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Healthy Extracts Reports Record Second Quarter 2022, Net Revenue up 93% with Strong Subscription-Based Revenue Growth

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Healthy Extracts Inc. (OTCQB: HYEX) reported a 93% increase in Q2 2022 net revenue, totaling $470,000, a record high. Subscription customers grew 51%, boosting subscription revenue by 52%. Despite a 31% increase in gross profit to $274,000, gross margin fell to 58% from 86% due to a one-time inventory write-down. The company expanded into retail with over 160 Natural Grocers stores and launched new products. The net loss was $859,000, up from $558,000 in the prior year. Cash increased to $159,000.

Positive
  • Q2 2022 net revenue up 93% to $470,000, a record.
  • Subscription-based revenue increased by 52%, reducing customer acquisition costs.
  • Entry into traditional retail with over 160 Natural Grocers stores.
Negative
  • Gross margin decreased to 58% from 86% due to a one-time write-down.
  • Operating expenses increased significantly to $888,000, up from $465,000.
  • Net loss widened to $859,000 from $558,000 in the previous year.

LAS VEGAS, Aug. 15, 2022 (GLOBE NEWSWIRE) -- Healthy Extracts Inc. (OTCQB: HYEX), a leading innovator of clinically proven plant-based products for heart and brain health, reported results for the second quarter ended June 30, 2022. All comparisons are to the same year-ago period unless otherwise noted.

Q2 2022 Financial Highlights

  • Net revenue totaled $470,000, up 93%—a Q2 record that keeps full year outlook on track for revenue to exceed $3 million.
  • Gross profit totaled $274,000, up 31%.
  • Gross margin was 58% as compared to 86% in the second quarter of 2021. The decrease in gross margin was due to a one-time write-down of certain inventory.
  • Subscription customers at June 30, 20222 increased 51% versus June 30, 2021, driving 52% increase in subscription-based revenue for the second quarter of 2022. The growth in subscription revenue helps reduce customer acquisition costs and provides greater visibility into future revenue.

First Half 2022 Financial Highlights

  • Net revenue totaled $933,000, up 125%.
  • Subscription-based revenue increase 51%.
  • Gross profit totaled $599,000, up 77%.
  • Gross margin was 64% as compared to 82% in the first half of 2021.

Q2 Operational Highlights

  • Entered traditional retail marketplace with the launch of company’s clinically-proven brain health products through more than 160 Natural Grocers® Stores nationwide (operated by NYSE-traded Vitamin Cottage Natural Food Markets).
  • Company’s top brand influencer and renowned fitness expert, Whitney Johns, launched her new line of natural health products available to order today from whitneyjohns.com and the Whitney Johns Nutrition Amazon Store. The WHITNEY JOHNS™ line of BRAIN ACTIVATE™, ACTIVE™, and WOMEN’S HORMONE SUPPORT™ products are based on Healthy Extracts’ proven all-natural Citrus Bergamot SuperFruit™ and Ultimate Brain Nutrients™ formulations.
  • Reported that a key ingredient in WHITNEY JOHNS ACTIVE formulation has been clinically proven to increase nitric oxide by 73% and oxygen consumption (VO2 max) by 24%, thereby enhancing physical performance and the benefits of exercise.
  • Introduced Brain Activate – Gel™, a unique proprietary gel pack formulation available to order today exclusively from whitneyjohns.com. The gel-pack technology is provided by Gelteq, a global leader in ingestible gel technology, under an exclusive U.S. and Canada licensing and manufacturing agreement to create and sell natural ingestible gels that contain Citrus Bergamot or Healthy Extracts’ Ultimate Brain Nutrients™ ingredients.
  • Launched Citrus Bergamot SuperFruit™ formulations on Walmart.com, which includes CLINICAL IMMUNE™, HER HEART™, CHOLESTEROL COMMAND™, PRO+™, SPORTS HEART™ and MEGA+O™. All are vegan friendly, non-GMO, gluten-free, naturally sourced and made and tested in certified U.S. facilities.
  • Published clinical study highlighting UBN RELIEF’s ability to naturally reduce the number and duration of migraine episodes for chronic migraine sufferers.

Management Commentary

“We made strong operational and financial progress in Q2,” commented Duke Pitts, president of Healthy Extracts. “We grew our topline to a record for a second quarter while expanding our sales channels and portfolio of proprietary, clinically-proven natural formulations for heart and brain health.

“We believe we are well positioned with our existing inventory of product ingredients to support continued growth throughout the rest of the year. We had anticipated potential supply chain issues regarding product price increases and were able to proactively prepare for such challenges. Further, our operational model affords us the flexibility to help offset higher freight cost with price adjustments. Also, now that our launch costs associated with products introduced in the quarter like Brain Activate – Gel, and launching products on Walmart.com and Amazon.com, are now behind us, we can now focus on reducing manufacturing costs. As a result, we expect our gross margins to increase in the second half of the year.

“During the quarter, the official launch of our brand influencer program featuring Whitney Johns opened a new major sales channel for our patented formations. Backed by Whitney’s tremendous personal endorsement and brand marketing strength, we see her new product line greatly elevating our social engagement, strengthening our brand identity, and supporting our ongoing market expansion.

