UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September~~March 3031, ~~2024~~2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _________ to _________

Commission file number: 000-56654

YERBAÉ BRANDS CORP.

YERBAE BRANDS CORP.

(Exact name of registrant as specified in its charter)

British Columbia, Canada

85-2611392

(State or other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

18801 N Thompson Peak Pkwy,

Suite 380 Scottsdale AZ

85255

(Address of Principal Executive Offices)

(Zip Code)

(480) 471-8391

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of exchange on which registered
None		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~May 1319, ~~2024~~2025, there were 6367,~~085~~160,~~228~~533 shares of the registrant’s common stock outstanding.

YERBAÉ BRANDS CORP.

FORM 10-Q

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2024~~2025

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		3
ITEM 1.	Financial Statements	3
	Condensed Consolidated Interim Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023	3
	Condensed Consolidated Interim Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024	3
	Condensed Consolidated Interim Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Interim Statements of Operations for the Three Months Ended March 31, 2025 and 2024 (unaudited)	4
	Condensed Consolidated Interim Statements of Changes in Shareholders’ Deficiency for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	5
	Condensed Consolidated Interim Statements of Changes in Shareholders’ Deficiency for the Three Months Ended March 31, 2025 and 2024 (unaudited)	5
	Condensed Consolidated Interim Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited)	6
	Condensed Consolidated Interim Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1918
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	2225
ITEM 4.	Controls and Procedures	2225
PART II. OTHER INFORMATION		2326
ITEM 1.	Legal Proceedings	2326
ITEM 1A.	Risk Factors	2326
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2326
ITEM 3.	Defaults Upon Senior Securities	2326
ITEM 4.	Mine Safety Disclosures	2326
ITEM 5.	Other Information	2326
ITEM 6.	Exhibits	2427
SIGNATURES		2528

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

YERBAÉ BRANDS CORP.

UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

(In United States dollars, except share data)

	September 30,			December 31,
	March 31,			December 31,
	2024			2023
	2025			2024
CURRENT ASSETS
Cash	$	~~269~~526,~~148~~187		$	~~977~~124,~~373~~214
Accounts receivable		~~710~~241,~~417~~863			1364,~~020,056~~886
Inventory		~~725~~751,~~243~~863			~~962~~676,~~288~~020
Prepaid expenses		~~501~~406,~~884~~261			~~721~~452,~~432~~903
Other current assets		150,000			150,000
Total current assets	$	2,~~356~~076,~~692~~174		$	31,~~831~~768,~~149~~023
NONCURRENT ASSETS
Property, plant and equipment, net		3011,~~129~~628			6026,~~453~~470
Right of use asset		~~143~~95,~~086~~137			~~210~~119,~~208~~445
Total noncurrent assets	$	~~173~~106,~~215~~765		$	~~270~~145,~~661~~915
Total assets	$	2,~~529~~182,~~907~~939		$	41,~~101~~913,~~810~~938
CURRENT LIABILITIES
Accounts payable	$	13,~~777~~109,~~981~~753		$	12,~~689~~377,~~407~~758
Accrued expenses		1,~~160~~298,~~276~~186			~~840~~1,~~426~~076,832
Notes payable, current portion		4,~~082~~635,~~962~~989			~~340~~3,~~178~~989,533
Note payable, related party		~~328~~346,~~167~~500			-337,667
Note payable		~~328~~346,~~167~~500			-337,667
Lease liability, current portion		~~127~~121,~~975~~025			~~117~~131,~~660~~563
Total current liabilities	$	7,477,361		$	2,987,671
Advances		525,000			225,000
Total current liabilities	$	10,036,453		$	8,138,353
NONCURRENT LIABILITIES
Notes payable, non-current portion		154,~~484~~422			210,~~234,038~~977
Lease liability, non-current portion		572,~~699~~306			~~155~~23,~~107~~544
Total noncurrent liabilities	$	736,~~183~~728		$	234,~~389,145~~521
Total liabilities	$	710,~~550~~043,~~544~~181		$	58,~~376~~172,~~816~~874
SHAREHOLDERS’ DEFICIENCY
EQUITY
Preferred shares - 100,000,000 authorized, zero issued and outstanding as of both September 30, 2024 and December 31, 2023	$	-		$	-
Preferred shares - 100,000,000 authorized, zero issued and outstanding as of both March 31, 2025 and December 31, 2024.	$	-		$	-
Common shares - without par value, 62,870,943 and 58,822,126 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively.		-			-
Common shares - without par value, 65,922,869 and 63,085,228 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively.		-			-
Additional paid-in capital		3640,~~499~~577,~~551~~864			3338,~~212~~847,~~631~~388
Accumulated deficit		(4148,~~520~~438,~~188~~106	)		(3445,~~487~~106,~~637~~324	)
Total deficiency	$	(57,~~020~~860,~~637~~242	)	$	(16,~~275~~258,~~006~~936	)
Total Liabilities & shareholders’ deficiency	$	2,~~529~~182,~~907~~939		$	41,~~101~~913,~~810~~938

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

YERBAÉ BRANDS CORP.

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(In United States dollars, except share data)

	2024			2023			2024			2023
	2025			2024
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2024			2023			2024			2023
	2025			2024
Revenues	$	1,~~631~~213,~~615~~883		$	21,~~986~~434,~~734~~971		$	~~4,628,830~~		$	~~9,991,758~~
Cost of sales		~~599~~703,~~845~~684			1620,~~417,603~~262			~~2,122,316~~			~~4,968,058~~
Gross profit	$	1510,~~031,770~~199		$	1814,~~569,131~~709		$	~~2,506,514~~		$	~~5,023,700~~
General and administrative	$	13,~~792~~192,~~423~~573		$	32,~~589~~892,~~314~~274		$	~~7,469,589~~		$	~~15,735,214~~
Sales, advertising and marketing		~~311~~213,~~915~~443			1457,~~886,414~~807			~~1,136,839~~			~~5,542,848~~
Total expenses	$	23,~~104~~406,~~338~~016		$	53,~~475~~350,~~728~~081		$	~~8,606,428~~		$	~~21,278,062~~
Net loss before other income (expense)		(12,~~072~~895,~~568~~817	)		(32,~~906~~535,~~597~~372	)		~~(6,099,914~~	)		~~(16,254,362~~	)
Interest expense		(406,926	)		(234,756	)		(932,637	)		(418,748	)
Other (expense) income
Net loss before income taxes		(1,479,494	)		(4,141,353	)		(7,032,551	)		(16,673,110	)
Interest income		68,240			-
Income tax expense		-			-			-			-
Interest expense		(504,205	)		(258,337	)
Net loss and comprehensive loss	$	(1,479,494	)	$	(4,141,353	)	$	(7,032,551	)	$	(16,673,110	)
Total other (expense) income		(435,965	)		(258,337	)
Basic and diluted loss per share	$	(0.02	)	$	(0.07	)	$	(0.11	)	$	(0.31	)
Net loss before income taxes		(3,331,782	)		(2,793,709	)
Basic and diluted weighted average shares outstanding		61,767,132			56,506,032			61,982,564			54,645,615
Income tax expense		-			-
Net loss and comprehensive loss	$	(3,331,782	)	$	(2,793,709	)
Basic and diluted loss per share	$	(0.05	)	$	(0.05	)
Basic and diluted weighted average shares outstanding		64,314,872			60,258,351

The accompanying notes are an integral part of these consolidated interim financial statements.

YERBAÉ BRANDS CORP.

UNAUDITED CONDENSED INTERIM STATEMENT OF SHAREHOLDERS’ DEFICIENCY

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2024~~2025 AND ~~SEPTEMBER~~MARCH 3031, ~~2023~~2024

(In United States dollars, except share data)

	Shares		Amount			~~Paid-In~~ Capital			Deficit			Total
	Common Stock					Additional Paid-In			Accumulated
	Shares		Amount			~~Paid-In~~ Capital			Deficit			Total
Balance, December 31, 2022		30,217,566	$	3,022		$	9,027,460		$	(13,663,598	)	$	(4,633,116	)
Recapitalization		8,239,215		(3,022	)		643,731			-			640,709
Convertible debt conversion into common shares		5,599,102		-			4,528,094			-			4,528,094
Shares issued as compensation in connection with financings		5,554,447		-			(481,574	)		-			(481,574	)
Warrant issuance		-		-			1,643,777			-			1,643,777
Performance shares issued in connection with Merger		5,000,000		-			6,086,596			-			6,086,596
Stock compensation expense		-		-			104,455			-			104,455
Stock compensation expense, shares
Exercise of warrants
Exercise of warrants, shares
Shares issued-Special Warrants
Shares issued-Special Warrants, shares
Net loss		-		-			-			(8,882,782	)		(8,882,782	)
Balance, March 31, 2023		54,610,330	$	-		$	21,552,539		$	(22,546,380	)	$	(993,841	)
Warrant issuance		-		-			1,250,603			-			1,250,603
Stock compensation expense		-		-			856,829			-			856,829
Net loss		-		-			-			(3,648,975	)		(3,648,975	)
Balance, June 30, 2023		54,610,330	$	-		$	23,659,971		$	(26,195,355	)	$	(2,535,384	)
Stock compensation expense		-		-			733,686			-			733,686
Convertible debt conversion into common shares		222,123		-			539,606			-			539,606
Shares issued for equity raise		2,476,321		-			3,615,023			-			3,615,023
Performance shares issued		-		-			413,841			-			413,841
Warrant issuance		1,094,968		-			1,225,613			-			1,225,613
Net loss		-		-			-			(4,141,353	)		(4,141,353	)
Balance, September 30, 2023		58,403,742	$	-		$	30,187,740		$	(30,336,708	)	$	(148,968	)
Balance, December 31, 2023		58,822,126	$	-		$	33,212,631		$	(34,487,637	)	$	(1,275,006	)
Exercise of warrants		1,451,098		-			1,551,979			-			1,551,979
Stock compensation expense		1,493,908		-			944,865			-			944,865
Net loss		-		-			-			(2,793,709	)		(2,793,709	)
Balance, March 31, 2024		61,767,132	$	-		$	35,709,475		$	(37,281,346	)	$	(1,571,871	)
Stock compensation expense		-		-			591,292			-			591,292
Balance, December 31, 2024		63,085,228	$	-		$	38,847,388		$	(45,106,324	)	$	(6,258,936	)
Shares issued-Special Warrants		1,103,811		-			-			-			-
Balance		63,085,228	$	-		$	38,847,388		$	(45,106,324	)	$	(6,258,936	)
Net loss		-		-			-			(2,759,348	)		(2,759,348	)
Stock compensation expense		2,837,641		-			1,730,476			-			1,730,476
Balance, June 30, 2024		62,870,943	$	-		$	36,300,767		$	(40,040,694	)	$	(3,739,927	)
Net loss		-		-			-			(3,331,782	)		(3,331,782	)
Balance		62,870,943	$	-		$	36,300,767		$	(40,040,694	)	$	(3,739,927	)
Balance, March 31, 2025		65,922,869	$	-		$	40,577,864		$	(48,438,106	)	$	(7,860,242	)
Stock compensation expense		-		-			198,784			-			198,784
Balance		65,922,869	$	-		$	40,577,864		$	(48,438,106	)	$	(7,860,242	)
Net loss		-		-			-			(1,479,494	)		(1,479,494	)
Balance, September 30, 2024		62,870,943	$	-		$	36,499,551		$	(41,520,188	)	$	(5,020,637	)
Balance		62,870,943	$	-		$	36,499,551		$	(41,520,188	)	$	(5,020,637	)

The accompanying notes are an integral part of these consolidated interim financial statements.

YERBAÉ BRANDS CORP.

