NASDAQ: MEHA

As part of our restructuring initiatives, HTO
Nevada, which was previously owned by HTO Holdings, was acquired by Functional Brands on May 19, 2023. This acquisition took place through
a share exchange agreement involving HOC, HTO Holdings, and Functional Brands. This exchange resulted in HTO Nevada becoming a wholly-owned
subsidiary of Functional Brands.

On July 22, 2025 we entered into Securities Purchase
Agreements (each as amended, the “Securities Purchase Agreement”), and on November 5, 2025 we completed the sale in the aggregate
100,000 shares of our Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred”), with a
stated value of $10,000,000, for aggregate gross proceeds of $8,000,000, before deducting placement agent fees and other offering related
expenses (the “Private Placement”), together with, as a bonus, 80,000 shares of the Company’s Series B Convertible Preferred
Stock, par value $0.001 per share (the “Series B Preferred’), with a stated value of $8,000,000.

On November 5, 2025, the Company completed the
direct listing of shares of its common stock, par value $0.00001 per share, on the Nasdaq Stock Market LLC under the symbol “MEHA”.

Following the consummation of the direct listing,
the holders of the Series A Preferred were entitled commencing on December 19, 2025 to convert such preferred stock into common stock
at a price per share equal to the lowest of: (i) the price per share equal to a valuation of $56,000,000 (the “Valuation Cap”),
(ii) 75% of the closing price of the common stock on the date of the direct listing, (iii) the closing price of the common stock on the
day prior to any conversion; and (iv) a 25% discount to the lowest five (5) day volume weighted average price of the common stock prior
to any such conversion, subject to a conversion floor price of $4.00 per share. The Series B Preferred is convertible into our common
stock at any time at a conversion price equal to the lower of (i) the closing price of the stock on the day prior to conversion and (ii)
the price per share of our common stock equal to the Valuation Cap.

For so long as the Series A Preferred remains
outstanding, we are required to pay a cash dividend, monthly in arrears from the date of funding, at a rate of 5% per annum for months
one through six, 10% per annum for months seven through twelve, 15% per annum for months thirteen through eighteen, and an additional
3% per month thereafter. The dividend may, at the investor’s option, be paid in common stock at the then applicable conversion price.
For as long as the Series B Preferred is outstanding, if we raise additional capital, the holders of Series B Preferred may require us
to use up to 25% of the proceeds from any financing to pay, in cash, a portion of any unconverted Series B Preferred. We are also required
to offer this redemption opportunity to each holder of the Series B Preferred within one (1) business day from the closing of such financing,
and such holder shall have one (1) business day to respond to us of its intention to redeem.

The foregoing summaries of the Securities
Purchase Agreement and the rights and privileges of the Preferred Stock do not purport to be complete and are qualified in their entirety
by reference to the Exhibits filed with our Current Report on Form 8-K filed with the SEC on November 6, 2025.

1

Recent Developments

Nasdaq Deficiency Letter

On December 30, 2025, the Company received a deficiency
letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC notifying the Company
that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock had been below the minimum
$1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum
Bid Price Requirement”).

The Nasdaq deficiency letter has no immediate
effect on the listing of the Company’s common stock, and its common stock will continue to trade on The Nasdaq Capital Market under
the symbol “MEHA” at this time.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A)
the Company has a compliance period of 180 calendar days, or until June 29, 2026, in which to regain compliance with the minimum bid price
requirement. If the Company evidences a closing bid price of at least $1 per share for a minimum of 10 consecutive business days during
the 180-day compliance period, the Company will automatically regain compliance. In the event the Company does not regain compliance with
the $1.00 bid price requirement by June 29, 2026, the Company may be eligible for consideration of a second 180-day compliance period
if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq’s
Capital Market, other than the minimum bid price requirement. In addition, the Company would also be required to notify Nasdaq of its
intent to cure the minimum bid price deficiency.

If the Company does not regain compliance with
the Minimum Bid Price Requirement by the end of the compliance period (or the second compliance period, if applicable), the Company’s
common stock will become subject to delisting. In the event that the Company receives notice that its common stock is being delisted,
the Nasdaq listing rules permit the Company to appeal a delisting determination by the Staff to a hearings panel.

The Company intends to monitor the closing bid
price of its common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement,
including initiating a reverse stock split. However, there can be no assurance that the Company will be able to regain compliance with
the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules.

Partial Repurchase of Series A Preferred

On December 30, 2025, the Company entered into
a Series A Convertible Preferred Stock Purchase Agreement (the “SPA”) with Helena Global Investment Opportunities 1 Ltd. (the
“Seller”), pursuant to which the Company agreed to purchase from the Seller, and the Seller agreed to sell to the Company,
all of the Seller’s shares of the Series A Preferred Stock, consisting of 12,022 shares (the “Purchase”).

The purchase price for the Purchase was $15.00
per share or an aggregate of $180,330, which the Company funded from its available working capital. The Purchase closed on December
31, 2025 (the “Closing”), upon the satisfaction of customary closing conditions set forth in the SPA, including delivery of
the shares. The SPA included customary representations and warranties and covenants.

The foregoing description of the SPA does not
purport to be complete and is qualified in its entirety by reference to the SPA, a copy of which was filed as Exhibit 10.1 to the Company’s
current report on Form 8-K filed with the SEC on January 5, 2026.

On February 5, 2026, the Company entered into
a Series A Convertible Preferred Stock Purchase Agreement (the “SPA”) with Evergreen Capital Management LLC (the “Seller”),
pursuant to which the Company agreed to purchase from the Seller, and the Seller agreed to sell to the Company, all of the Seller’s
shares of the Company’s Series A Convertible Preferred Stock (the “Series A Preferred”), consisting of 12,445 shares
(the “Purchase”).

