UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the fiscal year ended:
Commission
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by check mark if the registrant is a well-known seasoned issuer, as defined in 405 of the Securities Act. Yes ☐
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equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most
recently completed second fiscal quarter approximately $
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TABLE OF CONTENTS
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This Annual Report on Form 10-K includes the accounts of Safety Shot, Inc., a Delaware corporation (“Safety Shot”). References in this Report to “we”, “our”, “us”. “Shot”, or the “Company” refer to Safety Shot, Inc. and its consolidated subsidiaries unless the context dictates otherwise.
FORWARD LOOKING STATEMENTS
Certain statements in this report, including information incorporated by reference, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements reflect current views about future events and financial performance based on certain assumptions. They include opinions, forecasts, intentions, plans, goals, projections, guidance, expectations, beliefs or other statements that are not statements of historical fact. Words such as “will,” “may,” “should,” “could,” “would,” “expects,” “plans,” “believes,” “anticipates,” “intends,” “estimates,” “approximates,” “predicts,” “forecasts,” “potential,” “continue,” or “projects,” or the negative or other variation of such words, and similar expressions may identify a statement as a forward-looking statement. Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, our goals, strategies, focus and plans, and other characterizations of future events or circumstances, including statements expressing general optimism about future operating results and the development of our products, are forward-looking statements.
Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risk Factors” below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward- looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with the Securities and Exchange Commission (“SEC”). The public can read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Annual Report on Form 10-K, which attempt to advise interested parties of the risks and factors that may affect our businesses, financial condition, results of operations and prospects.
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PART I
ITEM 1. BUSINESS
Overview
Safety Shot Inc. (NASDAQ: SHOT) was formerly known as Jupiter Wellness Inc. In August 2023, the Company successfully completed the asset purchase of the Safety Shot Dietary Supplement from GBB Drink Lab, Inc. (“GBB”), thereby gaining ownership of various assets, including the intellectual property, trade secrets, and trademarks associated with its dietary supplement (the “Safety Shot Dietary Supplement”). Concurrently with the asset purchase, the Company changed its name to Safety Shot, Inc. and changed its NASDAQ trading symbol to SHOT. The Company launched its e-commerce sale of the Safety Shot Dietary Supplement in December 2023. On October 9, 2024, the Company renamed the Safety Shot Dietary Supplement as the “Sure Shot Dietary Supplement.”
The Sure Shot Dietary Supplement has been formulated to reduce the accumulation of blood alcohol. Noteworthy is the fact that the Sure Shot Dietary Supplement comprises 28 active ingredients, all falling under the Generally Regarded As Safe (GRAS) category. Under sections 201(s) and 409 of the Federal Food, Drug, and Cosmetic Act (the Act), any substance that is intentionally added to food is a dietary supplement, that is subject to premarket review and approval by the FDA, unless the substance is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of its intended use, or unless the use of the substance is otherwise excepted from the definition of a dietary supplement.
It’s crucial to note that the Sure Shot Dietary Supplement is currently manufactured in a facility adhering to Good Manufacturing Practices (GMP), ensuring the highest standards of quality and safety throughout its production process. The Company currently maintains a workforce comprising eight full-time employees of its own.
Specializing in Consumer Packaged Goods, our focus centers on the commercialization of a 12-ounce product positioned as a dietary supplement. Beyond our existing product, we have introduced new product lines, including a convenient powdered stick pack version and a 4-ounce version of the Sure Shot Dietary Supplement.
The Company has discontinued the historical product lines of Jupiter Wellness which included a diverse range of products, such as hair loss treatments, vitiligo solutions, and sexual wellness products, that catered to different health and wellness needs and our commitment to supporting health and wellness by developing innovative solutions to a range of conditions. In connection therewith, on September 24, 2024, the Company entered into a Separation and Exchange Agreement with its subsidiary Caring Brands, Inc. whereby Caring Brands will seek to commercialize this product line. Caring Brands will be responsible for all costs associated with the operation of that line of business. The Company will focus its efforts on the commercialization of the Sure Shot Dietary Supplement. The Company will retain ownership of 3,000,000 shares of Caring Brands, Inc.
The Company entered into a stock exchange agreement (the “Exchange Agreement”) with SRM Entertainment, Inc. (“SRM”) to govern the separation of SRM and the Company. On May 26, 2023, we amended and restated the Exchange Agreement (the “Amended and Restated Exchange Agreement”) to include additional information regarding the distribution and the separation of SRM and the Company. The separation as set forth in the Amended and Restated Exchange Agreement with the Company closed August 14, 2023. Pursuant to the Amended and Restated Exchange Agreement, on May 31, 2023, SRM issued to the Company 6,500,000 shares of SRM Common Stock (representing 79.3% of SRM’s outstanding shares of Common Stock) in exchange for 2 ordinary shares of SRM Ltd owned by the Company (representing all of the issued and outstanding ordinary shares of SRM) (the “Share Exchange”). On August 14, 2023, SRM consummated its Initial Public Offering (“IPO”), pursuant to which it sold 1,250,000 shares of its common stock at a price of $5.00 per share. In connection with the Share Exchange and SRM’s IPO, the Company distributed 2,000,000 shares of SRM’s common stock to the Company’s stockholders and certain warrant holders (out of the 6.5 million shares issued in May 2023) which occurred on the effective date of the Registration Statement but prior to the closing of the IPO. Following such distribution, the Company owns 4.0 million of the 9,450,000 shares of common stock outstanding and SRM is now a minority owned subsidiary of the Company.
To achieve our mission, we rely on our team of highly skilled and experienced professionals who are committed to advancing our vision of health and wellness. Our team includes individuals with scientific backgrounds, an experienced researcher, product developers, and business experts who collaborate to create new products and enhance existing ones. We also seek to partner with industry leaders and organizations to gain access to the latest technologies and expand our reach.
The Sure Shot Dietary Supplement is currently sold through e-commerce and in retail stores. In addition, we are seeking to collaborate with other companies to license our intellectual property, to create additional revenue streams and expand our global presence. At present, we do not experience concentration risk or dependence on major customers.
We maintain a diverse network of raw material suppliers integral to our production processes. Acquisition strategies encompass both direct procurement and collaborative efforts with our co-packers. The selection of suppliers is contingent upon various factors, including ingredient specificity, availability, and other essential considerations. Notably, these suppliers coincide with those currently providing materials to other facilities engaged in the manufacturing of drinks, powders, tablets, and capsules. Our roster of suppliers comprises reputable entities such as Jiaherb, Compound Solutions, Kyowa-Hakko, Mitsubishi Ingredients, Nura, Sensapure Flavors, Brenntag, E3 Ingredients, Ingredients Online, among others. This strategic alliance with established industry players underscores our commitment to sourcing high-quality raw materials essential for the production of our innovative product line. Furthermore, our approach to supplier relationships reflects a dedication to maintaining a seamless and reliable supply chain. We believe that this not only ensures the consistency of our current offerings but also positions us favorably for future developments. The Management believes that as we continue to expand our product portfolio, we believe that these partnerships with trusted suppliers play a pivotal role in upholding the standards that we expect of our brand.
Products Roadmap
The Sure Shot Dietary Supplement was launched on our own website and through Amazon in December 2023 and with several Big Box stores. The Company is advancing several product formats and formulations to continue to offer a wide array of products that can be purchased at various locations that coincide with consumer shopping habits. In particular, the Company plans to develop new flavors for each of its current SKUs (12oz., 4 oz. and “Stick Pack”. In addition, the current formula will be offered at various dosages and the Company plans to conduct additional research studies as follows: assessing varying dosages of the Sure Shot Dietary Supplement against body weight, gender and age, examining several current and proposed ingredients with respect to their specific role in reducing BAC and how they affect the enzymatic activity associated with the metabolism of alcohol, and finally, examining additional markers with respect to improving post-alcohol consumption symptoms and feelings.
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The Company intends to perform the additional research studies in Q2 and Q3 of 2025. The Company will continue to sponsor the studies and intends to work with the Center for Applied Health Sciences (“CAHS”) in Canfield, OH. The participants will be selected based upon the parameters of the individual studies and the Company will follow the same protocols employed in the clinical trials at the CAHS described in more detail below in “Research and Development.”
Research and Development
Our research and development team in continually looking to develop new therapeutic products, while continually improving and enhancing our existing products and product candidates to address customer demands and emerging trends.
We have conducted extensive informal research and experimentation involving a substantial number of volunteers under the influence of alcohol. Our findings indicate that the Sure Shot Dietary Supplement can reduce a person’s Blood Alcohol Content, as measured by the premier Breathalyzer on the market. We have recently completed our clinical trials of the Sure Shot Dietary Supplement which have shown a statistically significant reduction in the Blood Alcohol Content (“BAC”) of the participants. The observable enhancements in cognitive abilities among the test subjects have been carefully documented.
The clinical trials took place from January 29, 2024, through June 10, 2024, at the CAHS located at 6570 Seville Drive, Canfield, OH 44406. The clinical trials were sponsored and paid for by the Company and consisted of 36 participants with a mean age of 36.3 years that were selected through advertising of the study. The Company did not inquire about the participants typical level of alcohol consumption but each participant had to qualify based upon a complete medical history questionnaire, release from physicians and submitting to a standard bloodwork panel. Each participant consumed exactly 100 mL of alcohol and the BAC of the participants ranged from 0.047 % to 0.068 %. The participants were not employees of the Company nor affiliated with the Company in any way. The clinical trials were a double-blind, randomized, placebo-controlled study that found that within 30 minutes of the consumption of the Sure Shot Dietary Supplement, the monitored participants saw a statistically significant drop of p=.002 in BAC and continued to see measurable drops in successive 30-minute increments. The results were measured by using a DOT-approved BACtrack S80 Breathalyzer on the participants to determine their BAC after ingesting several alcoholic beverages, followed by drinking 12 ounces of the Sure Shot Dietary Supplement and then measuring the participants’ BAC 30 minutes later. In addition, cognitive responses were measured using the Visual Analogue Scale (“VAS”) and physical function assessed at the same intervals as the blood draws and breathalyzer assessments to correlate to function. The VAS consisted of a 10 cm, straight line with end points that measured from low-to-high for a number of physical feelings and sensations. The participants were asked to mark a point on the line that corresponded with their experience. The distance from the end to the point marked by the participant was then measured in millimeters to quantify their level of sensation. On each visit, participants were asked to perform the VAS tests and the VAS assessed subjective ratings for head discomfort (headache), nausea, fatigue, energy, tiredness, thirst and ability to concentrate. The Company also conducted further physical assessment by monitoring biometric measurements such as blood pressure and heart rate at various intervals. The key assumptions in the study were that the participants would demonstrate a marked decrease in BAC following the consumption of the Sure Shot Dietary Supplement versus that of the placebo. In addition, the study assumed that the participants would feel better and demonstrate marked improvement in cognitive skills and physical function following the consumption of the Sure Shot Dietary Supplement versus that of the placebo. The Company had previously observed in our numerous, pre-clinical tests that participants who consumed significant amounts of alcohol (more than two drinks) experienced marked and rapid reductions in their BAC when measured by BACTrack S80 breathalyzers after consumption of the Sure Shot Dietary Supplement. In addition, the Company observed in the pre-clinical tests that the participants showed significant improvement in motor function and reduction in slurred speech and other markers commonly associated with alcohol consumption. These findings led the Company to continue to develop the Sure Shot Dietary Supplement and commission a clinical study to prove our hypothesis. There were five adverse events amongst the participants in the study. Four of the adverse events were associated with the Sure Shot Dietary Supplement (three felt nauseous and one developed a rash) and none of the adverse events were serious. The final adverse event was associated with congestion of the placebo.
Since approximately 2010, the Company has performed 100s of pre-clinical tests in an effort to develop and perfect the Sure Shot Dietary Supplement. These informal, pre-clinical tests included friends, family and other volunteers who consumed alcohol at varying levels and then were tested prior to the consumption of the Sure Shot Dietary Supplement. The pre-clinical tests were neither peer reviewed nor were the subjects screened prior to their participation. In addition, the VAS was not used nor were there any placebos or other control measures taken in the pre-clinical tests and as such these tests are considered informal and non-clinical. The participants’ BAC was measured by using the BacTrack S80 after the consumption of various amounts of alcohol and prior to the consumption of the Sure Shot Dietary Supplement and then at 30 minutes, 45 minutes and one-hour intervals after consumption of the Sure Shot Dietary Supplement so we could assess the efficacy of the Company’s R&D efforts at that point in time. The Company also observed motor function skills such as walking, balancing and speech at the same intervals following the consumption of 12 ounces of the Sure Shot Dietary Supplement. The Company defined and noted the significant improvement in each area by observing participants’ walk and whether a participant’s gait was unsteady, or whether their balance was off while standing and whether their speech was clear or slurred. The Company incurred research and development expenses of $100,591 and $1,637,117 for the years ended December 31, 2022, and 2023, respectively.
Sales and Marketing
We primarily sell our products through e-commerce websites including Amazon and through retail stores. To drive loyalty, word-of-mouth marketing, and sustainable growth, we invest in customer experience and customer relationship management. Our marketing investments are directed towards driving profitable growth through advertising, public relations, and brand promotion activities, including digital platforms, sponsorships, collaborations, brand activations, and channel marketing. Additionally, we continue to invest in our marketing and brand development efforts by investing capital expenditures on product displays to support our channel marketing via our retail partners. We launched the Sure Shot Dietary Supplement in stores such as BevMo! in the second quarter of 2024.
Manufacturing, Logistics and Fulfillment
We outsource the manufacturing of our products to contract manufacturers, who produce them according to our formulation specifications. Our products are manufactured by contract manufacturers in India and the US. The majority of our products will then be shipped to third-party warehouses and to our corporate offices, which can either transport them to our distributors, retailers, or directly to our customers. Our third-party warehouses are located in the US. We use a limited number of logistics providers to deliver our products to both distributors and retailers, which allows us to lessen order fulfillment time, cut shipping costs, and improve inventory flexibility.
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Our Competitive Strengths
We are committed to driving continuous improvement through innovation. Since our inception, we have made significant investments in research and development and have acquired a substantial portfolio of intellectual property, which continues to grow each year. Our commitment to innovation has allowed us to create unique products that address unmet needs in the market, all backed by rigorous clinical research. We believe that our focus on research and development is designed to enable us to stay ahead of the curve and provide our customers with products that are not only effective but also innovative. We take pride in our patent portfolio and the continuous growth we have achieved, as we believe that it showcases our dedication to creating new and unique solutions for our customers. By staying committed to innovation, we are confident in our ability to meet the ever-changing needs of the health and wellness market. We believe that the Sure Shot Dietary Supplement stands as a unique product in the liquid dietary supplement market. Nevertheless, our competitive landscape includes many companies involved in the production of health and welfare products, including beverages.
Recent Developments
Settlement Agreement with Bigger Capital
On January 20, 2025, the Company entered into the Bigger Settlement Agreement. In exchange for a resolution to all issues and claims that relate to the previously filed action against the Company in the Supreme Court of the State of New York, New York County, Index No. 65018/2024. Pursuant to the Bigger Settlement Agreement, the Company agreed to pay or issue to Bigger Capital the following: (i) pay Bigger Capital $375,000; (ii) issue a secured convertible note in the principal amount of $1.75 million maturing on December 31, 2026 (the “Secured Convertible Bigger Note”); (iii) a convertible note in the principal amount of $3.5 million maturing June 30, 2025 (the “Convertible Bigger Note,” and, together with the Secured Convertible Bigger Note, the “Bigger Notes”); and (iv) 5,332,889 shares of common stock issuable upon the exercise of common stock purchase warrants to purchase shares of common stock of the Company at an exercise price of $0.4348 per share (the “Bigger Warrants”). A significant shareholder of the Company and Bigger Capital entered into a voting agreement in favor of Bigger Capital in addition to the Bigger Settlement Agreement. The Bigger Settlement Agreement is filed herein as Exhibit 10.32. The Secured Convertible Bigger Note is filed herein as Exhibit 4.5 and the Convertible Bigger Note is filed herein as Exhibit 4.6.
The Secured Convertible Bigger Note
The Secured Convertible Bigger Note accrues interest on the unpaid principal amount therein at the rate of nine percent (9%) per annum from January 20, 2025 until the earlier to occur of (i) the date such unpaid principal amount is paid in full, or (ii) the date such unpaid principal amount is converted into shares of the Company’s common stock, in accordance with the terms hereof, and shall be computed on the basis of a 360-day year for the actual number of days elapsed. Interest accruing hereunder shall be paid either in cash or in shares of the common stock.
At the option of its holder, the holder of the Secured Convertible Bigger Note may convert all or any portion of the outstanding principal amount of the Secured Convertible Bigger Note plus accrued and unpaid interest thereon, for a number of shares of common stock of the Company equal to the quotient obtained by dividing the dollar amount of such outstanding principal amount of the Secured Convertible Bigger Note plus the accrued and unpaid interest thereon being converted by the Secured Convertible Bigger Note Conversion Price (as defined below) as of the applicable conversion date.
“Secured Convertible Bigger Note Conversion Price” means the lesser of (i) $0.5435 per share and (ii) the closing price of the Company’s common stock, as reflected on Nasdaq.com, immediately preceding the date of Stockholder Approval (as defined below), subject to adjustment as provided in the Secured Convertible Bigger Note.
“Stockholder Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Capital Market (or any successor entity) from the stockholders of the Company with respect to the transactions contemplated under the Secured Convertible Bigger Note and the other Transaction Documents (as defined in the Secured Convertible Bigger Note), including, without limitation, the issuance of all of the shares of common stock issuable thereunder, including in an amount that would, when aggregated with (i) the number of shares issued upon any prior conversions of the Convertible Bigger Note, and (ii) the number of shares issued upon any prior exercises of the Bigger Warrant, exceed 19.99% of the issued and outstanding Common Stock on January 20, 2025, at a price less than the market value of the Company’s common stock on January 20, 2025.
The Convertible Bigger Note
Interest shall accrue on the unpaid principal amount of the Convertible Bigger Note at the rate of nine percent (9%) per annum from January 20, 2025 until the earlier to occur of (i) the date such unpaid principal amount is paid in full, (ii) the date such unpaid principal amount is converted into shares of the Company’s common stock, in accordance with the terms of the Convertible Bigger Note, or (iii) the date the Company otherwise satisfies its Repayment Obligation (as defined in Convertible Bigger Note) in respect of such outstanding principal amount via an Alternative Payment Method (as defined in Convertible Bigger Note).
Upon the maturity date of the Convertible Bigger Note, at the Company’s discretion, the Company will have the option to either (i) repay the Convertible Bigger Note in full including any accrued interest, (ii) issue a $2,000,000 SAFE Note, or (iii) a $4.5 million convertible note bearing a 9% interest rate, maturing on December 31, 2027 (the “Replacement Bigger Note”). The form of the Replacement Bigger Note is filed herein as Exhibit 4.8.
At the option of its holder, the holder of the Convertible Bigger Note may convert all or any portion of the outstanding principal amount of the Convertible Bigger Note plus accrued and unpaid interest thereon, for a number of shares of common stock of the Company equal to the quotient obtained by dividing the dollar amount of such outstanding principal amount of the Convertible Bigger Note plus the accrued and unpaid interest thereon being converted by the Convertible Bigger Note Conversion Price (as defined below) as of the applicable conversion date.
“Convertible Bigger Note Conversion Price” means $0.5435 per share, subject to adjustment as provided under the Convertible Bigger Note.
The Bigger Warrants
Pursuant to the Bigger Settlement Agreement, the Company agreed to exchange the 1,650,050 warrants held by Bigger Capital for a total of 5,332,889 warrants exercisable for $0.43 (the latter warrants, the “Bigger Warrants”). The Bigger Warrants contain customary adjustment provisions and representation and warranties. The Bigger Warrants are exercisable for a five year period following their issuance date. The Bigger Warrants are filed herein as Exhibit 4.7.
Registration Rights
Pursuant to the Bigger Settlement Agreement, the Company shall promptly file a registration statement for shares of the Company’s Common Stock equal to 150% of the shares initially issuable upon exercise of the Bigger Notes (the “Registrable Bigger Securities”), which filing shall be no later than ten (10) business days after the execution of the Settlement Agreement. The Company shall diligently take all steps necessary for the registration statement to become effective as soon as practicable and shall thereafter maintain the registration statement until the Registrable Bigger Securities are sold. Upon receiving notification from the SEC that either the registration statement relating to the Registrable Bigger Securities have received a “no review” from the SEC or that the SEC has no additional comments to the registration statement, the Company will take all action necessary to ensure that the registration statement has been declared effective within two business days of either such notification.
