Functional Brands expanded its Q2 2026 gross margin by approximately 710 basis points to 59.9%, even as the company lost its Nasdaq listing, saw its proposed BullionFX transaction terminated and continued to report substantial operating losses.
Quarterly revenue increased only 2% to $1.87 million from $1.83 million, but gross profit rose approximately 16% to $1.12 million from $968,095. The margin improvement reflected a shift toward higher-margin channels and changes to the company’s Amazon business model.
The stronger gross economics were overwhelmed by higher corporate expenses. General and administrative spending more than doubled to $2.10 million from $958,493, reflecting higher payroll, professional fees, Amazon seller fees, stock compensation, insurance and public-company expenses.
As a result, operating loss widened to approximately $1.3 million from $160,000, while net loss increased to $2.63 million from $226,056. The quarter also included a $967,942 non-cash change in derivative-liability fair value.
At the corporate level, the strategic plan changed sharply during the quarter. BullionFX terminated the binding letter of intent covering Functional Brands’ proposed acquisition of blockchain-related intellectual property and assets, leaving the company’s existing nutraceutical and wellness operations as its principal operating foundation.
Functional Brands’ shares were also delisted from Nasdaq and moved to OTC Markets under ticker MEHA. The combination of the failed transaction, delisting and continuing public-company costs adds financing pressure despite the improvement in core gross margin.
That pressure is visible on the balance sheet. Functional Brands had only approximately $352,000 of cash at June 30, down from $2.73 million at year-end, along with a $2.90 million working-capital deficit. The company said these conditions raise substantial doubt about its ability to continue as a going concern and that additional financing will be required.
The quarter therefore presents two very different pictures: improving unit economics inside the core Kirkman business and deteriorating financial flexibility at the public-company level.
KEY QUOTES:
“Our core Kirkman business continued to make real progress in the second quarter — revenue grew and gross margin expanded meaningfully — and we believe that underlying momentum is genuine. At the same time, we want our stockholders to have a clear picture of the challenges we are managing: the termination of the BullionFX letter of intent, our common stock’s move to OTC Markets, and the increased costs of operating as a public company all weighed on our results this quarter. Our focus now is on strengthening our balance sheet, managing our cost structure, and executing on the core nutraceutical business that remains the foundation of this Company.”
Eric Gripentrog, CEO of Functional Brands