The purchase price for the Purchase was $50.00
per share or an aggregate of $622,250, which the Company funded from its available working capital. The Purchase closed on February 6,
2026 (the “Closing”), upon the satisfaction of customary closing conditions set forth in the SPA, including delivery of the
shares. The SPA includes customary representations and warranties and covenants.

The foregoing description of the SPA does not
purport to be complete and is qualified in its entirety by reference to the form of the SPA, a copy of which was filed as Exhibit 10.1
to the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2026.

After the Closing, the shares of Series A Preferred
so purchased by the Company were cancelled in accordance with the Company’s organizational documents and applicable law, and the
Company caused the appropriate entries to be made in its books and records.

2

Bylaw Amendment

On February 1, 2026, the Company’s
board of directors approved and adopted an amendment (the “Amendment”) to the Company’s bylaws (the “Bylaws”)
which reduces the number of shares required to constitute a quorum at a stockholders meeting of the holders of shares of the outstanding
capital stock of the Company to provide that stockholders holding thirty-three and four-tenths percent (33.4%) of the Company’s
outstanding capital stock entitled to vote at such meeting shall constitute a quorum (Section 2.7 of the Bylaws).

Prior to the Amendment to
the quorum requirements of the Bylaws as discussed above, the presence, in person or by proxy, of the holders of a majority of the outstanding
capital stock entitled to vote at the meeting would constitute a quorum for the transaction of business at such meeting. The change to
the quorum requirement for stockholder meetings was made to improve the Company’s ability to hold stockholder meetings when called.

The foregoing description
of the Amendment to the Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment,
a copy of which was attached as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2026.

Exchange of Series A and B Convertible Preferred
Stock

On March 9, 2026, the Company entered into an
Exchange and Amendment Agreement with certain investors, pursuant to which such investors exchanged all of their outstanding shares of
the Company’s Series A and Series B Convertible Preferred Stock for a combination of newly issued Series C Convertible Preferred
Stock, cash, senior secured convertible promissory notes and shares of the Company’s common stock. For purposes of the exchange,
the remaining stated value of the Series A Convertible Preferred Stock was valued at 80% of stated value and the Series B Convertible
Preferred Stock at 100%, resulting in an aggregate assigned value of approximately $8.38 million.

The Series C Convertible Preferred Stock has a
stated value of $1,000 per share and is convertible into shares of the Company’s common stock at fixed conversion prices of $0.30,
$0.35 and $0.41 per share, applied to 50%, 25% and 25% of the stated value, respectively, subject to customary anti-dilution adjustments
and beneficial ownership limitations. The Series C Convertible Preferred Stock does not accrue dividends unless an event of default occurs
under the governing documents.

The senior secured convertible promissory notes
bear interest at 12% per annum, matures 17 months from issuance and begins amortizing in equal monthly installments beginning one year
after issuance. The notes are convertible into shares of the Company’s common stock at a price equal to 120% of the closing price
of the Company’s common stock immediately prior to the exchange date, subject to certain adjustments. The notes are secured by a
pledge and security agreement granting the Investors a first-priority security interest in substantially all of the Company’s assets.

The foregoing descriptions of the exchange, the
Series C Convertible Preferred Stock and the senior secured convertible promissory notes do not purport to be complete and are qualified
in their entirety by reference to the Exhibits filed with the Company’s Current report on Form 8-K filed with the SEC on March 13,
2026.

Discontinuance of Hemp
Products

Subsequent to December 31, 2025 the Company determined
it to be in the best interest of the Company and its stockholders that we discontinue all lines of business related to hemp or that contain
CBD products or its derivatives.

Tru2u.Health Launch

In February 2026, we launched Tru2u.health, a
new digitally native health platform that expands the Company’s strategic footprint from traditional dietary supplement manufacturing
into integrated supported wellness services. The platform represents an extension of the Company’s operations, designed to support
sustainable, recurring revenue models and broaden consumer engagement in the fast-growing digital health market.

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Our Products

Kirkman Brand

Our “Kirkman” brand products are
manufactured in our FDA registered, cGMP certified facility in Lake Oswego, Oregon. Established in 1949, Kirkman specializes in manufacturing
nutritional supplements and is one of the oldest companies dedicated to serving the special needs community.

Our Kirkman brand offers more than 150 products,
including probiotics, enzymes, vitamins, multivitamins, amino acids, antioxidants, immune support, essential fatty acids, preconception,
prenatal supplements, personal care products and other specialty products. Kirkman treats patients with autism spectrum disorders and
special dietary needs through an established network of over 2,000 doctors in over 40 countries. Our Kirkman brand operates in 95% of
the major subsegments in the supplement industry. Kirkman has a long-standing loyal customer and consumer base due to the rigorous testing
of products in compliance with FDA requirements.

Our products under the Kirkman brand include,
but are not limited to, the following:

●
Supplements for Autism;

●
Essential Fatty Acids;

●
Oxytocin;

●
Vitamin B12;

●
Vitamin B6 and Magnesium;

●
Glutathione;

●
Melatonin;

●
Amino Acids;

●
Probiotics;

●
Multivitamins and Minerals; and

●
Digestive Enzymes;

●
Antioxidants.

Our products under the Kirkman brand are focused
on:

Digestive enzymes:
Over the counter oral digestive enzyme supplements are a combination of proteases, which aid protein digestion; lipases, which aid in
fat digestion; and amylases, which aid in carbohydrate digestion. These may be prescribed by a doctor in some cases, when the pancreas
does not make enough digestive enzymes on its own. People are increasingly taking over the counter (“OTC”) digestive enzymes
in lower doses to support general gut health.

Essential fatty acids:
Also called omega-3 fatty acids, essential fatty acids are important digestive chemicals that the body cannot make on its own.