“As the nation’s largest online marketplace, we see our new presence on Amazon.com driving strong sales growth, elevating consumer awareness and creating positive reviews of this new Whitney Johns line as it has with our other products. Amazon.com is a key part of our multi-channel approach that has been showing great results, particularly with Amazon’s convenient ‘Subscribe and Save’ option.

“We see popular brand influencers like Whitney helping us to reach millions of new consumers directly through their online presence as well as through new prime shelf placements at major retailers nationwide.

“In Q2, we announced the entry of Healthy Extracts’ natural formulations for brain health into the retail marketplace through Natural Grocers stores. This relationship broadened our sales channels by adding a major national grocer and opened a key new revenue stream. Natural Grocers’ acclaimed high standards for natural and organic products represent a tremendous validation of our plant-based formulations for brain health and builds additional trust to consumers.

“We are providing educational support to Natural Grocers floor staff members so that they can become knowledgeable about ACTIVATE and RELIEF and their clinically proven benefits. We expect to generate revenue from this new channel in the current quarter with marketing starting in September.

“In July, we launched a new clinical study investigating UBN ACTIVATE’s effect on golfers’ energy, focus and scores. We anticipate positive results from this observational trial of the effect of ACTIVATE on golf performance. We see many B2B opportunities with major golf companies that would be interested in an all-natural supplement that could give golfers an edge in their game. We also anticipate attracting golfers under our brand influencer program and where we can secure key product endorsements.

“We recently launched our premium Citrus Bergamot SuperFruit™ heart health supplement, BergaMet PRO+™, on Fullscript.com, the nation’s leading care delivery platform for integrative medicine. This launch dramatically expands our reach to healthcare practitioners and their millions of patients across the country. It is also strong validation of the clinically proven benefits of BergaMet PRO+ for heart health. We lead the competition with BergaMet PRO+ having 47% BPF Gold potency as compared to the closest competitor at only 38% BPF.

“As a company focused on brain, heart and soon also gut health, we plan to leverage our relationship with Gelteq to launch additional gel products that will be like no other in the world. This will include a Whitney Johns gut health gel pack as well as a new gel pack option for our Ultimate Brain Nutrients RELIEF™. RELIEF is our proprietary, patent-pending natural formulation that provides relief from symptoms often associated with migraine headaches. We also plan to launch a number of proprietary-formulated caffeine-based gel products. We expect to launch these new gel products in the second half of this year. We are also planning to grow our product portfolio through the strategic acquisition of companies that fit our platform and can benefit from our marketing strength.

“Looking at the second half of this year, we expect our expanding distribution channels to further elevate consumer awareness of our brands, with this continuing to drive strong year-over-year sales growth.”

Q2 Financial Summary

Net revenue in the second quarter of 2022 increased 93% to $470,000 from $244,000 in the same year-ago quarter.

Gross profit totaled $274,000 or 58.4% of net revenue as compared to $210,000 or 86.2% of revenue in the same year-ago quarter.

Operating expenses increased to $888,000 compared to $465,000 in the same year-ago quarter. The increase in operating expenses was due to increased general and administrative expenses. This included non-cash-based compensation of $466,000.

Net loss totaled $859,000 or $(0.00) per basic and diluted share compared to a net loss of $558,000 or $(0.00) per basic and diluted share in the same year-ago period. The second quarter of 2022 included a change in fair value on derivative of $221,000. After giving effect to the change of derivative and non-cash-based compensation, on a proforma basis net loss was $172,000.

Cash totaled $159,000 as of June 30, 2022, as compared to $92,000 on March 31, 2022. The increase in cash was due to proceeds from the issuance of convertible debt and the issuance of common stock.

First Half 2022 Financial Summary

Net revenue in the first half of 2022 increased 125% to $933,000 from $414,000 in the same year-ago period.

Gross profit totaled $599,000 or 64.2% of net revenue as compared to $339,000 or 81.8% of revenue in the same year-ago period.

Operating expenses increased 7% to $1.3 million compared to $1.2 million in the same year-ago period. The increase in operating expenses was due to increased general and administrative expenses. This included non-cash based compensation totaled $409,000.

Net loss totaled $856,000 or $(0.00) per basic and diluted share compared to a net loss of $1.9 million or $(0.01) per basic and diluted share in the same year-ago period. The first half of 2022 included a change in fair value on derivative of $142,000. After giving effect to the change of derivative and non-cash-based compensation, on a proforma basis net loss would be $306,000.

About Healthy Extracts “Live Life Young Again”
Healthy Extracts Inc. is a platform for developing or acquiring science-forward, clinically proven, plant-based proprietary products in select high-growth categories within the multibillion-dollar nutraceuticals market.

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 containing Citrus Bergamot SuperFruit™. This superfruit is known to have the highest quality and concentration of polyphenols and flavonoids, and with healthy heart benefits backed by more than 17 clinical studies.
  