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Settlement Agreement with Intracoastal Capital, LLC
On January 14, 2025, the Company entered into the Intracoastal Settlement Agreement with Intracoastal Capital. In exchange for a resolution to all issues and claims that relate to the previously filed action against the Company in the Supreme Court of the State of New York, New York County, Index No. 655967/2023. Pursuant to the Intracoastal Settlement Agreement, the Company agreed to issue to Intracoastal Capital the following: (i) shares of the Company’s common stock with a value of $875,000, as set forth below (the “Intracoastal Settlement Shares”) and (ii) a settlement payment of $175,000. The number of Intracoastal Settlement Shares shall be the greater of the Initial Share Amount (as defined below) or the Adjusted Share Amount (as defined below).
“Adjusted Share Price” means the lesser of (i) the volume weighted average price of the Company on the five trading days prior to the day that the registration statement registering the Intracoastal Settlement Shares becomes effective or (ii) the closing price for the Company on the day prior to such registration statement becomes effective. In such event, the Company shall deliver within two (2) business days additional shares of common stock so that Intracoastal Capital receives, in total, an amount equal to 875,000 divided by the Adjusted Share Price.
“Initial Share Amount” means an amount equal to 875,000 divided by the Initial Share Price. The Initial Share Amount shall be subject to adjustment if the Adjusted Share Price is lower than the Initial Share Price.
“Initial Share Price” means the lesser of the volume weighted average price for the Company, as reported on the Nasdaq, on the five trading days prior to the execution of the Intracoastal Settlement Agreement, or (ii) the closing price of the Company, as reported on the Nasdaq on the day prior to the execution of the Intracoastal Settlement Agreement.
The Intracoastal Settlement Agreement is filed herein as Exhibit 10.33.
Settlement with Alta Partners, LLC
On or about January 18, 2024, Alta Partners, LLC, (“Alta”) filed a lawsuit against the Company in the federal district court for the Southern District of New York, case captioned, Alta Partners, LLC v. Safety Shot, Inc. No. 24-cv-373 (S.D.N.Y.) (the “Litigation”). The Litigation stems from the Company’s warrants to purchase shares of Company common stock and asserted causes of action for Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing and violation of Section 11 of the Securities Act of 1933. The Litigation sought compensatory, general and liquated damages in an amount to be proven at trial. On or about January 29, 2025, the Company settled this litigation by agreeing to pay $350,000 in exchange for a release of all claims by Alta.
Consulting Agreement with Blue Capital S.A., LLC
On January 18, 2025, the Company entered into a Consulting Agreement with Blue Capital S.A., LLC., a United Arab Emirates limited company (“Blue Capital”) pursuant to which Blue Capital shall provide the Company with services as stated therein, for a period of five (5) year term commencing on February 1, 2025. The Company shall issue to Blue Capital 4,545,454 options to purchase shares of the Company’s common stock, par value $0.001 (the “Common Stock”) at $0.44 per shares (the “Blue Capital Options”). The Blue Capital Options shall vest in equal quarterly installments such that 2,272,727 Options shall vest on August 1, 2025, and 2,272,727 Blue Capital Options shall vest on February 1, 2026. The Consulting Agreement with Blue Capital is filed as Exhibit 10.34.
January 2025 PIPE Investment
On January 17, 2025, the Company entered into a Securities Purchase Agreement with one accredited investor for the purchase of 2,277,389 shares for gross proceeds of $1,000,000 at a price of $0.4391 per share, which reflects a 20% discount from the closing price of the common stock on January 14, 2025. The Securities Purchase Agreement is filed herein as Exhibit 10.35.
Notice of Nasdaq Listing Deficiency
On January 2, 2025, the Company received a notice from The Nasdaq Stock Exchange (“Nasdaq”) that the closing bid price for our common stock had been below $1.00 per share for the previous 30 consecutive days, and that we are therefore not in compliance with the minimum bid price requirement for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (“Rule 5550(a)(2)”). Nasdaq’s notice has no immediate effect on the listing or trading of our common stock on the Nasdaq Capital Market.
The notice indicates that we will have 180 calendar days, until July 1, 2025, to regain compliance with this requirement. We can regain compliance with the $1.00 minimum bid listing requirement if the closing bid price of our common stock is at least $1.00 per share for a minimum of ten (10) consecutive business days during the 180-day compliance period.
If the Company does not regain compliance during the initial compliance period, we may be eligible for an additional 180 day period to regain compliance. To qualify, we would be required to meet the continued listing requirement for market value of our publicly held shares and all other Nasdaq initial listing standards, with the exception of the minimum bid price requirement under Rule 5550(a)(2), and we would need to provide written notice to Nasdaq of our intention to cure the deficiency during the second compliance period. If it appears to Nasdaq that we will not be able to cure the deficiency, or if we are otherwise not eligible, we expect that Nasdaq will notify us that our common stock will be subject to delisting. We will have the right to appeal a determination to delist our common stock, and our common stock would remain listed on The Nasdaq Capital Market until the completion of the appeal process.
We intend to actively monitor the minimum bid price of our common stock and may, as appropriate, consider available options to regain compliance with Rule 5550(a)(2), including undertaking a reverse stock split. However, there can be no assurance that the Company will be able to regain compliance with Rule 5550(a)(2).
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Arrangement Agreement with Yerbae Brands Corp.
On January 7, 2025, the Company entered into a definitive Arrangement Agreement (the “Arrangement Agreement”) with Yerbaé Brands Corp., (“Yerbaé”), a corporation organized under the laws of the Province of British Columbia, pursuant to which, among other things, the Company will acquire all of the issued and outstanding common shares of Yerbaé (the “Arrangement”). The Arrangement will be implemented by way of a plan of arrangement (the “Plan of Arrangement”) in accordance with the Business Corporations Act (British Columbia) and is subject to approval by the Supreme Court of British Columbia (the “Court”), the stockholders of the Company and the shareholders of Yerbaé, among other customary closing conditions for a transaction of this nature and size.
Consideration
On the terms and subject to the conditions of the Arrangement Agreement and the Plan of Arrangement, at the effective time of the Arrangement (the “Effective Time”) all of the common shares of Yerbaé then issued and outstanding immediately prior to the Effective Time (including the common shares of Yerbaé to be issued on the settlement of all of the performance share units and restricted share units of Yerbaé, which will be settled immediately prior to the Effective Time) will be acquired by the Company in consideration for the right to receive an aggregate of 20,000,000 shares of common stock of the Company (collectively, the “Consideration Shares”). Each option (each a “Replaced Option”) to purchase common shares of Yerbaé outstanding immediately prior to the Effective Time (whether or not vested) will be deemed to be exchanged for an option (“Replacement Option”) entitling the holder to purchase shares of common stock of the Company. The number of shares of common stock of the Company underlying each Replacement Option will equal the number of common shares of Yerbaé underlying the corresponding Replaced Option multiplied by the exchange ratio. The exercise price of each Replacement Option will equal the exercise price of the corresponding Replaced Option divided by the exchange ratio and each Replacement Option will be fully vested. In accordance with the respective terms of Yerbaé’s outstanding warrants and debentures, the terms of each warrant and debenture of Yerbaé will entitle the holder thereof to receive, upon exercise or conversion, as applicable, in substitution for the number of Yerbaé common shares subject to such warrant or debenture, a number of shares of Company common stock. In addition, if the Arrangement is consummated, the Company will pay up to $500,000 of Yerbaé’s transaction expenses.
Representations and Warranties; Covenants
Pursuant to the Arrangement Agreement, each of the Company and Yerbaé made customary representations and warranties for transactions of this type. All of the representations and warranties of the Company and Yerbaé will expire and be terminated at the Effective Time. Each of the Company and Yerbaé have also agreed to be bound by certain covenants that are customary for transactions of this type, including obligations of the parties during the period between the date of the execution of the Arrangement Agreement and the Effective Time (the “Interim Period”) to, in all material respects, conduct their respective businesses in the ordinary course consistent with past practice, and to refrain from taking certain specified actions without the prior written consent of the other party, in each case, subject to certain exceptions and qualifications. The covenants and agreements of the Company and Yerbaé that by their terms are to be performed at or after the Effective Time shall, in each case, survive until fully performed.
Closing Conditions
The respective obligations of each party to consummate the Arrangement are subject to the satisfaction or waiver of certain customary mutual closing conditions, including (i) the issuance of the interim and final orders by the Court with respect to the Arrangement; (ii) the adoption by the requisite Yerbaé shareholders of a resolution approving the Arrangement (the “Yerbaé Shareholder Approval”); (iii) the approval by the requisite Company stockholders of the issuance of the Consideration Shares and an amended and restated equity incentive plan reserving a number of shares of Company common stock equal to no less than 10% of the fully diluted shares of Company common stock issued and outstanding immediately following the Effective Time (the “Company Stockholder Approval”); (iv) the absence of any law or order prohibiting, rendering illegal or permanently enjoining the consummation of the Arrangement; (v) the obtainment of any regulatory approvals required in connection with the Plan of Arrangement, except for such approvals the failure of which to obtain would not reasonably be expected to have a material adverse effect on the parties or would not materially impede or delay the completion of the Arrangement; (vi) the approval by the TSX Venture Exchange;
the approval of the listing of the Consideration Shares by Nasdaq; (viii) the exemption of the issuance of the Consideration Shares from the registration requirements of the Securities Act, pursuant to Section 3(a)(10) thereof; (ix) that the representations of the other party in the Arrangement Agreement are true and correct as of the date of the Arrangement Agreement and the Effective Time (subject to certain materiality qualifiers) and (x) that the other party will have complied in all material respects with its covenants in the Arrangement Agreement.
Additionally, the obligation of the Company to consummate the Arrangement is subject to the satisfaction or waiver of the following conditions, among others: (i) that there will not have occurred during the Interim Period any material adverse effect with respect to Yerbaé; (ii) that the Company shall have received Support Agreements (as defined below) from certain shareholders of Yerbaé representing not less than 40.1% of the issued and outstanding common shares of Yerbaé (collectively, the “Supporting Yerbaé Shareholders”) no later than 30 days following the date of the Arrangement Agreement (and such shareholders shall not have breached their obligations or covenants thereunder in any material respect as of the Effective Time); and (iii) that the Yerbaé shareholders shall have not validly exercised and not withdrawn dissent rights with respect to more than 5% of the common shares of Yerbaé then outstanding.
The obligation of Yerbaé to consummate the Arrangement is also conditioned upon (i) the Company appointing Todd Gibson to the board of directors of the Company as of the Effective Time and (ii) that there will not have occurred during the Interim Period any material adverse effect with respect to the Company.
The Arrangement Agreement is filed herein as Exhibit 10.36.
Equity Disbursement Agreement with Maxim Group LLC
On December 6, 2024, the Company entered into an Equity Disbursement Agreement (the “Sales Agreement”) with Maxim Group LLC (the “Sales Agent”) pursuant to which the Company may offer and sell, from time to time, in its sole discretion, shares of its common stock, having an aggregate offering price of up to $5,000,000, subject to certain limitations on the amount of common stock that may be offered and sold by the Company set forth in the Sales Agreement. The Company is not obligated to make any sales of common stock under the Sales Agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs.
Any shares offered and sold in the at-the-market offering will be issued pursuant to the registration statement on Form S-3 (File No. 333-267644), initially filed by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act on September 28, 2022, and declared effective on November 9, 2022, and the prospectus supplement relating to the at-the-market offering filed with the SEC on December 6, 2024, and any applicable additional prospectus supplements related to the at-the-market offering that form a part of the registration statement.
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The Sales Agent may sell the shares of common stock by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act, including sales made through Nasdaq, or any other trading market for the common stock, sales made to or through a market maker other than on an exchange or through an electronic communications network, or in negotiated transactions pursuant to terms set forth in a placement notice delivered by the Company to the Sales Agent under the Sales Agreement. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, the Sales Agent will use commercially reasonable efforts, consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations, and the rules of Nasdaq, to sell the shares from time to time based upon the Company’s instructions, including any price, time or size limits specified by the Company. The Sales Agent is not obligated to purchase any shares of common stock on a principal basis pursuant to the Sales Agreement.
The Company will pay the Sales Agent a commission equal to 3.0% of the gross sales proceeds of any shares sold through the Sales Agent under the Sales Agreement, and also has provided the Sales Agent with customary indemnification and contribution rights. The Sales Agreement contains customary representations and warranties and conditions to the placements of the shares pursuant thereto, obligations to sell shares under the Sales Agreement are subject to satisfaction of certain conditions, including customary closing conditions.
The Sales Agreement is filed as Exhibit 10.37.
Separation and Exchange Agreement with Caring Brands, Inc.
On September 24, 2024, the Company entered into a Separation and Exchange Agreement (the “Separation Agreement”) with Caring Brands, Inc., a Nevada corporation (“CB Nevada”), Caring Brands, Inc, a Florida corporation (“CB Florida”) and Brian S. John, as the representative of the shareholders of CB Florida (the “Representative”). The Company, along with the other shareholders of CB, exchanged 100% of the issued and outstanding shares of common stock of CB Florida (the “Exchange”) for the CB Nevada shares of common stock, including the 3,000,000 shares of CB Nevada common stock received by the Company. Pursuant to the Separation Agreement, the Company’s business segment that creates and sells innovative wellness consumer products industries (the “CB Business”) along with the assets, intellectual property and liabilities related thereto were transferred to CB Nevada.
The Separation Agreement is filed herein as Exhibit 10.38.
Consulting Agreement with Core 4 Capital Corp.
On September 23, 2024, the Company entered into a Consulting Agreement with Core 4 Capital Corp. (“Core 4 Consulting Agreement”), a New York corporation (“Core 4 Capital Corp.”), pursuant to which Core 4 shall provide the Company with services as stated therein, for a period of six (6) month term commencing on October 1, 2024. The Company shall issue 1,250,000 shares of the Company’s restricted stock. This stock will vest in equal quarterly installments such that 625,000 shares shall vest on December 31, 2024, and 625,000 shares shall vest on March 31, 2025.
The Company’s President, Jordan Schur is a 15% owner of Core 4 Capital Corp. but is not an officer or director of this entity. Other shareholders of Core 4 are also members of Mr. Schur’s immediate family (but not dependents).
The Core 4 Consulting Agreement is filed as Exhibit 10.39.
Core 4 Capital Corp. Stock Purchases
On August 30, 2024, the Company entered into a Securities Purchase Agreement with Core 4 Capital Corp. for the purchase of (i) 3,370,787 shares of the Company’s common stock at a price of $0.89 per share which was the closing price on August 29, 2024; and (ii) 3,370,787 warrants to purchase shares of common stock at a price of $0.125 per warrant. These warrants are exercisable for a period of five years from the date of issuance and have an exercise price of $0.89. The Company’s President, Jordan Schur, is a 15% owner of the Investor, but is not an officer or director of such Investor. Other shareholders of the Investor are also members of Mr. Schur’s immediate family (but not dependents). The Company did not pay any commissions in connection with this offering and expects net proceeds of approximately $3,421,348 from the offering. This Securities Purchase Agreement is filed as Exhibit 10.40. These warrants are filed as Exhibit 10.41.
On June 27, 2024, the Company entered into a Securities Purchase Agreement with Core 4 Capital Corp. for the purchase of 943,396 shares of common stock of the Company at a price of $1.06 per share, which was the closing price on June 27, 2024). The Company paid no commissions in connection with this securities purchase and the net proceeds were approximately $1,000,000. This Securities Purchase Agreement is filed as Exhibit 10.42.
On April 4, 2024, the Company entered into a Securities Purchase Agreement with Core 4 Capital Corp. for the purchase of 2,369,668 shares of the Company’s common stock to Core 4 Capital Corp. at a price of $2.11 per share, which was the closing price on April 4, 2024. The Company paid no commissions in connection with this securities purchase and net proceeds thereto were approximately $4,975,000. This Securities Purchase Agreement is filed as Exhibit 10.43.
Management Employment Agreements
John Gulyas Employment Agreement
On December 16, 2024, the Company entered into an employment agreement (“Gulyas Agreement”) with John Gulyas, pursuant to which Mr. Gulyas will serve as the Company’s Executive Chairman of the board of directors. The Agreement provides for (A) a $300,000 annual base salary paid in equal installments on the Company’s regular pay dates no less frequently than bi-monthly, (B) a restricted stock award of 1,000,000 shares of Company’s common stock fully vested as of the date therein, an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $500,000 for Q1 and Q2 of 2025, (D) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $1,000,000 for Q3 and Q4 of 2025, and (E) other customary employee benefits. On or about March 3, 2025, the Company amended the Gulyas Agreement by changing Section 5. b. to read, Restricted Stock. As part of his employment, Employee shall receive a grant of 1,000,000 shares of Company restricted common stock (the “RSUs”) as compensation for work performed in 2025 and 2026. The 1,000,000 RSUs will start vesting on April 1, 2025, in quarterly increments over the following year as follows: 250,000 will vest on July 1, 2025; 250,000 will vest on October 1, 2025; 250,000 will vest on January 1, 2026, and 250,000 will vest on April 1, 2026.
The Gulyas Agreement is filed herein as Exhibit 10.44.
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Jordon Schur Employment Agreement
On December 16, 2024, the Company entered into an employment agreement with Jordon Schur (the “Schur Agreement”), pursuant to which Mr. Schur will serve as the Company’s President. The Agreement provides for (A) a $300,000 annual base salary paid in equal installments on the Company’s regular pay dates no less frequently than bi-monthly, (B) a restricted stock award of 1,000,000 shares of Company’s common stock fully vested as of the date therein, (C) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $500,000 for Q1 and Q2 of 2025, (D) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $1,000,000 for Q3 and Q4 of 2025, and (E) other customary employee benefits. On or about March 3, 2025, the Company amended the Schur Agreement by changing Section 5. b. to read, Restricted Stock. As part of his employment, Employee shall receive a grant of 1,000,000 shares of Company restricted common stock (the “RSUs”) as compensation for work performed in 2025 and 2026. The 1,000,000 RSUs will start vesting on April 1, 2025, in quarterly increments over the following year as follows: 250,000 will vest on July 1, 2025; 250,000 will vest on October 1, 2025; 250,000 will vest on January 1, 2026, and 250,000 will vest on April 1, 2026.
The Schur Agreement is filed as Exhibit 10.45.
Jarrett Boon Employment Agreement
On December 16, 2024, the Company entered into an employment agreement with Jarrett Boon (the “Boon Agreement”), pursuant to which Mr. Boon will serve as the Company’s Chief Executive Officer. The Boon Agreement provides for (A) a $300,000 annual base salary paid in equal installments on the Company’s regular pay dates no less frequently than bi-monthly, (B) a restricted stock award of 1,000,000 shares of Company’s common stock fully vested as of the date therein, (C) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $500,000 for Q1 and Q2 of 2025, (D) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $1,000,000 for Q3 and Q4 of 2025, and (E) other customary employee benefits. On or about March 3, 2025, the Company amended the Boon Agreement by changing Section 5. b. to read, Restricted Stock. As part of his employment, Employee shall receive a grant of 1,000,000 shares of Company restricted common stock (the “RSUs”) as compensation for work performed in 2025 and 2026. The 1,000,000 RSUs will start vesting on April 1, 2025, in quarterly increments over the following year as follows: 250,000 will vest on July 1, 2025; 250,000 will vest on October 1, 2025; 250,000 will vest on January 1, 2026, and 250,000 will vest on April 1, 2026.
The Boon Agreement is filed as Exhibit 10.46.
Danielle De Rosa Employment Agreement
On April 22, 2024, the Company entered into an employment agreement with Danielle De Rosa (the “De Rosa Employment Agreement”), pursuant to which Ms. Rosa will serve as the Company’s Chief Financial Officer. As consideration for her services, the Company will pay Ms. Rosa a salary of $250,000 per annum, which salary is payable bi-monthly. Subject to suitable business conditions, Ms. Rosa may receive a 5% pay increase payable to her at each one-year anniversary from the commencement of the De Rosa Employment Agreement. The Company will also award 200,000 stock options to Ms. Rosa, granted at a strike price equal to the closing market price on the date that Ms. De Rosa first starts to work for the Company as an independent consultant. These stock options will vest on a quarterly basis, in equal installments over three years. The stock options will terminate on the fifth year anniversary of their date of issuance.
The De Rosa Employment Agreement is filed as Exhibit 10.47.