P2i (prenatal) Brand

We launched a certified prenatal vitamin in April
2024 for expectant mothers under the ‘P2i by Kirkman’ brand. These vitamins have been specially formulated by our company
to provide essential nutrients for both the mother and the developing fetus. The International Federation of Gynecology and Obstetrics
(“FIGO”) published a position statement about toxic chemicals and environmental contaminants in prenatal vitamins. FIGO’s
recommendation from the October 2023 position statement highlights that patients should only consume, and clinicians should only prescribe,
vitamins and supplements that have been independently assessed to make certain they do not contain contaminants. Manufacturers should
be held to a standard of production that assures safety and minimizes contaminants and certification of all prenatal vitamins becomes
the standard of care. The FIGO Committee report on Climate Change and Toxic Environmental Exposures brought together global scientists
to review reputable reference sources for chemicals that have the potential to impact maternal and newborn health, including the USA
Environmental Protection Agency, the European Union, and the California EPA. The group of experts recommended several approaches, including:

●Establishing a list of toxic chemicals
and contaminants that should be screened for in prenatal vitamins and reduced to de minimis
levels; and

●Conducting assays of existing vitamins
to assess ongoing risk to maternal and newborn health. This work can extend to personal exposure
risk by offering women testing for the presence of potentially toxic environmental chemicals.
Mass spectrometry currently offers the most comprehensive measurement.

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This first publication of a list of toxic chemicals
and contaminants represents the most comprehensive testing available at present but does not purport to identify or eliminate all potential
sources of toxicity.

We are currently the only certified prenatal
vitamin in the market that aligns to the FIGO position statement. We have formulated and produced a prenatal vitamin called P2i by Kirkman.
There are approximately 3.6 million pregnancies alone in the United States (https://www.cdc.gov/nchs/fastats/births.htm) and the initial
market focus for this product will be the United States with the expectation to expand globally since FIGO’s position statement
reaches all countries.

The P2i by Kirkman prenatal vitamin has been
certified by The FORUM, a nonprofit 501(c)(3) organization dedicated to promoting low-toxicity standards for prenatal healthy products.
The FORUM operates under a Memorandum of Understanding (MOU) with FIGO, a globally recognized organization of obstetricians and gynecologists.
This MOU establishes a shared objective to reduce environmental toxicity in prenatal products.

The certification process involves rigorous testing
and evaluation to ensure compliance with The FORUM’s low-toxicity standards, which align with FIGO’s objectives for maternal
and fetal health. These standards include:

●Analysis of 24 heavy metals, ensuring
levels are below stringent safety thresholds;

●Testing for the presence of 120
toxic chemicals, such as pesticides and endocrine disruptors, with strict limits to prevent
potential harm; and

●Utilization of ISO 17025-accredited
laboratories for all testing to ensure reliability and reproducibility of results.

Purity Labs, an ISO 17025-accredited laboratory, as directed by The
FORUM, conducted testing, which confirmed the product’s compliance with The FORUM’s criteria. Based on this testing, The
FORUM issued its certification, indicating that Kirkman’s prenatal vitamin meets its standards for low toxicity and safety.

Tru2u.Health

The Company has launched a health & wellness
platform that includes the marketing of supplements and an outsourced partnership with CareValidate. There are currently 10 supplements
utilizing existing formulations that will be sold under the Tru2u brand. The supplements are the following:

●
Multi Vitamin

●
Biotin

●
B Complex

●
Magnesium / Melatonin

●
Vitamin D

●
Co10

●
L-Theanine

●
Phosphatidylserine

●
Bone Support

●

Vitamin C

5

www.Tru2u.health is a consumer-facing telehealth
and wellness platform that combines board-certified clinical support with personalized treatment plans, medication-based therapies, and
the Company’s existing portfolio of science-backed nutraceutical products. The platform is structured to onboard patients nationwide
in compliance with applicable state telehealth and prescribing regulation.

The platform’s core service components
include:

●Board-Certified Telehealth Support:
Virtual clinical consultations and ongoing medical oversight provided by licensed physicians
experienced in weight-management and metabolic health.

●Medication-Based Wellness Protocols:
Clinically guided GLP-1 weight management programs and other peptide-based treatment protocols
offered under physician supervision where appropriate.

●Clean Supplement Integration:
Access to the Company’s premium, science-based nutritional supplement products as part
of comprehensive treatment and wellness plans.

Tru2u.health will provide personalized plans
based on the consumer needs, with an emphasis on convenience, regulatory compliance, and transparency. The platform’s go-to-market
strategy includes digital acquisition and awareness initiatives supported by external influencers with substantial combined audience
reach to drive national awareness and consumer engagement.

The launch of www.Tru2u.health aligns with broader
consumer trends toward integrated, digitally delivered health solutions that combine clinical oversight with convenient access to therapeutic
and supplemental products. The platform is intended to augment the Company’s existing direct-to-consumer channels, strengthen its
recurring revenue streams, and extend its competitive positioning within the evolving health and wellness ecosystem.

To facilitate the telehealth and wellness protocols
within the wellness platform, we have entered into a commercial services agreement with CareValidate. CareValidate delivers HIPAA-compliant
digital workflows and automated care coordination that support the entire patient journey — from eligibility and intake through
scheduling, medication routing, lab orders, and follow-up communications — helping reduce administrative burden, improve accuracy,
and enhance the patient experience. CareValidate’s solutions are built to support regulated healthcare use cases while delivering
a consistent, secure, and compliant digital experience for both providers and patients

Competitive Strengths

The Kirkman brand has been in business for over
70+ years with a loyal and repeat consumer base. We believe that this loyalty is a direct response to our high purity and quality standards
that we maintain. As a result:

●
We source all materials from high quality suppliers.

●
We test finished goods in certified laboratories with state-of-the-art
equipment and manufacture our supplements in US-based cGMP certified and FDA Selling facility located in Lake Oswego, Oregon.

6

●
The FDA requires that we conduct at least one appropriate test or examination
to verify and identify any component that is a dietary ingredient.