UBN KETONOMICS® proprietary formulations have been clinically shown to support brain health, including memory, cognition, focus and neuro-energy. UBN is pursuing intellectual property license opportunities for monetizing its IP portfolio of multiple issued and pending patents.
  
For more information visit: healthyextractsinc.com, bergametna.com or tryubn.com.

Forward-Looking Statements and Safe Harbor Notice
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, 2022, 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 and 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.™

Healthy Extracts Company Contact
Duke Pitts, President
Healthy Extracts Inc.
Tel (720) 463-1004
Email contact

Investor Contact:
Ronald Both or Justin Lumley
CMA
Tel (949) 432-7566
Email contact

Media Contact:
Tim Randall
CMA
Tel (949) 432-7572
Email contact


HEALTHY EXTRACTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDING JUNE 30,
(Unaudited)

  FOR THE 3
MONTHS ENDING
JUNE 30,
 FOR THE 6
MONTHS ENDING
JUNE 30,
   2022   2021   2022   2021 
REVENUE        
Gross revenue $542,484  $278,458  $1,094,138  $459,492 
Less selling fees  (72,673)  (34,572)  (160,940)  (45,173)
Net revenue  469,812   243,886   933,198   414,318 
         
COST OF REVENUE        
Cost of goods sold  195,556   33,764   334,238   75,206 
Written off inventory  -   -   -   - 
Total cost of revenue  195,556   33,764   334,238   75,206 
         
GROSS PROFIT  274,255   210,122   598,960   339,112 
         
OPERATING EXPENSES        
General and administrative  888,401   464,831   1,258,758   1,180,918 
Total operating expenses  888,401   464,831   1,258,758   1,180,918 
         
OTHER INCOME (EXPENSE)        
Interest expense, net of interest income  (24,365)  (13,597)  (57,322)  (29,356)
Change in fair value on derivative  (220,817)  (289,445)  (141,839)  (980,225)
Loss on extinguishment of debt  -   -   -   - 
SBA loan forgiveness  -   -   -   - 
Gain on sale of asset  -   -   2,643   - 
         
Total other income (expense)  (245,181)  (303,041)  (196,517)  (1,009,581)
         
Net gain/(loss) before income tax provision  (859,326)  (557,751)  (856,315)  (1,851,387)
         
NET GAIN/(LOSS) $(859,326) $(557,751) $(856,315) $(1,851,387)
         
Loss per share - basic and diluted $(0.00) $(0.00) $(0.00) $(0.01)
Weighted average number of shares outstanding - basic and diluted  339,980,360   315,764,537   342,254,631   317,043,903 


HEALTHY EXTRACTS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

  JUNE 30,
2022
 DECEMBER 31,
2021
ASSETS    
     
CURRENT ASSETS    
Cash $159,405  $222,098 
Accounts receivable  100,192   133,340 
Inventory  1,869,088   1,957,966 
Total current assets  2,128,685   2,313,404 
     
Fixed assets, net of accumulated depreciation of $45,944 and $36,895, respectively  6,598   1,035 
Patents/Trademarks  521,881   521,881 
Deposit  16,890   - 
Goodwill  193,260   193,260 
Total other assets  738,629   716,175 
     
TOTAL ASSETS $2,867,313  $3,029,579 
     
LIABILITIES AND STOCKHOLDERS' DEFICIT    
     
LIABILITIES    
Accounts payable $114,141  $37,267 
Accrued liabilities  7,784   59,264 
Notes payable  -   - 
Notes payable - related party  866   170,866 
Convertible debt, net of discount of $0.00 and $0.00, respectively  507,337   171,750 
Convertible debt - related party, net of discount of $0.00 and $0.00, respectively  -   - 
Accrued interest payable  14,683   13,050 
Accrued interest payable - related party  17,031   14,118 
Derivative liabilities  234,365   92,527 
Total current and total liabilities  896,208   558,841 
     
STOCKHOLDERS' EQUITY (DEFICIT)    
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, 2,500,000,000 shares authorized,
344,491,821 and 338,887,410 shares issued and outstanding, respectively
  344,492   338,384 
  Additional paid-in capital  17,426,549   17,075,974 
Accumulated deficit  (15,799,935)  (14,943,620)
Total stockholders' equity (deficit)  1,971,105   2,470,738 
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $2,867,313  $3,029,579 

FAQ

What were Healthy Extracts Inc.'s Q2 2022 financial highlights?

In Q2 2022, Healthy Extracts reported a net revenue of $470,000, a 93% increase over the same period last year, with a gross profit of $274,000.

What is the current stock symbol for Healthy Extracts Inc.?

The stock symbol for Healthy Extracts Inc. is HYEX.

How did Healthy Extracts' gross margin change in Q2 2022?

Healthy Extracts' gross margin decreased to 58% in Q2 2022 from 86% in Q2 2021.

What drove the revenue increase for Healthy Extracts in 2022?

The revenue increase was driven by a 51% growth in subscription customers and a new retail presence.

What was Healthy Extracts' net loss for Q2 2022?

The net loss for Q2 2022 was $859,000, compared to a loss of $558,000 in the same quarter last year.

HEALTHY EXTRACTS INC

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