The expected life of the note was based on the remaining contractual term of the instruments. The Company uses the historical volatility of its Common Stock to estimate the future volatility for its Common Stock. The expected dividend yield was based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. The risk-free interest rate was based on rates established by the Federal Reserve Bank.
Consolidated Statement of Operations – Change in fair value on derivative
During the year ended December 31, 2023, the following transactions were recorded in the account “change in fair value on derivative”: (i) as a result of the issuance of convertible notes, the Company recorded derivative liabilities of $(145,067); (ii) the Company viewed the convertible debt derivatives as short term and thus chose to expense the debt discounts associated with the derivative liabilities incurred during this period in the amount of $(29,167); (iii) the changes in the fair value of these derivative liabilities for the year ended December 31, 2023 resulted in a gain of $83,920; and (iv) the Company recorded a gain on debt extinguishment of $38,172 to account for the extinguishment of derivative liabilities associated with the settlement or the conversion of the convertible debt accounted for as a derivative liability.
During the three months ended June 30, 2024, the following transactions were recorded in the account “change in fair value on derivative”: (i) the change in the fair value of these derivative liabilities for the three months ended June 30, 2024 resulted in a loss of $582,472.
20
The details of derivative liability transactions for the period ended June 30, 202 and December 31, 2023 are as follows:
The change in Level 3 financial instrument fair value is as follows:
Balance, December 31, 2022
|
| $102,011
|
Issued during the year ended December 31, 2023
|
| 145,067
|
Derivative liabilities debt discount
|
| 29,167
|
Change in fair value recognized in operations
|
| (83,923)
|
Converted during the year ended December 31, 2023
|
| (38,172)
|
Balance, December 31, 2023
|
| $154,150
|
Issued during the six months ended June 30, 2024
|
| -
|
Derivative liabilities debt discount
|
| -
|
Change in fair value recognized in operations
|
| 582,472
|
Converted during the six months ended June 30, 2024
|
| -
|
Balance, June 30, 2024
|
| $736,623
|
NOTE 9 – INCOME TAXES
The effective income tax rate for the three months ended June 30, 2024 and 2023 differs from the U.S. Federal statutory rate due to the following:
|
| June 2024
|
| June 2023
|
Federal statutory income tax rate
|
| $209,833
|
| $(162,163)
|
Change in valuation allowance
|
| (209,833)
|
| 162,163
|
|
| $-
|
| $-
|
The components of the deferred tax assets and liabilities at June 30, 2024 and 2023 are as follows:
|
| June 2024
|
| June 2023
|
Long-term deferred tax assets:
|
|
|
|
|
Federal net operating loss carryforwards
|
| $209,833
|
| $162,163
|
Valuation allowance
|
| (209,833)
|
| (162,163)
|
Net long-term deferred tax assets
|
| $-
|
| $-
|
NOTE 10 – STOCKHOLDERS’ EQUITY
Authorized Stock
The Company has authorized 75,000,000 common shares with a par value of $0.001 per share. Each common share entitles the holder to one vote on any matter on which action of the stockholders of the corporation is sought. During February 2017, the Company increased the authorized number of shares to 500,000,000. Also, the Company increased the authorized preferred stock to 75,000,000 shares and designated 25,000,000 shares of preferred stock to Series A Convertible Preferred Stock. During January 2018, the Company increased its authorized number of common shares to 1,000,000,000. During April 2018, the Company increased its authorized number of common shares to 2,500,000,000. The Board of Directors, in the future, has the authority to increase the authorized capital up to 4,000,000,000 shares based on shareholder approval. On December 29, 2023 the Company decreased its authorized number of common shares to 50,000,000.
The Company effectuated a reverse stock split of 120-for-1 as of December 29, 2023. Due to the reverse stock split we added 9,802 common stock shares from the fractional shares issued by the DTC.