●
We conduct ingredient testing by verifying the identity through ISO
certified 3rd party laboratories.

●
We test for the presence of residual solvents and pesticides (where
applicable) of up to 24 heavy metals and microbial contamination that could lead to illness or death. Microbial tests can include,
but are not limited to, aerobic plate count, yeast & mold, coliforms, E. coli, pseudomonas, staphylococcus aureus, bile tolerant
gram negative, salmonella, aflatoxins and listeria.

●
Heavy metals testing includes beryllium, aluminum, vanadium, chromium,
manganese, cobalt, nickel, copper, zinc, arsenic, selenium, molybdenum, palladium, silver, cadmium, tin, antimony, barium, tungsten,
platinum, thallium, lead, uranium and mercury.

●
For incoming raw ingredients, we ID using a variety of methods. The
FDA requires that a finished batch of the dietary supplement meets product specifications for identity, purity, strength, composition,
and for limits on those types of contamination that may adulterate or that may lead to adulteration of the finished batch of the
dietary supplement. This can be conducted for a subset of finished dietary supplement batches through a sound statistical sampling
plan (or for every finished batch). For our business, we test every batch of products to ensure heavy metals are below California’s
Pop 65 limits. In addition, every batch is tested for microbial contamination.

The Kirkman brand’s 70+ year history in
the industry, along with our rigorous material testing, allows Kirkman to use statistical sampling to ensure the identity, purity and
strength of each product is met. Our formulations use proprietary blends. The FDA does not require any testing on dietary supplements
whereas we test for approximately 90 metals and toxins in our raw materials.

Industry

According to Grand View Research, the Global Nutritional
Supplements Market is valued at approximately $517.09B in 2025 and is expected to expand at a compound annual growth rate (CAGR) of 6.6%
from 2026 to 2033. Market growth is driven by rising health awareness, increasing demand for preventive healthcare, and growing adoption
of functional foods and dietary supplements across all age groups.

7

According to Grand View Research projections
U.S. Nutritional Supplements Market is valued at approximately $112.6 billion in 2024 and is expected to expand at a compound annual
growth rate (CAGR) of 4.9% from 2025 to 2030. The growing awareness and prioritization of health and wellness among consumers fuels the
demand for nutritional supplements. This includes approaching proactive ways such as improving their well-being, which leads to purchasing
supplements that address nutritional deficiencies and obesity and enhance immunity, energy levels, and mental health. E-commerce
has become a significant distribution channel, allowing consumers easier access to a wide range of products. Therefore, the market
is poised for substantial expansion as consumer awareness of health and preventive care continues to rise.

*Source: Grand View Research

According to Grand View Research, the U.S. Dietary
Supplement Market is valued at approximately $68.7 billion in 2025 and is expected to expand at a compound annual growth rate (CAGR) of
5.7% from 2024 to 2030. The market is primarily driven by rising health consciousness, an aging population, an increasing prevalence of
lifestyle-related conditions, and a growing focus on preventive healthcare. Consumers are proactively seeking ways to boost immunity,
improve mental well-being, manage stress, and support overall health, especially after the COVID-19 pandemic. In addition, the popularity
of fitness and wellness culture, coupled with greater access to health information through digital platforms, has empowered individuals
to take control of their nutritional needs. The expansion of e-commerce, advancements in personalized nutrition, and the availability
of innovative product formats like gummies and functional beverages have further fueled market growth.

8

Nutraceuticals are active components that offer
various health benefits. Owing to their safety profile, nutritional benefits, and therapeutic effects, nutraceutical products have gained
recognition across the globe. They are known to provide nutrition, support therapy for treatment, prevent a wide range of diseases, and
reduce side effects caused by cancer radiotherapy and chemotherapy.

According to Grand View Research, the global prenatal
vitamin supplement market was valued at USD 542.8 million in 2023 and is projected to grow at a CAGR of 8.5% from 2024 to 2030. Increasing
awareness about healthy eating habits and proper medication among pregnant women is the major factor driving the market. The overweight
and sedentary lifestyle of pregnant women increases the deficiency of minerals and vitamins. In addition, malnutrition in infants, increasing
incidence of other congenital disabilities, and increasing awareness about the benefits of prenatal supplements are some of the factors
driving the market. The U.S. prenatal vitamin supplements market has been identified as a potentially lucrative market. Strong endorsements
and guidelines from healthcare providers such as the CDC and ACOG bolster confidence in the efficacy and necessity of prenatal vitamins
among expectant mothers, driving widespread adoption and market growth in the U.S. According to the American College of Obstetricians
and Gynecologists (ACOG), during pregnancy, essential nutrients such as iron, folic acid, choline, calcium, omega-3 fatty acids, vitamin
D, B vitamins, and vitamin C are crucial for fetal development and maternal health. A balanced diet rich in sources such as leafy greens,
dairy, lean meats, fortified foods, and a prenatal vitamin containing folic acid ensures adequate intake to support both mother and baby’s
needs.

9

Growth Strategy

We aim to be a leader in the nutraceutical space
by manufacturing products held to the highest standard of quality in terms of toxins, metals, and other impurities. Our goal is to build
a well-rounded portfolio of products including mushroom-based supplements which are specially formulated to support a broad range of everyday
health needs. These products are intended to include functional blends and single-ingredient offerings featuring clinically relevant mushroom
species—such as lion’s mane, reishi, cordyceps, chaga, and turkey tail—positioned across key consumer segments including
daily wellness, prenatal support, athletic performance, and recovery, among others. We plan to do this by:

●
Strengthening our existing 70-year-old Kirkman brand with its established base of consumers in the autism community by curating our product mix to cater to their specific needs;

●
Investing heavily into our sales and marketing activities as well as business development, such as Tru2u.health, in order to increase sales and distribution;

●
Launching multiple brands, broad as well as niche, including P2i by Kirkman which is the only certified prenatal vitamin supporting FIGO’s October 2023 position statement, to allow us to increase our market share;

●
Modernizing our manufacturing capabilities by reorganizing the space and introducing new and efficient machinery and equipment to significantly enhance our output; and

●
Identify key companies with synergistic strengths for partnerships or acquisitions.