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

(In United States dollars)

	2024			2023
	2025			2024
	For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2024			2023
	2025			2024
Cash flows from operating activities:
Net loss	$	(73,~~032~~331,~~551~~782	)	$	(162,~~673~~793,~~110~~709	)
Adjustment to reconcile net loss to net cash used in operating activities:
Share-based compensation		1,~~734~~730,~~941~~476			1944,~~694,970~~865
Performance shares granted upon consummation of RTO		-			~~6,086,596~~-
Depreciation and amortization		232,~~260~~444			295,~~083~~495
Gain on sale of equipment		-(3,602	)		~~(70,647~~-	)
Lease expense		(19,971	)		37,899
Interest expense		134,890			-
Accretion expense		538,634			215,412
Lease expense		(7,468	)		(4,992	)
Accretion expense		215,809			168,602
Change in operating assets and liabilities:
Accounts receivable		~~309~~123,~~639~~023			11427,~~559~~754
Inventory		~~237~~(75,~~045~~843	)		(65354,~~100~~768	)
Prepaid expenses		~~219~~46,~~547~~642			~~(261~~96,~~142~~828	)
Accounts payable		70731,~~972~~995			(1325,~~104,076~~732	)
Accrued interest		~~148~~48,~~486~~481			4349,~~047~~020
Accrued expenses		~~171~~172,~~364~~873			70(59,~~497~~591	)
Net cash used in operating activities		(3212,~~598,634~~062	)		(91,~~985~~846,~~012~~228	)
Cash flows from investing activities:
Proceeds from the sale of equipment		-16,000			~~96,168~~(857	)
Recapitalization		-			640,709
Net cash flows provided by investing activities:		16,000			(857	)
Net cash flows provided by investing activities:		-			736,877
Cash flows from financing activities:
Proceeds from debt instruments and notes payable		3970,~~057,477~~000			5262,~~973,613~~077
Payments on debt instruments and notes payable		(2671,~~039,047~~965	)		(4334,~~004,143~~580	)
Proceeds from note - related party		~~320,000~~-			-
Warrants exercised		~~1,551,979~~-			-1,551,979
Fees on Convertible note		-			(204,050	)
Advances from Safety Shot		300,000			-
Proceeds from issuance of common stock and warrants		-			8,226,909
Fees on Convertible note		-			-
Net cash flows provided by (used in) financing activities:		2,890,409			9,992,329
Proceeds from issuance of common stock and warrants		-			-
Net change in cash		(708,225	)		744,194
Net cash flows provided by (used in) financing activities:		598,035			1,479,476
Cash, beginning of period		977,373			857,710
Net change in cash		401,973			(367,609	)
Cash, end of period	$	269,148		$	1,601,904
Cash, beginning of period		124,214			977,373
Cash, end of period	$	526,187		$	609,764
Supplemental disclosure of cash flow information
Cash paid for interest	$	(~~160~~165,~~290~~442	)	$	(7446,~~584~~185	)
Conversion of notes payable to common stock	$	-		$	4,528,094
Reverse takeover transaction	$	-		$	(569,115	)

The accompanying notes are an integral part of these consolidated interim financial statements.

YERBAÉ BRANDS CORP.

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2024~~2025

(Unaudited)

NOTE 1 - NATURE AND DESCRIPTION OF BUSINESS

Yerbaé Brands Corp. (“Yerbaé” and, together with its subsidiary, the “Company”., “we”, or “us”) is a corporation existing under the Business Corporations Act (British Columbia) (“BCBCA”). Yerbaé’s principal subsidiaries are Yerbaé Brands Co. (“Yerbaé USA”) and Yerbaé LLC of which Yerbaé owns 100% interests in. Yerbaé is a beverage manufacturer focusing on the development and distribution of plant-based energy drinks and seltzers.

On May 19, 2022, Yerbaé (formerly Kona Bay Technologies Inc. (“Kona Bay”)) entered into a definitive arrangement agreement and plan of merger, as amended on August 31, 2022 and February 8, 2023, with Yerbaé USA, Kona Bay Technologies (Delaware) Inc. (“Merger Sub”), a wholly-owned Delaware subsidiary of the Company, 1362283 B.C. Ltd. (“FinCo”), a wholly-owned British Columbia subsidiary of Kona Bay, Todd Gibson and Karrie Gibson, pursuant to which Kona Bay proposed to complete a business combination with Yerbaé USA via the acquisition of all of the issued and outstanding securities of Yerbaé USA from the securityholders (collectively, the “Original Yerbaé Securityholders”) of Yerbaé USA (the “Kona Bay Transaction”). The Kona Bay Transaction was subject to the approval of the TSX Venture Exchange (“TSXV”) and constituted a reverse takeover of Kona Bay by Yerbaé USA as defined in TSXV Policy 5.2 – Change of Business and Reverse Takeovers.

On February 8, 2023, Yerbaé completed the Kona Bay Transaction with Yerbaé USA by way of a reverse merger conducted pursuant to: (i) the provisions of the Delaware General Corporations Law (“DGCL”) in which Merger Sub merged with and into Yerbaé USA, and (ii) a plan of arrangement conducted pursuant to the provisions of the BCBCA, which resulted in the amalgamation of Kona Bay ~~with~~ with FinCo. In connection with the closing of the Kona Bay Transaction, Yerbaé (formerly, Kona Bay Technologies Inc.) consolidated its issued and outstanding common shares (each, a “Common Share”) on the basis of 5.8 pre-consolidation Common Shares ~~for~~ every one post-consolidation Common Share and changed its name from “Kona Bay Technologies Inc.” to “Yerbaé Brands Corp.”

On January 7, 2025, Yerbaé entered into a definitive Arrangement Agreement with Safety Shot, pursuant to which, among other things, Safety Shot will acquire all of the issued and outstanding common shares of Yerbaé. The Arrangement will be implemented by way of a plan of arrangement in accordance with the Business Corporations Act and is subject to approval by the Supreme Court of British Columbia, the stockholders of Safety Shot and the shareholders of Yerbaé, and subject to other customary closing conditions for a transaction of this nature and size. The Arrangement has not been consummated as May 20, 2025.

Basis of Presentation and Principles of Consolidation

The accompanying ~~unaudited condensed interim~~ consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include Yerbaé and its subsidiaries and include the accounts of all majority owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. The Company had the following wholly- owned consolidated subsidiaries as of ~~September~~March 3031, ~~2024~~2025:

Subsidiary	Date of Incorporation	Jurisdiction of Incorporation	Ownership Percentage	Direct or Indirect Ownership
Yerbaé Brands Co.	August 21, 2020	Delaware	100%	Direct
Yerbaé LLC⁽¹⁾	May 18, 2016	Delaware	100%	Indirect

(1) Yerbaé LLC is a wholly- owned subsidiary of Yerbaé Brands Co.

These unaudited condensed interim consolidated financial statements should be read in conjunction with the company’s latest consolidated annual financial statements for the period ended December 31, ~~2023~~ 2024 that was filed ~~in our Form 10 filed~~ with the SEC on ~~July~~March 1910, ~~2024~~2025. In general, disclosure provided in these unaudited condensed interim consolidated financial statements do not repeat the disclosure provided in the Company’s most recent audited consolidated annual financial statements. However, these unaudited condensed interim consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented.

Going Concern

Yerbaé’s evaluation of its ability to continue as a going concern requires itevaluation toof ~~evaluate its~~ future sources and uses of cash and whether it is sufficient to fund its currently expected operations in conducting business activities one year from the date its ~~unaudited condensed interim~~ consolidated financial statements are issued. Yerbaé evaluates the probability associated with each source and use of cash resources in making its going concern determination.

~~Due~~Management ~~to our recurring losses, the ongoing challenging market conditions for beverage companies and our limited cash balance as of September 30, 2024, management~~ believes that it is probable that the Company will be unable to meet its obligations as they come due within one year after the date that the ~~unaudited condensed interim consolidated~~ financial statements are issued. ~~While~~As ~~the~~described above, ~~Company~~on isJanuary ~~attempting to plan additional financings~~7, ~~including equity and debt~~2025, ~~which~~Yerbaé ~~are~~entered ~~intended to~~into ~~mitigate~~a ~~the~~definitive ~~conditions~~Arrangement orAgreement ~~events~~with ~~that~~Safety ~~raise~~Shot, ~~substantial~~pursuant ~~doubt about our ability~~ to ~~continue as a going concern~~which, ~~those~~among ~~financings may~~other ~~not occur. If the financings do not occur~~things, ~~management~~Safety Shot will ~~try~~acquire ~~and~~all ~~implement~~of ~~alternative~~the ~~arrangements,~~issued and ~~such~~outstanding ~~arrangements~~common ~~could~~shares ~~have a potentially significant negative impact on the current net asset value~~ of ~~the Company~~Yerbaé. ~~These~~The ~~alternatives~~arrangement ~~include:~~was ~~(1)~~not ~~raising~~yet ~~additional~~consummated ~~capital~~as byof ~~means~~the ~~other~~date ~~than~~of ~~those~~this ~~planned through equity and/or debt financing; and/or (2) entering into new commercial relationships to help fund future expenses~~filing.

AsHowever, as a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements within one year after the date that the financial statements are issued, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.

Management Estimates

The preparation of ~~the unaudited condensed interim~~ consolidated financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the ~~unaudited condensed interim~~ consolidated financial statements and accompanying notes. These estimates are based on historical experience and various other assumptions that management believes to be reasonable under the circumstances, including the potential future effects of macroeconomic trends and events, such as inflation and interest rate levels; supply chain disruptions; uncertainty from potential recessionary effects; climate-related matters; market, industry and regulatory factors, including permitting issues; global events, such as the ongoing military conflicts in Ukraine and ~~the~~ ~~middle east~~Palestine; and public health matters. These estimates form the basis for making judgments about the Company’s operating results and the carrying values of assets and liabilities that are not readily apparent from other sources. While management believes that such estimates are reasonable when considered in conjunction with the Company’s ~~unaudited condensed interim~~ consolidated financial position and results of operations taken as a whole, actual results could differ materially from these estimates.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Note

In accordance with Rule 10-01(a)(5) of Regulation S-X, the Company has not provided summary of significant accounting policy disclosure which would substantially duplicate the disclosure contained in our most recent annual report included in our Form 10-K filed with ~~the~~ the Securities and Exchange Commission (the “SEC”) on ~~July~~March 1910, ~~2024~~2025.

Inventory

Inventory is valued at the lower of cost or net realizable value with cost determined on a first-in/first-out basis. The cost of inventory includes material and manufacturing costs. Inventoriable costs are expensed to cost of goods sold on the unaudited condensed interim consolidated statement of operations in the same period as finished products are sold. The amount of any write-down of inventory to net realizable value and all losses of inventory are recognized as an expense in the period when the write-down or loss. No write downs were recognized during the three and nine month interim reporting periods ended September 30, 2024 or September 30, 2023. Further, we establish a reserve related to shrinkage. The reserve is adjusted at the end of each reporting period as needed.

Long-Lived Assets

Management regularly reviews property and equipment and other long-lived assets for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is an indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks. Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. No impairments were recognized during the three and nine month interim periods ended September 30, 2024 or September 30, 2023.

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect ~~the~~our ~~Company’s~~ own assumptions. While the Company does not have any financial instruments that are measured to fair value on a recurring or non-recurring basis, it does have financial instruments, such as cash, notes payable (current, ~~and~~non-current ~~the~~portion, ~~line~~and ofrelated ~~credit~~party), accounts payable, and lease liability ( current and non-current portion) as of both ~~September~~March 3031, ~~2024~~2025, and December 31, ~~2023~~2024. The fair value of the cash is equal to its carrying value due to the short-term nature and liquidity of the instrument. Similarly, the fair value of the notes payable (current portion, and related party), advance, lease liability (current portion), and accounts payable, which are categorized as level 3 instruments, are also equal to their carrying value due to their short-term nature.

The Company’s financial instruments as of ~~September~~March 3031, ~~2024~~2025 included cash, accounts ~~receivables~~receivable, accounts payable, related party ~~notes~~ notes payable and notes payable. The stated amounts of cash, accounts ~~receivables~~receivable and accounts payable represent fair value due to the short-term nature of the instruments. Further, the stated amount of the related party notes payable and notes payable, which are classified as level 3 instruments, also represent fair value due to the notes being issued at currently prevailing market rates.

Notes Payable

The Company recognizes its note payables in accordance with the guidance in ASC 470, Debt. When there is no stated interest rate on the note payable, or the note payable includes an original issue discount, the Company determines the interest rate utilizing the interest method outlined in ASC 835, Interest. In accordance with the ASC topic, original issue discounts are recognized as a debt discount and amortized to interest expense over the estimated life of the loan. Finally, note payables are classified as either current or non-current in accordance with the guidance in ASC 210 Balance Sheet and ASC 470 Debt.

Segment Reporting

The Company’s operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer (“CEO”). In addition to requiring certain information about operating segments, ASC 280 also requires that entities report certain information about their products and services, the geographic areas in which they operate, and their major customers.

Currently, the Company conducts its business within a single operating segment. Further, the Company does not have any long-lived assets located outside of the United States.

Recent Accounting Pronouncements

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures-In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. Yerbaé ~~expects~~adopted ~~this~~ the ASU tobeginning ~~only~~with ~~impact~~ its ~~disclosures~~Form ~~with~~10-K nofor ~~impact~~the toyear ~~the~~ended ~~Company’s~~December ~~results~~31, of2024. ~~operations~~However, the ~~cash~~adoption ~~flows~~of ~~and~~the new standard did not have a material impact on the requisite disclosure in its financial ~~condition~~statements.

Income Taxes (Topic 740): Improvements to Income Tax Disclosures-In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the ~~rate~~ reconciliation rate and income taxes paid. ASU No. 2023-09 requires a public business entity (“PBE”) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025, and continuing to provide the pre-ASU disclosures for the prior periods or may apply the amendments retrospectively by providing the revised disclosures for all period presented. Yerbaé expects this ASU to only impact its disclosures with no impact to the Company’s results of operations, cash flows, and financial condition.