On October 16, 2017, the Company filed an Amended and Restated Certificate of Designation of the Rights, Preferences, Privileges and Restrictions of the Series A Convertible Preferred Stock (the “Amended Certificate”) with the Secretary of State of the State of Nevada. The Amended Certificate reduces the number of preferred shares designated as Series A Preferred Stock from 25,000,000 shares to 1,333,334 shares. The Amended Certificate also changes the conversion and voting rights of the Series A Preferred Stock. The Series A Preferred Stock is now
21
convertible into the number of shares of our common stock equal to 0.00006% of our outstanding common stock upon conversion. The voting rights of the Series A Preferred Stock are now equal to the number of shares of common stock into which the Series A Preferred Stock may convert.
As of June 30, 2024, there are no outstanding shares of preferred stock. All the preferred stock was converted in common stock on February 4, 2019.
Common Share Issuances
There were no shares issued during the first quarter 2024. During the three months ended June 30, 2024, the Company issued 29,666 shares of common stock for services. 4,166 shares were issued at $6.00 per share while 25,500 shares were issued at $2.20 per share.
During the three months ended March 31, 2023, the Company issued 320,000 shares of common stock for services. These shares were issued at a per share price of $0.05. During the three months ended June 30, 2023, the Company did not issue any shares of common stock. During the three months ended September 30, 2023, the Company issued 9,000,000 shares of common stock for the Restricted Stock Units which were executed. The holders paid the Company $0.01 for each share of common stock and the value of each share was $0.05. There were no shares issued during the fourth quarter 2023.
Warrant Issuances
During the three months ending March 31, 2023, the Company issued 61,846 warrants to 2 unrelated parties at a per share price of $5.6592. On February 2, 2022, the Company issued 16,667 warrants to an individual at a per share price of $6.00. As of December 31, 2023, there were 195,180 warrants outstanding, of which 195,180 warrants are fully vested. As of June 30, 2024, there were 132,680 warrants outstanding, of which 132,680 warrants are fully vested.
|
|
| Weighted-
|
|
|
| Weighted-
| Average
|
|
|
| Average
| Remaining
| Aggregate
|
|
| Exercise
| Contractual
| Intrinsic
|
| Warrants
| Price
| Life (Years)
| Value
|
|
|
|
|
|
Outstanding at December 31, 2023
| 195,180
| $6.72
| 2.26
| $32,678
|
Granted
| -
| -
| -
| -
|
Forfeited
| (62,500)
| 6.00
| -
| -
|
Exercised
| -
| -
| -
| -
|
Outstanding at June 30, 2024
| 132,680
| $7.07
| 2.56
| $-
|
|
|
|
|
|
Vested and expected to vest at June 30, 2024
| 132,680
| $7.07
|
| $-
|
|
|
|
|
|
Exercisable at June 30, 2024
| 132,680
| $7.07
|
| $-
|
At June 30, 2024, the intrinsic value of these stock warrants was $0 as the exercise price of these stock warrants were greater than the market price.
22
Share Conversion Agreements
All of the holders of the Company’s Series A Convertible Preferred Stock (the “Preferred Holders”) entered into a Preferred Stock Conversion Agreement. Pursuant to the Conversion Agreements, the Preferred Holders converted their shares of preferred stock into common stock, effective as of the Exchange. As a result, no shares of the Company’s Series A Convertible Preferred Stock are outstanding. An aggregate of 15,592,986 shares of common stock were issued to the Preferred Holders. The Preferred Holders agreed to convert each share of Series A Convertible Preferred Stock into eighteen (18) shares of common stock and agreed to retire a total of 467,057 shares of Series A Convertible Preferred Stock. The Company cancelled the retired shares.