MAHA Movement

The “Make America Healthy Again” (MAHA)
movement reflects a growing national focus on preventive health, nutritional transparency, and reducing reliance on reactive healthcare
interventions. As consumers increasingly seek science-based nutritional solutions to support long-term wellness, brands that emphasize
clean ingredients, rigorous quality standards, and targeted health support are well positioned to contribute to this shift. The Kirkman®
brand aligns closely with these priorities through its long-standing commitment to hypoallergenic formulations, strict quality control,
and clinically informed nutritional products designed to support sensitive populations. By delivering trusted, high-quality supplements
that prioritize safety, purity, and efficacy, Kirkman helps advance the broader objective of improving population health through accessible
nutritional support and preventive wellness strategies.

Marketing

We market our products through various sales
channels, primarily trade shows and through print and digital advertisements, focusing on several customer types. These customers include
consumers, wholesalers, distributors, and those seeking private label products. We repeatedly test new marketing venues, platforms and
approaches and measure results to improve the cost-effectiveness of our efforts.

Trade Shows

We participate in a variety of trade shows each
year with differing attendee focuses. These include health and wellness shows, Autism conferences, OBGYN conferences, convenience and
grocery stores, consumer product distribution, and private labels.

Digital and Printed Advertisements

We utilize sophisticated digital tools to place
ads primarily through Google and Facebook (now Meta) that target potential customers and those showing interest in our products. In addition,
we have recently begun to place traditional print ads in journals and magazines focused on convenience stores, distributors, and private
label products.

In addition to new prospect acquisition programs,
our marketing team produces newsletters that are distributed to our contacts with the goal of keeping our company top-of-mind, and this
newsletter has historically resulted in conversion of contacts into current customers.

10

Market Performance Group

Functional Brands has engaged Market Performance
Group (“MPG”) in a strategic eCommerce marketing arrangement to accelerate growth across its Direct-to-Consumer (“DTC”)
and Amazon channels. Under this arrangement, MPG will lead the development and execution of Kirkman’s digital commerce strategy,
with a focus on scalable revenue growth, improved customer acquisition efficiency, and enhanced brand visibility across key digital platforms.

MPG will oversee and optimize several core areas,
including paid media strategy and execution, Amazon growth and optimization, DTC acceleration, and strategic growth initiatives, all aimed
at driving measurable revenue growth for Kirkman. MPG will implement full-funnel paid media campaigns across key digital platforms, customer
acquisition and retargeting efforts, managing media budget to optimize return-on-ad-spend, and performance analytics and attribution modeling.
Additionally, we intend to have MPG enhance Kirkman’s Amazon presence through paid advertising, listing optimization (SEO, content, and
A+ content enhancements), competitive positioning and keyword strategies, while pushing for revenue acceleration through promotions. DTC
strategies will focus on traffic growth through performance marketing channels, conversion rate optimization, and lifecycle marketing
to improve customer lifetime value and acquisition costs. Strategic growth initiatives will include new customer acquisition strategies,
channel expansion opportunities, and detailed performance reporting. MPG aims to strengthen Kirkman’s competitive positioning in
the supplement category, enhance its digital footprint, and establish a scalable eCommerce infrastructure.

Furthermore, as Kirkman transitions from a reseller
approach to managing its own Amazon Seller’s Central account, we expect the brand to gain advantages such as pricing and margin optimization,
improved brand control, direct advertising management, enhanced data ownership, and greater stability in inventory and buy box positioning,
all of which are expected to positively influence enterprise valuation. This arrangement reinforces MPG’s role as an integral extension
of the Kirkman brand, ensuring alignment with brand integrity and long-term value creation.

Customers and Markets

We sell our Kirkman branded supplements to 45
countries through international distributors that have partnered with the Kirkman brand for two decades. We have recurring consumers
that purchase Kirkman brand products via our website at www.kirkmangroup.com, as well as through Amazon. Our core B2B customers are iHerb,
Emerson and FullScript. We also have several hundred direct customers, classified as professionals, where we sell our supplements. These
customers include doctors, chiropractors, and practitioners who sell our products to their patients. In addition, we plan to focus our
commercial efforts for P2i by Kirkman prenatal to OBGYN’s and expectant mothers.

Competition

●
There are several competitors in the supplement space.
Within the vitamin segment, 66% of vitamins purchased are classified as multivitamins, as indicated by Nielsen Retail Measurement
Data. Market leaders in the multi-vitamin segment are ‘private label store brands’ followed by Nature Made, Centrum,
One-A-Day and Nature’s Bounty, respectively.

●
Minerals remain a steady category, and they include Calcium, Magnesium
and Iron as the main mineral categories. Private Label brands, again, lead the way, followed by Nature Made, Caltrate, Citracal and
Nature’s Bounty.

●
Supplement growth outpaces the vitamin and minerals categories (Source:
Nielsen). The segments within the supplement category include, but are not limited to, Digestive Health, General Health, Heart Health,
Energy, and Sleep Aids. The leaders within this space are Nature’s Bounty, Nature Made, Emergen-C, Baush+Lomb and Airbourne.
91% of the supplement revenue (Nielsen Homescan Panel Data) is generated within the following four sales channels: Warehouse Club,
Grocery, Super Centers and Drug Stores.

●
There are several product delivery methods for vitamins, minerals and
supplements. These delivery methods could be tablets, capsules, liquids, effervescent tablets, and powders. Kirkman has the ability
to produce capsules, tablets, liquids and powders to properly compete with core competitors.