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this Update require a public business entity to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective of the disclosure requirements is to provide disaggregated information about a public business entity’s expenses to help investors (a) better understand the entity’s performance, (b) better assess the entity’s prospects for future cash flows, and (c) compare an entity’s performance over time and with that of other entities. Public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is still assessing the new standard but does not believe it will have a material impact on its financial statements.

NOTE 3 - REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company is in the business of manufacturing plant-based beverages and derives its revenues from one primary source-product sales. Revenue from contracts with customers is recognized when control of the goods are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods.

The Company recognizes revenue in accordance with the five-step model outlined in ASC 606-Revenue from Contracts with Customers. Specifically, the Company recognizes revenue from the sale of Yerbaé product to our customers by applying the following steps:

	1.	Identify the contract(s) with a customer
	2.	Identify the performance obligations in the contract
	3.	Determine the transaction price
	4.	Allocate the transaction price to the performance obligations in the contract
	5.	Recognize revenue when (or as) the entity satisfies a performance obligation

The Company’s contracts with customers contain a single performance obligation consisting of providing Yerbaé energy drinks. As it pertains to the single performance obligation, the Company does not recognize any contract assets or contract liabilities as it does not: (1) have a right to consideration in exchange for goods or services that the entity has transferred to a customer when the right is conditioned on something other than the passage or (2) receive payment prior to performing.

The Company typically satisfies its performance obligations at a point in time upon the occurrence of delivery of the product to the customer. Further, payment is typically received within 60 days after product delivery and does not include a significant financing component.

10The Company’s contracts with customers include variable consideration including customer rebates and quick-pay discounts. The Company estimates variable consideration, which it does not consider to be constrained, using either the most likely amount or expected value methods depending on the type of variable consideration.

The Company’s contracts with customers include variable consideration including customer rebates and quick pay discounts. The Company estimates variable consideration, which it does not consider to be constrained, using either the most likely amount or expected value methods depending on the type of variable consideration.

The Company only provides refunds for products that are damaged during delivery to the customer. However, instances of refunds are rare and have not historically had a material impact on the Company’s results of operations. Finally, Yerbaé has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer.

In addition to variable consideration, the Company also provides payments to certain customers for slotting fees. In accordance with the guidance in ASC 606-10-32, the Company determined that the payment is not in exchange for a distinct good or service and it is therefore recognized as a reduction to the transaction price. As the slotting fee payment covers the life of the contract with a customer, the initial payment is recognized as an asset and is amortized as a reduction to revenue on a rational and reasonable basis over the estimated life of the contract.

Costs to Obtain a Contract with a Customer

The Company does not recognize any assets related to either costs to obtain or ~~fulfil~~fulfill a contract with a customer. We incur certain delivery costs prior to transferring control of Yerbaé product to ~~our~~the customers (i.e. outbound freight). In accordance with the guidance in ASC 606-10-25, those costs are recognized as a ~~fulfilment~~fulfillment cost as they are provided prior to transferring control of the Yerbaé product to ~~our~~the customer (i.e. akin to shipping and handling). Further, the costs are classified in general and administrative within the ~~unaudited condensed interim~~ consolidated statement of operations and comprehensive loss.

NOTE 4 - REVERSE RECAPITALIZATION

On February 8, 2023, Yerbaé completed the Transaction with Yerbaé USA by way of a reverse merger conducted pursuant to: (i) the provisions of the Delaware General Corporations Law (“DGCL”) in which Merger Sub merged with and into Yerbaé USA, and (ii) a plan of arrangement conducted pursuant to the provisions of the BCBCA, which resulted in the amalgamation of Kona Bay with FinCo. In connection with the Closing, Yerbaé (formerly, Kona Bay Technologies Inc.) consolidated its issued and outstanding common shares (each, a “Common Share”) on the basis of 5.8 pre-consolidation Common Shares for each one post-consolidation Common Share and changed its name from “Kona Bay Technologies Inc.” to “Yerbaé Brands Corp.”. In accounting for the Transaction, the Company determined that Kona Bay was a shell company (as that term has been defined in Rule 405 of the United States Securities Act of 1933) as prior to the merger they had no operations and assets consisting solely of cash and cash equivalents. Thus, pursuant to section 12100 of the United States Securities and Exchange Commission’s (“SEC”) financial reporting manual, the Company concluded that: (1) the Transaction should be accounted for as “a reverse takeover equivalent to the issuance of Common Shares by the Company for the net monetary assets of Kona Bay”; and (2) the Company should be considered the accounting acquirer/legal acquiree in the Transaction. As the Company concluded that Yerbaé USA was the accounting acquirer/legal acquiree in the transaction, the historical results of the combined company (prior the merger) represent the historical results of Yerbaé USA.

The recognition and measurement for the acquisition of Kona Bay, was analogized to the guidance in ASC 805-40 Reverse Acquisitions which requires that the accounting acquirer measure the fair value of the consideration transferred based on the number of common shares the legal target would have had to issue in order to retain a specified ownership in the combined Company (the “deemed issuance”). Yerbaé intended to retain and 85% ownership interest in the combined company, and therefore, based on 30.2 million shares outstanding immediately prior to the merger, would have had to issue approximately 5.3 million shares to the owners of the legal parent (to retain an 85% ownership). In addition, based on an equity financing by the Company which occurred immediately before the transaction, the Company determined that the common shares had a fair value of $1.23 per share. This resulted in the determination of the fair value of the consideration transferred in the transaction was approximately $6.5 million (5.2 million shares x $1.23 per Common Share) and that of the $6.5 million transferred approximately $0.6 million should be allocated to the cash acquired from Kona Bay (i.e., the “net assets” acquired) and the remaining $5.9 million should be recognized as a charge to equity as follows:

SCHEDULE OF RECOGNIZED AS A CHARGE TO EQUITY

	Allocation Table
	($ in millions)
Fair value of consideration paid	$	6.5
Net assets acquired (cash)		(0.6	)
Charge to additional paid in capital	$	5.9

InNOTE ~~addition,~~4 the Company presented the acquisition of Kona Bay as a “recapitalization” line item in our statement of changes in shareholders equity reflecting: (1) the number of Kona Bay’s outstanding common shares immediately prior to the transaction; and (2) the approximately $6.5 million in fair value of consideration transferred (calculated pursuant to the paragraph above). Further, while the guidance in ASC 805-40 also requires a revision to historical equity (of the combined company) to reflect the legal capital of the legal acquirer, the Company concluded that this was not required in our scenario as the conversion ratio, which reflects the number of common shares issued by the legal acquirer to effectuate the transaction compared to the number of common shares in the capital of Yerbaé outstanding immediately prior to the transaction, was 1:1.INVENTORY

~~NOTE~~Inventory 5consisted -of ~~INVENTORY~~the following as of:

Inventory consists of the following for the fiscal periods presented:

SCHEDULE OF INVENTORY

	September 30, 2024			December 31, 2023
	2025			2024
Raw material	$	151,550		$	54,954
	March 31, 2025			December 31, 2024
Finished goods		576,621			908,433
Raw material	$	183,900		$	240,540
Reserve for shrinkage		(2,928	)		(1,099	)
Finished goods		571,702			439,228
TOTAL	$	725,243		$	962,288
Reserve for shrinkage		(3,739	)		(3,748	)
TOTAL	$	751,863		$	676,020

NOTE 65 – PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and consist primarily of vehicles. Depreciation is computed on a straight-line method over an estimated useful life of the asset of approximately five years.

SCHEDULE OF PROPERTY AND EQUIPMENT

	September 30, 2024			December 31, 2023
	March 31, 2025			December 31, 2024
Vehicles, gross	$	7436,~~036~~735		$	~~109~~74,~~915~~036
Vehicles, accumulated depreciation		(4325,~~907~~107	)		(4947,~~462~~566	)
Vehicles, net	$	3011,~~129~~628		$	6026,~~453~~470

Depreciation expense ~~totalled~~totaled $32,~~479~~444 and $65,~~732~~495 for the three months ended ~~September~~March 3031, ~~2024~~2025, and ~~2023~~2024, respectively., ~~Depreciation~~and ~~expense~~is ~~totalled~~recorded ~~$13,246~~ in General and ~~$29,083~~Administrative ~~for~~in the ~~nine~~unaudited condensed interim consolidated statement of operations. During the three months ended ~~September~~March 3031, ~~2024~~2025, ~~and~~the ~~2023~~Company sold a vehicle for $16,000 the ~~respectively~~net book value of the asset was $12,398 ~~and~~resulting isin a gain on the sale of $3,602 which was recorded in ~~General~~general and ~~Administrative~~administrative in the ~~unaudited~~ condensed interim consolidated statement of operations.

12NOTE 6 – ACCRUED EXPENSES

~~NOTE~~Accrued 7expenses –consisted ~~ACCRUED~~of ~~EXPENSES~~the following as of:

Accrued expenses consist of the following as of the following dates:

SCHEDULE OF ACCRUED EXPENSES

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Payroll and related costs	$	238,312	$	358,154
Accrued employee bonuses and payroll	$	170,797	$	145,185
Credit card expenses		494,715		259,144
Accrued retention bonuses		189,614		-
Interest		281,839		133,353
Accrued credit card expenses		393,273		413,592
Other accrued expenses		145,410		89,775
Accrued interest		378,993		330,512
TOTAL	$	1,160,276	$	840,426
Other accrued expenses		165,509		187,543
TOTAL	$	1,298,186	$	1,076,832

1312

NOTE 87 – NOTES PAYABLE

Notes payable consisted of the following:

SCHEDULE OF NOTES PAYABLE

	September 30, 2024			December 31, 2023
	March 31, 2025			December 31, 2024
Convertible notes payable to multiple investors in the amount of $3,802,000 in total. The loans mature during April 2025 and have a stated interest rate of 6.00%		2,734,936			2,196,302
Convertible notes payable to multiple investors in the amount of $3,802,000 in total. The loans mature during April 2025 and have a stated interest rate of 6.00%. Subsequent to reporting period end, the maturity date of the loan was extended to July 30, 2025.		3,153,614			2,937,805
Various notes payable in monthly instalments ranging from $543 to $652, including interest ranging from 2.90% to 5.49%, due October 2026. The notes are secured by vehicles.		30,968			60,914
Various notes payable in monthly installments ranging from $543 to $652, including interest ranging from 2.90% to 5.49%, due October 2026. The notes are secured by vehicles.		11,611			27,514
Short term note payable due to Amazon Lending originated December 26, 2023 maturing December 26, 2024 at an interest rate of 14.49%, secured by inventories.	$	36,937		$	317,000
Note payable to MaximCash Solutions for $750,000 with an original issue discount of $86,786. The loan was repaid in January 2025.		-			388,523
Note payable to MaximCash Solutions for $750,000 with an original issue discount of $97,500. The loan matures on July 5, 2025 and has an effective interest rate of 42%		584,801			-
Note payable to MaximCash Solutions for $1,000,000. The loan matures on January 29, 2026 and has an effective interest rate of 27%		874,708			-
Note payable to an unrelated third party for $540,000 with an original issue discount of $40,000. The loan matures on August 16, 2025 and has an effective interest rate of 8%		500,000			-
Note payable to an investor for $540,000 with an original issue discount of $40,000. The loan matures on August 16, 2025 and has an effective interest rate of 8%		520,000			510,000
Note payable to an unrelated third party for $60,000 with an original issue discount of $10,000. The loan matures on February 26, 2025 and has an effective interest rate of 8.3%		51,667			-
Note payable to an investor for $60,000 with an original issue discount of $10,000. The loan matured February 26, 2025 and has an effective interest rate of 8.3%. Subsequent to reporting period end, the maturity date of the loan was extended to July 15, 2025.		60,000			56,667
Note payable to an unrelated third party for $230,000. The loan agreement includes a payment rate of 15% of the Company’s weekly sales plus an additional $30,000 fee.		159,137			-
Note payable to an investor for $230,000. The loan agreement includes a payment rate of 15% of the Company’s weekly sales plus an additional $30,000 capital fee.		20,478			80,001
Related party note payable to a director of the Company for $330,000 with an original issue discount of $30,000. The loan matures on June 15, 2025 and has an effective interest rate of 10%		307,500			-
Related party note payable to a director of the Company for $330,000 with an original issue discount of $30,000. The loan matures on July 15, 2025 and has an effective interest rate of 10%.		322,500			315,000
Related party note payable to a director of the Company for $24,000 with an original issue discount of $4,000. The loan matures on June 15, 2025 and has an effective interest rate of 10%		20,667			-
Related party note payable to a director of the Company for $24,000 with an original issue discount of $4,000. The loan matured February 26, 2025 and has an effective interest rate of 10%. Subsequent to reporting period end, the maturity date of the loan was extended to July 15, 2025.		24,000			22,667
Total notes payable		4,~~426~~986,~~613~~911			24,~~574~~338,~~216~~177
Less current maturities		(4,~~411~~982,~~129~~489	)		(~~340~~4,~~178~~327,200	)
Total notes payable, non-current portion	$	154,~~484~~422		$	210,~~234,038~~977

Loans Issued ~~Prior~~During tothe ~~2024~~Three Months Ended March 31, 2025

On January 29, 2025, the Company entered into a loan agreement with MaximCash Solutions (“MaximCash”) for $1,000,000. The loan included an origination cost of $30,000. The loan matures on January 29, 2026. A portion of the proceeds from this loan in the amount of $407,392 was used to pay down the existing facility with MaximCash that was set to mature on June 11, 2025. In accordance with ASC 470-50, Modification and Extinguishments, the Company concluded that the exchange should be considered a debt extinguishment as the original and new loan were made on substantially different terms. In accordance with the ASC subtopic, the Company recognized a $30,000 loss on the exchange. The balance of the loan was $874,708 net of discounts and repayments as of March 31, 2025 and had an effective interest rate of 27%.