Omnibus Stock Grant and Option Plan
The following summary of options activity for the six months ended June 30, 2024 is presented below:
|
|
| Weighted-
|
|
|
| Weighted-
| Average
|
|
|
| Average
| Remaining
| Aggregate
|
|
| Exercise
| Contractual
| Intrinsic
|
| Options
| Price
| Life (Years)
| Value
|
|
|
|
|
|
Outstanding at December 31, 2023
| 38,333
| $6.00
| 2.34
| 46,000
|
Granted
| -
| -
| -
| -
|
Forfeited
| -
| -
| -
| -
|
Exercised
| -
| -
| -
| -
|
Outstanding at June 30, 2024
| 38,333
| $6.00
| 1.84
| $-
|
|
|
|
|
|
Vested and expected to vest at June 30, 2024
| 38,333
| $6.00
|
| $-
|
Exercisable at June 30, 2024
| 38,333
| $6.00
|
| $-
|
At June 30, 2024, the intrinsic value of these stock options was $0 as the exercise price of these stock options were greater than the market price.
The following summary of restricted stock units’ activity for the six months ended June 30, 2024 is presented below:
|
|
|
|
| Weighted-
|
|
|
|
|
|
| Weighted-
|
|
|
|
|
|
| Average
|
|
|
|
|
|
| Grant Date
|
|
|
| Shares
|
|
| Fair Value
|
|
|
|
|
|
|
|
|
Non-vested at December 31, 2023
|
|
| 58,958
|
|
|
| 1.20
|
|
Granted
|
|
| -
|
|
|
| -
|
|
Vested
|
|
| -
|
|
|
| -
|
|
Forfeited
|
|
| -
|
|
|
| -
|
|
Non-vested at June 30, 2024
|
|
| 58,958
|
|
|
| 1.20
|
|
As of December 31, 2023, the amount of unvested compensation related to issuances of restricted stock units’ fair value was $423,910. This amount will be amortized and expensed over the life of the contract and will be included in selling, general and administrative expenses in the accompanying consolidation statements of operations.
As of June 30, 2024, the amount of unvested compensation related to issuances of restricted stock units’ fair value was $60,727. This amount will be amortized and expensed over the life of the contract and will be included in selling, general and administrative expenses in the accompanying consolidation statements of operations. At June 30, 2024,
23
the intrinsic value of these restricted stock unit was $76,646 as the exercise price of these RSU’s were less than the market price.
The fair value of share options, units, and warrants are estimated using the Black-Scholes option pricing method based on the following weighted-average assumptions:
|
| Months and Years Ending
|
|
|
| June 30, 2024
|
|
| December 31, 2023
|
|
Risk-free interest rate
|
|
| 5.37
| %
|
|
| 5.18
| %
|
Average expected term (years)
|
|
| 4.7 years
|
|
|
| 4.7 years
|
|
Expected volatility
|
|
| 203
| %
|
|
| 106.5
| %
|
Expected dividend yield
|
|
| -
|
|
|
| -
|
|
NOTE 11 – BUSINESS SEGMENT INFORMATION
As of June 30, 2024, the Company operated in two reportable segments (Corporate and Health Supplements) supported by a corporate group which conducts activities that are non-segment specific. The following table presents selected financial information about the Company’s reportable segments for the quarter ended June 30, 2024.
| CONSOLIDATED
| HEALTH SUPPLEMENTS
| CORPORATE
|
| | BergaMet NA, LLC
| UBN
| |
Revenue
| 1,597,175
| 1,597,175
| -
| -
|
Cost of Revenue
| 702,728
| 702,728
| -
| -
|
Long-lived Assets
| 732,030
| 193,260
| 538,771
| -
|
Gain (Loss) Before Income Tax
| (749,402)
| 185,135
| (320)
| (934,217)
|
Identifiable Assets
| 1,319,622
| 1,319,622
| -
| -
|
Depreciation and Amortization
| (547)
| (547)
| -
| -
|
As of June 30, 2023, the Company operated in two reportable segments (Corporate and Health Supplements) supported by a corporate group which conducts activities that are non-segment specific. The following table presents selected financial information about the Company’s reportable segments for the quarter ended June 30, 2023.