Intellectual Property
As of the date hereof, the Company owns five patents, including the patent (US 9,186,350 B2) and patent (US 10,028,991 B2) for the composition of the Sure Shot Dietary Supplement used for minimizing the harmful effects associated with alcohol consumption by supporting the metabolism of alcohol. US 9,186,350 B2 (the “350 Patent”), relates to an early version of the Sure Shot Dietary Supplement and is owned by the Company. The 350 Patent is a utility patent that covers the United States jurisdiction and expired on December 25, 2023. US 10,028,991 B2 (the “991 Patent”) is a continuation of the 350 Patent and relates to the Sure Shot Dietary Supplement and is owned by the Company. The 991 Patent is a utility patent that covers the United States jurisdiction and expires on November 5, 2035. In and around September of 2024, the Company received a Notice of Allowance for a new patent U.S. Patent Application No. 18/395,565 that relates to current version of the Sure Shot Dietary Supplement. On December 3, 2024, U.S. Patent No. 12,156,878 (formerly U.S. Patent Application No. 18/395,656) was granted. This patent is a utility patent and covers the United States jurisdiction. The Company owns three additional patents that relate to legacy products that the Company neither currently sells nor has any plans to sell in the future.
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Government Regulation
The Sure Shot Dietary Supplement:
The production, distribution and sale in the United States of the Sure Shot Dietary Supplement is subject to various U.S. federal, state and local regulations, including but not limited to: the Federal Food, Drug and Cosmetic Act (“FD&C Act”); the Occupational Safety and Health Act and various state laws and regulations governing workplace health and safety; various environmental statutes; the Safe Drinking Water and Toxic Enforcement Act of 1986 (“California Proposition 65”); data privacy and personal data protection laws and regulations, including the California Consumer Privacy Act of 2018 (as modified by the California Privacy Rights Act) and a number of other federal, state and local statutes and regulations applicable to the production, transportation, sale, safety, advertising, marketing, labeling, packaging, and ingredients of the Sure Shot Dietary Supplement.
We also may in the future be affected by other existing, proposed and potential future regulations or regulatory actions, including those described below, any of which could adversely affect our business, financial condition and results of operations.
Furthermore, legislation and regulation may be introduced in the United States at the federal, state, municipal and supranational level in respect of each of the subject areas discussed below. Public health officials and health advocates are increasingly focused on the public health consequences associated with obesity and alcohol consumption, especially as they may affect children, and are seeking legislative change to reduce the consumption of sweetened and alcohol beverages.
We are subject to a number of regulations applicable to the formulation, labeling, packaging, and advertising (including promotional campaigns) of our products. In California, we are subject to California Proposition 65, a law which requires that a specified warning be provided before exposing California consumers to any product that contains in excess of threshold amounts of a substance listed by California as having been found to cause cancer or reproductive toxicity. California Proposition 65 does not require a warning if the manufacturer of a product can demonstrate that the use of the product in question exposes consumers to an average daily quantity of a listed substance that is below that threshold amount, which is determined either by scientific criteria set forth in applicable regulations or via a “safe harbor” threshold that may be established by the state, or the substance is naturally occurring, or is subject to another applicable exception. As of the date of this registration statement, we are not required to put a warning label on our product and our products are perfluoroalkyl and polyfluoroalkyl substances (“PFAS”) free. We are unable to predict whether a component found in our product might be added to the California list in the future. Furthermore, we are also unable to predict when or whether the increasing sensitivity of detection methodology may become applicable under this law and related regulations as they currently exist, or as they may be amended. If we are required to add warning labels to any of our products or place warnings in certain locations where our products are sold, it will be difficult to predict whether, or to what extent, such a warning would have an adverse impact on sales of our products in those locations or elsewhere. In addition, there has been increasing regulatory activity globally regarding constituents in packaging materials, including PFAS. Regardless of whether perceived health consequences of these constituents are justified, such regulatory activity could result in additional government regulations that impact the packaging of our beverages.
In addition, the U.S. Food and Drug Administration (the “FDA”) has regulations with respect to serving size information and nutrition labeling on food and beverage products, including a requirement to disclose the amount of added sugars in such products and regulations about whether a product qualifies as a drug. Further, the U.S. Department of Agriculture promulgated regulations requiring that, by January 1, 2022, the labels of certain bioengineered foods include a disclosure that the food is bioengineered. These regulations may impact, reduce and/or otherwise affect the purchase and consumption of our products by consumers.
All ingredients in the Sure Shot Dietary Supplement are deemed Generally Recognized as Safe (GRAS) and align with FDA standards, permitting their inclusion in supplements. In the event that the FDA or any governmental agency identifies an ingredient or aspect of our product as unsafe, we commit to promptly withdrawing that component in accordance with regulatory directives. From a product and sales perspective, there are no impediments or concerns raised by any governmental agency. It is essential to note that the Sure Shot Dietary Supplement is classified as a dietary supplement, exempt from the approval or filing requirements mandated for pharmaceutical drugs by the FDA or other regulatory authorities.
Employees
As of this prospectus, we had eight full-time employees. We believe our relations with our employees to be good.
Properties
Currently, we do not own any real property. We rent office space at 1061 E. Indiantown Rd., Ste. 110, Jupiter, FL 33477 for $15,038 per month. The Company entered into the office lease effective July 1, 2021, which has a primary term of the lease of five years with one renewal option for an additional three years. As part of the Separation Agreement, Caring Brands, Inc. has agreed to assume to lease obligations upon it reaching certain milestones.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
If we are unable to keep up with rapid technological changes, our products may become obsolete.
The market for our products is characterized by significant and rapid change. Although we will continue to expand our product line capabilities to remain competitive, research and discoveries by others may make our processes, products, or brands less attractive or even obsolete.
Competition could adversely affect our business.
Our industry in general is competitive. It is possible that future competitors could enter our market, thereby causing us to lose market share and revenues. In addition, some of our current or future competitors may have significantly greater financial, technical, marketing, and other resources than we do or may have more experience or advantages in the markets in which we will compete that will allow them to offer lower prices or higher quality products. If we do not successfully compete with these competitors, we could fail to develop market share and our future business prospects could be adversely affected.
If we are unable to develop and maintain our brand and reputation for our product offerings, our business and prospects could be materially harmed.
Our business and prospects depend, in part, on developing and then maintaining and strengthening our brand and reputation in the markets we serve. If problems with our products cause our customers to have a negative experience or failure or delay in the delivery of our products to our customers, our brand and reputation could be diminished. If we fail to develop, promote and maintain our brand and reputation successfully, our business and prospects could be materially harmed.
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We are subject to government regulation, and unfavorable changes could substantially harm our business and results of operations.
We are subject to general business regulations and laws as well as regulations and laws specifically governing our industries in the U.S. and other countries in which we operate. Uncertainty surrounding existing and future laws and regulations may impede our services and increase the cost of providing such services. These regulations and laws may cover taxation, tariffs, user pricing, distribution, consumer protection and the characteristics and quality of services.
We depend heavily on key personnel, and turnover of key senior management could harm our business.
Our future business and results of operations depend in significant part upon the continued contributions of our senior management personnel. If we lose their services or if they fail to perform in their current positions, or if we are not able to attract and retain skilled personnel as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key personnel in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future. We may not have written employment agreements with all of our senior management. We do not have any key person insurance.
Our products may not meet health and safety standards or could become contaminated.
We do not have control over all of the third parties involved in the manufacturing of our products and their compliance with government health and safety standards. Even if our products meet these standards, they could otherwise become contaminated. A failure to meet these standards or contamination could occur in our operations or those of our manufacturers, distributors or suppliers. This could result in expensive production interruptions, recalls and liability claims. Moreover, negative publicity could be generated from false, unfounded or nominal liability claims or limited recalls. Any of these failures or occurrences could negatively affect our business and financial performance.
The sale of our products involves product liability and related risks that could expose us to significant insurance and loss expenses.
We face an inherent risk of exposure to product liability claims if the use of our products results in, or is believed to have resulted in, illness or injury. Our products contain combinations of ingredients, and there is little long-term experience with the effect of these combinations. In addition, interactions of these products with other products, prescription medicines and over-the-counter treatments have not been fully explored or understood and may have unintended consequences.
Any product liability claim may increase our costs and adversely affect our revenue and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance may fail to cover future product liability claims, which, if adversely determined, could subject us to substantial monetary damages.
The success of our business will depend upon our ability to create and expand our brand awareness.
The markets we compete in, including the wellness drink market, sexual wellness and hair growth markets we intend to compete in, are highly competitive, with many well-known brands leading the industry. Our ability to compete effectively and generate revenue will be based upon our ability to create and expand awareness of our products distinct from those of our competitors. It is imperative that we are able to convey to consumers the benefits of our products. However, advertising and packaging and labeling of such products will be limited by various regulations. Our success will be dependent upon our ability to convey to consumers that our products are superior to those of our competitors.
We must develop and introduce new products to succeed.
Our industry is subject to rapid change. New products are constantly introduced to the market. Our ability to remain competitive depends in part on our ability to enhance existing products, to develop and manufacture new products in a timely and cost-effective manner, to accurately predict market transitions, and to effectively market our products. Our future financial results will depend to a great extent on the successful introduction of several new products. We cannot be certain that we will be successful in selecting, developing, manufacturing and marketing new products or in enhancing existing products.
| ● | The success of new product introductions depends on various factors, including, without limitation, the following: Successful sales and marketing efforts; | |
| ● | Timely delivery of new products; | |
| ● | Availability of raw materials; | |
| ● | Pricing of raw materials; | |
| ● | Regulatory allowance of the products; and | |
| ● | Customer acceptance of new products. |
Adverse publicity associated with our products or ingredients, or those of similar companies, could adversely affect our sales and revenue.
Adverse publicity concerning any actual or purported failure by us to comply with applicable laws and regulations regarding any aspect of our business could have an adverse effect on the public perception of us. This, in turn, could negatively affect our ability to obtain financing, endorsers and attract distributors or retailers for our products, which would have a material adverse effect on our ability to generate sales and revenue.
Our distributors’ and customers’ perception of the safety and quality of our products or even similar products distributed by others can be significantly influenced by national media attention, publicized scientific research or findings, product liability claims and other publicity concerning our products or similar products distributed by others. Adverse publicity, whether or not accurate, that associates consumption of our products or any similar products with illness or other adverse effects, will likely diminish the public’s perception of our products. Claims that any products are ineffective, inappropriately labeled or have inaccurate instructions as to their use, could have a material adverse effect on the market demand for our products, including reducing our sales and revenue.
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If serious adverse or undesirable side effects are identified during the development of our product candidates, we may abandon or limit our development or commercialization of such product candidates.
If our product candidates are associated with undesirable side effects or have unexpected characteristics, we may need to abandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.
If we elect or are forced to suspend or terminate any clinical trial with one of our product candidates, the commercial prospects of such product candidate will be harmed, and our ability to generate revenue from such product candidate will be delayed or eliminated. Any of these occurrences may harm our business, financial condition and prospects significantly.
If we experience delays or difficulties in the enrollment of subjects to our clinical trials, our ability to complete such trials will be adversely affected
Identifying, screening and enrolling patients to participate in clinical trials of our product candidates is critical to our success, and we may not be able to identify, recruit, enroll and dose a sufficient number of patients with the required or desired characteristics to complete our clinical trials in a timely manner. The timing of our clinical trials depends on our ability to recruit patients to participate as well as to subsequently dose these patients and complete required follow-up periods. In particular, because our planned clinical trials may be focused on indications with relatively small patient populations, our ability to enroll eligible patients may be limited or may result in slower enrollment than we anticipate.
In addition, we may experience enrollment delays related to increased or unforeseen legal and logistical requirements at certain clinical trial sites. These delays could be caused by reviews by contractual discussions with individual clinical trial sites. Any delays in enrolling and/or dosing patients in our planned clinical trials could result in increased costs, delays in advancing our product candidates, delays in testing the effectiveness of our product candidates or in termination of the clinical trials altogether.
Participant enrollment may also be affected by other factors, including:
| ● | coordination with clinical research organizations to enroll and administer the clinical trials; | |
| ● | coordination and recruitment of collaborators and investigators at individual sites; | |
| ● | size of the participant population and process for identifying participants; | |
| ● | design of the clinical trial protocol; | |
| ● | eligibility and exclusion criteria; | |
| ● | perceived risks and benefits of the product candidates under study; | |
| ● | time of year in which the trials are initiated or conducted; | |
| ● | ability to obtain and maintain subject consents; | |
| ● | ability to enroll participants in a timely manner; | |
| ● | risk that enrolled subjects will drop out before completion of the trials; | |
| ● | proximity and availability of clinical trial sites for prospective participants; | |
| ● | ability to monitor subjects adequately during and after treatment. |
It is uncertain whether product liability insurance will be adequate to address product liability claims, or that insurance against such claims will be affordable or available on acceptable terms in the future.
Clinical research involves the testing of products on human volunteers pursuant to a clinical trial protocol. Such testing involves a risk of liability for personal injury to or death of patients due to, among other causes, adverse side effects, improper administration of the new product, or improper volunteer behavior. Claims may arise from patients, clinical trial volunteers, consumers, physicians, hospitals, companies, institutions, researchers, or others using, selling, or buying our products, as well as from governmental bodies. In addition, product liability and related risks are likely to increase over time, in particular upon the commercialization or marketing of any products by us or parties with which we enter into development, marketing, or distribution collaborations. Although we are contracting for general liability insurance in connection with our ongoing business, there can be no assurance that the amount and scope of such insurance coverage will be appropriate and sufficient in the event any claims arise, that we will be able to secure additional coverage should we attempt to do so, or that our insurers would not contest or refuse any attempt by us to collect on such insurance policies. Furthermore, there can be no assurance that suitable product liability insurance (at the clinical stage and/or commercial stage) will continue to be available on terms acceptable to us or at all, or that, if obtained, the insurance coverage will be appropriate and sufficient to cover any potential claims or liabilities.
If we are unable to establish relationships with licensees or collaborators to carry out sales, marketing, and distribution functions or to create effective marketing, sales, and distribution capabilities, we will be unable to market our products successfully.
Our business strategy may include out-licensing product candidates to or collaborating with larger firms with experience in marketing and selling pharmaceutical products. There can be no assurance that we will successfully be able to establish marketing, sales, or distribution relationships with any third-party, that such relationships, if established, will be successful, or that we will be successful in gaining market acceptance for any products we might develop. To the extent that we enter into any marketing, sales, or distribution arrangements with third parties, our product revenues per unit sold are expected to be lower than if we marketed, sold, and distributed our products directly, and any revenues we receive will depend upon the efforts of such third parties.
If we are unable to establish such third-party marketing and sales relationships, or choose not to do so, we would have to establish in-house marketing and sales capabilities. To market any products directly, we would have to establish a marketing, sales, and distribution force that has technical expertise and could support a distribution capability. Competition in the dietary supplement industry for technically proficient marketing, sales, and distribution personnel is intense and attracting and retaining such personnel may significantly increase our costs.
There can be no assurance that we will be able to establish internal marketing, sales, or distribution capabilities or that these capabilities will be sufficient to meet our needs.
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Natural disasters and other events beyond our control could materially adversely affect us.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control. Such events could make it difficult or impossible for us to deliver our services to our customers and could decrease demand for our services.
We have a limited operating history upon which investors can evaluate our future prospects.
We have a limited operating history upon which an evaluation of its business plan or performance and prospects can be made. The business and prospects of the Company must be considered in the light of the potential problems, delays, uncertainties and complications encountered in connection with a newly established business and new industry. The risks include, but are not limited to, the possibility that we will not be able to develop functional and scalable products and services, or that although functional and scalable, our products and services will not be economical to market; that our competitors hold proprietary rights that preclude us from marketing such products; that our competitors market a superior or equivalent product; that we are not able to upgrade and enhance our technologies and products to accommodate new features and expanded service offerings; or the failure to receive necessary regulatory clearances for our products. To successfully introduce and market our products at a profit, we must establish brand name recognition and competitive advantages for our products. There are no assurances that we can successfully address these challenges. If it is unsuccessful, we and our business, financial condition and operating results could be materially and adversely affected.
The current and future expense levels are based largely on estimates of planned operations and future revenues rather than experience. It is difficult to accurately forecast future revenues because our business is new and our market has not been developed. If our forecasts prove incorrect, the business, operating results and financial condition of the Company may be materially and adversely affected. Moreover, we may be unable to adjust our spending in a timely manner to compensate for any unanticipated reduction in revenues. As a result, any significant reduction in revenues may immediately and adversely affect our business, financial condition and operating results.
Our products and manufacturing activities are subject to extensive government regulation, and failure to comply with these laws and regulations, as they currently exist or as modified in the future, may increase our costs, limit or eliminate our ability to sell certain products, subject us or our suppliers to the risk of enforcement action, or otherwise adversely affect our business, results of operations and financial condition.
The manufacture, packaging, labeling, advertising, promotion, distribution, import, export and sale of our products are subject to regulation by numerous national and local governmental agencies in the United States and other countries, including but not limited to the U.S. Food and Drug Administration (FDA) and the Federal Trade Commission (FTC). Failure to comply with FDA regulatory requirements may result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines, and criminal prosecutions. Any action of this type by the FDA could materially adversely affect our ability to market our products successfully.
The manufacture of nutritional or dietary supplements and related products in the United States requires compliance with dietary supplement current Good Manufacturing Practice (GMP) regulations, which are based on the food-model GMP regulations, with additional requirements that are specific to dietary supplements. We believe the manufacturing processes for the Safety Shot Dietary Supplement substantially complies with the applicable dietary supplement GMP requirements. Nevertheless, any FDA action determining that such processes do not comply with dietary supplement GMPs could materially adversely affect our ability to manufacture and market the Sure Shot Dietary Supplement in the United States. In addition, the Dietary Supplement & Nonprescription Drug Consumer Protection Act requires dietary supplement manufacturers and distributors to notify the FDA when they receive reports of serious adverse events associated with their products that occur within the United States.
Individual U.S. states also regulate nutritional supplements. A state may seek to interpret claims or products presumptively valid under federal law as illegal under that state’s regulations, or otherwise seek to create restrictions to access under state law. For example, during the 204 legislative session, several states are considering bills that would restrict the sale of muscle building and/or weight management supplements to people over the age of 18. Government agencies, as well as legislative bodies, can change existing regulations, or impose new ones, or could take aggressive measures, causing or contributing to a variety of negative consequences, including:
| ● | requirements for the reformulation of products to meet new standards; | |
| ● | the recall or discontinuance of products; | |
| ● | additional record-keeping requirements; | |
| ● | expanded documentation of the properties of certain or all products; | |
| ● | expanded or different labeling or advertising for products; | |
| ● | expanded adverse event tracking and reporting requirements; and | |
| ● | additional scientific substantiation to support product claims. |
We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative orders, when and if promulgated, could have on our business, financial condition, or results of operations.
We are subject to government regulations of the processing, formulation, packaging, labeling and advertising of our wellness and dietary supplement products.
Under the Federal Food, Drug, and Cosmetic Act (the FD&C Act), companies that manufacture and distribute functional foods and dietary supplements, such as our Safety Shot Dietary Supplement, are limited in the claims that they are permitted to make about nutritional support on the product label without FDA approval. Any failure by us to adhere to the labeling requirements could lead to the FDA requiring that our products be repackaged and relabeled, which would have a material adverse effect on our business. In addition, companies are responsible for the accuracy and truthfulness of, and must have adequate scientific substantiation for, any nutritional or functional claims. These claims must be truthful and not misleading. Promotional claims about foods and dietary supplements also must not include statements that the product can diagnose, mitigate, treat, cure or prevent a specific disease or class of disease.
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We believe we are able to market our Sure Shot Dietary Supplement product in reliance on the self-affirmed Generally Recognized As Safe (GRAS) status of our formulation’s current ingredients. No governmental agency or other third party has made a determination as to whether or not the Sure Shot Dietary Supplement has achieved GRAS status. We make this determination based on independent scientific opinions that the individual ingredients and formulation as a whole are not harmful under their intended conditions of use. If the FDA, another regulatory authority or other third party denied our self-affirmed GRAS status for the Sure Shot Dietary Supplement, we could face significant penalties or be required to undergo the regulatory approval process in order to market our product, and our business, financial condition and results of operations will be adversely affected. We cannot guarantee that in such a situation the Sure Shot Dietary Supplement would be approved.
The processing, formulation, packaging, labeling and advertising of our products may also be subject to regulation by the FTC, the Environmental Protection Agency (EPA), and various agencies of the states and localities in which the products are sold. Any changes in the current regulatory environment could impose requirements that would limit our ability to market our supplement products and make bringing new products to market more expensive. In addition, the adoption of new regulations or changes in the interpretation of existing regulations may result in significant compliance costs or discontinuation of product sales and may adversely affect our business, financial condition and results of operations.
