Strong Subscription-Based Revenue Growth and Third Sequential Positive Cash Flow Quarter
LAS VEGAS, NV / ACCESSWIRE / August 14, 2024 / Healthy Extracts Inc. (OTCQB:HYEX), a platform for acquiring, developing, patenting, marketing, and distributing plant-based nutraceuticals that target select high-growth categories within the multibillion-dollar nutraceuticals market, reported results for the three and six months ended June 30, 2024. All comparisons are to the same year-ago period unless otherwise noted.
Q2 2024 Financial Highlights
Net revenue increased 54% to a record $908,000, driven primarily by distribution channel expansion, particularly wholesale, and growth in subscription-based revenue.
Gross profit increased 71% to $486,000 with gross margin up 510 basis points to 53.5% due to manufacturing efficiency and product mix.
Achieved third sequential positive cash flow quarter, generating approximately $80,000 in the quarter.
Operating expenses decreased 68% to $498,000 in the quarter.
Net income of $113,500 or $0.04 per basic and diluted share.
Amazon "Subscribe & Save" customers at June 30, 2024 increased 70% year-over-year to a record number of subscribers. Direct-to-consumer subscription customers (excluding Amazon) at June 30, 2024 increased 26% year-over-year. Subscription growth helps reduce customer acquisition costs, increases traction, and provides greater visibility into future revenue.
Management Commentary
"In Q2, our record-breaking top-line growth, margin expansion, and improved cash flow were driven by strong gains in both direct-to-consumer and wholesale sales," stated Healthy Extracts President, Duke Pitts. "Even aside from wholesale that was unusually high for the quarter, we surpassed our earlier stated expectations for the quarter, reflecting growing momentum with our target retail customers.
"During the quarter we also strengthened our financial foundation, reducing debt by more than $108,000 while simultaneously increasing our cash reserves. In fact, our debt restructuring and streamlining in Q2 resulted in an additional $15,000 per month in positive cash flow. As a result, we achieved our third consecutive quarter of positive cash flow, generating approximately $80,000. We are planning to reinvest this cash flow into further expanding our product offerings and revenue streams, including the valuable recurring revenue from product subscriptions.
"For our Amazon "Subscribe & Save" offers, we generated record sales on Amazon in July, primarily as a result of our sales and marketing efforts during Prime Day. We expect Amazon sales to continue to be strong in the coming months.
"Given our success with the Amazon "Subscribe and Save" offer, in July we replaced our traditional buy-2-get-1 offers on our DTC eCommerce website with a 20% discount for subscribing to monthly shipments. We expect this move to increase sales and margins, as well as the lifetime value of our customers. In fact, the new offer has been well received, generating a significant increase in overall subscriber growth during the first several weeks.
"Looking ahead, we anticipate continued strong performance in top-line growth, increased cash flow, profitability, and market share expansion as our addressable markets strengthen. This growth will be largely driven by the launch of new products that will benefit from the broad market channels we have strategically developed and invested in over the past several years. These investments have proven to be the most effective way to create significant shareholder value, and this will continue to be our top priority."
2024 Financial Outlook
For the remainder of 2024, the company anticipates continued growth with new product introductions laying a path for higher profits excluding non-cash transactions.
2024 Product Outlook
Healthy Extracts' top brand ambassador and renowned fitness expert, Whitney Johns, is preparing to launch WHITNEY JOHNS? NUTRITION on-the-go gel packs for COLLAGEN (anti-aging) in the second half of 2024. These products will be based on Healthy Extracts' exclusive oral delivery system and proprietary formulations.
The company is also planning to launch in the second half of 2024 its new BergaMet MYNUS sugar blocker, which is specially formulated to reduce up to 42% of the sugar impact from meals. The MYNUS on-the-go gel-packs will be made available under the company's exclusive U.S. and Canadian licensing and manufacturing agreement with Gelteq.
Q2 2024 Financial Summary
Net revenue in the second quarter of 2024 increased 54% to $908,000 from $588,000 in the same year-ago quarter, primarily due to distribution channel expansion and to a lesser extent the growth in subscription-based revenue.
Gross profit totaled $486,000 or 53.5% of net revenue as compared to $285,000 or 48.4% of net revenue in the same year-ago quarter. The increase in gross margin was a result of manufacturing efficiency and product mix.