Loans Issued Prior to 2025

Convertible Notes

On April 13, 2023, Yerbaé closed the first tranche (the “First Tranche”) of its brokered debenture unit (each, a “Debenture Unit”) offering which consisted of 1,650 Debenture Units for gross proceeds of $1,650,000. On May 5, 2023, Yerbaé closed the second tranche (the “Second Tranche”) pursuant to which it issued an additional 2,152 Debenture Units for gross proceeds of $2,152,000, and for aggregate gross proceeds, together with the closing of the First Tranche, of $3,802,000.

1413

Each Debenture Unit consisted of: (i) one (1) convertible debenture (each, a “Debenture”) in the principal amount of $1,000; and (ii) 714 share purchase warrants. The Debentures mature on April 30, 2025 (the “Maturity Date”), and bear interest at a rate of 6.0% per annum, payable on the earlier of the Maturity Date or the date of conversion of the Debentures. The interest will be payable in Common Shares to be determined at the Market Price (as that term is defined in the Policies of the TSXV). The principal amount of the Debentures will be convertible at the holder’s option into Common Shares at any time prior to the close of business on the earlier of: (i) the last business day immediately preceding the Maturity Date, and (ii) the date fixed for redemption in the case of a change of control, at a conversion price of $1.40 per Common Share, subject to adjustment in certain customary events. Each warrant entitles the holder thereof to acquire one Common Share at a price per Common Share of $1.70 at any time prior to the Maturity Date, subject to an acceleration right whereby, if, in the event the Common Shares have a daily volume weighted average trading price on the TSXV (or such other recognized North American securities exchange) of $3.00 or greater per Common Share for any ten (10) consecutive trading day period at any time after the date that is four (4) months following the issuance of the warrants, Yerbaé may accelerate the expiry of the warrants by giving notice to the holders by disseminating a news release advising of the acceleration) and, in such case, the warrants will be deemed to have expired on the day which is thirty (30) days after the date of such notice.

In accounting for the Debentures, the Company concluded the conversion option should not be bi-furcated from the debt host as it was ~~considered~~ considered indexed to the company’s stock in accordance with ASC 815-40. Further, the Company also concluded that the detachable warrants should be classified in equity as they: (1) were not within the scope of ASC 480-10; and (2) should be considered indexed to the Company’s Common Shares. In accordance with ASC 470-20, the Company recognized both the Debentures and detachable warrants at their relative fair values. This resulted in the recognition of a debt discount that is being amortized to interest expense over the life of the Debenture Units. During the three ~~and nine~~ months ended ~~September~~March 3031, 2025 and 2024, the Company recorded accretion expense of $~~190~~215,~~270~~ 809 and $~~538~~168,~~634~~602, respectively. The remaining unamortized debt discount balance as of ~~September~~March 3031, ~~2024~~2025 was $~~542~~123,~~063~~386. Further, the remaining balance of the convertible debentures as of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024 was $23,~~734~~153,~~936~~614 and $2,~~196~~937,~~302~~805, respectively. Subsequent to the reporting period end, the original maturity date of April 30, 2025 was extended by ninety days to July 30, 2025.

Motor Vehicle Loan

During 2023, the Company entered into various notes payable related to vehicles with monthly instalments ranging from $543 to $652, ~~including~~ including interest ranging from 2.90% to 5.49%, due October 2026. The notes are secured by vehicles. There were no changes to the terms of these loans. ~~All~~During ~~changes~~the ~~were~~three months ended March 31, 2025, the Company sold a ~~result~~vehicle for $16,000 the net book value of the asset was $12,398 resulting in a gain on the sale of $3,602 which was recorded in general and administrative in the condensed interim consolidated statement of operations. All other changes to the balance was due to repayment.

Amazon Lending

During 2023, the Company entered into a financing arrangement with Amazon Lending, maturing December 26, 2024 at an interest rate of 14.49%, secured by inventories. There were no changes to the terms of these loans. All changes were a result of repayment.

Ampla and Oxford Financing

On May 16, 2023, Yerbaé replaced their finance provider Ampla LLC (“Ampla”) and secured a new accounts receivable and inventory of $2,500,000 with Oxford Commercial Finance, a Michigan banking corporation, through its Delaware subsidiary Yerbaé LLC. The Company can draw down funds as needed, and only pay interest on the amount borrowed. The debt facility was secured by a security interest in all assets of Yerbaé, including a first security interest in Yerbaé’s accounts receivable and inventory. The facility was repaid during 2023.

Loans Issued During the Nine Months Ended September 30, 2024

Unrelated Third-Party Loans

On September 16, 2024, the Company entered into an agreement with a private lender whereby the lender originally agreed to loan an aggregate of up to $540,000. The loan matures on August 16, 2025. The balance of the loan was $~~500~~520,000 net of discounts and repayments as of ~~September 30~~March 31, ~~2024~~2025 and had an effective interest rate of approximately 8.0%.

On August 26, 2024, the Company entered into an agreement with a lender whereby the lender agreed to loan an aggregate of up to $60,000 . The loan ~~matures~~matured on February 26, 2025. The balance of the loan was $5160,~~667~~000 ~~net of discount and repayments~~ as of ~~September~~March 3031, ~~2024~~2025 and had an effective interest rate of approximately 816.37%. Subsequent to reporting period end, the maturity date of the loan was extended to July 15, 2025.

On July 5, 2024, the Company entered into a loan agreement with MaximCash solutions for $750,000. The loan included an origination ~~cost~~costs of $22,500. In addition, the Company agreed to issue the lender ~~$75,000 in~~ common stock with a fair value of $64,285 of the Company for a total discount of $9786,~~500~~786. The loan ~~matures on July 5, 2025. The balance of the loan was $584,801 net of discounts and repayments as of September 30, 2024 and~~ had an effective interest rate of 42%.

~~During~~The ~~June of 2024, the Company entered into a~~ loan ~~agreement~~was ~~with~~to ~~Parafin~~mature ~~for~~on ~~$230~~July 5,~~000~~ ~~and stated fee of $30,000; of which $10,000 was paid during period~~2025. ~~This~~During ~~stated fee is treated as an interest and amortized over~~ the ~~term~~three ofmonths ~~the~~ended ~~loan. The loan agreement includes a payment~~March ~~rate~~31, of2025, ~~15% of~~ the Company’s ~~weekly~~entered ~~sales~~into ~~over~~a annew ~~8-month~~facility ~~period.~~agreement ~~The~~with ~~balance of~~ the ~~loan~~lender ~~was~~resulting ~~$159,137,~~in ~~net~~the ofpayoff ~~discounts and repayments as~~ of ~~September~~this ~~30, 2024~~facility.

During June of 2024, the Company entered into a loan agreement with Parafin for $230,000 and stated fee of $30,000; of which $59,523 was paid during period. This stated fee is treated as interest and amortized over the term of the loan. The loan agreement includes a payment rate of 15% of the Company’s weekly sales over an 8-month period. The balance of the loan was $20,478, net of discounts and repayments as of March 31, 2025.

Future principal maturities of notes payable at March 31, 2025 were as follows:


2025 remainder	$	5,164,132
2026		98,959
Total payments	$	5,263,091
Debt discount		(276,180	)
Balance	$	4,986,911

Advances

Pursuant to the Arrangement Agreement with Safety Shot, short-term operating cash advances are to be made available to the Company. During the three months ended March 31, 2025, the Company received short-term operating cash totaling $300,000. The Company received advances totaling $225,000 during the year ended December 31, 2024, resulting in total advances of $525,000 as of March 31, 2025.

Related Party Loans

These loans are described in Note 1110.

15NOTE 8 – SHARE CAPITAL

NOTE 9 – SHARE CAPITAL

Yerbaé is authorized to issue an unlimited number of Common Shares without par value and 100,000,000 preferred shares (each, a “Preferred Share”) without par value.

For the interim period ended ~~September~~March 3031, ~~2024~~2025, and annual period ended December 31, ~~2023~~2024, the Company had the following equity transactions:

On May 19, 2022, Yerbaé (formerly Kona Bay) entered into the Arrangement Agreement with Yerbaé USA, Merger Sub, FinCo, Todd Gibson and Karrie Gibson, with respect to the Transaction. On February 8, 2023, Yerbae completed its Transaction with Yerbaé USA by way of a reverse takeover. conducted pursuant to: (i) the provisions of the DGCL in which Merger Sub merged with and into Yerbaé USA, and (ii) a plan of arrangement conducted pursuant to the provisions of the BCBCA. In connection with the Closing, Yerbaé (formerly, Kona Bay) consolidated its outstanding Common Shares on the basis of 5.8 pre-consolidation Common Shares for each one post-consolidation Common Share prior to the completion of the Amalgamation and changed its name from “Kona Bay Technologies Inc.” to “Yerbaé Brands Corp.”. Total Common Shares issued relating to the reverse takeover that were issued to former Kona Bay shareholders was 8,239,215 Common Shares with a fair value of $7,526,000.

At the time of Closing, an aggregate of 54,493,953 Common Shares were issued and outstanding of which: 35,848,290 Common Shares were issued to the former Yerbaé shareholders (inclusive of an aggregate of 5,631,276 Common Shares issued to former holders of an aggregate of $4,500,000 in convertible promissory notes of Yerbaé USA converted immediately prior to closing of the Transaction), 8,000,000 performance Common Shares (each, a “Performance Share”) were issued with a fair value of $11,360,000 of which $2,433,404 was recognized as a reduction of equity related to the current financing proceeds received and $2,840,000 has been included as deferred offering costs initially, and as of December 31, 2023, the deferred offering costs balance was Nil. The Performance Shares are held in escrow and are to be released upon the completion of certain performance-based incentives related to the listing of the Common Shares on the TSX Venture Exchange (“TSXV”), future equity financings, and certain trailing gross revenue targets, and 2,015,163 Shares were issued to former holders of subscription receipts of FinCo issuable in connection to a concurrent financing of $2,433,404 to the Transaction.

In addition, the 1,087,752 options to purchase shares of common stock (each, a “Yerbaé USA Share”) of Yerbaé USA which were outstanding immediately prior to closing of the Transaction were cancelled and the holders thereof were granted an aggregate of 1,087,752 options to purchase Common Shares (each, an “Option”), 1,754,464 warrants to purchase Yerbaé USA Shares which were outstanding immediately prior to Closing were cancelled and the holders thereof were granted an aggregate of 1,754,464 replacement warrants of Yerbaé, and 2,015,163 warrants to purchase shares of FinCo which were outstanding immediately prior to closing of the Transaction were cancelled and the holders thereof were granted an aggregate of 2,015,163 replacement warrants. 5,631,276 warrants were also issued as part of the conversion of the $4,500,000 convertible promissory notes.

In connection with the closing of the Transaction, the parties paid customary advisory fees to an eligible arm’s length third party finder (the “Finder”), in consideration for the Finder’s services in facilitating the identification, negotiation and implementation of the Transaction which consisted of the issuance of 507,662 Common Shares with a fair value of $720,880, as well as a cash payment of $200,000.

On July 17 2023, Yerbaé announced a non-brokered private placement of units (each, a “Unit”) of the Company at a price of $1.83 per Unit for aggregate gross proceeds of up to $5,000,000 (the “Offering”), with each Unit consisting of one Common Share and one warrant entitling the holder thereof to acquire one additional Common Share at a price per warrant share of $2.15 for a period of 24 months from the date of issuance. On August 18, 2023, Yerbaé closed the initial tranche of the Offering which consisted of the issuance by the Company of 2,219,629 Units for aggregate gross proceeds of $4,061,921. In connection with the closing of the initial tranche, the Company paid eligible finders cash fees of $33,243. On August 31, 2023, Yerbaé closed the second tranche of the Offering which consisted of the issuance by the Company of 225,329 Units for aggregate gross proceeds of $412,352.