While we have positioned the Sure Shot Dietary Supplement as a dietary supplement, it is possible that the FDA or a state regulatory agency could classify our product as a drug. If the Sure Shot Dietary Supplement is determined to be a drug, we would not be able to market it further without making significant changes to the product and labeling or going through the drug approval process, which would limit our ability to effectively market the product and would adversely affect our financial condition and results of operations. Additional clinical trials may be necessary in order to support any new drug approval for the Sure Shot Dietary Supplement, and clinical trials designed to support drug approval may be time consuming, expensive, and uncertain. If required, such additional studies may take years to complete, and we may never generate the necessary data or results required to obtain marketing authorization of Safety Shot Dietary Supplement as an over-the-counter drug product. Accordingly, there can be no assurances that any such drug approval, if required, could be obtained for the Sure Shot Dietary Supplement. If the FDA or a state regulatory agency ultimately determines the Sure Shot Dietary Supplement is a drug rather than a dietary supplement, the agency could claim that the product is misbranded and require that we recall, repackage and relabel the product and impose civil and/or criminal penalties. Any of these situations could adversely affect our business and operations, and any public actions taken by the FDA or other regulatory agency against us could lead to consumer complaints, civil lawsuits, retail customers terminating any supply agreements we may have with them, and significant reputational harms to the company.
Our failure to comply with applicable laws or regulations could result in substantial monetary penalties and could adversely affect our operating results.
In recent years, the marketing and labeling of functional foods and beverages and dietary supplements has brought increased risk that consumers will bring class action lawsuits and that the FTC and/or state attorneys general will bring legal action concerning the truth and accuracy of the marketing and labeling of such products, seek removal of such products from the marketplace, and/or impose fines and penalties. Our Sure Shot Dietary Supplement product is marketed with express and implied statements relating to the ingredients or health and wellness related attributes, which may increase the potential risk of regulatory scrutiny over such claims. The lack of specific regulations or guidance on common supplement terms and statements used in product labeling has contributed to legal challenges against many supplement companies, and plaintiffs have commenced legal actions against several nutritional supplement companies, asserting false, misleading and deceptive advertising and labeling claims. In addition, the FTC has instituted numerous enforcement actions against dietary supplement companies for failure to have adequate substantiation for claims made in advertising or for the use of false or misleading advertising claims. Our failure to comply with applicable regulations could result insubstantial monetary penalties, which would likely have a material adverse effect on our financial condition or results of operations.
Even when unmerited, class action lawsuits, action by the FTC or state attorneys general enforcement actions can be expensive to defend against and may adversely affect our reputation with existing and potential customers and consumers and our corporate and brand image, which would likely have a material and adverse effect on our business, financial condition or results of operations. The number of private consumer class actions relating to false or deceptive advertising against nutritional supplement companies has increased in recent years.
In addition, the FDA has aggressively enforced its regulations with respect to different types of product claims that may or may not be made for food or dietary supplement products. These events could interrupt the marketing and sales of our Sure Shot Dietary Supplement product, severely damage our brand reputation and public image, increase our legal expenses, result in product recalls or litigation, and impede our ability to deliver our products in sufficient quantities or quality, which would likely result in a material adverse effect on our business, financial condition, results of operations and cash flows.
Congress and/or regulatory agencies may impose additional laws or regulations or change current laws or regulations, and state attorneys general may increase enforcement of existing or new laws, and compliance with new or changed governmental regulations, or any state attorney proceeding, could increase our costs significantly and materially and adversely affect our business, financial condition and results of operations.
From time to time, Congress, the FDA, the FTC, or other federal, state, local or foreign legislative and regulatory authorities may impose additional laws or regulations that apply to us, repeal laws or regulations that we consider favorable to us or impose more stringent interpretations of current laws or regulations. We are not able to predict the nature of such future laws, regulations, repeals or interpretations or to predict the effect that additional governmental regulation, when and if it occurs, would have on our business in the future. Those developments could require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, adverse event reporting or other new requirements.
For example, in recent years, the FDA has issued warning letters to several dietary supplement companies alleging improper and unapproved drug claims regarding their products marketed for use as hangover cures or to prevent hangovers. If the FDA determines that we have disseminated inappropriate and unapproved drug claims for our Safety Shot Dietary Supplement, which we are positioning as a dietary supplement, we could receive a warning or untitled letter, be required to modify our product claims or take other actions to satisfy the FDA. Such a public warning or untitled letter from the FDA could harm our reputation and could lead to potential customer or consumer complaints or even civil lawsuits and other financial damages. While we would intend to vigorously defend our company and the Safety Shot product line in such a situation, any developments of this nature could increase our costs significantly and would likely have a material adverse effect on our business, financial condition and results of operations.
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Our reliance on third parties to manufacture and supply our products, including the Sure Shot Dietary Supplement, may harm our business, financial condition and operating results.
We contract with third-party suppliers and manufacturers for the production of our products, including the Sure Shot Dietary Supplement. These third-party suppliers and manufacturers produce and, in most cases, pack our products according to formulations and specifications that have been developed by or in conjunction with our in-house product development team. Products manufactured by third-party suppliers at their facilities must also pass through quality control and assurance procedures to ensure they are manufactured in conformance with our specifications. We cannot assure you that our third-party contract manufacturers will continue to reliably supply products to us at the levels of quality, or the quantities, we require, and in compliance with our specifications or applicable laws, including under the FDA’s dietary supplement GMP regulations and the FD&C Act’s food safety provisions. Should our contract manufacturers experience quality issues or supply us with non-conforming products, we may need to terminate relationships or secure alternative suppliers. Identifying and obtaining acceptable replacement manufacturing sources, on a timely basis or at all, for FDA-regulated functional beverages and dietary supplement products is challenging. Additionally, any future need to transfer our third-party manufacturing business to another contract manufacturer could be expensive, time-consuming, result in delays in our production or shipping, reduce our net sales, damage our relationship with customers and damage our reputation in the marketplace.
We rely on third parties to conduct clinical trials and most nonclinical studies of our products, including the Sure Shot Dietary Supplement. If these third parties do not perform as contractually required, fail to satisfy regulatory or legal requirements or miss expected deadlines, our product development and commercialization efforts could be delayed with material and adverse effects on our business, financial condition, results of operations and prospects.
While we recently completed a clinical trial for the Safety Shot Dietary Supplement and may sponsor clinical trials in the future for the Sure Shot Dietary Supplement or other products, we do not independently conduct clinical trials or the majority of nonclinical studies involving our products or product candidates. Accordingly, while we perform certain functions internally, we currently rely on third-party contract research organizations (CROs), such as the Center for Applied Health Sciences, as well as laboratories, clinical investigators, clinical data management organizations, and consultants, to help us design, conduct, supervise and monitor research involving our products and human participants. As a result, we have less control over the timing, quality and other aspects of our clinical trials than we would have had we conducted them on our own. There is a limited number of third-party service providers that specialize in the wellness space or have the expertise required to achieve our business objectives. If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or investigators or to do so on commercially reasonable terms. Further, these laboratories, investigators, CROs and consultants are not our employees and we have limited control over the amount of time and resources that they dedicate to our product development programs. These third parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources from our programs. The third parties with which we contract might not be diligent, careful or timely in conducting our nonclinical studies or clinical trials. If we cannot contract with acceptable third parties on commercially reasonable terms, or at all, or if these third parties do not carry out their contractual duties, satisfy the legal and regulatory requirements for the conduct of nonclinical studies or clinical trials or meet expected deadlines for any reason, our product development efforts could be delayed and otherwise adversely affected.
In all events, we are responsible for ensuring that each of our nonclinical studies and clinical trials is conducted in accordance with the general investigational plan and protocols for the relevant study or trial. For example, the FDA requires certain nonclinical studies to be conducted in accordance with good laboratory practices and clinical trials to be conducted in accordance with good clinical practices, including practices and requirements for designing, conducting, recording and reporting the results of nonclinical studies and clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of clinical trial participants are protected. Our reliance on third parties we do not control do not relieve us of these responsibilities and requirements. Any adverse development or delay in our nonclinical studies or clinical trials could have a material and adverse effect on our business, financial condition, results of operations and prospects.
Further, should the FDA determine that the Sure Shot Dietary Supplement is a drug rather than a dietary supplement and require us to secure new drug approval or another form of marketing authorization for the Sure Shot Dietary Supplement, there can be no assurance that the nonclinical and clinical data we have generated to date would be sufficient to meet applicable regulatory standards for demonstrating substantial evidence of effectiveness. “Substantial evidence” represents the evidentiary threshold in the FD&C Act for the efficacy of new drugs, and it requires at least one adequate and well-controlled clinical investigation to establish effectiveness. Because we have positioned the Sure Shot Dietary Supplement as a dietary supplement, our recently completed clinical trial may not meet FDA’s expectations for a well-controlled clinical investigation adequate to support a potential drug approval.
We may not meet our product development and commercialization milestones.
We have established milestones, based upon our expectations regarding our technologies at that time, which we use to assess our progress toward developing our products. These milestones relate to technology and design improvements as well as dates for achieving development goals. If our products exhibit technical defects or are unable to meet cost or performance goals, our commercialization schedule could be delayed, and potential purchasers of our initial commercial products may decline to purchase such products or may opt to pursue alternative products.
We may also experience shortages of equipment due to manufacturing difficulties. Multiple suppliers provide the components used in manufacturing our products. Our manufacturing operations could be disrupted by fire, earthquake or other natural disaster, a labor-related disruption, failure in supply or other logistical channels, electrical outages or other reasons. If there were a disruption to manufacturing facilities, we would be unable to manufacture until we have restored and re-qualified our manufacturing capability or developed alternative manufacturing facilities.
Our operations in international markets involve inherent risks that we may not be able to control.
Our business plan includes the marketing and sale of our proposed products in international markets. Accordingly, our results could be materially and adversely affected by a variety of uncontrollable and changing factors relating to international business operations, including:
| ● | Macroeconomic conditions adversely affecting geographies where we intend to do business; | |
| ● | Foreign currency exchange rates; | |
| ● | Political or social unrest or economic instability in a specific country or region; | |
| ● | Higher costs of doing business in foreign countries; | |
| ● | Infringement claims on foreign patents, copyrights or trademark rights; | |
| ● | Difficulties in staffing and managing operations across disparate geographic areas; | |
| ● | Difficulties associated with enforcing agreements and intellectual property rights through foreign legal systems; | |
| ● | Trade protection measures and other regulatory requirements, which affect our ability to import or export our products from or to various countries; | |
| ● | Adverse tax consequences; | |
| ● | Unexpected changes in legal and regulatory requirements; | |
| ● | Military conflict, terrorist activities, natural disasters and medical epidemics; and | |
| ● | Our ability to recruit and retain channel partners in foreign jurisdictions. |
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Compliance with new and existing laws and governmental regulations could increase our costs significantly and adversely affect our results of operations.
The processing, formulation, safety, manufacturing, packaging, labeling, advertising and distribution of our products are subject to federal laws and regulation by one or more federal agencies, including the FDA, the FTC, the CPSC, the USDA, and the EPA. These activities are also regulated by various state, local and international laws and agencies of the states and localities in which our products are sold. Government regulations may prevent or delay the introduction, or require the reformulation, of our products, which could result in lost revenues and increased costs to us. For instance, the FDA regulates, among other things, the composition, safety, manufacture, labeling and marketing of dietary ingredients and dietary supplements (including vitamins, minerals, herbs, and other dietary ingredients for human use). Dietary supplements and dietary ingredients that do not comply with FDA’s regulations and/or the DSHEA will be deemed adulterated or misbranded. Manufacturers and distributors of dietary supplements and dietary ingredients are prohibited from marketing products that are adulterated or misbranded, and the FDA may take enforcement action against any adulterated or misbranded dietary supplement on the market. The FDA has broad enforcement powers. If we violate applicable regulatory requirements, the FDA may bring enforcement actions against us, which could have a material adverse effect on our business, prospects, financial condition, and results of operations. The FDA may not accept the evidence of safety for any new dietary ingredient that we may wish to market, may determine that a particular dietary supplement or ingredient presents an unacceptable health risk based on the required submission of serious adverse events or other information, and may determine that a particular claim(such as reducing Blood Alcohol Content) or statement of nutritional value that we use to support the marketing of a dietary supplement is an impermissible drug claim or is not substantiated. Any of these actions could prevent us from marketing particular dietary supplement products or making certain claims or statements with respect to those products. The FDA could also require us to remove a particular product from the market. Any future recall or removal would result in additional costs to us, including lost revenues from any products that we are required to remove from the market, any of which could be material. Any product recalls or removals could also lead to an increased risk of litigation and liability, substantial costs, and reduced growth prospects.
Additional or more stringent laws and regulations of dietary supplements and other products have been considered from time to time. These developments could require reformulation of some products to meet new standards, recalls or discontinuance of some products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of some products, additional or different labeling, additional scientific substantiation, or other new requirements. Any of these developments could increase our costs significantly. In addition, regulators’ evolving interpretation of existing laws could have similar effects.
International trade disputes, including U.S. trade tariffs and retaliatory tariffs, could adversely impact our business.
International trade disputes, including threatened or implemented tariffs by the United States and threatened or implemented tariffs by foreign countries in retaliation, could adversely impact our business. Many of our tenants sell imported goods and tariffs or other trade restrictions could increase costs for these tenants. To the extent our tenants are unable to pass these costs on to their customers, our tenants could be adversely impacted. In addition, international trade disputes, including those related to tariffs, could result in inflationary pressures that directly impact our costs, such as costs for steel, lumber and other materials applicable to our redevelopment projects. Trade disputes could also adversely impact global supply chains which could further increase costs for us and our tenants or delay delivery of key inventories and supplies.
Significant political, trade, regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations.
Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S. federal administration, are difficult to predict and may have a material adverse effect on us. Similarly, changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For example, during the prior Trump administration, increased tariffs were implemented on goods imported into the U.S., particularly from China, Canada, and Mexico. On February 1, 2025, the U.S. imposed a 25% tariff on imports from Canada and Mexico, which were subsequently suspended for a period of one month, and a 10% additional tariff on imports from China. Historically, tariffs have led to increased trade and political tensions, between not only the U.S. and China, but also between the U.S. and other countries in the international community. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including, but not limited to, U.S. and China trade policies, could have a material adverse effect on our financial condition or results of operations.
Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.
As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while some jurisdictions, such as the United States, subject the mining, ownership and exchange of cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.
In January 2025, U.S. President Donald Trump issued an executive order forming a presidential working group to establish a clear regulatory framework for digital assets, and leaders in both houses of the U.S. Congress have announced a bicameral working group with the objective of passing legislation to provide regulatory clarity for the industry. Committees in both houses of the U.S. Congress have held hearings to ensure fair access to financial services, including for companies operating in the digital asset space. Additionally, President Trump and members of the U.S. Congress announced that they are studying the possibility of creating a national strategic digital asset reserve to include Bitcoin, and at least twelve states have introduced legislation to create strategic Bitcoin reserves.
While these ongoing regulatory developments appear to be positive, and we anticipate greater regulatory certainty in the future, given the difficulty of predicting the outcomes of ongoing and future regulatory actions and legislative developments, it is possible that future developments could have a material adverse effect on our business, prospects, or operations.
Our business, operations, financial position and timelines, could be materially adversely affected by the continuing military action in Ukraine and the war between Israel and Hamas.
As a result of the military action commenced in February 2022 by the Russian Federation and Belarus in Ukraine and the war between Israel and Hamas commenced in October 2023, and related economic sanctions imposed or that may in the future be imposed by certain governments, our financial position and operations may be materially and adversely affected. As our ability to continue to operate will be dependent on raising debt and equity finance, any adverse impact to those markets as a result of these conflicts, including due to increased market volatility, decreased availability in third-party financing and/or a deterioration in the terms on which it is available (if at all), could negatively impact our business, results of operations, cash flows, financial condition, and/or prospects. The extent of any potential impact is not yet determinable, however.
Risks Related to our Financial Position and Capital Needs
Our accountant has indicated doubt about our ability to continue as a going concern.
As of December 31, 2024, and 2023, the Company had $348,816 and $3,833,349 in cash, accumulated deficit of $115,090,347 and $65,480,715 and cash flow used in operations of $18,089,748 and $10,715,314, respectively. The Company has incurred and expects to continue to incur significant costs in pursuit of its expansion and development plans. These conditions raise doubt about the Company’s ability to continue as a going concern and accordingly our auditors have included a going concern opinion in our annual report.
In connection with certain public and private offerings (the “Financing”), the Company offered warrants as part of the Financing packages. During the year ended December 31, 2024, the Warrant Holders exercised a total of 2,996,127 warrants for shares of common stock for a total exercise price of $3,962,714 and during the year ended December 31, 2023, the Warrant Holders exercised a total of 10,266,845 warrants for shares of common stock for a total exercise price of $8,887,837. At December 31, 2024, the Company has 18,803,334 warrants outstanding at an average exercise price of $2.09. The Company expects, although there can be no assurance, that a majority of the outstanding warrants will be exercised in the near future.
The Company also holds 2,623,342 shares of SRM Entertainment, Inc. (Nasdaq: SRM) valued at $0.63 per share (as of December 31, 2024) and these shares are considered trading shares and are held as marketable securities on the balance sheet. These shares are not covered by an effective registration statement but may be sold subject to Rule 144.
At December 31, 2024, the Company had $348,816 in cash and the Company recognizes that it may need to raise additional capital in order to continue to execute its business plan in the future. There is no assurance that the Warrant Holders will exercise their warrants or additional financing will be available if needed or that the Company will be able to obtain financing on terms acceptable to it or whether the Company will become profitable and generate positive operating cash flow. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may be forced to substantially curtail its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or other assets.
We may seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing ownership interests will be diluted and the terms of such financings may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financings may be coupled with an equity component, such as warrants to purchase shares, which could also result in dilution of our existing stockholders’ ownership. The incurrence of indebtedness would result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business and may result in liens being placed on our assets and intellectual property. If we were to default on such indebtedness, we could lose such assets and intellectual property.
Our potential for rapid growth and our entry into new markets make it difficult for us to evaluate our current and future business prospects, and we may be unable to effectively manage any growth associated with these new markets, which may increase the risk of your investment and could harm our business, financial condition, results of operations and cash flow.
Our proliferation into new markets may place a significant strain on our resources and increase demands on our executive management, personnel and systems, and our operational, administrative and financial resources may be inadequate. We may also not be able to effectively manage any expanded operations or achieve planned growth on a timely or profitable basis, particularly if the number of customers using our technology significantly increases or their demands and needs change as our business expands. If we are unable to manage expanded operations effectively, we may experience operating inefficiencies, the quality of our products and services could deteriorate, and our business and results of operations could be materially adversely affected.
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Changes in tax laws and unanticipated tax liabilities could adversely affect our effective income tax rate and ability to achieve profitability.
Our effective income tax rate in the future could be adversely affected by a number of factors including changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws. We regularly assess all of these matters to determine the adequacy of our tax provision which is subject to discretion. If our assessments are incorrect, it could have an adverse effect on our business and financial condition. There can be no assurance that income tax laws and administrative policies with respect to the income tax consequences generally applicable to us or to our subsidiaries will not be changed in a manner which adversely affects our shareholders.
Risks Related to our Intellectual Property
We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.
A third party may sue us or one of our strategic collaborators for infringing its intellectual property rights. Likewise, we may need to resort to litigation to enforce licensed rights or to determine the scope and validity of third-party intellectual property rights.
The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation would divert our efforts. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. If we do not prevail in this type of litigation, we or our strategic collaborators may be required to pay monetary damages; stop commercial activities relating to the affected products or services; obtain a license in order to continue manufacturing or marketing the affected products or services; or attempt to compete in the market with a substantially similar product.
Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue some of our operations. In addition, a court may require that we pay expenses or damages, and litigation could disrupt our commercial activities.
Any inability to protect our intellectual property rights could reduce the value of our products and brands, which could adversely affect our financial condition, results of operations and business.
Our business is partly dependent upon our trademarks, trade secrets, copyrights and other intellectual property rights. Effective intellectual property rights protection, however, may not be available under the laws of every country in which we and our sub-licensees may operate. There is a risk of certain valuable trade secrets, beyond what is described publicly in patents, being exposed to potential infringers. Regardless of our technology being protected by patents or otherwise, there is a risk that other companies may employ the technology without authorization and without recompensing us.
The efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. In addition, protecting our intellectual property rights is costly and time consuming. There is a risk that we may have insufficient resources to counter adequately such infringements through negotiation or the use of legal remedies. It may not be practicable or cost effective for us to fully protect our intellectual property rights in some countries or jurisdictions. If we are unable to successfully identify and stop unauthorized use of our intellectual property, we could lose potential revenue and experience increased operational and enforcement costs, which could adversely affect our financial condition, results of operations and business.
The intellectual property behind our products may include unpublished know-how as well as existing and pending intellectual property protection. All intellectual property protection eventually expires, and unpublished know-how is dependent on key individuals.
The commercialization of our licensed products is partially dependent upon know-how and trade secrets held by certain individuals working with and for us. Because the expertise runs deep in these few individuals, if something were to happen to any or all of them, the ability to properly manufacture our products without compromising quality and performance could be diminished greatly.