Operating expenses decreased 68% to $498,000 as compared to $1.5 million in the same year-ago quarter. The decrease in operating expenses was primarily due to one-time expenses in the year-ago quarter related to the company's planned uplist to Nasdaq and issuance of options and warrants that did not reoccur in the second quarter of 2024, and to a lesser extent the reduction in general operating expense in the second quarter of 2024.
Net income totaled $113,500 or $0.04 per basic and diluted share, as compared to a net loss of $1.3 million or $(0.44) per basic and diluted share in the same year-ago period, with the improvement primarily due to the decreased expenses and a change in the fair value of derivative expense.
Excluding costs related to the company's planned acquisition and public offering expenses, regulatory expense, stock-based compensation expense, change in fair value of derivative expense and interest expense, net income in the second quarter of 2024 totaled $37,000 or $0.01 per basic and diluted share.
First Half 2024 Financial Summary
Net revenue in the second half of 2024 increased 33% to $1.6 million from $1.2 million in the same year-ago period, primarily due to product line and distribution channel expansion.
Gross profit totaled $894,000 or 56.0% of net revenue as compared to $563,000 or 46.8% of net revenue in the same year-ago period. The increase in gross margin was a result of product mix sold, and the decrease in manufacturing and freight costs.
Operating expenses decreased 56% to $968,000 compared to the same year-ago period. The decrease in operating expenses was primarily due to one-time expenses in the same year-ago period related to the company's planned uplist to Nasdaq and the issuance of options and warrants that did not reoccur in the first half of 2024, and to a lesser extent the reduction in general operating expense in the first half of 2024.
Net loss for the first half of 2024 totaled $0.7 million or $(0.25) per basic and diluted share, as compared to $1.8 million or $(0.64) per basic and diluted share. The improvement in net loss was primarily due to the same factors in the second quarter of 2024.
Excluding costs related to the company's planned acquisition and public offering expenses, regulatory expense, stock compensation expense, change in fair value on derivative expense and interest expense, net income totaled $25,000 or $0.01 per basic and diluted share.
About Healthy Extracts "Live Life Young Again"
Healthy Extracts Inc.is a platform for acquiring, developing, researching, patenting, marketing, and distributing plant-based nutraceuticals.
The company's subsidiaries, BergametNA? and Ultimate Brain Nutrients? (UBN), offer nutraceutical natural heart and brain health supplements. This includes the only heart health supplement distributed in North America containing Citrus Bergamot SuperFruit?. This superfruit has the highest known concentration of polyphenols and flavonoids.
UBN's KETONOMICS? proprietary formulations, which have been designed to enhance brain activity, focus, headache and cognitive behavior, provide many sales and intellectual property licensing opportunities.
All statements other than statements of historical facts included in this press release are "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include our expectations and those statements that use forward-looking words such as "projected," "expect," "possibility" and "anticipate." The achievement or success of the matters covered by such forward-looking statements involve significant risks, uncertainties and assumptions. Actual results could differ materially from current projections or implied results. Investors should read the risk factors set forth in the Company's Annual Report on Form 10-K filed with the SEC on April 1, 2024, and future periodic reports filed with the SEC. All of the Company's forward-looking statements are expressly qualified by all such risk factors and other cautionary statements. The Company cautions that statements and assumptions made in this news release constitute forward-looking statements and make no guarantee of future performance. Forward-looking statements are based on estimates and opinions of management at the time statements are made. The information set forth herein speaks only as of the date hereof. The Company and its management undertake no obligation to revise these statements following the date of this news release.
Food & Drug Administration Disclosure
The product and formulation featured in this release is not for use by or sale to persons under the age of 12. This product should be used only as directed on the label. Consult with a physician before use if you have a serious medical condition or use prescription medications. A doctor's advice should be sought before using this and any supplemental dietary product. These statements have not been evaluated by the FDA. This product is not intended to diagnose, treat, cure or prevent any disease.
BergametNA?, Ultimate Brain Nutrients?, UBN?, Citrus Bergamot SuperFruit? and F4T? are registered trademarks of Healthy Extracts Inc.?