●
Within the special needs category, competition includes New Beginnings,
Claire Labs, Houston Enzymes and Lifetrients. These companies primarily focus on the dietary sensitivities of their respective consumers.

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Technology & Intellectual Property

The following is a list of our current trademark
registrations:

12

Regulation

Trade Regulations

Our suppliers generally source or manufacture
finished goods in parts of the world that may be affected by the imposition of duties, tariffs or other import regulations in the U.S.
We believe that our redundant network of suppliers provides sufficient capacity to mitigate any dependency risks on a single supplier.

We buy necessary components or ingredients for
our products from suppliers or factories both domestically and internationally. We do not depend on any single supplier. However, if
we are unable to continue to obtain our finished products from international locations or if our suppliers are unable to source raw materials,
it could significantly disrupt our business. Further, we are affected by economic, political and other conditions in the U.S. and internationally,
including those resulting in the imposition or increase of import duties, tariffs and other import regulations and widespread health
emergencies, which could have a material adverse effect on our business.

Laws and Regulations Relating to Our Products

Nutraceutical

The dietary supplement industry is regulated
on a federal level in the U.S. by the Food and Drug Administration (“FDA”) and the Federal Trade Commission (“FTC”)
as well as by government agencies in each of the 50 states. FDA regulates both finished dietary supplement products and dietary ingredients.
FDA regulates dietary supplements under a different set of regulations than those covering “conventional” foods and drug
products. Under the Dietary Supplement Health and Education Act of 1994 (DSHEA):

Manufacturers and distributors of dietary supplements
and dietary ingredients are prohibited from marketing products that are adulterated or misbranded. That means that these firms are responsible
for evaluating the safety and labeling of their products before marketing to ensure that they meet all the requirements of the Federal
Food, Drug, and Cosmetic Act as amended by DSHEA and FDA regulations. The FDA has the authority to take action against any adulterated
or misbranded dietary supplement product after it reaches the market. Most dietary supplement manufacturing, labeling and marketing is
covered by extensive regulations issued and enforced by the FDA and the FTC. The FDA has regulatory authority under the Federal Food,
Drug and Cosmetic Act as amended in 1994 by the Dietary Supplement Health and Education Act (DSHEA) and in 2006 by the Dietary Supplement
and Nonprescription Drug Consumer Protection Act. Under the DSHEA, dietary supplements are regulated as a category of food. The FDA regulates
both finished dietary supplement products and dietary ingredients. By law, it is illegal to manufacture or market dietary supplement
products that are adulterated or misbranded, and the FDA has regulatory authority to remove such products from the marketplace.

Key Regulations

Responsible companies in the dietary supplement
industry abide by extensive regulations that cover manufacturing, labeling, quality control, safety, post-market surveillance and more.

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New Dietary Ingredient Notifications

The Food Drug & Cosmetic Act, as amended
by the Dietary Supplement Health and Education Act (DSHEA), established that dietary supplements that were in commerce prior to 1994
have a history of safe use, and therefore, can remain on the market without additional safety review. All new ingredients marketed
after that date, however, must submit a formal 75-day notice along with evidence that the product is reasonably expected to be safe.
This is referred to as a new dietary ingredient (NDI) notification. If the FDA has concerns about the ingredient or its safety profile,
the agency has clear authority to request more information or to reject the notification and deny the product’s entry into the
market.

Dietary Supplement Labeling Requirements

The following are the minimum labeling requirements:

1.Statement of Identity

The statement must include the product name and
identify itself as a dietary supplement. Although you may replace the term dietary with the type of ingredients that are in the product,
having one of them on the product label is a mandatory requirement. The product must be labeled either as conventional foods and beverages
or dietary supplement based on its actuals.

2.Net Quantity of Contents

The net quantity of content informs consumers
of the amount of dietary supplement that is in the container or package. The net quantity of content must be located on the product label
as a distinct item in the bottom 30 percent of the principal display panel in lines generally parallel to the base of the container.

3.Supplements Chart

The supplement facts must contain the list of
names and quantities of dietary ingredients present in the product’s serving size and servings per container.

4.Ingredients List

The list of ingredients must be displayed in
descending order of predominance by weight. If all source ingredients are listed in the supplement facts panel, and there are no other
ingredients, such as excipients or fillers, an ingredient statement is not needed.

5.Other Details

Other details required include manufacturer,
packer, or distributor name and address, and domestic U.S. mail address and phone number to which a consumer can report a serious adverse
event. If an adverse event is reported, the company must notify the FDA.

Good Manufacturing Practices

Good manufacturing practices (“GMPs”)
for dietary supplements are specific rules for the manufacturing processes of vitamins, minerals, herbs and botanicals, amino acids and
all other supplements. Finalized in 2007, these rigorous practices impose higher standards on dietary supplements than food GMPs applied
to conventional foods. Dietary supplement GMPs include thorough requirements for identity testing for all ingredients as they arrive
at the manufacturer’s site. Manufacturers must qualify their suppliers before receiving goods, incoming ingredients must be quarantined
until their identity is confirmed using scientifically valid methods of analysis, and all components of dietary supplements must meet
specifications established by the manufacturer regardless of where the ingredient was sourced.

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Manufacturers are accountable to the FDA for
the manufacturing process as well as the ingredients. During an inspection, the FDA has access to all the manufacturers’ records,
including access to the country of origin of all supplement ingredients. The existing bioterrorism law already requires all parties in
the production and distribution of dietary ingredients to keep records of suppliers and customers (“one up and one down”)
that permit the agency to trace the pedigree of ingredients back to their original source. In addition, the GMP rules examine sanitation,
batch records for production, employee training, validation of the manufacturing procedures, and testing final products for conformance
with the label.

Adverse Event Reporting

In 2006, Congress passed The Dietary Supplement
and Nonprescription Drug Consumer Protection Act, commonly referred to as the “adverse event reporting law.” The passage
of this law was strongly supported by CRN and others in the industry as it provides an important regulatory tool for the FDA to protect
consumers. Under this law, dietary supplement companies are required to report serious adverse events to the FDA no later than 15 business
days after the company receives the report.