Yerbae entered into an agreement, as amended on June 19, 2023 (the “FORCE Family Agreement”) with FORCE Family Office Inc. (“FORCE”). Under the terms of the FORCE agreement, FORCE will provide certain business development and corporate strategies services to enhance the Company’s growth and market positioning. In consideration for the services to be provided by FORCE, the Company agreed to pay FORCE an aggregate consulting fee of $150,000 payable in Common Shares as to $25,000 in Common Shares on the date that is one month from the date of execution of the FORCE agreement at a deemed price per Common Share equal to the prevailing market price of the Common Shares on the date of such payment and $125,000 in Common Shares on the date of expiration of the six month term at a deemed price per Common Share equal to the prevailing market price of the Common Shares on the date of such payment. Accordingly, on July 21, 2023, the Company issued 11,363 Common Shares to FORCE at a deemed price of $2.20 per Common Share in satisfaction of the initial $25,000 payment.

On November 16, 2023, Yerbaé issued 159,496 Common Shares upon the exercise of 159,496 warrants. On November 24, 2023, Yerbaé issued 66,489 Common Shares at a deemed price of US$1.88 per Common Share to FORCE pursuant to the terms of the FORCE Family Agreement.

On December 29, 2023, Yerbaé granted, effective January 1, 2024, an aggregate of 531,250 Options, 1,666,665 RSUs and 1,002,775 PSUs. Each Option, once vested, is exercisable into one Common Share at a price of $0.96 per Common Share for a period of 7 years. Each RSU representing the right to receive, once vested twelve (12) months from the date of grant, in accordance with corresponding the RSU award agreements, one Common Share. Each PSU represents the right to receive, once vested, in accordance with the correspondence PSU award agreements and achievement of the performance criteria, one Common Share.

During the year ended December 31, 2023, $525,000 in principal amount of Debentures and $14,606 in accrued interest was converted into an aggregate of 375,000 Common Shares. The principal amount was converted using a Common Share price of $1.40 and the accrued interest was converted using a weighted average Common Share price of $1.81.

During the year ending December 31, 2023, the Company received proceeds of $1,040,212 in relation to the exercise of an aggregate of 1,094,968 Warrants at $0.95 per Common Share resulting in the issuance of 1,094,968 Common Shares. At December 31, 2023, there were 58,822,126 common shares issued and outstanding.

On January 16, 2024, the Company issued, in connection with the exercise by one eligible warrant holder (the “Eligible Holder”) who participated in the Company’s warrant exercise incentive program an aggregate of 835,000 Warrants for aggregate proceeds to the Company of $1,002,000, and an aggregate of 835,000 warrants (each, an “Incentive Warrant”) to the Eligible Holder. The Incentive Warrants are exercisable into the same number of common shares of the Company at an exercise price of $1.50 per common share until December 14, 2025, subject to an acceleration provision whereby, if for any thirty (30) consecutive trading days (the “Premium Trading Days”) following the repricing the closing price of the common shares exceeds $2.50 per common share, the Incentive Warrants’ expiry date will be accelerated such that holders will have thirty (30) calendar days to exercise the Incentive Warrants (if they have not first expired in the normal course) (the “Acceleration Clause”). In accordance with the guidance in ASC 815-40-35, the Company determined that the exchange was related to an equity financing (i.e. the inducement of the existing warrants) and therefore recognized the $133,600 excess in fair value of the exchanged instrument over the fair value of the instrument immediately before it was exchanged as an equity issuance cost.

On January 22, 2024, the Company issued, in connection with the exercise by one eligible warrant holder, an aggregate of 263,157 Common Shares for aggregate proceeds to the Company of $249,980.

On January 30, 2024, the Company issued, in connection with the exercise by one eligible warrant holder, an aggregate of 352,941 Common Shares for aggregate proceeds to the Company of $300,000.

On March 12, 2024, the Company issued an aggregate of 1,493,908 Common Shares at a deemed issue price of $0.74 pursuant to the vesting of certain performance share units (each, a “PSU”) and restricted share units (each, a “RSU”), as to 685,867 PSUs and 808,041 RSUs.

On April 8, 2024, the Company issued an aggregate of 1,103,811 common shares and 1,103,811 share purchase warrants pursuant to the exercise and terms of 1,003,468 special warrants originally issued pursuant to the closing of a special warrants offering which closed on December 6, 2023. The proceeds of the special warrants of approximately $1.5 million were received on December 6, 2023 and no proceeds were received upon the exercise of the special warrants.

~~During~~On ~~the~~October ~~three~~3, ~~months~~2024, ~~ended~~the ~~September~~Company ~~30,~~issued ~~2024~~214,835 ~~there~~common ~~was~~shares at a ~~total~~fair value of ~~3,208,498~~$0.30 ~~warrants~~per ~~expired~~common ~~unexercised~~share pursuant to a loan agreement with Maximcash solutions (see Note 7).

17During the three months ended March 31, 2025, there were no warrant issuances, expirations or exercises.

During the three months ended March 31, 2025, 2,837,641 common shares were issued for the vesting of various stock awards granted.

During the three months ended March 31, 2025 and 2024, the Company recognized share-based compensation of $1,730,476 and $944,865, respectively.

Equity Awards

On February 13, 2025, the Company granted 975,000 RSUs with a total grant date fair value of $136,500, which vest one year following from the grant date. Additionally, on February 12, 2025, 4,115,000 stock options were granted, which vested upon the date of grant. These stock options had a total fair value of approximately $382,695, as calculated using the Black-Scholes pricing model with the following assumptions: volatility of 76%, discount rate of 3.99%, expected term of 4.31 years, and an exercise price of $0.105.

Performance Shares

During the three months ended March 31, 2023, the Company granted an aggregate 5 million Performance Shares to the CEO and COO upon consummation of the Transaction. These Performance Shares are held in escrow and are to be released upon the completion of certain performance-based incentives related to the listing of the Common Shares on the TSX Venture Exchange (“TSXV”), future equity financings, and certain trailing gross revenue targets. As of ~~September~~March 3031, ~~2024~~ 2025, 2.5 million performance shares have been released and the remainder are still in escrow as not all of the performance criteria have been achieved.

~~During~~NOTE ~~the~~9 ~~three~~– ~~months~~LOSS ~~ended~~PER March 31, 2023, the Company granted an aggregate 3 million Performance Shares to external parties in connection with the Transaction. One million of these Performance Shares were released upon completion of the Transaction. The remaining two million Performance Shares were subject to escrow until completion, within twelve months of the Listing Date, by the Company of a financing of a minimum aggregate of $7,000,000 (excluding the proceeds from the Concurrent Financing) at a valuation of the Company equal to a minimum of $50,000,000. These performance criteria were met during the year ended December 31, 2023, and, as such, all of the performance shares were released from escrow as of December 31, 2023.SHARE

~~NOTE~~Basic 10loss –per ~~LOSS~~share ~~PER~~is ~~SHARE~~calculated by dividing the net loss by the weighted average number of Common Shares issued during the three months ended March 31, 2025, and 2024. The following table reflects the loss and share data used in the basic loss per share calculations:

Basic loss per share is calculated by dividing the net loss by the weighted average number of Common Shares issued during the three and nine months ended September 30, 2024, and 2023. The following table reflects the loss and share data used in the basic loss per share calculations:

SCHEDULE OF NET LOSS PER SHARE

	2024			2023			2024			2023
	2025			2024
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2024			2023			2024			2023
	2025			2024
Net loss	$	(13,~~479~~331,~~494~~782	)	$	(42,~~141~~793,~~353~~709	)	$	~~(7,032,551~~	)	$	~~(16,673,110~~	)
Basic and diluted weighted average number of Common Shares in issue		6164,~~767~~314,~~132~~872			5660,~~506~~258,~~032~~351			~~61,982,564~~			~~54,645,615~~
Basic and diluted loss per share	$	(0.0205	)	$	(0.0705	)	$	~~(0.11~~	)	$	~~(0.31~~	)

Diluted loss per share did not include the effect of outstanding stock options, PSUs, RSUs, performance shares, warrants and convertible debentures as the effect would be anti-dilutive. The Company excluded the following securities from its computation of diluted shares outstanding, as their effect would have been anti-dilutive:

	As At
	September 30, 2024
	March 31, 2025
Restricted stock units(1)		1,027,378
Restricted stock units outstanding(1)		1,866,664
Performance share units(1)		595,422
Performance share units outstanding(1)		-
Performance shares		2,500,000
Stock options		2,338,380
Stock options outstanding		6,278,365
Warrants		10,145,484
Warrants outstanding		10,954,307
Convertible debt		2,715,714

(1)

These amounts represent shares granted but not yet issued

~~NOTE 11 – RELATED PARTIES~~16

~~On January 30, 2023, the Company~~NOTE ~~entered~~10 ~~into~~– aRELATED ~~loan agreement with a director of the Company. An aggregate of $100,000 was advanced by the related party pursuant to the loan agreement. The loan was fully repaid during 2023.~~PARTIES

On July 1, 2024, the Company entered into a loan agreement with a director of the Company, whereby the director loaned the Company $330,000. The loan matures on June 15, 2025 and had an effective interest rate 10%. The net balance of the loan as of ~~September~~March 3031, ~~2024~~2025, was $~~307~~322,500 which includes accrued interest to the end of the period.

On August 26, 2024, the Company entered into a loan agreement with a director of the Company, whereby the director loaned the Company $24,000 with an effective rate of 816.37%. The loan ~~matures~~matured on February 26, ~~2024~~2025. The ~~net~~ balance of the loan as of ~~September~~March 3031, ~~2024~~2025, was $2024,~~667 net~~000. Subsequent to reporting period end, the maturity date of ~~discount~~the ~~and~~loan ~~repayments~~was extended to July 15, 2025.

NOTE 1211 - INCOME TAXES

The Company recognized pre-tax accounting losses for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024. As of ~~September~~March 3031, ~~2024~~ 2025, any deferred tax assets, which have been recognized primarily as a result of loss carry forwards, have been fully offset by a valuation allowance. As such, for ~~both~~ the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024 and September 30~~2025, ~~2023,~~ there were no significant variations in the relationship between income tax expense and pretax accounting income.

NOTE 1312 - COST OF SALES

Cost of sales is primarily comprised of materials, including in-bound freight, and rent related to the Company’s manufacturing facilities. The breakdown for the items within costs of sales was the following for the periods presented:

SCHEDULE OF COST OF SALES

	2024		2023		2024		2023
	2025		2024
	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2024		2023		2024		2023
	2025		2024
Materials	$	~~558~~672,~~360~~211	$	1574,~~378,422~~241	$	~~1,972,902~~	$	~~4,854,156~~
Warehouse rent (non-lease)		4131,~~485~~473		3946,~~181~~021		~~149,414~~		~~113,902~~
Cost of goods sold	$	~~599~~703,~~845~~684	$	1620,~~417,603~~262	$	~~2,122,316~~	$	~~4,968,058~~

NOTE 1413 – GENERAL AND ADMINISTRATIVE

General and administrative consisted of the following expenses during the periods presented:

	2024		2023		2024		2023
	2025		2024
	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2024		2023		2024		2023
	2025		2024
Share-based compensation	$	~~198~~1,~~784~~730,476	$	~~733~~944,~~686~~865	$	~~1,734,941~~	$	~~1,694,970~~
Outbound freight		~~442~~394,~~380~~822		~~575~~424,~~560~~150		~~1,333,707~~		~~1,956,911~~
Employee benefits		~~471~~364,~~508~~289		756,~~147~~224		~~1,788,796~~		~~2,272,388~~
Professional fees		~~420~~417,~~757~~166		1260,~~030,786~~742		~~1,314,551~~		~~2,197,653~~
Office expenses		~~222~~237,~~801~~265		~~254~~302,~~353~~611		~~838,652~~		~~889,376~~
Performance shares granted upon consummation of RTO		-		-		-		6,086,596
Other		48,555		203,682
Other		36,193		238,782		458,942		637,320
Total general and administrative expenses	$	3,192,573	$	2,892,274
Total general and administrative expenses	$	1,792,423	$	3,589,314	$	7,469,589	$	15,735,214

NOTE 1514 - COMMITMENTS & CONTINGENCIES

Litigation

During the ordinary course of the Company’s business, it is subject to various claims and litigation. Management believes that the outcome of such claims or litigation will not have a material adverse effect on the Company’s unaudited condensed interim consolidated financial position, results of operations or cash flow.

Commitments

The Company has unconditional purchase obligations for certain raw materials, such as ingredients and bottles. However, none of the contracts related to the purchase obligations are entered into for a period greater than one year.