Knowledge published in the form of any future intellectual property has finite protection, as all patents and trademarks have a limited life and an expiration date. While continuous efforts will be made to apply for patents and trademarks if appropriate, there is no guarantee that additional patents or trademarks will be granted. The expiration of patents and trademarks relating to our products may hinder our ability to sub-license or sell our products for a long period of time without the development of a more complex licensing strategy.
If we are not able to adequately protect our intellectual property, then we may not be able to compete effectively, and we may not be profitable.
Our existing proprietary rights may not afford remedies and protections necessary to prevent infringement, reformulation, theft, misappropriation and other improper use of our products by competitors. We own the formulations contained in our products and we consider these product formulations to be our critical proprietary property, which must be protected from competitors. Although trade secret, trademark, copyright and patent laws generally provide a certain level of protection, and we attempt to protect ourselves through contracts with manufacturers of our products, we may not be successful in enforcing our rights. In addition, enforcement of our proprietary rights may require lengthy and expensive litigation. We have attempted to protect some of the trade names and trademarks used for our products by registering them with the U.S. Patent and Trademark Office, but we must rely on common law trademark rights to protect our unregistered trademarks. Common law trademark rights do not provide the same remedies as are granted to federally registered trademarks, and the rights of a common law trademark are limited to the geographic area in which the trademark is actually used. Our inability to protect our intellectual property could have a material adverse impact on our ability to compete and could make it difficult for us to achieve a profit.
Risks Related to Our Securities and Other Risks
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stockless attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
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The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”
We are required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements is time-consuming and results in increased costs to us and could have a negative effect on our results of operations, financial condition or business. As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) and the requirements of the Sarbanes-Oxley Act. These requirements may place a strain on our systems and resources.
The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we will need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join our firm and to maintain appropriate operational and financial systems to adequately support expansion. These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our results of operations, financial condition or business.
As an “emerging growth company” as defined in the JOBS Act, we intend to take advantage of certain temporary exemptions from various reporting requirements including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We may also delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, as permitted by the JOBS Act.
We have broad discretion in the use of the net proceeds from any offerings and may not use them effectively.
Our management will have broad discretion in the application of the net proceeds from any offerings and may spend or invest these proceeds in a way with which our stockholders disagree. The failure by our management to apply these funds effectively could harm our business and financial condition. Pending their use, we may invest the net proceeds from any offering in a manner that does not produce income or that loses value.
Our management has limited experience in managing the day-to-day operations of a public company and, as a result, we may incur additional expenses associated with the management of our Company.
We only became a public company in October 2020. The management team is responsible for the operations and reporting of the Company. The requirements of operating as a public company are many and sometimes difficult to navigate. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. If we lack cash resources to cover these costs of being a public company in the future, our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our potential results of operations, cashflow and financial condition after we commence operations.
Compliance with changing corporate governance regulations and public disclosures may result in additional risks and exposures.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new regulations from the SEC, have created uncertainty for public companies such as ours. These laws, regulations, and standards are subject to varying interpretations in many cases, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased expense and significant management time and attention.
Certain of our stockholders hold a significant percentage of our outstanding voting securities, which could reduce the ability of minority stockholders to effect certain corporate actions.
At March 25, 2025, our officers and directors are the beneficial owners of approximately 14.7% our issued and outstanding voting securities. As a result, they possess significant influence over our elections and votes. As a result, their ownership and control may have the effect of facilitating and expediting a future change in control, merger, consolidation, takeover or other business combination, or encouraging a potential acquirer to make a tender offer. Their ownership and control may also have the effect of delaying, impeding, or preventing a future change in control, merger, consolidation, takeover or other business combination, or discouraging a potential acquirer from making a tender offer.
If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Once our common stock is quoted, if one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline.
We do not intend to pay dividends for the foreseeable future.
We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends on our common stock in the foreseeable future.
Our Second Amended and Restated Certificate of Incorporation contains an exclusive forum provision for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our Second Amended and Restated Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, New York shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or agent of the Company to the Company or the Company’s shareholders or (c) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said court having personal jurisdiction over the indispensable parties named as defendants therein. This provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the company and its directors, officers, or other employees and may discourage lawsuits with respect to such claims. This provision does not apply to actions arising under the Exchange Act or Securities Act.
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Our issuance of additional common stock or preferred stock may cause our common stock price to decline, which may negatively impact your investment.
Issuances of a substantial number of additional shares of our common or preferred stock, or the perception that such issuances could occur, may cause prevailing market prices for our common stock to decline. In addition, our board of directors is authorized to issue additional series of shares of preferred stock without any action on the part of our stockholders. Our board of directors also has the power, without stockholder approval, to set the terms of any such series of shares of preferred stock that may be issued, including voting rights, conversion rights, dividend rights, preferences over our common stock with respect to dividends or if we liquidate, dissolve or wind up our business and other terms. If we issue cumulative preferred stock in the future that has preference over our common stock with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the market price of our common stock could decrease.
Anti-takeover provisions in the Company’s charter and bylaws may prevent or frustrate attempts by stockholders to change the board of directors or current management and could make a third-party acquisition of the Company difficult.
The Company’s certificate of incorporation and bylaws contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. Furthermore, the Board of Directors has the ability to increase the size of the Board and fill newly created vacancies without stockholder approval. These provisions could limit the price that investors might be willing to pay in the future for shares of the Company’s common stock.
Our common stock may become subject to the SEC’s penny stock rules and accordingly, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.
The SEC has adopted regulations, which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and therefore would be a “penny stock” according to SEC rules, unless we are listed on a national securities exchange. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:
| ● | Make a special written suitability determination for the purchaser; | |
| ● | Receive the purchaser’s prior written agreement to the transaction; | |
| ● | Provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and | |
| ● | Obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed. |
Although our common stock is not currently subject to these rules, it were to become subject to such rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell your securities.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with NeTTronix Technology Solutions who reports to our CFO, to manage the risk assessment and mitigation process.
We
engage
We
have
Our
cybersecurity incident response and vulnerability management policies are designed to escalate certain cybersecurity incidents to members
of management depending on the circumstances, including our Chief Executive Officer, and Chief Financial Officer. In addition,
ITEM 2. PROPERTIES
Currently, we do not own any real property. We rent office space at 1061 E. Indiantown Rd., Ste. 110, Jupiter, FL 33477 for $15,038 per month. The Company entered into the office lease effective July 1, 2021, which has a primary term of the lease of five years with one renewal option for an additional three years. As part of the Separation Agreement, Caring Brands, Inc. has agreed to assume to lease obligations upon it reaching certain milestones. We do not own any real estate.
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ITEM 3. LEGAL PROCEEDINGS
On November 30, 2023, Intracoastal Capital, LLC (“Intracoastal”) filed a lawsuit against the Company in the New York County Supreme Court, alleging that (i) the Company is in breach of a common stock warrant issued to Intracoastal on or about July 26, 2021, and (ii) that the Company should be ordered by the court to deliver to Intracoastal 330,619 free trading shares of Company common stock (the “Intracoastal Litigation”). The Intracoastal Litigation seeks compensatory damages in an amount no less than $2 million, in addition to liquidated damages and attorney’s fees. On January 14, 2025, the Company settled all issues and claims relating to the Intracoastal Litigation pursuant to the terms of the Intracoastal Settlement Agreement. Under the Intracoastal Settlement Agreement, the Company agreed to issue to Intracoastal Capital the following: (i) the Intracoastal Settlement Shares and (ii) a settlement payment of $175,000. The number of Intracoastal Settlement Shares shall be the greater of the Initial Share Amount or the Adjusted Share Amount. The Intracoastal Settlement Agreement is filed herein as Exhibit 10.33.
On September 5, 2023, “Sabby” Volatility Warrant Master Fund Ltd. filed a lawsuit against the Company in the federal district court for the Southern District of New York case captioned Sabby Volatility Warrant Master Fund Ltd. v. Jupiter Wellness, Inc., No.1:23-cv-07874-KPF (the “Litigation”). Sabby’s initial complaint in the Litigation alleges that the Company’s delayed spin-off and distribution of the common stock of “SRM” Entertainment. Inc. give rise to claims of breach-of-contact, promissory estoppel, and negligent misrepresentation. On November 10, 2023, Jupiter sought judicial permission to move to dismiss Sabby’s complaint, arguing that Sabby had no legal right to the delayed distribution occurring on the original record date, and that regardless, no law requires the Company to compensate Sabby for the costs of covering its short position against the Company. In response, the Court allowed the parties to bypass that dismissal motion briefing so long as Sabby filed an amended complaint by December 15, 2023.
Sabby seeks compensatory damages estimated to exceed $500,000. The Company has filed a motion to dismiss Sabby’s amended complaint and is awaiting the Court’s ruling. The Company intends to vigorously defend itself against Sabby’s claims and does not believe that the Litigation’s ultimate disposition or resolution will have a material adverse effect on the Company’s financial position, results of operations or liquidity. The case was dismissed with prejudice by the federal district court for the Southern District of New York on September 23, 2024. On October 10, 2024, Sabby filed an appeal of the Southern District’s dismissal to the United States Court of Appeals for the Second Circuit. The Company is awaiting the decision from the Court of Appeals for the Second Circuit.
On February 9, 2024, “Sabby” Volatility Warrant Master Find Ltd. sued the Company in the federal district court for the Southern District of New York, case captioned, Sabby Volatility Warrant Master Fund Ltd. v. Safety Shot, Inc., No. 1:24-cv-920-NRB (the “Litigation”). Sabby’s initial complaint alleges that the Company has improperly refused to honor Sabby’s exercise of a Warrant to acquire 2,105,263 shares of common stock. On March 8, 2024, Sabby filed an amended complaint. The Company has answered the amended complaint is due on March 29, 2024. Sabby seeks “liquidated and compensatory damages in an amount to be proven at trial,” including compensatory damages “estimated to be at least $750,000,” liquidated damages “estimated to be at least $600,000,” specific performance, attorneys’ fees, expenses and costs. The Company intends to vigorously defend itself against Sabby’s claims and does not believe that the Litigation’s ultimate disposition or resolution will have a material adverse effect on the Company’s financial position, results of operations or liquidity.
On January 16, 2024, 3i LP (“3i”), filed a lawsuit against the Company in the Supreme Court of the State of New York in the County of New York, case captioned, 3i LP v. Safety Shot, Inc. No. 650196/24 (the “Litigation”). The case stems from the Company’s alleged denial of 3i’s attempt to exercise certain warrants and states causes of action for actual damages and liquidated damages in an amount of approximately $380,000. The Company filed its answer to the complaint on or about March 7, 2024. The Company intends to defend itself vigorously against Sabby’s claims and does not believe that the Litigation’s ultimate disposition will have a material adverse effect on the Company’s financial position, results of operations or liquidity.
On January 10, 2024, Bigger Capital Fund, L.P. (“Bigger Capital”), filed a lawsuit against the Company in the Supreme Court for the State of New York, Case No. 650148/2024 (the “Bigger Litigation”). The Litigation stemmed from the Company’s warrant to purchase 1,656,050 shares of Company common stock issued to Bigger Capital on July 20, 2021, and asserts causes of action for Breach of Contract, Specific Performance and Declaratory Relief. Pursuant to the Bigger Litigation, Bigger capital sought compensatory damages of $3 million, liquidated damages in an estimated amount of $4 million, specific performance, attorney’s fees and declaratory relief.
On January 20, 2025, the Company entered into the Bigger Settlement Agreement. In exchange for a resolution to all issues and claims that relate to the previously filed action against the Company in the Supreme Court of the State of New York, New York County, Index No. 65018/2024. Pursuant to the Bigger Settlement Agreement, the Company agreed to pay or issue to Bigger Capital the following: (i) pay Bigger Capital $375,000; (ii) issue a secured convertible note in the principal amount of $1.75 million maturing on December 31, 2026 (the “Secured Convertible Bigger Note”); (iii) a convertible note in the principal amount of $3.5 million maturing June 30, 2025 (the “Convertible Bigger Note,” and, together with the Secured Convertible Bigger Note, the “Bigger Notes”); and (iv) 5,332,889 shares of common stock issuable upon the exercise of common stock purchase warrants to purchase shares of common stock of the Company at an exercise price of $0.4348 per share (the “Bigger Warrants”). A significant shareholder of the Company and Bigger Capital entered into a voting agreement in favor of Bigger Capital in addition to the Bigger Settlement Agreement. The Bigger Settlement Agreement is filed herein as Exhibit 10.32. The Secured Convertible Bigger Note is filed herein as Exhibit 4.5 and the Convertible Bigger Note is filed herein as Exhibit 4.6.
On or about January 18, 2024, Alta Partners, LLC, (“Alta”) filed a lawsuit against the Company in the federal district court for the Southern District of New York, case captioned, Alta Partners, LLC v. Safety Shot, Inc. No. 24-cv-373 (S.D.N.Y.) (the “Litigation”). The Litigation stems from the Company’s warrant to purchase shares of Company common stock and asserts causes of action for Breach of Contract Breach of the Implied Covenant of Good Faith and Fair Dealing (in the alternative) and violation of Section 11 of the Securities Act of 1933. The Litigation seeks compensatory general and liquidated damages in an amount to be proven at trial. On or about January 29, 2025, the Company settled the Litigation by agreeing to pay $350,000 in exchange for a release of all claims by Alta.
The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is traded on the NASDAQ Stock Market LLC under the symbol SHOT and its warrants are traded under the symbol SHOTW.
The following table sets forth the range of high and low bid prices for our common stock for each of the periods indicated as reported by such marketplaces. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
| Period | High | Low | ||||||
| 2024 Fiscal Year: | ||||||||
| Fourth Quarter Ended December 31, 2024 | $ | 1.35 | $ | 1.67 | ||||
| Third Quarter Ended September 30, 2024 | $ | 1.77 | $ | 1.55 | ||||
| Second Quarter Ended June 30, 2024 | $ | 2.46 | $ | 1.00 | ||||
| First Quarter Ended March 31, 2024 | $ | 4.05 | $ | 1.95 | ||||
| 2023 Fiscal Year: | ||||||||
| Fourth Quarter Ended December 31, 2023 | $ | 7.50 | $ | 1.04 | ||||
| Third Quarter Ended September 30, 2023 | $ | 1.58 | $ | 0.32 | ||||
| Second Quarter Ended June 30, 2023 | $ | 0.48 | $ | 0.27 | ||||
| First Quarter Ended March 31, 2023 | $ | 0.97 | $ | 0.28 | ||||
We consider our common stock to be thinly traded and, accordingly, reported sales prices or quotations may not be a true market-based valuation of our common stock.
As of March 30, 2025, there were 42 holders of record of our common stock, and no holders of record of our warrants.
Dividends
We do not anticipate paying any cash dividends on our common stock in the foreseeable future and we intend to retain all of our earnings, if any, to finance our growth and operations and to fund the expansion of our business. Payment of any dividends will be made in the discretion of our Board of Directors, after our taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion. No dividends may be declared or paid on our common shares, unless a dividend, payable in the same consideration or manner, is simultaneously declared or paid, as the case may be, on our shares of preferred stock, if any.
Issuance of Unregistered Securities
There were no sales of unregistered securities during the fiscal year ended December 31, 2024 other than those transactions previously reported to the SEC on our quarterly reports on Form 10-Q and current reports on Form 8-K.
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Securities Authorized for Issuance under Equity Compensation Plans
On July 31, 2023 and January 17, 2024, our Board of Directors and majority shareholders, respectively, approved the Safety Shot, Inc. 2024 Equity Incentive Plan (the “2024 Plan”), to be administered by our Compensation Committee. Pursuant to the 2024 Plan, we are authorized to grant options and other equity awards to officers, directors, employees and consultants. The purchase price of each share of common stock purchasable under an award issued pursuant to the 2024 Plan, shall be determined by our Compensation Committee, in its sole discretion, at the time of grant, but shall not be less than 100% of the fair market of such share of common stock on the date the award is granted, subject to adjustment. Our Compensation Committee shall also have sole authority to set the terms of all awards at the time of the grant. Pursuant to the 2024 Plan, a maximum of 15,000,000 shares of our common stock shall be set aside and reserved for issuance, subject to adjustments as may be required in accordance with the terms of the 2023 Plan.
On October 31, 2023 and December 5, 2023, our Board of Directors and majority shareholders, respectively, approved the Safety Shot, Inc. 2023 Equity Incentive Plan (the “2023 Plan”), to be administered by our Compensation Committee. Pursuant to the 2023 Plan, we are authorized to grant options and other equity awards to officers, directors, employees and consultants. The purchase price of each share of common stock purchasable under an award issued pursuant to the 2023 Plan, shall be determined by our Compensation Committee, in its sole discretion, at the time of grant, but shall not be less than 100% of the fair market of such share of common stock on the date the award is granted, subject to adjustment. Our Compensation Committee shall also have sole authority to set the terms of all awards at the time of the grant. Pursuant to the 2023 Plan, a maximum of 7,000,000 shares of our common stock shall be set aside and reserved for issuance, subject to adjustments as may be required in accordance with the terms of the 2023 Plan.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This annually report contains forward-looking statements. These statements relate to 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 are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our 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 by these 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, performance or achievements. 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.
Our audited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this annually report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annually report.
In this annually report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this annually report and unless otherwise indicated, the terms “we”, “us”, “our”, “SHOT” and the “Company” mean Safety Shot, Inc.
Company Overview
Safety Shot Inc. (NASDAQ: SHOT) was formerly known as Jupiter Wellness Inc. In August 2023, the Company successfully completed the asset purchase of the functional beverage Safety Shot from GBB Drink Lab, Inc. (“GBB”), thereby gaining ownership of various assets, including the intellectual property, trade secrets, and trademarks associated with its dietary supplement Safety Shot Beverage (the “Safety Shot Beverage”). Concurrently with the asset purchase, the Company changed its name to Safety Shot, Inc. and changed its NASDAQ trading symbol to SHOT. The Company launched its e- commerce sale of the Safety Shot Beverage in December 2023.
The Safety Shot Beverage has been formulated to reduce the accumulation of blood alcohol. Noteworthy is the fact that the Safety Shot Beverage comprises 28 active ingredients, all falling under the Generally Regarded As Safe (GRAS) category. Under sections 201(s) and 409 of the Federal Food, Drug, and Cosmetic Act (the Act), any substance that is intentionally added to food is a dietary supplement, that is subject to premarket review and approval by FDA, unless the substance is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of its intended use, or unless the use of the substance is otherwise excepted from the definition of a dietary supplement.
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It’s crucial to note that the Safety Shot Beverage is currently manufactured in a facility adhering to Good Manufacturing Practices (GMP), ensuring the highest standards of quality and safety throughout its production process. The Company currently maintains a workforce comprising eight full-time employees of its own.
Specializing in Consumer Packaged Goods, our focus centers on the commercialization of a 12-ounce beverage positioned as a dietary supplement. Beyond our existing product, we are actively pursuing a future product line, including a convenient powdered stick pack version. This strategic expansion aligns with our corporate vision to address evolving consumer demands, positioning the Company in the market for dietary supplements. We believe that this initiative not only enriches our product portfolio but also emphasizes our dedication to innovation and adaptability, catering to the discerning preferences of health-conscious consumers. The Company intends to continue its current product lines, except for its products which contain CBD, which the Company no longer sells. Our product pipeline also includes a diverse range of products, such as hair loss treatments, vitiligo solutions, and sexual wellness products, that cater to different health and wellness needs and our commitment to supporting health and wellness by developing innovative solutions to a range of conditions but will focus our efforts on the commercialization of the Safety Shot Beverage.
The Safety Shot Beverage has established a development infrastructure that the Company believes fits with its existing over-the-counter and prescription-grade health and wellness products.
To achieve our mission, we rely on our team of highly skilled and experienced professionals who are committed to advancing our vision of health and wellness. Our team includes individuals with scientific backgrounds, an experienced researcher, product developers, and business experts who collaborate to create new products and enhance existing ones. We also seek to partner with industry leaders and organizations to gain access to the latest technologies and expand our reach.
We generate revenue through various channels, our primary sales include our “nostingz” suncare products which are sold through e-commerce platforms, licensing revenues from Photocil and sales of the Safety Shot Beverage. Photocil is currently sold in India through a licensing agreement. We received FDA approval of our labelling and composition to sell Photocil as an OTC product in the US and plan to relaunch the product in the US in the fourth quarter of 2024 through e-commerce channels. Safety Shot Beverage is currently sold through e-commerce and social media platforms. Additionally, we are collaborating with other companies to license our intellectual property, to create additional revenue streams and expand our global presence. At present, we do not experience concentration risk or dependence on major customers.