This post-market surveillance program alerts
the FDA to possible signals or potential patterns of a problem, enabling the agency to identify concerns with ingredient safety, manufacturing
issues, contamination (of either raw ingredients or finished products), tampering, and even bioterrorism. However, adverse events do
not demonstrate a causal relationship between the product and the event.

Since the law went into effect, the dietary supplement
industry’s track record demonstrates a strong safety profile for the industry’s products both in comparison to other FDA-regulated
industries and considering that more than 170 million Americans take dietary supplements. In 2016, the FDA announced it would make
data from the FDA Adverse Event Reporting System (FAERS) public.

Additional Safety Protections

Once a dietary supplement enters the stream of
commerce, the FDA may remove a product if it is “adulterated” or “misbranded.” A product is considered adulterated
if it contains unlisted ingredients or is not prepared or packaged under good manufacturing conditions. It is misbranded if its
labeling is false or misleading. In either case, the agency has enforcement authority to seize and destroy the product, impose fines
or even imprisonment. In addition, the FDA can remove a product from the market if it “presents a significant or unreasonable risk
of illness or injury” under conditions of use recommended in its labeling. A separate provision gives the FDA authority to declare
a product “an imminent hazard to public health or safety.” In less dramatic situations, the FDA can request manufacturers
to modify products and claims or to provide warnings to consumers. The Food Safety & Modernization Act, signed into law in 2011,
gave the FDA additional authority to issue a mandatory recall when a company fails to voluntarily recall an unsafe food (including dietary
supplements) after being asked to by the FDA.

Food Safety Regulations

Title 21 Code of Federal Regulations, Part
111: Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements

This regulation applies to manufacturers, packagers,
labelers, or holders and includes importers as well. The manufacturing facilities of certain types of human food including dietary supplements
are required to have a production and process control system in place.

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A California law known as Proposition 65 requires
a specific warning to appear on any product containing a component listed by the state as having been found to cause cancer or birth
defects. The state maintains lists of these substances and periodically adds other substances to these lists. Proposition 65 exposes
all food and beverage producers to the possibility of having to provide warnings on their products in California because it does not
provide for any generally applicable quantitative threshold below which the presence of a listed substance is exempt from the warning
requirement. Consequently, the detection of even a trace amount of a listed substance can subject an affected product to the requirement
of a warning label. However, Proposition 65 does not require a warning if the manufacturer of a product can demonstrate that the use
of that product exposes consumers to a daily quantity of a listed substance that is:

●
below a “safe harbor”
threshold that may be established;

●
naturally occurring;

●
the result of necessary cooking; or

●
subject to another applicable exemption.

In January 2019, New York State’s governor
announced the “Consumer Right to Know Act,” a proposed law that would impose similar and potentially more stringent labeling
requirements than California Proposition 65. The law has not yet been adopted, and to our knowledge California Proposition 65 remains
the most onerous state-level chemical exposure labeling statutory scheme. However, due in part to the large size of California’s
market, promotional products sold or distributed anywhere in the United States may be subject to California Proposition 65.

We are unable to predict whether a component
found in a product that we assisted a client in producing might be added to the California list in the future. Furthermore, we are also
unable to predict when or whether the increasing sensitivity of detection methodology may become applicable under this law and related
regulations as they currently exist, or as they may be amended.

We are subject to various federal, state and
local laws and regulations, including but not limited to, laws and regulations relating to labor and employment, U.S. customs and consumer
product safety, including the Consumer Product Safety Improvement Act, or the “CPSIA.” The CPSIA created more stringent safety
requirements related to lead and phthalates content in children’s products. The CPSIA regulates the future manufacture of these
items and existing inventories and may cause us to incur losses if we offer for sale or sell any non-compliant items. Failure to comply
with the various regulations applicable to us may result in damage to our reputation, civil and criminal liability, fines and penalties
and increased cost of regulatory compliance. These current and any future laws and regulations could harm our business, results of operations
and financial condition.

Legal requirements apply in various jurisdictions
in the United States and overseas requiring deposits or certain taxes or fees be charged for the sale, marketing and use of certain non-refillable
beverage containers. The precise requirements imposed by these measures vary. Other types of beverage container-related deposit, recycling,
tax and/or product stewardship statutes and regulations also apply in various jurisdictions in the United States and overseas. We anticipate
additional, similar legal requirements may be proposed or enacted in the future at local, state and federal levels, both in the United
States and elsewhere.

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New legislation or regulation, the application
of laws from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to
the Internet and e-commerce generally could result in significant additional taxes on our business. Further, we could be subject to fines
or other payments for any past failures to comply with these requirements. The continued growth and demand for e-commerce is likely to
result in more laws and regulations that impose additional compliance burdens on e-commerce companies.

Laws and Regulations Relating to Data Privacy

In the ordinary course of our business, we might
collect and store in our internal and external data centers, cloud services and networks sensitive data, including our proprietary business
information and that of our customers, suppliers and business collaborators, as well as personal information of our customers and employees.
The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. The number
and sophistication of attempted attacks and intrusions that companies have experienced from third parties has increased over the past
few years. Despite our security measures, it is impossible for us to eliminate this risk.