NOTE 1615 - SUBSEQUENT EVENTS

AsOn ~~discussed~~January in7, ~~Note 9~~2025, the Company entered into athe ~~loan~~Arrangement ~~agreement~~Agreement with ~~MaximCash~~Safety ~~Solutions~~Shot, ~~during~~a ~~July~~Delaware ofcorporation, ~~2024~~pursuant to ~~borrow~~which, ~~$750~~among other things,~~000~~ Safety Shot will acquire all of the issued and outstanding common shares of Yerbaé. The Arrangement will be implemented Inby ~~consideration~~way ~~for~~of a plan of arrangement in accordance with the ~~loan~~Business Corporations Act (British Columbia) and is subject to approval by the Supreme Court of British Columbia, the ~~Company~~stockholders ~~agreed~~of toSafety ~~issue~~Shot ~~$75~~and the shareholders of Yerbaé,~~000~~ and subject to other customary closing conditions for a transaction of ~~shares~~this tonature and size. The merger between the ~~lender~~two atentities $0was not yet consummated as of the date of this filing.35 ~~per~~The company has set a formal meeting and proxy voting date of June the 12th 2025, at 10:00 am PST for ~~share~~a meeting to be held at the corporate office address of 18801 n Thompson peak parkway, orSuite ~~214~~380,~~285 shares~~ Scottsdale AZ 85255. ~~While~~The meeting will also be conducted in a virtual format via the ~~loan~~Zoom ~~was~~application ~~entered~~to ~~into~~enhance ~~during~~accessibility ~~July,~~for shareholders. Additional information regarding the ~~Company~~Arrangement ~~issued~~was included in the ~~shares~~Company’s ~~upon~~Form ~~approval~~8-K ~~from~~filed with the ~~TSXV~~SEC ~~during~~on ~~October~~January of8, ~~2024~~2025.

1817

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect management’s current views with ~~respect~~ respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled “Risk Factors” in our Form 10-K, as filed with the U.S. SEC on ~~July 19~~March 10, ~~2024~~2025, any of which may cause our Company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Readers should carefully review and consider the various disclosures made by us in the Form 10-K filed with the SEC on ~~July~~March 1910, ~~2024~~2025, this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

Use of United States Generally Accepted Accounting Principles (“GAAP”) Financial Measures

We use United States GAAP financial measures, unless otherwise noted. All of the GAAP financial measures used by us in this report relate to the inclusion of financial information. This discussion and analysis should be read in conjunction with our financial statements and the notes thereto included elsewhere in this quarterly report. All references to dollar amount in this section are in United States dollars, unless expressly stated otherwise.

Overview

Yerbaé was founded by Todd Gibson and Karrie Gibson in 2016 to create plant-based energy drinks containing yerba mate, a South American herb and a natural source of caffeine. Yerbaé’s first beverage was launched in the first quarter of 2017.

Yerbaé is engaged in the development, marketing, sale, and distribution of plant-based energy beverages that do not contain calories, carbohydrates, or sugar. Yerbaé’s line of beverages are blended with non-GMO plant-based ingredients and offer the benefits of yerba mate and white tea; sustainably sourced from Brazil and other growing regions in South America.

Yerbaé beverages are created to provide products targeted at consumers focused on health, wellness, and fitness and seeking healthier beverages as an alternative to existing energy drinks. The products are formulated to provide a more refreshing taste than coffee, with additional benefits to existing sodas and sparkling waters, along with healthier ingredients than traditional energy drinks. Yerbaé’s products complement a variety of healthy lifestyles, such as non-GMO, Keto, Vegan, Kosher, Paleo and gluten-free diets.

The accompanying ~~unaudited condensed~~ interim consolidated financial statements have been prepared on athe basis that assumes that ~~the Company~~we will continue as a going concern and that contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. ~~The Company~~ We had an accumulated deficit of $4148.54 million and $3445.51 million as of ~~September~~ 30March 31, ~~2024~~2025, and December 31, ~~2023~~2024, respectively. Further, ~~the Company~~ we had cash and cash equivalents of approximately $0.3 5 million and $1.0.1 million as of ~~September~~March 3031, ~~2024~~2025, and December 31, ~~2023~~2024, respectively. Our ~~The Company’s~~ primary focus in recent months has been and will continue to be supporting the manufacturing of its products which requires capital and resources. ~~The Company~~We ~~expects~~expect that ~~its~~our operating losses and negative cash flows will continue for the foreseeable future. Based on ~~the Company~~our company’s currently available cash resources, current and forecasted level of operations, and forecasted cash flows for the 12-month period subsequent to the date of issuance of these ~~unaudited condensed~~ interim consolidated financial statements, ~~the Company~~we will require additional funding to continue to progress its operational obligations as they come due. These factors raise substantial doubt about ~~the~~our ~~Company~~company’s ability to continue as a going concern.

~~The~~Our ~~Company’s~~ ability to continue as a going concern is dependent upon ~~its~~our ability to obtain the necessary financing to meet ~~its~~ our obligations and repay ~~its~~our liabilities arising from normal business operations when they come due, and to generate profitable operations in the future. Management plans to provide for ~~the~~our ~~Company~~company’s capital requirements through financing, operations, or ~~other~~ other transactions, including third party loans.

Management’s discussion and analysis of financial condition and results of operations

Liquidity and Capital Resources

As of ~~September~~March 3031, ~~2024~~2025, and December 31, ~~2023~~2024, ~~the~~we ~~Company~~ had a working capital deficit of $~~5,095,669~~8.0 million and ~~surplus of~~ $~~843~~6.4 million,~~478,~~ respectively. ~~The~~ ~~Company~~We ~~has~~have incurred losses since inception and as of ~~September~~March 3031, ~~2024,~~2025 and December 31, ~~2023~~2024, had an accumulated deficit of approximately $4148.54 million and $3445.51 million, respectively. ~~The~~Our ~~Company’s~~ objective in managing ~~its~~our capital is to ensure that there is sufficient liquidity to finance and grow our ~~its~~ operations, maximize the preservation of capital, provide adequate capital to fund ~~its~~our business objectives, and deliver competitive returns on invested capital. To fund ~~its~~our activities, ~~the~~we ~~Company~~have ~~has~~ primarily relied on private placement financing, warrant exercises, loans and other forms of debt. The material debt financing and loan transactions were as follows:

Notes Payable

Convertible Notes

During 2023, convertible notes payable were issued in the amount of $3,802,000 with a stated interest rate of 6.00%. The convertible notes were unsecured and are due on April 30, 2025. The balance, net of debt discount, of the convertible notes as of ~~September~~March 3031, ~~2024~~2025, and December 31, ~~2023~~2024, was $23,~~734~~153,~~936~~614 and $2,~~196~~937,~~302~~805, respectively. Subsequent to the end of the reporting period, the original maturity date of April 30, 2025 was extended by ninety days to July 30, 2025.

Motor Vehicle Loan

During 2023, the Company entered into various notes payable related to vehicles with monthly ~~installments~~instalments ranging from $543 to $652, ~~including~~ including interest ranging from 2.90% to 5.49%, due October 2026. The notes are secured by vehicles. ~~and~~There ~~had~~were ano ~~balance~~changes to the terms of ~~$30~~these loans. During the three months ended March 31,~~968~~ ~~and~~2025, the Company sold a vehicle for $6016,~~914~~000 asthe net book value of ~~September~~the 30asset was $12,398 ~~2024~~resulting in ~~and~~a ~~December~~gain 31on the sale of $3,602 ~~2023.~~which ~~There~~was ~~were~~recorded noin ~~changes~~general toand administrative in the ~~terms~~ ofcondensed ~~these~~interim ~~loans.~~consolidated statement of operations. All other changes ~~were~~to athe ~~result~~balance ofwas due to repayment.

~~Amazon Lending~~19

Ampla and Oxford Financing

Unrelated Third-Party Loans

On ~~July~~September 516, 2024, the Company entered into aan ~~loan~~ agreement with ~~MaximCash~~a ~~solutions~~private ~~for~~lender ~~$750,000.~~whereby ~~The loan included an origination cost of $22,500. In addition,~~ the ~~Company~~lender originally agreed to ~~issue~~loan ~~the~~an ~~lender $75,000 in common stock~~ aggregate of ~~the~~up ~~Company~~to ~~for a total discount of~~ $97540,~~500~~000. The loan matures on ~~July~~August 516, 2025. The balance of the loan was $~~584~~520,~~801~~000 net of discounts and repayments as of ~~September 30~~March 31, ~~2024~~2025 and had an effective interest rate of 42approximately 8.0%.

On August 26, 2024, the Company entered into an agreement with a lender whereby the lender agreed to loan an aggregate of up to $60,000. The loan ~~matures~~matured on February 26, 2025. The balance of the loan was $5160,~~667~~000 ~~net of discount and repayments~~ as of ~~September~~March 3031, ~~2024~~2025 and had an effective interest rate of approximately 816.37%. Subsequent to the end of the reporting period, the maturity date of loan was extended from Feb 2025 to June 15, 2025.

On ~~September~~July 165, 2024, the Company entered into ana loan agreement with aMaximCash ~~private~~Solutions ~~lender~~(“MaximCash”) ~~whereby~~for $750,000. The loan included origination costs of $22,500. In addition, the ~~lender~~Company agreed to ~~loan~~issue anthe ~~aggregate~~lender common stock with a fair value of up$64,285 toof the Company for a total discount of $~~540~~86,~~000~~786. The loan ~~matures~~had onan ~~August~~effective ~~16,~~interest ~~2025~~rate of 42%. The ~~balance~~loan ofwas ~~the~~to ~~loan~~mature ~~was~~on ~~$500~~July 5,~~000~~ 2025. asDuring ofthe ~~September~~three 30months ended March 31, ~~2024~~2025, ~~and~~the ~~had~~Company anentered ~~effective~~into a new facility agreement with the lender resulting in ~~interest~~the ~~rate~~payoff of ~~approximately~~this 8facility.~~0%.~~

~~During June~~On ofJanuary ~~2024~~29, 2025, the Company entered into a loan agreement with ~~Parafin~~MaximCash for $~~230~~1,000,000. ~~and~~The ~~stated~~loan ~~fee~~included an origination cost of $30,000;. The loan matures on January 29, 2026. A portion of ~~which~~the proceeds from this loan in the amount of $10407,~~000~~392 was used to pay down the existing facility with MaximCash that was ~~paid during~~set ~~period.~~to ~~This~~mature ~~stated~~on ~~fee~~June is11, ~~treated~~2025. asIn anaccordance ~~interest~~with ASC 470-50, Modification and ~~amortized~~Extinguishments, ~~over~~the Company concluded that the ~~term~~exchange ofshould be considered a debt extinguishment as the ~~loan.~~original ~~The~~and new loan were ~~agreement~~made ~~includes~~on asubstantially ~~payment rate~~different ofterms. ~~15%~~In ofaccordance with the ASC subtopic, the Company’s ~~weekly~~recognized ~~sales~~a ~~over~~$30,000 anloss ~~8-month~~on ~~period.~~the exchange. The balance of the loan was $~~159~~874,~~137,~~708 net of discounts and repayments as of ~~September~~March 3031, ~~2024~~ 2025 and had an effective interest rate of 27%.

Advances

Related Party Loans

On ~~January~~July 301, ~~2023~~2024, the Company entered into a loan agreement with a director of the Company., Anwhereby ~~aggregate~~the ofdirector loaned the Company $~~100~~330,000. The ~~was~~loan ~~advanced~~matures ~~by the~~on ~~related~~June ~~party~~15, ~~pursuant~~2025 toand ~~the~~had ~~loan~~an ~~agreement~~effective interest rate 10%. The net balance of the loan as of March 31, 2025, was ~~fully~~$322,500 which ~~repaid~~includes ~~during~~accrued ~~2023~~interest to the end of the period.

On August ~~July 1~~26, 2024, the Company entered into a loan agreement with a director of the Company, whereby the director loaned the Company $~~330~~24,000 with an effective rate of 16.7%. The loan ~~matures~~matured on ~~June~~February 1526, 2025 ~~and had an effective interest rate 10%~~. The ~~net~~ balance of the loan as of ~~September~~March 3031, ~~2024~~2025, was $~~307~~24,~~500~~000. ~~which~~Subsequent ~~includes accrued interest~~ to the end of the reporting period, the maturity date of loan was extended from Feb 2025 to June 15, 2025.

On August 26, 2024, the Company entered into a loan agreement with a director of the Company, whereby the director loaned the Company $24,000 with an effective rate of 8.3%. The loan matures on February 26, 2024. The net balance of the loan as of September 30, 2024, was $20,667 net of discount and repayments.