| CONSOLIDATED
| HEALTH SUPPLEMENTS
| CORPORATE
|
| | BergaMet NA, LLC
| UBN
| |
Revenue
| 1,203,427
| 1,203,427
| -
| -
|
Cost of Revenue
| 640,517
| 640,517
| -
| -
|
Long-lived Assets
| 732,030
| 229,304
| 502,727
| -
|
Gain (Loss) Before Income Tax
| (1,846,392)
| (366,435)
| (4,113)
| (1,475,843)
|
Identifiable Assets
| 1,654,206
| 1,654,206
| -
| -
|
Depreciation and Amortization
| 1,098
| 1,098
| -
| -
|
Currently, all of our customers are located in the United States of American and Canada. Our revenues to our customers are not material to our overall total sales. Our largest customers, Natural Grocers and Emerson Ecologics, LLC, account for less than 1% of our total sales in the months ending June 30, 2024 and 2023.
NOTE 12 – SUBSEQUENT EVENTS
The Company evaluated its June 30, 2024 financial statements for subsequent events through August 6, 2024, the date the financial statements were available to be issued.
24
ITEM 2Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
Although the forward-looking statements in this Quarterly Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, its unaudited financial statements and related notes elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.
Overview
We are a platform for acquiring, developing, patenting, marketing, and distributing plant-based nutraceuticals. Our products have not been evaluated by the FDA or any similar regulatory body for safety and efficacy. Our proprietary and patented products target select high-growth categories within the multibillion-dollar nutraceuticals market, such as heart, brain and immune health. Our mission is to acquire or create products with health and performance benefits that have mass consumer appeal.
Guided by this mission, our first two acquisitions formed our current operating subsidiaries, BergaMet NA, LLC, which offers nutraceutical heart and immune health products, and UBN, which offers nutraceutical products for brain health. Based on published research from third-party sources, we believe our BergaMet NA, LLC products have been shown to support heart health, support immune response, and address metabolic syndrome.
Our Financial Condition and Going Concern Issues
As a result of our financial condition, we have received a report from our independent registered public accounting firm for our financial statements for the years ended December 31, 2023 and 2022 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern. From inception (December 19, 2014) through the end of December 31, 2023, we have incurred accumulated net losses of $18,399,673. In order to continue as a going concern, we must effectively balance many factors and generate more revenue so that we can fund our operations from our sales and revenues.
25
If we are not able to do this, we may not be able to continue as an operating company. At our current revenue and burn rate, we have an immediate cash need, and thus we must raise capital by issuing debt or through the sale of our stock. However, there is no assurance that our existing cash flow will be adequate to satisfy our existing operating expenses and capital requirements.
Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023
Introduction
We had revenues of $908,389 and $1,597,175 for the three and six months ended June 30, 2024, compared to $588,484 and $1,203,427 for the three and six months ended June 30, 2023. Our cost of revenue for the three and six months ended June 30, 2024 were $422,301 and $702,728, compared to $303,415 and $640,517 for the three and six months ended June 30, 2023.
Our operating expenses were $497,996 and $968,427 for the three and six months ended June 30, 2024, compared to $1,540,942 and $2,223,972 for the three and six months ended June 30, 2023. Our operating expenses consisted entirely of general and administrative expenses.
Our net income (loss) was $113,500 and $(747,758) for the three and six months ended June 30, 2024, compared to $(1,267,235) and $(1,846,392) for the three and six months ended June 30, 2023.
Revenues and Net Operating Loss
Our revenue, operating expenses, other income (expense), and net loss for the three and six months ended June 30, 2024 and 2023 were as follows:
|
| Three Months
Ended
|
| Three Months
Ended
|
| Six Monts
Ended
|
| Six Months
Ended
|
|
| June 30,
|
| June 30,
|
| June 30,
|
| June 30,
|
|
| 2024
|
| 2023
|
| 2024
|
| 2023
|
|
|
|
|
|
|
|
|
|
Revenue
| $
| 908,389
| $
| 588,484
| $
| 1,597,175
| $
| 1,203,427
|
|
|
|
|
|
|
|
|
|
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 expenses, 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)
|
Gain on sale of asset
|
| -
|
| -
|
| -
|
| -
|
Total other income (expense)
|
| 125,408
|
| (11,362)
|
| (673,777)
|
| (185,331)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
| $
| 113,500
| $
| (1,267,235)
| $
| (747,758
| $
| (1,846,392)
|
Revenues
We had revenues of $908,389 and $1,597,175 for the three and six months ended June 30, 2024, compared to $588,484 and $1,203,427 for the three and six months ended June 30, 2023, an increase of
26
$319,905, or 54%, and $393,748, or 33%, respectively. We expect strong growth to increase as our direct consumer sales and marketing efforts continue to perform.
