumulated deficit of $44,099,813.
• At December 31, 2024, the Company had a working capital deficit of $1,124,601.
• At December 31, 2024, the Company had a decrease in net revenue of $7,943,390.
• At December 31, 2024, the Company had a decrease in net income of $4,213,774.
• At December 31, 2024, the Company used $4,803,390 in operating activities.

Management concluded that the above factors alleviate doubts about the Company’s ability to generate enough cash from operations and other available sources to satisfy its obligations for the next twelve months from the issuance date.

Short- and Long-Term Borrowings

The Company has various short-term and long-term borrowing arrangements, including loans from related parties, Shopify Capital, and other lenders. The Company has consolidated and restructured its debt over time, with the most recent amendments occurring in 2024. As of the date of this filing, the Company is in compliance with all of the terms, conditions and covenants associated with the loan agreements.

Approximately $13.3 million of the Company’s outstanding indebtedness comes due in the year ending December 31, 2025, and approximately $15.8 million comes due in the year ending December 31, 2026. The Company is currently working on refinancing its debt obligations.

Operating Activities

For the year ended December 31, 2024, the Company had net cash used in operating activities of $4,803,390 as compared to $421,729 of net cash provided by operating activities for the year ended December 31, 2023. The decrease was primarily due to increases in accounts receivable and prepaid expenses and a decrease of accounts payable and accrued liabilities.

Investing Activities

For the years ended December 31, 2024 and 2023, the Company used net cash of $0 in investing activities.

Financing Activities

For the year ended December 31, 2024, net cash provided by financing activities was $4,804,086, as compared to $2,090,782 used in financing activities for the year ended December 31, 2023. The increase was attributable to the issuance of common stock offset by repayment on notes payable.

Key Near-Term Initiatives

During 2025, the Company intends to organically grow its current product lines by developing and launching new products and expanding into new markets. Specifically, for FOCUSfactor, the Company is working on increased distribution for its recently launched ready-to-drink beverage. The Company also intends to grow further through additional strategic acquisitions.

Off-Balance Sheet Arrangements

During the years ended December 31, 2024 and 2023, the Company had no off-balance sheet arrangements.

Inflation

The effect of inflation on the Company’s operating results was not significant in the years ended December 31, 2024 and 2023.

Critical Accounting Policies

The Company’s critical accounting policies include the use of estimates, revenue recognition, contract liabilities, income taxes, and the effect of exchange rates on results.