Warrant Exercise and Expiration

On January 16, 2024, the Company issued, in connection with the exercise by one eligible warrant holder (the “Eligible Holder”) who participated in the Company’s warrant exercise incentive program an aggregate of 835,000 Warrants for ~~gross~~aggregate proceeds to the Company of $1,002,000, and an aggregate of 835,000 warrants (each, an “Incentive Warrant”) to the Eligible Holder. The Incentive Warrants are exercisable into the same number of common shares of the Company at an exercise price of $1.50 per common share until December 14, 2025, subject to an acceleration provision whereby, if for any thirty (30) consecutive trading days (the “Premium Trading Days”) following the repricing the closing price of the common shares exceeds $2.50 per common share, the Incentive Warrants’ expiry date will be accelerated such that holders will have thirty (30) calendar days to exercise the Incentive Warrants (if they have not first expired in the normal course) (the “Acceleration Clause”). In accordance with the guidance in ASC 815-40-35, the Company determined that the exchange was related to equity financing (i.e. the inducement of the existing warrants) and therefore recognized the $133,600 excess in fair value of the exchanged instrument over the fair value of the instrument immediately before it was exchanged as an equity issuance cost.

On January 22, 2024, the Company issued 263,157 Common Shares upon the exercise of 263,157 share purchase warrants at an exercise price of $0.95 per Common Share for gross aggregate proceeds of $250,000.

On January 30, 2024, the Company issued 352,941 Common Shares upon the exercise of 352,941 share purchase warrants at an exercise price of $0.85 per Common Share for gross aggregate proceeds of $300,000.

On April 8, 2024, the Company issued an aggregate of 1,103,811 common shares and 1,103,811 share purchase warrants pursuant to the exercise and terms of 1,003,468 special warrants originally issued pursuant to the closing of a special warrants offering which closed on December 6, 2023. The proceeds of the special warrants of approximately $1.5 million were received on December 6, 2023, and no proceeds were received upon the exercise of the special warrants.

During the three months ended September 30, 2024, there was a total of 3,208,498 warrants expired unexercised.

On January 22, 2024, the Company issued, in connection with the exercise by one eligible warrant holder, an aggregate of 263,157 Common Shares for aggregate proceeds to the Company of $249,980.

On January 30, 2024, the Company issued, in connection with the exercise by one eligible warrant holder, an aggregate of 352,941 Common Shares for aggregate proceeds to the Company of $300,000.

On October 3, 2024, the Company issued 214,835 common shares at a fair value of $0.30 per common share pursuant to a loan agreement with Maximcash solutions (see Note 7).

During the three months ended March 31, 2025, there were no warrant issuances, expirations or exercises.

Commitments

As discussed in our consolidated financial statements for the annual period ended December 31, ~~2023~~2024, the Company entered into an office lease agreement during December of 2022. The ongoing monthly payments are not expected to have a material impact on the Company’s financial condition.

InThe ~~addition to the lease agreement, the~~ Company ~~also~~ enters into unconditional purchase obligations for inventory items such as cans and product ingredients. However, these obligations are not entered into for a period greater than one year. The Company has not entered into any off-balance sheet arrangements.

Going Concern

Yerbaé’s evaluation of its ability to continue as a going concern requires it to evaluate its future sources and uses of cash sufficient to fund its currently expected operations in conducting business activities one year from the date the financial statements are issued. Yerbaé evaluates the probability associated with each source and use of cash resources in making its going concern determination.

Due to our recurring losses, the ongoing challenging market conditions for beverage companies and our limited cash balance as of ~~September~~March 3031, ~~2024~~ 2025, management believes that it is probable that ~~the~~we ~~Company~~ will be unable to meet ~~its~~our obligations as they come due within one year after the date that the ~~unaudited~~audited ~~condensed~~ consolidated financial statements are issued. While ~~the~~we ~~Company~~are is attempting to plan additional ~~financings~~financing, which are intended to mitigate ~~the~~ conditions or events that raise substantial doubt about our ability to continue as a going concern, those financings may not occur. If the ~~financings do~~financing does not occur, management will try and implement alternative arrangements, and such arrangements could have a potentially significant negative ~~impact~~ impact on the current net asset value of ~~the~~our ~~Company~~company. These alternatives include: (1) raising additional capital by means other than those ~~planned~~ planned through equity and/or debt ~~financings~~financing; and/or (2) entering into new commercial relationships to help fund future expenses.

As a result of ~~the~~our ~~Company~~company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements within one year after the date that the financial statements are issued, there is uncertainty regarding ~~the~~our ~~Company’s~~ ability to maintain liquidity sufficient to operate ~~its~~our business effectively, which raises substantial doubt as to ~~the~~our ~~Company~~company’s ability to continue as a going concern.

Cash Flows

The following tables summarize the results of the Company’s cash flows for the below respective periods:

	For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2024			2023
	2025			2024
Net cash provided by (used in):
Operating activities	$	(3212,~~598,634~~062	)	$	(91,~~985~~846,~~012~~228	)
Investing activities		-16,000			~~736,877~~(857	)
Financing activities		2598,~~890,409~~035			91,~~992~~479,~~329~~476
Net change in cash	$	~~(708~~401,~~225~~973	)	$	~~744~~(367,~~194~~609	)

Operating Activities

Net cash used in operating activities was approximately $30.62 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, and was comprised of the net loss of $73.03 million and had net non-cash items ~~totalling~~totaling $2.21 million, consisting primarily of $1.7 million in share-based compensation expense, $0.2 million in accretion expense and $0.51 million in ~~accretion~~interest expense. Changes in operating assets and liabilities was $1.10 million, primarily consisting of a change in accounts receivable of $0.31 million, inventory of ($0.21) million, ~~prepaid expenses of $0.2 million,~~ accounts payable of $0.~~1 million,~~7 ~~accrued interest of $0.1~~ million and accrued expenses of $0.12 million.

Net cash used in operating activities was approximately $101.08 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023.~~2024 ~~The~~and ~~net~~was ~~loss~~comprised ~~for~~of the ~~nine months ended~~net ~~September~~loss ~~30,~~of ~~2023, was~~ $162.78 million and ~~had~~was primarily offset by net ~~noncash~~non-cash items oftotaling $81.01 million, ~~primarily~~ consisting ofprimarily ~~performance shares granted upon consummation~~ of ~~the reverse takeover of~~ $60.19 million, in share-based compensation ofexpense and $10.72 million ~~and~~in accretion expense ~~of $0~~.2 ~~million.~~ Changes in operating assets and liabilities was ($10.32 million), primarily consisting of a change in accounts ~~payable~~receivable of ($10.14 million), ~~prepaid~~ ~~expenses~~inventory of ($0.34 million), ~~accrued~~and ~~expenses~~accounts payable of ~~$0.1 million and~~ ($0.13 million) ~~in inventory~~.

Investing Activities

~~The~~During ~~Company did not engage in any material investing activities during~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2024.~~2025, ~~Net cash provided from investing activities for~~ the ~~nine months ended September~~ ~~30,~~Company ~~2023~~sold ~~was~~a ~~$0.6~~vehicle ~~million. The $0.6 million amount~~ for ~~the nine months ended September 30, 2023, was comprised primarily of~~ $016,000.~~6 million of cash acquired as part of the reverse merger with Kona Bay.~~

The Company did not engage in any material investing activities during the three months ended March 31, 2024.

Financing Activities

Net cash provided by financing activities was $20.96 million ~~and $10.0 million~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2024, and 2023, respectively~~2025. For the ~~nine~~three months ended ~~September 30~~March 31, ~~2024~~2025, these amounts consisted of net proceeds from ~~the exercise of warrants of $1.6 million and net proceeds from~~ debt instruments and ~~notes~~advances ~~payable~~ of $1.~~0 million and proceeds from note to related party of $0.~~3 million~~. For the nine months ended September 30~~, ~~2023,~~partially ~~these~~offset ~~amounts~~by ~~consisted of proceeds from issuance of common stock and warrants of $8.2 million,~~ net ~~proceeds~~payments ~~from~~on debt instruments and notes payable of $2.0 ~~million and fees related to the issuance of convertible notes of ($0~~.2 7 million).

Net cash provided by financing activities was $1.5 million for the three months ended March 31, 2024. For the three months ended March 31, 2024, these amounts consisted of net proceeds from the exercise of warrants of $1.6 million, proceeds from debt instruments and notes payable of $0.3 million and net payments on debt instruments and notes payable of $0.3 million.

Results of Operations

Three months ended ~~September~~March 3031, ~~2024~~2025, compared to three months ended ~~September~~March 3031, ~~2023~~2024

The following tables set forth the Company’s results of operations for the periods presented. The comparison of financial results is not necessarily indicative of future results.

	For the Three Months Ended September 30,
	For the Three Months Ended March 31,
	2024			2023
	2025			2024
Revenues	$	1,~~631~~213,~~615~~883		$	21,~~986~~434,~~734~~971
Cost of sales		~~599~~703,~~845~~684			1620,~~417,603~~262
Gross profit	$	1510,~~031,770~~199		$	1814,~~569,131~~709
General and administrative	$	13,~~792~~192,~~423~~573		$	32,~~589~~892,~~314~~274
Sales, advertising and marketing		~~311~~213,~~915~~443			1457,~~886,414~~807
Total expenses	$	23,~~104~~406,~~338~~016		$	53,~~475~~350,~~728~~081
Net loss before other income (expense)		(12,~~072~~895,~~568~~817	)		(32,~~906~~535,~~597~~372	)
Interest expense		(406,926	)		(234,756	)
Other expense		(435,965	)		(258,337	)
Net loss before income taxes		(13,~~479~~331,~~494~~782	)		(42,~~141~~793,~~353~~709	)
Income tax expense		-			-
Net loss and comprehensive loss	$	(13,~~479~~331,~~494~~782	)	$	(42,~~141~~793,~~353~~709	)

Revenues

	For the Three Months Ended September 30,				Change
	For the Three Months Ended March 31,				Change
	2024		2023		$			%
	2025		2024		$			%
Revenues	$	1,~~631~~213,~~615~~883	$	21,~~986~~434,~~734~~971	$	(1221,~~355,119~~088	)		-4515	%

Yerbaé’s revenues declined by $10.42 million, or 4515%, for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to the ~~same period in the~~ prior year. ~~This~~During ~~decline was primarily attributed to~~ the ~~non-renewal~~three ofmonths ended ~~its~~March ~~agreement with Sam’s Club~~31, ~~the nation’s second-largest club retailer~~2025, ~~as well as~~ the ~~challenging~~Company ~~consumer~~adjusted ~~packaged~~its ~~goods~~customer ~~(CPG)~~portfolio ~~U.S. market today, which has been impacted~~ by ~~inflation~~ ~~and~~discontinuing ~~may~~less beprofitable ~~contributing to a reduction in consumer basket size. Despite this decrease~~accounts, ~~Yerbaé~~including ~~continued~~previously ~~to advance~~announced ~~its~~exits ~~distribution~~from ~~footprint,~~unprofitable ~~executing with major retailers such as Kroger, Amazon,~~ and ~~Costco, along with multiple~~ other ~~retail chains. In the third quarter of 2024~~high-slotting, ~~the~~low-volume ~~Company prioritized efforts to stabilize its business foundation, focusing on core strengths~~retailers. ~~Key~~This ~~growth~~strategic ~~was~~shift ~~seen~~contributed ~~in the Natural Foods, Direct-~~to~~-Consumer,~~ ~~and Direct Store Delivery (“DSD”) channels, bolstered by~~ the ~~successful~~ ~~rollout~~decrease ~~of the new 12oz can platform launched~~ in Q1revenue ~~2024. Club store placements continued to perform well in select~~for ~~regions;~~three-month ~~however, a reduction in the number of stocked club stores as noted above led to a decline in quarterly sales~~period.

In 2024, the Company focused on developing retail partnerships aimed at improving gross margins and increasing shareholder value. Progress was made in key distribution channels, providing a foundation for future growth. Additionally, the Direct-to-Consumer segment was expanded with the introduction of new variety packs and increased brand visibility through social media influencers and digital advertising. The Company also strengthened its distributor network, adding 14 new distributors in the third quarter of 2024 to support growth initiatives for 2025 and beyond.

Revenues for the three months ended March 31, 2025 were further influenced by broader market conditions in the U.S. consumer packaged goods sector, including inflationary pressures.

Cost of Sales

	For the Three Months Ended September 30,				Change
	For the Three Months Ended March 31,				Change
	2024		2023		$			%
	2025		2024		$			%
Cost of sales	$	~~599~~703,~~845~~684	$	1620,~~417,603~~262		~~(817~~83,~~758~~422	)		~~-58~~13	%

Cost of sales is primarily comprised of product materials, ingredient costs, bottling, inbound freight, and other related expenses. Costs of sales decreased by $0.8 million, or 58%, as compared to the same period in the prior year. The decrease in cost of goods sold was directly related to the decrease in sales during 2024.23

Cost of sales is primarily comprised of product materials, ingredient costs, bottling, inbound freight, and other related expenses. Costs of sales increased by $0.1 million, or 13%, as compared to the same period in the prior year. The increase in cost of goods sold was primarily attributable to broad increases to material and production costs. The company participated in discounted promotional activity during the quarter that would have an impact on the company’s gross margin as well as the sale of short dated inventory to a liquidation company.