Cost of Revenue
Our cost of revenue for the three and six months ended June 30, 2024 were $422,301 and $702,728, compared to $303,415 and $640,517 for the three and six months ended June 30, 2023, an increase of $118,886, or 39%, and $62,212, or 10%, respectively. Gross profit for the three and six months ended June 30, 2024 was $486,088 and $894,446, compared to $285,069 and $562,911 for the three and six months ended June, 30, 2023, an increase of $201,019, or 71%, and $331,536, or 59%, respectively.
Cost of revenue as a percentage of revenues was 46% and 44% for the three and six months ended June 30, 2024, compared to 52% and 53% for the three and six months ended June 30, 2023. The reduced cost as a percentage of revenues was due to efficiencies as a result of increased revenue.
General and Administrative
Our general and administrative expenses were $497,996 and $968,427 for the three and six months ended June 30, 2024, compared to $1,540,942 and $2,223,972 for the three and six months ended June 30, 2023, a decrease of $1,042,947, or 68%, and $1,255,545, or 56%, respectively. In the three months ended June 30, 2024, general and administrative expenses consisted mainly of advertising of $172,118, consulting fees of $94,500, stock-based compensation $74,854, salaries and wages of $51,476.88 and accounting and legal fees of $41,778.50. In the three months ended June 30, 2023, general and administrative expenses consisted mainly of consulting fees of $766,405, stock-based compensation $432,047, advertising of $168,148, accounting and legal fees of $30,883, and salary and wages of $36,813. During the three months ended June 30, 2023, part of the increase in costs were due to a catch up of stock compensation that occurred. Additionally, some of the incremental costs of the Company’s uplist have not been deferred and have been included.
Other Income (Expense)
Other income (expense) was $125,408 and $(673,777) for the three and six months ended June 30, 2024, compared to $(11,362) and $(185,331) for the three and six months ended June 30, 2023, an increase of $136,770, or 1,200%, and a decrease of 488,447, or 264%, respectively. In the six months ended June 30, 2024, other income (expense) consisted of interest expense, net of interest income $(91,305) and change in fair value on derivative of $(582,472). In the six months ended June 30, 2023, other income (expense) consisted of interest expenses, net of interest income of $(114,272) and change in fair value on derivative of $(71,058). In the three months ended June 30, 2024, other income (expense) consisted of interest expense, net of interest income ($48,748) and change in fair value on derivative of $174,156. In the three months ended June 30, 2023, other income (expense) consisted of interest expense, net of interest income of $(25,212) and change in fair value on derivative of $13,850. Change in fair value of derivative was related to the conversion of convertible debts into common stock shares.
27
Net Income (Loss)
Net income (loss) was $113,500 and $(747,758), or $0.04 and $(0.25) per share, for the three and six months ended June 30, 2024, compared to $(1,267,235) and $(1,846,392), or $(0.44) and $(0.64) per share, for the three and six months ended June 30, 2023.
Our net income (loss) varies from period to period primarily because of the change in fair value on derivative and our increase in general and administrative expenses.
Liquidity and Capital Resources
Introduction
During the three and six months ended June 30, 2024, we had positive operating cash flows. Our cash on hand as of December 31, 2023 was $19,441 and as of June 30, 2024 was $148,231. While we had positive net cash from operations for the three and six months ended June 30, 2024, our monthly cash flow burn rate for the year ended December 31, 2023 was $35,000. We have both short- and medium-term cash needs. We anticipate that these needs will be satisfied through increased revenues and the issuance of debt or the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.