We maintain a diverse network of raw material suppliers integral to our production processes. Acquisition strategies encompass both direct procurement and collaborative efforts with our co-packers. The selection of suppliers is contingent upon various factors, including ingredient specificity, availability, and other essential considerations. Notably, these suppliers coincide with those currently providing materials to other facilities engaged in the manufacturing of drinks, powders, tablets, and capsules. Our roster of suppliers comprises reputable entities such as Jiaherb, Compound Solutions, Kyowa- Hakko, Mitsubishi Ingredients, Nura, Sensapure Flavors, Brenntag, E3 Ingredients, Ingredients Online, among others. This strategic alliance with established industry players underscores our commitment to sourcing high-quality raw materials essential for the production of our innovative product line. Furthermore, our approach to supplier relationships reflects a dedication to maintaining a seamless and reliable supply chain. We believe that this not only ensures the consistency of our current offerings but also positions us favorably for future developments. The Management believes that as we continue to expand our product portfolio, we believe that these partnerships with trusted suppliers play a pivotal role in upholding the standards that we expect of our brand.
As a result of recent changes to the laws governing CBD products, as well as the declining popularity of CBD products, the Company no longer markets or sells any CBD products. The Company hopes to find a suitor or partner to dispose of its CBD related assets but has not entered into any agreements to do so.
Critical Accounting Policies
Our management’s discussion and analysis of our financial condition and results of operations is based on our audited financial statements for the year ended December 31, 2024 and 2023, which have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, and the rules and regulations of the Securities and Exchange Commission. The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
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The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and are expressed in United States Dollars. Significant accounting policies are summarized below:
Revenue Recognition
The Company generates its revenue from the sale of its products directly to the end user or distributor (collectively the “customer”).
The Company recognizes revenues by applying the following steps in accordance with FASB Accounting Standards Codification 606 “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
| ● | identify the contract with a customer; |
| ● | identify the performance obligations in the contract; |
| ● | determine the transaction price; |
| ● | allocate the transaction price to performance obligations in the contract; and |
| ● | recognize revenue as the performance obligation is satisfied. |
The Company’s performance obligations are satisfied when goods or products are shipped on an FOB shipping point basis as title passes when shipped. Our product is generally paid in advance of shipment or standard net 30 days and we offer no specific right of return, refund or warranty related to our products except for cases of defective products of which there have been none to date.
Inventory
Inventories are stated at the lower of cost or market. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Inventory is based upon the average cost method of accounting.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Impairment of Long-Lived Assets
We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.
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Goodwill and Intangible Assets
Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit.
Intangible assets consist of patents and trademarks, purchased customer contracts, purchased customer and merchant relationships, purchased trade names, purchased technology, and non-compete agreements. Intangible assets are amortized over the period of estimated benefit using the straight- line method and estimated useful lives ranging from one to twenty years. No significant residual value is estimated for intangible assets. We evaluate long- lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.
Investments Held-to-Maturity
Investments that the Company’s management has the “positive intent and ability” to hold through maturity are classified and accounted for as hold-to-maturity investments (“HTM”). HTM investments are carried at amortized cost in the financial statements. For investments classified as HTM, no unrealized gains and losses will be recognized in financial statements.
Earnings (Loss) Per Share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments such as options, warrants, convertible securities and preferred stock, unless the effect is to reduce a loss or increase earnings per share. Warrants are not considered in the calculations for the years ended December 31, 2024 and 2023, as the impact of the potential common shares would be to decrease the loss per share.
| For the Years Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Numerator: | (49,409,632 | ) | (15,083,041 | ) | ||||
| Net (loss) | ||||||||
| Deemed Dividend | (2,293,301 | ) | - | |||||
Loss attributable to shareholders | $ | (51,702,933 | ) | $ | (15,083,041 | ) | ||
| Denominator: | ||||||||
| Denominator for basic earnings per share - Weighted-average common shares issued and outstanding during the period | 54.441,190 | 30,877,804 | ||||||
| Denominator for diluted earnings per share | 54,441,190 | 30,877,804 | ||||||
| Basic (loss) per share | $ | (0.91 | ) | $ | (0.49 | ) | ||
| Diluted (loss) per share | $ | (0.91 | ) | $ | (0.49 | ) | ||
| Loss per share attributed to common shareholders | $ | (0.95 | ) | - | ||||
Cash
We consider all short-term investments with a maturity of three months or less when purchased to be cash and equivalents for purposes of the statement of cash flows. There were no cash equivalents as December 31, 2024 and 2023.
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Foreign Currency Translation
Assets and liabilities in foreign currencies are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the period. Equity accounts are translated at historical exchange rates. Gains and losses from foreign currency transactions and translation for the years ended December 31, 2024 and 2023 and the cumulative translation gains and losses as of December 31, 2024 and 2023 were not material.
Accounts Receivable
Accounts receivable are generated from sales of the Company’s products. The Company provides an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. During the years ended December 31, 2024 and 2023, the Company recognized no allowance for doubtful collections.
Fair Value of Financial Instruments
The fair value of our assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Income Taxes
We account for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on our evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Since we were incorporated on October 24, 2018, the evaluation was performed for 2018 tax year, which would be the only period subject to examination. We believe that our income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to our financial position. Our policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.
The Company’s deferred tax asset at December 31, 2024 and 2023 consists of net operating loss carry forwards calculated using federal and state effective tax rates equating to approximately $14,660,582 and $8,658,484, respectively. Due to the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance of $14,660,582 and $8,658,484 for the years ended December 31, 2024 and 2023.
Research and Development
The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $ 271,719 and $100,591 for the year ended December 31, 2024 and 2023, respectively.
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Stock Based Compensation
We recognize compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation - Stock Compensation” (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant- date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options and warrants. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. For options granted to employes, we use a plain vanilla Black-Scholes calculation to calculate fair value with standard market inputs.
On October 24, 2018, the inception date (“Inception”), we adopted ASU No. 2018-07 “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to non-employees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.
Recently Issued Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The standard will be effective for us in the first quarter of our fiscal year 2020, although early adoption is permitted (but no sooner than the adoption of Topic 606). The Company has adopted this standard beginning January 1, 2019. The adoption of this standard has not had a significant impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.
In February 2016, Topic 842, “Leases” was issued to replace the leases requirements in Topic 840, “Leases”. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. Topic 842 will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods and is to be retrospectively applied. The Company has adopted this standard beginning January 1, 2019. The adoption of this standard has not had a significant impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.
Results of Operations
For the years ended December 31, 2024 and 2023
The following table provides selected financial data about us for the year ended December 31, 2024 and 2023, respectively.
| December 31, 2024 | December 31, 2023 | |||||||
| Sales | $ | 701,967 | $ | 202,670 | ||||
| Cost of Sales | 3,147,724 | 277,127 | ||||||
| Gross Profit (Loss) | (2,445,757 | ) | (74,457 | ) | ||||
| Total operating expenses | 39,611,915 | 12,524,869 | ||||||
| Other (income) expenses | 6,354,158 | 2,222,187 | ||||||
| Net Loss from continuing operations | $ | (48,411,830 | ) | $ | (14,821,513 | ) | ||
| Income (loss) from discontinued operations | (997,802 | ) | (261,528 | ) | ||||
| Net Loss | $ | (49,409,632 | ) | $ | (15,083,041 | ) | ||
Deemed Dividend | $ | (2,293,301 | ) | - | ||||
Loss attributable to shareholders | $ | (51,702,933 | ) | (15,083,041 | ) | |||
Revenues
We generated $701,967 in revenues for the year ended December 31, 2024 compared to $202,670 revenues for the year ended December 31, 2023. The increase is due to the Company the commencement of marketing and selling its Safety Shot beverage in December 2023.
Operating Expenses
We had total operating expenses of $39,611,915 for the year ended December 31, 2024 compared to $12,524,869 for the year ended December 31, 2023.
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Operating expenses for the year ended December 31, 2024, totaled $39,611,915 and were in connection with our daily operations as follows: (i) marketing expenses of $7,038,078; (ii) research and development of $232,161 which included clinical trials; (iii) legal and professional expenses of $8,063,858 primarily for due diligence and legal work on a proposed merger and litigation along with corporate advisory services, registration statement preparation fees, general corporate governance fees; (iv) rent and utilities of $275,247; (v) depreciation and amortization of $428,827; (vi) general and administrative expenses of $3,117,507, consisting of payroll and related taxes, travel, meals and entertainment, office supplies and expense and other normal office and administration expenses; and (vii) stock based compensation of $20,456,237 consisting of the fair value of stock issued in lieu of cash.
Operating expenses for the year ended December 31, 2023, totaled $12,524,869 and were in connection with our daily operations as follows: (i) marketing expenses of $566,666; (ii) research and development of $100,591 which included clinical trials; (iii) legal and professional expenses of
$4,856,586 primarily for due diligence and legal work on two proposed mergers and litigation along with corporate advisory services, registration statement preparation fees, general corporate governance fees; (iv) rent and utilities of $206,871; (v) depreciation and amortization of $215,175; (vi) general and administrative expenses of $4,296,899, consisting of payroll and related taxes, travel, meals and entertainment, office supplies and expense and other normal office and administration expenses; (vii) stock based compensation of $2,082,081 consisting of the fair value of stock issued in lieu of cash and (viii) impairment of a $200,000 advance to an affiliate.
Other income and expense
Other income and expense for the year ended December 31, 2024, included realized gains of $1,193,666 on the sale of marketable securities and $862,407 of unrealized losses on unsold marketable securities, net interest expense of $118,325 and other income of $6,567,092.
Other income and expense for the year ended December 31, 2023, included realized gains of $244,504 on the sale of marketable securities and $1,511,488 of unrealized losses on unsold marketable securities, unrealized loss of $864,418 on equity investment, net interest expense of $114,093 and other income of $23,308.
Income and loss f rom discontinued operations
For the year ended December 31, 2024 and 2023, The Company had losses from discontinued operations of $997,802 and $261,528, respectively.
Income/Losses
Net losses were $49,409,632 and $15,083,041 for the years ended December 31, 2024 and 2023, respectively.
Deemed Dividend
In connection with the settlement with Bigger Capital, Company agreed to cancel 1,656,050 original warrants with an exercise price of $1.40 held by Bigger in exchange for 5,332,889 “exchange” warrants with an exercise price of $0.4348. The fair value of the exchange warrants is $2,732,329 which is offset by the fair value of the remaining life of the original warrant of $439,028 and is considered a deemed dividend attributable to the shareholders in the determination of earnings (loss) per share.
Impact of Inflation
We believe that inflation has had a negligible effect on operations since inception. We believe that we can offset inflationary increases in the cost of operations by increasing sales and improving operating efficiencies.
Off Balance Sheet Arrangements
We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “variable interest entities.”
Liquidity and Capital Resources
The Company is in commercialization mode, while continuing to pursue the development of its next generation products as well as new products that are being developed.
We generally require cash to:
| ● | launch sales initiatives, |
| ● | fund our operations and working capital requirements, |
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| ● | develop and execute our product development and market introduction plans, |
| ● | fund research and development efforts, and |
| ● | pay any expense obligations as they come due. |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to a smaller reporting company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our financial statements and corresponding notes thereto called for by this item may be found beginning on page F-1 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company’s management, including its Chief Executive Officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company’s desired disclosure control objectives. In designing periods specified in the SEC’s rules and forms, and that such information is accumulated and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company’s certifying officers have concluded that the Company’s disclosure controls and procedures are not effective in reaching that level of assurance.
At the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and principal financial officer concluded that our disclosure controls and procedures were ineffective to ensure that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officer, recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to the Company, based on the assessment and control of disclosure decisions currently performed by a small team. The Company plans to expand its management team and build a fulsome internal control framework required by a more complex entity.
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Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
As of December 31, 2024, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on the criteria established by COSO management concluded that the Company’s internal control over financial reporting was ineffective as of December 31, 2024.
This Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting as smaller reporting companies are not required to include such report and EGC’s are exempt from this requirement entirely until they are no longer an EGC. Management’s report is not subject to attestation by the Company’s independent registered public accounting firm.
Limitations on the Effectiveness of Controls
Management has confidence in its internal controls and procedures. The Company’s management believes that a control system, no matter how well designed and operated can provide only reasonable assurance and cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all internal control systems, no evaluation of controls can provide absolute assurance that all control issuers and instances of fraud, if any, within the Company have been detected.
Changes in Internal Controls
There were no changes in the Company’s internal controls over financial reporting that occurred during the fiscal year ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.
ITEM 9B. OTHER INFORMATION
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our directors and executive officers and their respective ages as of the date of this Form 10-K are as follows:
| Name | Age | Position(s) | ||
| John Gulyas | 50 | Chairman and Director | ||
| Danielle De Rosa | 47 | Chief Financial Officer | ||
| Jarrett Boon | 54 | Chief Executive Officer and Director | ||
| David Sandler | 55 | Chief Operating Officer | ||
| Jordan Schur | 60 | Director and President | ||
| Richard Pascucci | 50 | Director | ||
| Christopher Marc Melton | 53 | Director | ||
| David J. Long | 46 | Director |
The following describes the business experience of each of our directors and executive officers, including other directorships held in reporting companies:
John Gulyas, Chairman and Director, has served as one of our directors since July 2023. Mr. Gulyas has owned and operated multiple franchise brands over the last 13 years. Since 2015 John has been the owner and the CEO of 2v consulting LLC. Since February 2020 John has been working as the Founder and President of GBB Drink Lab, who is the world’s first rapid blood alcohol detoxification drink, and which was recently acquired by the Company. From October 2018 to September 2021, John worked as a vice president of franchise development at Vio Med Spa. He worked as site development coordinator at European Wax Center from June 2007 to March 2017.
Jarrett Boon, Chief Executive Officer and Director, has served as the director since October 2023 and was appointed as the Chief Executive Officer of the Company in February 2024. Mr. Boon was the Co-Founder and CEO of GBB Drink Lab, which developed Safety Shot Beverages, the first patented beverage on Earth that helps people feel better faster by reducing blood alcohol content and boosting clarity. Mr. Boon has over 30 years of experience building successful businesses from creation to exit. He was one of the original thought leaders and investors in LifeLock, a leading identity protection provider, where he applied his expertise in sales, marketing, and strategic business development to grow LifeLock to $500 million in revenue. LifeLock went public in 2012 and was subsequently acquired by Symantec in 2016 for $2.3 billion. Prior to LifeLock, Mr. Boon founded SW Promotions, a marketing and advertising company. SW Promotions and its 400 employees were acquired by one of its publicly traded partners.
Jordan Schur, Director and President, has served as Director and President of the Company since March of 2024. In 2006, He has worked as the Chief Executive Officer and Chairman of Suretone Entertainment Group since 2006, as well as the Chief Executive Officer of Mimram Shur Pictures. Mr. Schur has held influential positions at various studios and record companies, overseeing artists like Snoop Dogg, Nirvana and Guns and Roses. His achievements include re-launching Geffen Records and boosting its revenue to over $1 billion, as well as founding the successful Flip Records. In the film sector, Mr. Schur co-founded Mimran Schur Pictures and Suretone Pictures, producing notable films such as “Warrior,” which earned an Academy Award nomination, and “Stone.” His entrepreneurial ventures also include Suretone Entertainment, which encompasses record labels and management companies that have made significant cultural impacts.
In addition, Mr. Schur co-founded film production company Mimran Schur Pictures in 2007. Mr. Schur worked as the President of Geffen Records/UMG from January 1999 to June of 2007. Under Mr. Schur’s oversight, Geffen Records achieved over $1 billion in revenue while becoming a consistent global market share leader for Universal Music Group. Mr. Schur has a Bachelor of Arts degree from Boston College.
Danielle De Rosa, Chief Financial Officer, has over 25 years of experience in all aspects of financial services and operational functions. Ms. De Rosa served as Chief Financial Officer at Virtra since January 2023. From July 2022 to December 2022, Ms. De Rosa served as the CFO at Common Spirit. From December 2010 to February 2022, Ms. De Rosa served as the Senior Finance Officer at Lorts Manufacturing. Ms. Rosa moved all around the U.S. and has a Master of Business Management and a Bachelor of Science in Accounting. Ms. De Rosa is a Harvard graduate in risk management and financial leadership as well.
Christopher Marc Melton, Director, has served as one of our directors since August 2019. Mr. Melton has served as director of SG Blocks, Inc. since November of 2011 and currently serves as the Audit Committee Chairman. From 2000 to 2008, Mr. Melton was a Portfolio Manager for Kingdon Capital Management (“Kingdon”) in New York City, where he ran in excess of $1 Billion book in media, telecom, and Japanese investment. Mr. Melton opened Kingdon’s office in Japan, where he set up a Japanese research company. From 1997 to 2000, Mr. Melton served as a Vice President at JPMorgan Investment Management as an equity research analyst, where he helped manage $1 Billion plus in REIT funds under management. Mr. Melton was a Senior Real Estate Equity Analyst at RREEF Funds in Chicago from 1995 to 1997. Mr. Melton is Principal and co-founder of Callegro Investments, a specialist land investor. He currently serves on several Public and Private Boards as well as Chairman of the Audit Committee of a Nasdaq listed company.
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Richard Pascucci, Director, has over 20 years of experience in the beverage industry. Since May 2018 Mr. Pascucci has been working as the founder and owner of Black Apple Group, LLC, a consulting group specializing in strategy, brand marketing, business intelligence, business insights and category development. Since May 2017, Mr. Pascucci has been working as the Beverage Consultant at Pascucci Enterprise, wherein he is responsible for the company’s key strategic areas, while identifying and delivering key projects and priorities. Between May 2011 and May 2017, Mr. Pascucci worked as the Chief Growth Officer and the VP of Business Development at Pabst Brewing Company. Mr. Pascucci has bachelors in arts from St. Joseph’s University, Philadelphia.
David Long, Director, has served as one of our directors since March 2024. Mr. Long has over 20 years of experience in leading and increasing growth for companies in the fitness and wellness industries. Since January 2010 Mr. Long has served as the CEO and the Co-Founder of Orangetheory Fitness Corporate. From June 2008 to June 2007 Mr. Long served as the Developer and Owner of European Wax Center. Mr. Long has a Bachelor’s degree in Health Science, Physical Therapy, and International Business from University of Florida and an MBA from University of Florida
David Sandler, Chief Operating Officer, has more than 30 years’ experience in the nutrition and health industry developing, building and managing high-growth, results-oriented projects. David is the founder of StrengthPro Inc., a consulting firm specializing specific areas of health, fitness, nutrition, and supplement ratio. David has been working as the president of Strengthpro since January 2021. Since May 2019 David has been serving as chief operations officer at Elite Beverage. From October 2016 to October 2019, David served as the chief operations officer at ProSupps USA, LLC.
Term of Office
Our Board is elected annually by our stockholders. Each director shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal.
Family Relationships
There are no family relationships among and between the issuer’s directors, officers, persons nominated or chosen by the issuer to become directors or officers, or beneficial owners of more than ten percent of any class of the issuer’s equity securities.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and officers, and the persons who beneficially own more than 10% of our Common Stock, to file reports of ownership and changes in ownership with the SEC. Copies of all filed reports are required to be furnished to us pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons have complied with all applicable filing requirements during the year ended December 31, 2024.
Board Composition
Director Independence
Our business and affairs are managed under the direction of our Board, which consist of six members. Under Nasdaq rules, independent directors must comprise a majority of a listed company’s board of directors, subject to certain exceptions. In addition, Nasdaq rules require that each member of a listed company’s audit, compensation and nominating and governance committees be independent, subject to certain phase-ins for newly- public companies. Under Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
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Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or (2) be an affiliated person of the listed company or any of its subsidiaries.
Our Board has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that Messrs. Melton, Pascucci, and Long do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of Nasdaq. In making this determination, our Board considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.
In making this determination, our Board considered the current and prior relationships that each non-employee director has with us and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non- employee director.
Board Diversity
The table below provides certain information regarding the diversity of our board of directors as the date of this annual report.
| Board Diversity Matrix | ||
| Country of Principal Executive Offices: | United States | |
| Foreign Private Issuer | No | |
| Disclosure Prohibited under Home Country Law | N/A | |
| Total Number of Directors | 6 | |
| Female | Male | Non-Binary | Did Not Disclose Gender | |||||
| Part I: Gender Identity | ||||||||
| Directors | 6 | |||||||
| Part II: Demographic Background | ||||||||
| Underrepresented Individual in Home Country Jurisdiction | N/A | |||||||
| LGBTQ+ | ||||||||
| Did Not Disclose Demographic Background | ||||||||
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Our Board seeks members from diverse professional backgrounds who combine a solid professional reputation and knowledge of our business and industry with a reputation for integrity. Our Board does not have a formal policy concerning diversity and inclusion but is in the process of establishing a policy on diversity. Diversity of experience, expertise, and viewpoints is one of many factors the Nominating and Corporate Governance Committee considers when recommending director nominees to our Board. Further, our Board is committed to actively seeking highly qualified women and individuals from minority groups and the LGBTQ+ community to include in the pool from which new candidates are selected. Our Board also seeks members that have experience in positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which they are, or were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our Company. While the Board has continued its efforts to identify candidates that have such experience, they have currently been unable to identify any such candidates which fulfill the diversity requirement with the requisite professional experience.