General and Administrative

	For the Three Months Ended September 30,				Change
	For the Three Months Ended March 31,				Change
	2024		2023		$			%
	2025		2024		$			%
General and administrative	$	13,~~792~~192,~~423~~573	$	32,~~589~~892,~~314~~274		(1300,~~796,891~~299	)		~~-50~~10	%

General and administrative expense included operational and administrative costs as detailed in the following table:

	For the Three Months Ended September 30,
	For the Three Months Ended March 31,
	2024		2023
	2025		2024
Share-based compensation	$	~~198~~1,~~784~~730,476	$	~~733~~944,~~686~~865
Outbound freight		~~442~~394,~~380~~822		~~575~~424,~~560~~150
Employee benefits		~~471~~364,~~508~~289		756,~~147~~224
Professional fees		~~420~~417,~~757~~166		1260,~~030,786~~742
Office expenses		~~222~~237,~~801~~265		~~254~~302,~~353~~611
Other		3648,~~193~~555		~~238~~203,~~782~~682
Total general and administrative expenses	$	13,~~792~~192,~~423~~573	$	32,~~589~~892,~~314~~274

General and administrative expenses ~~decreased~~increased to $13.82 million for the three months ended ~~September~~March 3031, ~~2024~~2025, as compared to $32.69 million for ~~the~~ the prior comparable period. The ~~decrease~~increase was primarily due to ~~decreases~~increases in share-based compensation of $0.5,8 and professional fees of $0.62 million,. These increases were partially offset by decreases in employee benefits of $0.34 million, aoffice ~~decrease~~expenses of ~~outbound freight of~~ $0.1 million and other expense of $0.2 million.

Sales, Advertising and Marketing

	For the Three Months Ended September 30,				Change
	For the Three Months Ended March 31,				Change
	2024		2023		$			%
	2025		2024		$			%
Sales, advertising and marketing	$	~~311~~213,~~915~~443	$	1457,~~886,414~~807		(1244,~~574,499~~364	)		-8353	%

Sales, advertising, and marketing expenses decreased to $0.32 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $10.95 million for ~~the prior~~ ~~year period. Throughout 2024,~~ the ~~Company~~three ~~has~~months ~~prioritized~~ended ~~delivering~~March ~~efficiencies across its sales~~31, ~~advertising,~~2024. ~~and~~The ~~marketing~~decrease ~~platforms. This~~was ~~effort~~driven ~~included~~by a strategic ~~focus~~evaluation onof ~~optimizing~~retailer ~~product~~performance, ~~availability~~promotions, ~~in both retail~~ and ~~eCommerce channels~~growth initiatives. AsThe ~~the~~ Company ~~continues its~~reduced ~~expansion, maximizing~~ the ~~effectiveness~~number of ~~every~~promotions ~~dollar~~and ~~spent~~discontinued ~~has~~programs ~~been~~that adid ~~top~~not ~~priority.~~meet ~~This~~performance ~~optimization~~expectations, ~~involved streamlining fewer~~including ~~less-effective~~paid ~~programs~~pallet ~~and~~positions, ~~leveraging~~slotting ~~insights~~fees, ~~gained~~and ~~about~~other ~~our~~sales ~~customers’ evolving needs in a dynamic consumer landscape~~initiatives. ~~Our efforts~~Additionally, ~~included~~the ~~refining~~Company ~~consumer~~focused ~~messaging~~on ~~and~~optimizing ~~enhancing~~digital targeting in~~-market~~ ~~activities~~its ~~with~~eCommerce ~~higher~~channels, ~~quality~~which ~~visuals~~has ~~and retailer-specific programs. These initiatives have~~ contributed to ~~the~~improved ~~continuous~~efficiency ~~improvement of the brand’s positioning~~ and ~~increased consumer engagement~~performance.

~~Interest~~Other Expense

	For the Three Months Ended September 30,				Change
	For the Three Months Ended March 31,				Change
	2024		2023		$		%
	2025		2024		$		%
Total interest expense	$	406,926	$	234,756		172,170		73	%
Other expense	$	435,965	$	258,337		177,628		69	%

~~Interest~~ Other expense includes interest income, interest expense and accretion expense related to. During the three months ended March 31, 2025, other expense totaled $0.4 million, comprised of accretion expense of $0.2 million related to the discount on the principal amount of $3,802,000 convertible debentures issued in 2023, $0.3 ~~and~~million ~~new~~of ~~debt~~interest ~~issuances~~expense inon ~~2024~~various ~~and~~notes ~~increased~~payable, topartially offset by interest income of $0.41 million. ~~for~~During the three~~-month~~ ~~period~~months ended ~~September~~March 3031, 2024, ~~compared~~other toexpense totaled $0.23 million, ~~during~~comprised ~~the~~of ~~comparable~~accretion expense ~~prior~~of ~~year period~~$0. ~~The~~2 ~~increase~~million ~~was primarily~~ related to anthe ~~increase~~discount inon ~~interest~~the ~~and~~principal ~~accretion~~amount ~~expense~~of ~~related~~$3,802,000 toconvertible ~~new~~debentures ~~debt~~issued ~~instruments~~in ~~that~~2023 ~~were~~and ~~entered~~$0.1 ~~into~~million of ~~during~~interest ~~2024~~expense on various notes payable.

~~Nine months ended September 30, 2024, compared to nine months ended September 30, 2023~~24

The following tables set forth the Company’s results of operations for the periods presented. The comparison of financial results is not necessarily indicative of future results.

	For the Nine Months Ended September 30,
	2024			2023
Revenues	$	4,628,830		$	9,991,758
Cost of sales		2,122,316			4,968,058
Gross profit	$	2,506,514		$	5,023,700
General and administrative	$	7,469,589		$	15,735,214
Sales, advertising and marketing		1,136,839			5,542,848
Total expenses	$	8,606,428		$	21,278,062
Net loss before other income (expense)		(6,099,914	)		(16,254,362	)
Interest expense		(932,637	)		(418,748	)
Net loss before income taxes		(7,032,551	)		(16,673,110	)
Income tax expense		-			-
Net loss and comprehensive loss	$	(7,032,551	)	$	(16,673,110	)

Revenues

	For the Nine Months Ended September 30,				Change
	2024		2023		$			%
Revenues	$	4,628,830	$	9,991,758	$	(5,362,928	)		-54	%

Yerbaé’s revenues declined by $5.4 million, or 54%, for the nine months ended September 30, 2024, compared to the same period in the prior year. Throughout this period, the Company prioritized optimizing its customer base by phasing out less profitable accounts, including previously announced exits from Sam’s Club and other high-slotting, low-volume retailers, which resulted in lower revenues for the nine-month period ended September 30, 2024 compared to the prior period. Yerbaé has instead focused on growth-oriented retail partnerships that enhance gross margins and deliver greater shareholder value. Significant progress was made in core focus channels, establishing a strong foundation for future growth. The Company also expanded its Direct-to-Consumer segment, introducing new variety packs and increasing brand awareness through a broader network of social media influencers and digital advertising. Additionally, Yerbaé strengthened its distributor relationships, onboarding 14 new distributors in the third quarter of 2024 to support its growth initiates for 2025 and beyond. Nine-month 2024 revenues were also impacted by the challenging CPG U.S. market, which has been impacted by higher inflation earlier in the period and as the Company transitioned from 16oz to 12 oz packaging, aligning with consumer demand for a more efficient product size, however this also resulted in decreased sales as the Company transitioned to the new can format. This transition was completed in Q2 2024.

Cost of Sales

	For the Nine Months Ended September 30,				Change
	2024		2023		$			%
Cost of sales	$	2,122,316	$	4,968,058		(2,845,742	)		-57	%

Cost of sales is primarily comprised of product materials, ingredient costs, bottling, inbound freight, and other related expenses. Costs of sales decreased by $2.8 million, or 57%, as compared to the same period in the prior year. The decrease in cost of goods sold was directly related to the decrease in sales during 2024.

General and Administrative

	For the Nine Months Ended September 30,				Change
	2024		2023		$			%
General and administrative	$	7,469,589	$	15,735,214		(8,265,625	)		-53	%

General and administrative expense included operational and administrative costs as detailed in the following table:

	For the Nine Months Ended September 30,
	2024		2023
Share-based compensation	$	1,734,941	$	1,694,970
Outbound freight		1,333,707		1,956,911
Employee benefits		1,788,796		2,272,388
Professional fees		1,314,551		2,197,653
Office expenses		838,652		889,376
Performance shares granted upon consummation of RTO		-		6,086,596
Other		458,942		637,320
Total general and administrative expenses	$	7,469,589	$	15,735,214

General and administrative expenses decreased to $7.5 million for the nine months ended September 30, 2024. The decrease was primarily due to a decrease in expense related to performance shares granted upon consummation of the reverse takeover during the nine months ended September 30, 2023, of $6.1 million, a decrease of professional fees of $0.9 million, a decrease of outbound freight of $0.6 million, a decrease of employee benefits of $0.5 million and a decrease of other expenses $0.2 million.

Sales, Advertising and Marketing

	For the Nine Months Ended September 30,				Change
	2024		2023		$			%
Sales, advertising and marketing		1,136,839	$	5,542,848		(4,406,009	)		-79	%

Sales, advertising and marketing decreased to $1.1 million for the nine months ended September 30, 2024, compared to $5.5 million for the prior year period. Over the past nine months, the Company has focused on evaluating and optimizing retailer performance, promotions, and growth levels. By concentrating on select channels, the Company has demonstrated its ability to operate more efficiently. This has involved reducing the number of promotions during the period and eliminating programs that did not meet expectations, such as paid pallet positions, slotting fees, and other sales initiatives. Additionally, the Company has prioritized more efficient and effective digital targeting in its eCommerce channels, which continues to deliver positive results.

Interest Expense

	For the Nine Months Ended September 30,				Change
	2024		2023		$		%
Total interest expense		932,637		418,748		513,889		123	%

Interest expense includes interest expense and accretion expense related to the principal amount of $3,802,000 convertible debentures issued in 2023 and new debt issuances in 2024. Interest expense increased to $0.9 million for the nine months ended September 30, 2024, compared to $0.4 million during the comparable prior year period. The increase was primarily related to an increase in accretion expense of $0.3 million and an increase in interest expense related to new debt instruments that were entered into during 2024.

Critical Accounting Estimates

Refer to the Company’s critical accounting estimates section provided in its consolidated annual financial statements for the period ended December 31, ~~2023~~2024. There were no material updates or changes to the disclosure for the ~~nine~~three-month period ended ~~September~~March 3031, ~~2024~~2025.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable. As a smaller reporting company, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

The Company’s management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this Report.

Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of ~~September~~March 3031, ~~2024~~2025, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended ~~September~~March 3031, ~~2024~~2025 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. The Company has resolved all outstanding litigation involving the Company and there are no suits or cases pending in which the Company is a party.

On May 16, 2025, the Company initiated a civil action in the United States District Court for the District of Arizona against Mr. Carl Sweat, his affiliate Elite NIL Solutions LLC, and Classic City Collective, Inc. The complaint alleges breach of contract, tortious interference, and infringement of the Company's intellectual property rights. The Company seeks injunctive relief to prevent the use or disclosure of its property, monetary damages, and other appropriate remedies.

Item 1A. Risk Factors

Not Applicable. As a smaller reporting company, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds

There were no unregistered sales of the Company’s equity securities during the three ~~or nine~~ months ended ~~September~~March 3031, ~~2024~~2025.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit		Incorporated by Reference
Number	Exhibit Description	Form	Exhibit
10.1	Gibson Loan Agreement
10.2	Maximcash Solutions Loan Agreement
10.3***	Private Lender Loan Agreement
10.4	BEA Investment Loan Agreement
10.5	Dratt Loan Agreement
10.6	Maximcash Solutions Loan Agreement 2025
31.1*	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.
32.1**	Section 1350 Certification of Chief Executive Officer.
32.2**	Section 1350 Certification of Chief Financial Officer.
101.INS*	Inline XBRL Instance Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

*** Portions of the exhibit have been omitted

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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.

YERBAÉ BRANDS CORP.

By:	/s/ Todd Gibson
	Todd Gibson
	Chief Executive Officer
Date:	~~November~~May 1420, ~~2024~~2025

By:	/s/ Karrie Gibson
	Karrie Gibson
	Interim Chief Financial Officer
Date:	~~November~~May 1420, ~~2024~~2025

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