Company Contact
Duke Pitts, President Healthy Extracts Inc. Tel (720) 463-1004 Email contact
Investor Contact
Ronald Both CMA Investor Relations Tel (949) 432-7566 Email contact
HEALTHY EXTRACTS, INC. CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2024 AND DECEMBER 31, 2023 (Unaudited)
JUNE 30
DECEMBER 31,
2024
2023
ASSETS
CURRENT ASSETS
Cash
$
148,231
$
19,441
Accounts receivable
90,560
30,440
Inventory, net
1,319,622
1,626,283
Offering costs
149,274
151,931
Right of use asset, net
41,077
71,583
Total current assets
1,748,764
1,899,678
Fixed assets
3,852
3,306
Patents/Trademarks
521,881
521,881
Deposit
16,890
16,890
Goodwill
193,260
193,260
Total other assets
735,883
735,336
TOTAL ASSETS
$
2,484,646
$
2,635,014
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable
$
54,020
$
116,842
Accrued liabilities
188,593
215,069
Lease liabilities - current
42,745
65,229
Lease liabilities - long-term
-
9,222
Notes payable
214,424
361,093
Notes payable - related party
178,366
83,366
Convertible debt, net of discount
601,251
608,601
Accrued interest payable
55,428
64,386
Accrued interest payable - related party
13,198
2,465
Derivative liabilities
736,623
154,150
Total current and total liabilities
2,084,646
1,680,424
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 75,000,000 shares authorized, none and none shares issued and outstanding, respectively
-
-
Common stock, $0.001 par value, 50,000,000 shares authorized, 2,993,572 shares issued and outstanding as of June 30, 2024, and 2,954,104 shares issued and outstanding as of December 31, 2023, respectively
354,532
354,492
Additional paid-in capital
19,192,899
18,999,770
Accumulated deficit
(19,147,431
)
(18,399,673
)
Total stockholders' equity
400,000
954,590
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
2,484,646
$
2,635,014
HEALTHY EXTRACTS, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDING JUNE 30, 2024 AND 2023 (Unaudited)
FOR THE 3 MONTH ENDING
FOR THE SIX MONTHS ENDING
JUNE 30
JUNE 30
2024
2023
2024
2023
REVENUE
Revenue
$
908,389
$
588,484
$
1,597,175
$
1,203,427
Net revenue
908,389
588,484
1,597,175
1,203,427
COST OF REVENUE
Cost of goods sold
422,301
303,415
702,728
640,517
Total cost of revenue
422,301
303,415
702,728
640,517
GROSS PROFIT
486,088
285,069
894,446
562,911
OPERATING EXPENSES
General and administrative
497,996
1,540,942
968,427
2,223,972
Total operating expenses
497,996
1,540,942
968,427
2,223,972
OTHER INCOME (EXPENSE)
Interest expense, net of interest income
(48,748
)
(25,212
)
(91,305
)
(114,272
)
Change in fair value on derivative
174,156
13,850
(582,472
)
(71,058
)
Total other income (expense)
125,408
(11,362
)
(673,777
)
(185,331
)
Net income/(loss) before income tax provision
113,500
(1,267,235
)
(747,758
)
(1,846,392
)
NET INCOME/(LOSS)
$
113,500
$
(1,267,235
)
$
(747,758
)
$
(1,846,392
)
Income/(Loss) per share - basic and diluted
$
0.04
$
(0.44
)
$
(0.25
)
$
(0.64
)
Weighted average number of shares outstanding - basic and diluted
2,967,281
2,878,146
2,967,281
2,878,629
HEALTHY EXTRACTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
FOR THE SIX MONTH ENDING
JUNE 30
2024
2023
Cash Flows from Operating Activities:
Net Income/(Loss)
$
(747,758
)
$
(1,846,392
)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization
(547
)
1,098
Warrants issued for services
193,168
1,148,857
Change in fair value on derivative liability
582,472
71,058
Changes in operating assets and liabilities:
Accounts receivable
(60,120
)
(9,106
)
Inventory
306,661
354,503
Offering Costs
2,657
-
Cost in acquisition of Hyperion/OP&M
-
(65,617
)
Right of use asset, net
30,506
(100,623
)
Note receivable
-
(34,500
)
Accounts payable
(62,822
)
21,011
Accrued liabilities
(26,476
)
(65,883
)
Accrued interest payable
(8,958
)
18,555
Accrued interest payable - related party
10,732
-
Lease liability - current
(22,484
)
56,139
Lease liability - long-term
(9,222
)
47,409
Net Cash used in Operating Activities
187,809
(403,493
)
Cash Flows from Investing Activities:
Purchase of fixed assets
-
-
Gain on sale of asset
-
-
Cash flows provided by (used in) Investing Activities:
-
-
Cash Flows from Financing Activities:
Proceeds from issuance of common stock
(0
)
-
Proceeds from issuance of convertible debt
25,926
350,000
Proceeds from issuance of noted payable
120,669
431,000
Proceeds from issuance of noted payable - related party