Our cash, current assets, total assets, current liabilities, and total liabilities as of June 30, 2024, and December 31, 2023, respectively, are as follows:
| June 30,
|
| December 31,
|
| Increase/
|
| 2024
|
| 2023
|
| (Decrease)
|
|
|
|
|
|
|
Cash
| $
| 148,231
|
| $
| 19,441
|
| $
| 128,790
|
Total Current Assets
| 1,748,764
|
|
| 1,899,678
|
| (150,914)
|
Total Assets
| 2,484,646
|
|
| 2,635,014
|
| (150,368)
|
Total Current and Total Liabilities
| 2,084,646
|
|
| 1,680,424
|
| 404,222
|
Our total current assets and total assets decreased slightly during the six months ended June 30, 2024, primarily as a result of our decrease in inventory of $306,661, offset in part by an increase in cash of $128,790. Our accumulated deficit increased during the six months ended June 30, 2024, by $747,758 to $19,147,431.
In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.
Cash Requirements
Our cash on hand as of June 30, 2024 was $148,231. Based on our current level of revenues and monthly burn rate for 2023 of approximately $35,000 per month, we will need to continue to fund operations by raising capital from the sale of our stock and debt financings.
28
Sources and Uses of Cash
Operating Activities
We had net cash from operating activities of $187,809 for the six months ended June 30, 2024, compared to net cash used in operating activities of $(403,493) for the six months ended June 30, 2023. We use our cash for normal business operations. Our net cash from operating activities for the six months ended June 30, 2024, consisted of our net loss of $747,758, offset in part by our change in fair value on derivative liability of $582,472 and our decrease in inventory of $306,661. Our net cash used in operating activities for the six months ended June 30, 2023, consisted of our net loss of $1,846,392, offset in part by our warrants issued for services of $1,148,857, and increase in inventory of $354,503.
Investing Activities
We had zero cash flows provided by investing activities for the six months ended June 30, 2024 and 2023.
Financing Activities
Our net cash provided by financing activities for the six months ended June 30, 2024 was $(59,019), compared to $430,342 for the six months ended June 30, 2023. Our net cash provided by financing activities consisted of proceeds from the issuance of notes payable of $120,669 and proceeds from the issuance of notes payable related party of $95,000, offset by repayment of notes payable of $300,614.
ITEM 3Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 4Controls and Procedures
(a)Disclosure Controls and Procedures
We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of March 31, 2024, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2024, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in our Annual Report on Internal Control Over Financial Reporting filed in our Annual Report on Form 10-K.
Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all errors and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well
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conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
(b)Changes in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report, the three-month period ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1Legal Proceedings
There are no updates to the disclosure of legal proceedings in our Annual Report on Form 10-K.
In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. 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. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.
ITEM 1ARisk Factors
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 2Unregistered Sales of Equity Securities and Use of Proceeds
On May 30, 2024 and May 7, 2024, we issued 4,166 and 25,500 shares of common stock for services rendered. The issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the shareholders were sophisticated.
Other than as set forth above, there have been no events which are required to be reported under this Item.
ITEM 3Defaults Upon Senior Securities
There have been no events which are required to be reported under this Item.
ITEM 4Mine Safety Disclosures
Not applicable.
ITEM 5Other Information
None.
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ITEM 6Exhibits
(a)Exhibits
(1)
| Incorporated by reference from our Registration Statement on Form S-1 filed with the Commission on August 28, 2023.
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(2)
| Incorporated by reference from our Annual Report on Form 10-K filed with the Commission on August 3, 2021.
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(3)
| Incorporated by reference from our Current Report on Form 8-K filed with the Commission on December 29, 2023.
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(4)
| Incorporated by reference from our Registration Statement on Form S-1 filed with the Commission on March 6, 2015.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Healthy Extracts Inc.
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Dated: August 14, 2024
| /s/ Kevin “Duke” Pitts
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| By:Kevin “Duke” Pitts
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| Its:President
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