Revenue Recognition

The Company applies Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) topic 606, Revenue from Contracts with Customers (ASC 606). ASC 606 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes all of the existing revenue recognition guidance. This standard requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 requires us to identify distinct performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. When distinct performance obligations exist, the Company allocates the contract transaction price to each distinct performance obligation. The standalone selling price is used to allocate the transaction price to the separate performance obligations. The Company recognizes revenue when, or as, the performance obligation is satisfied.

Mostly, revenues are recognized at the time of shipment to the customer with the price being fixed and determinable and collectability assured, provided title and risk of loss is transferred to the customer. Most of the Company’s shipping and handling costs are built into the transaction price, but if the customer asks for express shipping, the costs charged to customers are classified as sales, and the shipping and handling costs incurred are included in cost of sales.

The Company’s subsidiary, BergaMet N.A., LLC, recognizes revenue from its main source – e-commerce revenue. Its sales channels include the Company’s subsidiary website channel or any other selling channel like Amazon, doctors’ offices, and walk-in sales. All of its customer sales for Healthy Extracts Inc. and Ultimate Brain Nutrients, LLC are recognized as revenue under the subsidiary of BergaMet N.A., LLC. All three divisions of the Company sell plant-based nutraceuticals to its end using customers. Gummy USA, LLC recognizes revenue from one main source – manufacturing. The Company’s sales channels are through third party customers by white labeling the products produced.

The Company evaluates the criteria pursuant to ASC 606-10-55. Some of the different considerations that it uses because of their significance are as follows: Collectability - payment has to be made prior to shipment unless the customer has agreed upon terms. Guaranties – the Company offers a money back guarantee to customers if they are unhappy with its products. Principal versus Agent Considerations - currently the Company is the principal and has not engaged an agent at this time and has not recognized any revenues under the agent considerations.

Revenue is recognized when, or as, control of a promised merchandise or service is shipped to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring title of those products or services and are recorded net of and discounts or allowances. Shipping costs paid by the customer are included in revenue. Merchandise sales are fulfilled with inventory held in the Company’s warehouses in Henderson, NV and Sarasota, FL. Therefore, the Company’s contracts have a single performance obligation (shipment of product).

If the Company receives a request for refund on a customer obligation, the Company will refund the full cost of the obligation due to its money back guarantee. Historically, the Company has done a valuation of its sales allowance account (customer returns). In 2025, the Company’s return percentage was 0.007% of sales and 2024 was 0.007% of sales. Due to the low refund percentage management decided there was not a need for an estimated adjustment for allowances and refunds due to materiality.

Revenue recognition is evaluated through the following five-step process:

1.identification of the contract with a customer; 

2.identification of the performance obligations in the contract; 

3.determination of the transaction price; 

4.allocation of the transaction price to the performance obligations in the contract; and 

5.recognition of revenue when or as a performance obligation is satisfied. 

These steps are met when an order is received, a price agreed and the product shipped or delivered to that customer.