A number of states in the U.S. have enacted data
privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of
personal information, such as social security numbers, financial information and other sensitive personal information. For example, all
50 states and several U.S. territories now have data breach laws that require timely notification to affected individuals, and at times
regulators, credit reporting agencies and other bodies, if a company has experienced the unauthorized access or acquisition of certain
personal information. Other state laws, particularly the California Consumer Privacy Act, as amended (“CCPA”), among other
things, contain disclosure obligations for businesses that collect personal information about residents in their state and afford those
individuals new rights relating to their personal information that may affect our ability to collect and/or use personal information.
The Virginia Consumer Data Protection Act (“CDPA”) also establishes rights for Virginia consumers to control how companies
use individuals’ personal data. The CDPA dictates how companies must protect personal data in their possession and respond to consumers
exercising their rights, as prescribed by the law, regarding such personal data. The CDPA went into effect on January 1, 2023. Further,
the California Privacy Rights Act (CPRA) was recently voted into law by California residents. The CPRA significantly amends the CCPA
and imposes additional data protection obligations on covered companies doing business in California, including additional consumer rights
processes and opt outs for certain uses of sensitive data. It also creates a new California data protection agency specifically tasked
to enforce the law, which would likely result in increased regulatory scrutiny of California businesses in the areas of data protection
and security. The substantive requirements for businesses subject to the CPRA went into effect on January 1, 2023, and became enforceable
on July 1, 2023. Meanwhile, several other states and the federal government have considered or are considering privacy laws like the
CCPA. We will continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose
significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability
for our business.

Outside of the U.S., data protection laws, including
the EU General Data Protection Regulation (the “GDPR”), also might apply to some of our operations or business collaborators.
Legal requirements in these countries relating to the collection, storage, processing and transfer of personal data/information continue
to evolve. The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the
ability to collect, analyze and transfer personal data/information of persons located in the European Union (EU), a requirement for prompt
notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any
violations (including possible fines for certain violations of up to the greater of €20 million or 4% of total company revenue).
Other governmental authorities around the world have enacted or are considering similar types of legislative and regulatory proposals
concerning data protection.

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The interpretation and enforcement of the laws
and regulations described above are uncertain and subject to change, and may require substantial costs to monitor and implement and maintain
adequate compliance programs. Failure to comply with United States and international data protection laws and regulations could result
in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse
publicity and could negatively affect our operating results and business.

Environmental Regulations

We use certain plastic, glass, fabric, metal
and other products in our business which may be harmful if released into the environment. In view of the nature of our business, compliance
with federal, state, and local laws regulating the discharge of materials into the environment, or otherwise relating to the protection
of the environment, has had no material effect upon our operations or earnings, and we do not expect it to have a material impact in
the foreseeable future.

Tax Laws and Regulations

Changes in tax laws or regulations in the jurisdictions
in which we do business, including the U.S., or changes in how the tax laws are interpreted, could further impact our effective tax rate,
further restrict our ability to repatriate undistributed offshore earnings, or impose new restrictions, costs or prohibitions on our
current practices and reduce our net income and adversely affect our cash flows.

We are also subject to tax audits in the United
States and other jurisdictions and our tax positions may be challenged by tax authorities. Although we believe that our current tax provisions
are reasonable and appropriate, there can be no assurance that these items will be settled for the amounts accrued, that additional tax
exposures will not be identified in the future or that additional tax reserves will not be necessary for any such exposures. Any increase
in the amount of taxation incurred as a result of challenges to our tax filing positions could result in a material adverse effect on
our business, results of operations and financial condition.

Other Regulations

We are subject to international, federal, national,
regional, state, local and other laws and regulations affecting our business, including those promulgated under the Occupational Safety
and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and
regulations of the Consumer Products Safety Commission, the Food, Drug, and Cosmetic Act, the Foreign Corrupt Practices Act of 1977 (FCPA),
various securities laws and regulations including but not limited to the Securities Exchange Act of 1934, as amended, the Securities
Exchange Act of 1933, as amended, and the NASDAQ Rules, various labor, workplace and related laws, and environmental laws and regulations.
Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations.

Implications of Being an Emerging Growth Company
and a Smaller Reporting Company

Upon the completion of this offering, we will
qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an
emerging growth company, we will not be required to:

●
Have an auditor report on our internal
controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);

●
Comply with any requirement that may be adopted
by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report
providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

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●
Submit certain executive compensation matters
to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and

●
Disclose certain executive compensation related
items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s
compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also
provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities
Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. In other words, an
emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private
companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore
not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an emerging growth company for
up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed
$1.235 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act,”) which would occur if the market value of our common stock that is held by non-affiliates
exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we
have issued more than $1 billion in non-convertible debt during the preceding three year period.

To the extent that we continue to qualify as
a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended,
(the “Exchange Act”), after we cease to qualify as an emerging growth company, certain of the exemptions available to us
as an emerging growth company may continue to be available to us as a smaller reporting company, including: (i) not being required to
comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (ii) scaled executive compensation disclosures;
and (iii) the requirement to provide only two years of audited financial statements, instead of three years.

Challenges, Risks and Limitations

Our ability to utilize our competitive advantages
in order to strengthen and expand our business and achieve our growth plan is subject to a number of risks and uncertainties more fully
discussed under “Risk Factors” in this Annual report. As discussed in our financial statements, we have suffered recurring
losses from operations and have a significant accumulated deficit. In addition, we continue to experience negative cash flows from operations.
This limited working capital capability may delay or make the accomplishment of our growth plans difficult. In assessing the likelihood
of our future success, investors in this offering should note our history of losses and the likelihood of our operating profitably in
the future. Because the type, timing, and impact of such regulations remain uncertain, we cannot give any assurance that such actions
will not have a material adverse effect on this emerging business and our strategy.

Corporate Information

We are currently incorporated and in good standing
in the State of Delaware. Our registered address is 6400 SW Rosewood Street, Lake Oswego, Oregon 97035 where we lease a 24,000 square
foot facility. Our telephone number is (800) 245-8282. We maintain the following websites: https://functionalbrandsinc.com, www.tru2u.health,
and https://kirkmangroup.com. Information available on our websites is not incorporated by reference in and is not deemed a part of this
annual report, and you should not consider any information contained on, or that can be accessed through, our website as part of this
annual report or in deciding whether to purchase our common stock.

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