Board Committees
Our Board has established Audit, Compensation, and Nominating and Corporative Governance Committees. Our Board may establish other committees to facilitate the management of our business. The composition and functions of the audit committee, compensation committee and nominating and corporate governance committee are described below. Members will serve on committees until their resignation or removal from the Board or until otherwise determined by our Board.
Audit Committee
Our audit committee consists of Messrs. Melton, Pascucci and Long, with Mr. Melton serving as the chairman. Our Board has determined that Mr. Melton is an “audit committee financial expert” within the meaning of the SEC regulations. Our Board has also determined that each member of our audit committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, the Board has examined each audit committee member’s scope of experience and the nature of their employment in the corporate finance sector. The functions of this committee include:
| ● | selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements; |
| ● | helping to ensure the independence and performance of the independent registered public accounting firm; |
| ● | discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, our interim and year-end operating results; |
| ● | developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; |
| ● | reviewing our policies on risk assessment and risk management; | |
| ● | reviewing related party transactions; obtaining and reviewing a report by the independent registered public accounting firm at least annually, that describes our internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and |
| ● | approving (or, as permitted, pre-approving) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm. |
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Compensation Committee
Our compensation committee consists of Messrs. Melton, Pascucci and Long with Mr. Long serving as the chairman. The functions of the compensation committee will include:
| ● | reviewing and approving, or recommending that our Board approve, the compensation of our executive officers; |
| ● | reviewing and recommending that our Board approve the compensation of our directors; |
| ● | reviewing and approving, or recommending that our Board approve, the terms of compensatory arrangements with our executive officers; |
| ● | administering our stock and equity incentive plans; |
| ● | selecting independent compensation consultants and assessing conflict of interest compensation advisers; |
| ● | reviewing and approving, or recommending that our Board approve, incentive compensation and equity plans; and |
| ● | reviewing and establishing general policies relating to compensation and benefits of our employees and reviewing our overall compensation philosophy. |
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Messrs. Melton, Pascucci and Long with Mr. Pascucci serving as the chairman. The functions of the nominating and governance committee will include:
| ● | identifying and recommending candidates for membership on our Board; |
| ● | including nominees recommended by stockholders; |
| ● | reviewing and recommending the composition of our committees; |
| ● | overseeing our code of business conduct and ethics, corporate governance guidelines and reporting; and |
| ● | making recommendations to our Board concerning governance matters. |
The nominating and corporate governance committee also annually reviews the nominating and corporate governance committee charter and the committee’s performance.
Board Leadership Structure and Role in Risk Oversight
Our Board is primarily responsible for overseeing our risk management processes. Our Board receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our assessment of risks. Our Board focuses on the most significant risks we face our general risk management strategy, and also ensures that risks we undertake are consistent with our Board’s appetite for risk. While our Board oversees our risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks we face and that our Board leadership structure supports this approach.
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Our amended and restated bylaws provide our Board with flexibility in its discretion to combine or separate the positions of Chairman of the Board and Chief Executive Officer. The Board currently separates the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. Our Chief Executive Officer, who is also a member of our Board, is responsible for setting the strategic direction of the Company and the day-to-day leadership and performance of the Company, while the Chairman of the Board provides guidance to the Chief Executive Officer, sets the agenda for the Board meetings, presides over meetings of the Board and tries to reach a consensus on Board decisions. Although these roles are currently separate, the Board believes it should be able to freely select the Chairman of the Board based on criteria that it deems to be in the best interest of the Company and its stockholders, and therefore one person may, in the future, serve as both the Chief Executive Officer and Chairman of the Board.
Clawback Policy
On December 1, 2023, the Board adopted the Safety Shot, inc. Clawback Policy (the “Clawback Policy”), effective December 1, 2023, providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. A copy of the Clawback Policy has been filed herewith, as exhibit 99.1.
Insider Trading Policies
We
have
Code of Ethics
We have adopted a code of ethics and conduct applicable to all of our directors, officers, employees and all persons performing similar functions. A copy of that code is attached as Exhibit 14.1 to the Registration Statement of which this prospectus forms a part thereof. We expect that any amendments to the code, or any waivers of its requirements, will be disclosed in our public filings with the Commission.
Corporate Governance Guidelines
We have adopted a corporate governance guidelines that serve as a flexible framework within which our Board and its committees operate. These guidelines cover a number of areas including the size and composition of the Board, Board membership criteria and director qualifications, director responsibilities, Board agenda, roles of the chairman of the Board and Chief Executive Officer and Chief Financial Officer, meetings of independent directors, committee responsibilities and assignments, Board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning. A copy of our corporate governance guidelines is attached hereto as Exhibit 14.2 to the Registration Statement of which this prospectus forms a part thereof.
Involvement in Certain Legal Proceedings
To our knowledge, our directors and executive officers have not been involved in any of the following events during the past ten years:
1. any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
4. being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
5. being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
6. being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Section 16(a) Beneficial Ownership Compliance
Based solely upon a review of copies of such forms filed on Forms 3, 4 and 5, and amendments thereto furnished to us, we believe that as of the date of this Report, our executive officers, directors and greater than 10 percent beneficial owners have complied on a timely basis with all Section 16(a) filing requirements, except Messrs. David Long, Richard Pascucci, Danielle De Rosa and David Sandler did not file Form 3s upon their employment or appointment to the Board and the Company, as applicable.
ITEM 11. EXECUTIVE COMPENSATION
Our principal executive officer and our two other most highly compensated executive officers during the fiscal years indicated below.
Current Officers and Directors Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total Compensation ($) | |||||||||||||||||||
| Jarrett Boon(1)(5) | ||||||||||||||||||||||||||
| Chief Executive Officer | 2024 | $ | 150,000 | $ | $ | - | $ | 1,504,454 | $ | 25,000 | $ | 1,679,454 | ||||||||||||||
| Jordan Schur(2) | ||||||||||||||||||||||||||
| President | 2024 | $ | 245,000 | $ | - | $ | 810,833- | $ | - | $ | - | $ | 1,055,833 | |||||||||||||
| John Gulyas(3)(5) | ||||||||||||||||||||||||||
| Chairman of the Board | 2024 | $ | - | $ | - | $ | - | $ | 1,504,454 | $ | 25,000 | $ | 1,529,454 | |||||||||||||
| Danielle DeRosa(4) | ||||||||||||||||||||||||||
| Chief Financial Officer | 2024 | $ | 145,833 | $ | - | $ | - | $ | 214,814 | $ | - | $ | 360,647 | |||||||||||||
| David Sandler(8) | ||||||||||||||||||||||||||
| Chief Operating Officer | 2024 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| 1. | Mr. Boon has served as Chief Executive Officer since February 2024 and served as a Director since October 2023. | |
| 2. | Mr. Schur has served as President and Director since March 2024. | |
| 3. | Mr. Gulyas has served as a Director since July 2023. | |
| 4. | Ms. DeRosa has served as Chief Financial Officer since April 2024. | |
| 5. | Mr. Boon and Mr. Gulyas were each paid $25,000 in Director fees during 2024. | |
| 6. | Option Rewards represents the fair value of the options granted during the period calculated using the Black-Scholes formula. | |
| 7. | Stock Awards are valued using the market price on the date of grant. | |
| 8. | Mr. Sandler has served as Chief Operating Officer since March 2024. |
| Former Officers and Directors Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($)(4) | Total Compensation ($) | |||||||||||||||||||
| Brian S. John(1)(3) | ||||||||||||||||||||||||||
| Former Chief Executive Officer | 2023 | $ | 293,958 | $ | 159,000 | $ | - | $ | $ | 25,000 | $ | 477,958 | ||||||||||||||
| Dr. Glynn Wilson(2) | ||||||||||||||||||||||||||
| Former Chairman of the Board and Chief Science Officer | 2023 | $ | 179,375 | $ | - | $ | - | $ | $ | 25,000 | $ | 204375 | ||||||||||||||
| Markita Russell | - | - | - | - | - | |||||||||||||||||||||
| Former Chief Financial Officer | 2023 | $ | 93,750 | $ | - | $ | - | $ | - | $ | - | $ | 93,750 | |||||||||||||
| 1. | Mr. John was appointed as Chief Executive Officer on October 28, 2018 and resigned from his position on February 28, 2024. | |
| 2. | Dr. Wilson was appointed as a director in November 2018 and as Chairman on October 15, 2019 and resigned from his position on February 28, 2024. | |
| 3. | Mr. John’s employment agreement called for a bonus on investments made by the Company. In 2023, Mr. John received 267,500 shares of restricted Chijet Motor Company common stock from the Company’s SPAC transaction and 500,000 restricted shares of SRM Entertainment Inc. related to the sale of SRM Entertainment Ltd. | |
| 4. | Mr. John and Dr. Wilson were each paid $25,000 in Director fees during 2023. |
Employment Agreements with Named Officers
John Gulyas Employment Agreement
On December 16, 2024, the Company entered into an employment agreement (“Gulyas Agreement”) with John Gulyas, pursuant to which Mr. Gulyas will serve as the Company’s Executive Chairman of the Board of Directors. The Agreement provides for (A) a $300,000 annual base salary paid in equal installments on the Company’s regular pay dates no less frequently than bi-monthly, (B) a restricted stock award of 1,000,000 shares of Company’s common stock fully vested as of the date therein, an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $500,000 for Q1 and Q2 of 2025, (D) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $1,000,000 for Q3 and Q4 of 2025, and (E) other customary employee benefits. On or about March 3, 2025, the Company amended the Gulyas Agreement by changing Section 5. b. to read, Restricted Stock. As part of his employment, Employee shall receive a grant of 1,000,000 shares of Company restricted common stock (the “RSUs”) as compensation for work performed in 2025 and 2026. The 1,000,000 RSUs will start vesting on April 1, 2025, in quarterly increments over the following year as follows: 250,000 will vest on July 1, 2025; 250,000 will vest on October 1, 2025; 250,000 will vest on January 1, 2026, and 250,000 will vest on April 1, 2026.
The Gulyas Agreement is filed herein as Exhibit 10.44.
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Jordon Schur Employment Agreement
On December 16, 2024, the Company entered into an employment agreement with Jordon Schur (the “Schur Agreement”), pursuant to which Mr. Schur will serve as the Company’s President. The Agreement provides for (A) a $300,000 annual base salary paid in equal installments on the Company’s regular pay dates no less frequently than bi-monthly, (B) a restricted stock award of 1,000,000 shares of Company’s common stock fully vested as of the date therein, (C) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $500,000 for Q1 and Q2 of 2025, (D) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $1,000,000 for Q3 and Q4 of 2025, and (E) other customary employee benefits. On or about March 3, 2025, the Company amended the Schur Agreement by changing Section 5. b. to read, Restricted Stock. As part of his employment, Employee shall receive a grant of 1,000,000 shares of Company restricted common stock (the “RSUs”) as compensation for work performed in 2025 and 2026. The 1,000,000 RSUs will start vesting on April 1, 2025, in quarterly increments over the following year as follows: 250,000 will vest on July 1, 2025; 250,000 will vest on October 1, 2025; 250,000 will vest on January 1, 2026, and 250,000 will vest on April 1, 2026.
The Schur Agreement is filed as Exhibit 10.45.
Jarrett Boon Employment Agreement
On December 16, 2024, the Company entered into an employment agreement with Jarrett Boon (the “Boon Agreement”), pursuant to which Mr. Boon will serve as the Company’s Chief Executive Officer.
The Boon Agreement provides for (A) a $300,000 annual base salary paid in equal installments on the Company’s regular pay dates no less frequently than bi-monthly, (B) a restricted stock award of 1,000,000 shares of Company’s common stock fully vested as of the date therein, (C) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $500,000 for Q1 and Q2 of 2025, (D) an incentive bonus of $100,000 and 500,000 restricted shares of Company’s common stock if the Company achieves a combined revenue of $1,000,000 for Q3 and Q4 of 2025, and (E) other customary employee benefits. On or about March 3, 2025, the Company amended the Boon Agreement by changing Section 5. b. to read, Restricted Stock. As part of his employment, Employee shall receive a grant of 1,000,000 shares of Company restricted common stock (the “RSUs”) as compensation for work performed in 2025 and 2026. The 1,000,000 RSUs will start vesting on April 1, 2025, in quarterly increments over the following year as follows: 250,000 will vest on July 1, 2025; 250,000 will vest on October 1, 2025; 250,000 will vest on January 1, 2026, and 250,000 will vest on April 1, 2026.
The Boon Agreement is filed as Exhibit 10.46.
Danielle DeRosa Employment Agreement
On April 22, 2024, the Company entered into an employment agreement with Danielle DeRosa (the “DeRosa Employment Agreement”), pursuant to which Ms. DeRosa will serve as the Company’s Chief Financial Officer. As consideration for her services, the Company will pay Ms. DeRosa a salary of $250,000 per annum, which salary is payable bi-monthly. Subject to suitable business conditions, Ms. DeRosa may receive a 5% pay increase payable to her at each one-year anniversary from the commencement of the DeRosa Employment Agreement. The Company will also award 200,000 stock options to Ms. DeRosa, granted at a strike price equal to the closing market price on the date that Ms. DeRosa first starts to work for the Company as an independent consultant. These stock options will vest on a quarterly basis, in equal installments over three years. The stock options will terminate on the fifth-year anniversary of their date of issuance.
The DeRosa Employment Agreement is filed as Exhibit 10.47.
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Employment Agreements with Senior Management
Stock Incentive Plan
On January 17, 2024, the Board of Directors adopted the 2024 Equity Incentive Plan (the “2024 Plan”), an omnibus equity incentive plan pursuant to which the Company may grant equity-linked awards to officers, directors, consultants and others and on July 31, 2024, the Shareholders ratified the 2024 Plan. . The 2024 Equity Incentive Plan was adopted as a means to offer incentives and attract, motivate and retain and reward persons eligible to participate in the 2024 Plan.
Summary of 2024 Equity Incentive Plan
Administration.
The Board of Directors has the sole authority to grant options or restricted stock. The authority to manage the operation of and administer the Plan shall be vested in the Compensation Committee. The Committee shall consist of two or more directors who are (i) “Independent Directors” (as such term is defined under the rules of the NASDAQ Stock Market) and (ii) “Non-Employee Directors” (as such term is defined in Rule 16b-3), which shall serve at the pleasure of the Board. The Board or the Committee administering the plan shall have full power and authority to designate recipients of options and restricted stock, and to determine the terms and conditions of the respective option and restricted stock agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan.
Eligibility.
The persons eligible for participation in the 2024 Equity Incentive Plan as recipients of options or restricted stock shall include directors, officers and employees of, and consultants and advisors to, the Company or any Subsidiary; provided that incentive options may only be granted to employees of the Company and any Subsidiary.
Awards.
A maximum of 15,000,000 shares of the Company’s common stock, par value $0.001 per share shall be subject to the Plan. The shares of common stock subject to the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of common stock shall be and is hereby reserved for such purpose.
Options.
The purchase price of each share of common stock purchasable under an incentive option shall be determined by the Committee at the time of grant but shall not be less than 100% of the Fair Market Value of such share of common stock on the date the option is granted.
The term of each option shall be fixed by the Committee, but no option shall be exercisable more than ten years after the date such option is granted and in the case of an incentive option granted to an optionee who, at the time such incentive option is granted, owns (within the meaning of Section 424(d) of the code) more than 10% of the total combined voting power of all classes of stock of the company or of any subsidiary, no such incentive option shall be exercisable more than five years after the date such incentive option is granted
Change of Control.
Upon the occurrence of a change in control the Committee may accelerate the vesting of outstanding restricted stock, in whole or in part, as determined by the Committee, in its sole discretion.
Outstanding Equity Awards at Fiscal Year-End
The were no equity awards outstanding as of December 31,2024.
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Director Compensation
The following table sets forth the amounts paid to Directors during the years ended December 31, 2024 and 2023.
| Directors | 2024 | 2023 | ||||||
| John Gulyas | $ | 25,000 | - | |||||
| Jarrett Boon | $ | 25,000 | - | |||||
| Jordan Schur | $ | 25,000 | - | |||||
| Richard Pascucci | $ | 25,000 | - | |||||
| Christopher Marc Melton | $ | 25,000 | - | |||||
| David J. Long | $ | 25,000 | - | |||||
| Brian John (former) | $ | 25,000 | ||||||
| Dr. Skender Fani (former) | $ | 25,000 | ||||||
| Glynn Wilson (former) | $ | 25,000 | ||||||
| Hector Alila (former) | $ | 25,000 | ||||||
| Nancy Torres (former) | $ | 25,000 | ||||||
| Christopher Melton | $ | 25,000 | ||||||
| Gary Herman (former) | $ | 25,000 | ||||||
| $ | 175,000 | |||||||
Agreements with Directors
Chris Melton
On July 29, 2019 (the “Melton Execution Date”), we entered into an independent director’s agreement with Christopher Melton, pursuant to which Mr. Melton shall serve as one of our directors and our Audit Committee Chairperson (the “Melton Agreement”). Pursuant to the Melton Agreement, we shall pay Mr. Melton $1,000 per quarter, per annum. Additionally, we shall issue to Mr. Melton an option to purchase 33,000 shares of our common stock on the Melton Execution Date and for each additional year Mr. Melton serves as a director (the “Melton Options”). The Melton Options shall have a three (3) year term and an exercise price of $0.25 per share and shall be issued on each anniversary date of his election.
David J. Long
On March 11, 2024 (the “Long Execution Date”), we entered into an independent director’s agreement with David Long, pursuant to which Mr. Long shall serve as one of our directors and our Audit Committee, Compensation Committee, and Nominating Committee (the “Long Agreement”). Pursuant to the Long Agreement, we shall pay Mr. Long $25,000 per annum. Additionally, we shall issue to Mr. Long an option to purchase 50,000 shares of our common stock on the Long Execution Date and for each additional year Mr. Long serves as a director (the “Long Options”). The Long Options shall have a three (3) year term and an exercise price equal to the market price per share of the Company common stock as of the date of the Long Agreement and shall be issued on each anniversary date of his election.
Richard Pascucci
On December 5, 2023 (the “Pascucci Execution Date”), we entered into an independent director’s agreement with Richard Pascucci, pursuant to which Mr. Pascucci shall serve as one of our directors and our Audit Committee, Compensation Committee, and Nominating Committee (the “Pascucci Agreement”). Pursuant to the Pascucci Agreement, we shall pay Mr. Pascucci $25,000 per annum. Additionally, we shall issue to Mr. Pascucci an option to purchase 50,000 shares of our common stock on the Pascucci Execution Date and for each additional year Mr. Pascucci serves as a director (the “Pascucci Options”). The Pascucci Options shall have a three (3) year term and an exercise price equal to the market price per share of the Company common stock as of the date of the Pascucci Agreement and shall be issued on each anniversary date of his election.
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On March 7, 2024, the Company entered into a director’s agreement with Mr. Schur (the “Schur Agreement”). Pursuant to the Schur Agreement, Mr. Schur is entitled to an annual salary of $25,000 per-annum, payable bi-monthly, and option to purchase 50,000 shares of common stock for each year he serves as a member of the Board, with an exercise price of the current market price of the Company’s common stock at time of issuance. The options shall expire 3 years after the date of issuance and shall be subject to the terms and conditions of the stock award agreement to be entered into by and between the Company and Mr. Schur.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) any person or group beneficially owning more than 5% of any class of voting securities; (ii) our directors, and; (iii) each of our named executive officers; and (iv) all executive officers and directors as a group as of March xx, 2025. The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. Unless otherwise indicated, the address of all listed stockholders is c/o Safety Shot, Inc., 1061 E. Indiantown Rd., Ste. 110, Jupiter, FL 33477.
The beneficial ownership of shares of common stock is calculated based on 86,683,391 shares of common stock, which includes 12,268,507 shares of Common Stock issued and outstanding, stock options of 8,861,000 held by beneficial owners and warrants of 3,370,787 held by a beneficial owner as of March 25, 2025.
Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons and entities named in the table have sole voting and investment power with respect to their beneficially owned Common Stock.
| Name of Beneficial Owner | Shares of Common Stock Beneficially Owned | % of Shares of Common Stock Beneficially Owned | ||||||
| Directors and Officers: | ||||||||
| Jordan
Schur(1) Director | 1,550,000 | 1.79 | % | |||||
| Danielle
De Rosa (2) Chief Financial Officer | 200,000 | 0.23 | % | |||||
| Jarrett
Boon (3) Chief Executive Officer | 4,917,000 | 5.67 | % | |||||
| John
Gulyas (4) Chairman and Director | 4,867,667 | 5.62 | % | |||||
| Richard
Pascucci (5) Director | 120,000 | 0.14 | % | |||||
| Christopher
Melton (6) Director | 141,000 | 0.16 | % | |||||
| David
J. Long(7) Director | 150,000 | 0.17 | % | |||||
| David
Sandler(8) Chief Operating Officer | 750,000 | 0.87 | % | |||||
| All officers and directors (9 persons) | 12,695,667 | 14.65 | % | |||||
| (1) | Includes 1,050,000 shares issuable upon exercise of options. |
| (2) | Includes 200,000 shares issuable upon exercise of options. |
| (3) | Includes 3,250,000 shares issuable upon exercise of options. |
| (4) | Includes 3,200,000 shares issuable upon exercise of options. |
| (5) | Includes 120,000 shares issuable upon exercise of options. |
| (6) | Includes 141,000 shares issuable upon exercise of options. |
| (7) | Includes 150,000 shares issuable upon exercise of options |
| (8) | Includes 750,000 shares issuable upon exercise of options |
| 43 |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
At December 31, 2022, the Company had invested $2,908,300 in Jupiter Wellness Sponsor LLC (“JWSL”), a limited liability company formed for the purpose of sponsorship of Jupiter Wellness Acquisition Corp. (“JWAC”), a special purpose acquisition company (“SPAC”) and a unconsolidated subsidiary. Mr. Brian John, our CEO, was the managing member of JWSL and Chief Executive Officer of JWAC.
JWAC filed a Current Report on Form 8-K filed with the Securities Exchange Commission on May 2, 2023. JWAC’s stockholders approved JWAC’s business combination with Chijet Inc. and its affiliates including Chijet Motor Company Inc. (collectively “Chijet”), at its Special Meeting of Stockholders held on May 2, 2023 and closed the transaction on June 1, 2023. As a result, on June 27, 2023, the Company received a total of 1,662,434 shares of restricted common stock of Chijet (Nasdaq: CJET) in exchange for its Loans. In August 2023, the Company receive 96,000 additional shares ChiJet due to downside protection clauses in the business combination agreements.
In May 2023, the Company purchased 48,000 shares of JWAC (now Chijet) common stock for $508,800 and in September and October 2023, the Company purchased an additional 18,200 shares for $36,330.
During the year ended December 31, 2023 the Company sold 271,679 ChiJet shares for a realized gain of $238,839.
At December 31, 2023 the Company, the Company held 1,200,821 common shares of Chijet (the “CJET Shares”) are considered trading securities and are categorized as marketable securities on the balance sheet. At December 31, 2023 the CJET Shares had a combined fair market value of $842,976 had a combined unrealized loss of $1,511,488 which is included in other income.
On December 9, 2022, The Company entered into a stock exchange agreement (the “Exchange Agreement”) with SRM Entertainment, Inc. (“SRM”) to govern the separation of SRM from the Company. On May 26, 2023, we amended and restated the Exchange Agreement (the “Amended and Restated Exchange Agreement”) to include additional information regarding the distribution and the separation of SRM the Company. The separation as set forth in the Amended and Restated Exchange Agreement with Jupiter closed August 14, 2023. Pursuant to the Amended and Restated Exchange Agreement, on May 31, 2023, SRM issued to the Company 6,500,000 shares of SRM Common Stock (representing 79.3% of SRM’s outstanding shares of Common Stock) in exchange for 2 ordinary shares of SRM Ltd owned by the Company (representing all of the issued and outstanding ordinary shares of SRM) (the “Share Exchange”). On August 14, 2023, SRM consummated its Initial Public Offering (“IPO”), pursuant to which it sold 1,250,000 shares of its common stock at a price of $5.00 per share. In connection with the Share Exchange and SRM’s IPO, the Company distributed 2,000,000 shares of SRM’s common stock to the Company’s stockholders and certain warrant holders (out of the 6.5 million shares issued in May 2023) which occurred on the effective date of the Registration Statement but prior to the closing of the IPO. Following such distribution, the Company owns 4.5 million of the 9,450,000 shares of common stock outstanding and SRM is now a minority owned subsidiary of the Company. SRM.
| 44 |
At December 31, 2022, the Company had an outstanding unsecured, non-interest bearing loan receivable balance of $1,482,673 from SRM Entertainment, Ltd, its wholly owned subsidiary. On September 1, 2022, the loan was converted to a six percent (6%) interest-bearing promissory note (the “Note”) due on the earlier of: (i) September 30, 2023 or (ii) the date on which the Company consummates an initial public offering of its securities. During the nine months ended September 30, 2023, the Company accrued $55,847 interest expense on the Note. The total balance of $1,538,520 ($1,482,673 note and $55,847 interest) due Jupiter was paid from proceeds SRM’s Initial Public Offering (“IPO”) on August 14, 2023.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees totaling $65,000 and $90,000 were paid to M&K CPAS during the year ended December 31, 2024 and 2023, respectively.
No other fees were paid to M&K CPAS.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
EXHIBIT INDEX
| 45 |
*Filed herewith.
| 46 |
SIGNATURES
Pursuant to the requirements of the Section 13 or 15 or 15(d) 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 on the day of March 28, 2025.
| SAFETY SHOT, INC | ||
|
By: |
/s/ Jarrett Boon | |
| Jarrett Boon | ||
| Chief Executive Officer and Director | ||
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Jarrett Boon | Director and Chief Executive Officer (principal executive officer) | March 28, 2025 | ||
| Jarrett Boon | ||||
| /s/ Danielle De Rosa | Chief Financial Officer (principal financial and accounting officer) | March 28, 2025 | ||
| Danielle De Rosa | ||||
| /s/ David Sandler | Chief Operating Officer | March 28, 2025 | ||
| David Sandler | ||||
| /s/ John Gulyas | Chairman | March 28, 2025 | ||
| John Gulyas | ||||
| /s/ Christopher Marc Melton | Director | March 28, 2025 | ||
| Christopher Marc Melton | ||||
| /s/ Jordan Schur | Director and President | March 28, 2025 | ||
| Jordan Schur | ||||
| /s/ Richard Pascucci | Director | March 28, 2025 | ||
| Richard Pascucci | ||||
| /s/ David Long | Director | March 28, 2025 | ||
| David Long |
| 47 |
SAFETY SHOT, INC.
INDEX TO FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Safety Shot, Inc.
Opinion on the Consolidated Financial Statements
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the Note 1 to the financial statements, the Company has suffered net losses from operations in current and prior periods and the Company has incurred and expects to continue to incur significant costs in pursuit of its expansion and development plans, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are discussed in the notes to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, audits of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audits Matter
The critical audit matter communicated below are matter arising from the current period audits of the consolidated financial statements that were communicated or required to be communicated to the audits committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating he critical audits matter below, providing separate opinions on the critical audits matter or on the accounts or disclosures to which they relate.
Evaluation of Intangible Assets
As discussed in Note 2 and 8 to the consolidated financial statements, the Company acquired intangible assets through an asset purchase agreement in 2023. At each reporting period, certain intangible assets are required to be assessed annually for impairment based on the facts and circumstances at that time. Auditing management’s evaluation of intangible assets can be a significant judgment given the fact that the Company uses management estimates on future revenues and expenses which are not easily able to be substantiated.
Given these factors and due to significant judgements made by management, the related audit effort in evaluating management’s judgments in evaluation of intangible assets required a high degree of auditor judgment.
The procedures performed included evaluation of the methods and assumptions used by the Company, tests of the data used and an evaluation of the findings. We evaluated and tested the Company’s significant judgments that determine the impairment evaluation of intangible assets.
/s/
www.mkacpas.com
We have served as the Company’s auditor since 2019.
March 28, 2025
| F-2 |
Safety Shot, Inc.
Consolidated Balance Sheets
December 31, 2024 and 2023
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Cash | $ | $ | ||||||
| Marketable Securities | ||||||||
| Inventory | ||||||||
| Accounts and other receivables | ||||||||
| Prepaid expenses and deposits | ||||||||
| Investment in Yerbae Brands | ||||||||
| Investment in SRM & Affiliates | ||||||||
| Other current assets | ||||||||
| Note Receivable | ||||||||
| Total current assets | ||||||||
| Right of Use assets | ||||||||
| Intangible assets, net of amortization | ||||||||
| Fixed assets, net of depreciation | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Accounts payable | $ | $ | ||||||
| Convertible notes | ||||||||
| Current portion of lease liability | ||||||||
| Accrued expenses | ||||||||
| Accrued liabilities | ||||||||
| Covid-19 SBA Loan | ||||||||
| Total current liabilities | ||||||||
| Long-term portion lease liability | ||||||||
| Total liabilities | ||||||||
| Preferred stock, $ par value, shares authorized, of which are issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized, of which and shares were issued and outstanding as of December 31, 2024 and 2023 | ||||||||
| Additional paid-in capital | ||||||||
| Common stock payable | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity (Deficit) | ( | ) | ||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
Safety Shot, Inc.
(Formerly known as Jupiter Wellness, Inc.)
Consolidated Statement of Operations
For the Years Ended December 31, 2024 and 2023
| 2024 | 2023 | |||||||
| Revenue | ||||||||
| Sales | $ | $ | ||||||
| Cost of Sales | ||||||||
| Gross profit (loss) from continuing operations | ( | ) | ( | ) | ||||
| Operating expense | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Other income / (expense) | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income / (expense) | ( | ) | ( | ) | ||||
| Unrecognized gain / (loss) on equity investment | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Net (loss) from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Income (loss) from discontinued operations | ( | ) | ( | ) | ||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Deemed Dividend | ( | ) | ||||||
| Loss attributable to shareholders | $ | ( | ) | ( | ) | |||
| Net (loss) per share: | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | $ | ( | ) | $ | ( | ) | ||
| Loss per share attributed to common shareholders | $ | ( | ) | $ | ||||
| Weighted average number of shares | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
Safety Shot, Inc.
(Formerly known as Jupiter Wellness, Inc.)
Consolidated Statement of Changes in Shareholders’ Equity
For the Years Ended December 31, 2024 and 2023
| Treasury Shares | Common Stock | Common Stock | Additional Paid | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Payable | In Capital | Deficits | Total | |||||||||||||||||||||||||
| Balance December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Shares issued in Public Offering | - | |||||||||||||||||||||||||||||||
| Shares issued -payable for services | - | |||||||||||||||||||||||||||||||
| Shares issued for services and stock payable | - | |||||||||||||||||||||||||||||||
| Purchase of intangible asset | - | |||||||||||||||||||||||||||||||
| Warrant conversions related to offerings | - | |||||||||||||||||||||||||||||||
| Warrant conversions related to promissory notes | - | |||||||||||||||||||||||||||||||
| Deconsolidation of SRM Entertainment and change to equity method of accounting | - | - | ||||||||||||||||||||||||||||||
| Fair value of price reduction on conversion price for notes and warrants | - | - | ||||||||||||||||||||||||||||||
| Fair value of options granted to employees | - | - | ||||||||||||||||||||||||||||||
| Fair value of warrants granted for services | - | - | ||||||||||||||||||||||||||||||
| Promissory note conversion | - | |||||||||||||||||||||||||||||||
| Fair value of warrants granted for services | - | - | ||||||||||||||||||||||||||||||
| Fair value of options granted for services | - | - | ||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Shares issued in Private Placements for cash | - | |||||||||||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||||||
| Shares issued -payable for settlement | - | |||||||||||||||||||||||||||||||
| Shares issued for employee bonus | ||||||||||||||||||||||||||||||||
| Shares issued for option exercises | - | |||||||||||||||||||||||||||||||
| Shares issued for Warrant conversions | - | |||||||||||||||||||||||||||||||
| Deconsolidation of Caring Brands | ||||||||||||||||||||||||||||||||
| Shares issued from Stock in connection with extinguishment of convertible notes | - | ( | ) | |||||||||||||||||||||||||||||
| Fair value of options granted | - | |||||||||||||||||||||||||||||||
| Issuance of Warrants | - | - | ||||||||||||||||||||||||||||||
| Deemed Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
Safety Shot, Inc.
(Formerly known as Jupiter Wellness, Inc.)
Consolidated Statement of Cash Flows
For the Years Ended December 31, 2024 and 2023
| 2024 | 2023 | |||||||
| Cash flows from continuing operating activities: | ||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Depreciation & Amortization | ||||||||
| Gain on sale of fixed assets | ( | ) | ||||||
| Fair value of stock-based compensation | ||||||||
| Fair value of options issued for services | ||||||||
| Fair value of warrants issued for services | ||||||||
| Fair value of shares issued from Convertible note extinguishment | ( | ) | ||||||
| Unrealized loss on equity investment | ||||||||
| Realized gain/loss on sale of marketable securities | ( | ) | ||||||
| Unrealized loss on marketable securities | ||||||||
| Bad debt expense | ||||||||
| Gain on sale of SRM stock | ( | ) | ||||||
| Accrued losses on settlements | ||||||||
| Adjustment to reconcile net income to net cash provided by (used in) operating activities | ||||||||
| Prepaid expenses and deposits | ( | ) | ||||||
| Right of Entry asset | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Other assets | ( | |||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Lease liability | ( | ) | ( | ) | ||||
| Net cash (used in) continuing operating activities | ( | ) | ( | ) | ||||
| Cash flows from discontinued operating activities: | ||||||||
| Income (loss) from discontinued operations | ( | ) | ( | ) | ||||
| Reclassification of assets and liabilities to held for sale | ||||||||
| Cash provided from discontinued operations | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Cash paid for purchase of assets | ( | ) | ( | ) | ||||
| Cash paid for investment | ( | ) | ||||||
| Cash paid for marketable securities | ( | ) | ||||||
| Cash paid for purchase of intangible assets | ( | ) | ||||||
| Cash paid for SRM Inc. | ( | ) | ||||||
| Cash received from SRM Ltd. loan repayment | ||||||||
| Cash received for sale of marketable securities | ||||||||
| Net change to value of marketable securities | ||||||||
| Cash paid for intangible assets | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Proceeds from sale of assets | ||||||||
| Net cash (used in) investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Cash received upon exercise of options | ||||||||
| Cash received upon warrant conversions | ||||||||
| Deconsolidation of subsidiary | ||||||||
Shares issued for private placements | ||||||||
| Loans to affiliates | ( | ) | ||||||
| Borrowings on debt | ||||||||
| Payments on debt | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at the beginning of the period | ||||||||
| Cash and cash equivalents at the end of the period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Non-cash items: | ||||||||
| Reclassification of Held to Maturity investments to Marketable Securities | $ | $ | ||||||
| Shares issued from stock payable for services | $ | $ | ||||||
| Shares issued for GBB asset purchase | $ | $ | ||||||
| Reclassification for SRM Ltd deconsolidation | $ | $ | ||||||
| Conversion of promissory note for common stock | $ | $ | ||||||
| Common stock issued from stock payable on extinguishment of debt | $ | |||||||
| Common stock issued from stock payable on convertible note | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
Safety Shot, Inc.
(Formerly known as Jupiter Wellness, Inc.)
Notes to Financial Statements
For the Years Ended December 31, 2024 and 2023
Note 1 - Organization and Business Operations
Safety Shot Inc. (NASDAQ: SHOT) was formerly known as Jupiter Wellness Inc. In August 2023 the Company acquired certain assets of GBB Drink Lab Inc which included the blood alcohol detox drink Safety Shot, an over-the-counter drink that can lower blood alcohol content to allow recovery from the effects of alcohol at a rate faster than would occur normally. Concurrently with the purchase, the Company changed its name to Safety Shot, Inc. and changed its NASDAQ trading symbol to SHOT. The Company launched Safety Shot in December 2023.
Safety Shot has a well-established clinical development infrastructure and fits within the Company’s existing over-the-counter health and wellness products. The Company will continue its current products line as an operating division and is committed to supporting health and wellness by developing innovative solutions to a range of conditions. We take pride in our research and development of over-the-counter (OTC) products and intellectual property, which aim to address some of the most prevalent health and wellness concerns today. Our product pipeline includes a diverse range of products, such as hair loss treatments, eczema creams, vitiligo solutions, and sexual wellness products, that cater to different health and wellness needs. We are dedicated to staying up-to-date with the latest scientific research and technology, ensuring that our products are effective, safe, and meet the highest industry standards.
To achieve our mission, we rely on a team of highly skilled and experienced professionals who are committed to advancing our vision of health and wellness. Our team includes scientists, researchers, product developers, and business experts who collaborate to create new products and enhance existing ones. We also partner with industry leaders and organizations to leverage the latest technologies and expand our reach.
We generate revenue through various channels, including the sales of our OTC and consumer products. Our products are available through various retailers and e-commerce platforms, making them accessible to a broad customer base. Additionally, we collaborate with other companies to license our intellectual property, creating additional revenue streams and expanding our global presence.
Segment Reporting
The Company operates as a single reportable segment. The Chief Operating Decision Maker (CODM) (our CEO, Jarrett Boon) reviews the financial performance of the company on a consolidated basis and makes decisions regarding resource allocation at that level. As a result, the company has determined that it operates in a single operating segment in accordance with Accounting Standards Codification (ASC) 280, Segment Reporting. The company’s product is a dietary drink supplement. Revenues from external customers are derived from e-commerce, distributors, and direct to retail consumers. The company only operates in the United States.
Going Concern Consideration
As of December
31, 2024 and 2023, the Company had accumulated deficits of $
Note 2 – Significant Accounting Policies Basis of Presentation
The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of US Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Jupiter Wellness Investments, Inc., a Florida corporation, and for the period from January 1, 2022 to August 14, 2023, SRM Entertainment, Limited, a Hong Kong private limited company, which was sold effective August 14, 2923. All intercompany accounts and transactions have been eliminated.
| F-7 |
Debt Extinguishment and Modification
Any changes or modification to debt instruments must be examined to determine if the modification has any significant effect. If the changes or modifications are material, the change or modification must be accounted for as an extinguishment. If determined to be an extinguishment, the change or modification to the original debt is derecognized and a new debt is recognized. Any difference in the fair value is recognized as a gain or loss on extinguishment.
Deconsolidation
The Company will
use Deconsolidation Accounting upon the loss of control of a subsidiary determined to be less than
Discontinued Operations
The Company adopted the FASB Accounting Standards Update No. 2014-08 Discontinued Operations requiring entities to reclassify assets and liabilities of a discontinued operation for all comparative periods presented in the statement of financial position. Effective August 14, 2023, the Company sold SRM Entertainment Ltd, (“SRM”) a wholly owned subsidiary. Financial statements preceding the effective date of the sale have been reclassified to reflect the respective SRM assets and liabilities as being held for sale and the operations of SRM are reflected a discontinued operation.
Effective September 24, 2024, the Company sold Caring Brands Inc., (“CBI”) a wholly owned subsidiary. Financial statements preceding the effective date of the sale have been reclassified to reflect the respective CBI assets and liabilities as being held for sale and the operations of CBI are reflected a discontinued operation.
Equity Method for Investments
Investments in unconsolidated affiliates, which the Company exerts significant influence but does not control or otherwise consolidate, are accounted for using the equity method. Equity method investments are initially recorded at cost. These investments are included in investment in joint ventures in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in loss from equity method joint venture in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary.
Asset Purchases
The Company accounts
for an acquisitive transaction determined to be an asset purchase based on the cost accumulation and allocation method, under which the
costs to purchase the asset or set of assets are allocated to the assets acquired.
Investments in Marketable Securities
The Company’s Marketable Securities are considered Held-For-Trading (“HFT”) or Trading Assets. HTF- Trading securities are valued at their fair value when purchased/sold, and any unrealized gains or losses are recorded periodically on financial reporting dates as other income or loss.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
| F-8 |
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers
all short-term investments with a maturity of three months or less when purchased to be cash and equivalents for purposes of the statement
of cash flows. There were
Inventory
Inventories are
stated at the lower of cost or market. The Company periodically reviews the value of items in inventory and provides write-downs or write-
offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Inventory
is based upon the average cost method of accounting. In connection with the re-branding and marketing of the Sure Shot beverage and change
in the size of the individual cans from a 12 oz can to a 4oz can, the Company wrote off a total of $
Investments Held-to-Maturity
Investments that the Company’s management has the “positive intent and ability” to hold through maturity are classified and accounted for as hold-to- maturity investments (“HTM”). HTM investments are carried at amortized cost in the financial statements. For investments classified as HTM, no unrealized gains and losses will be recognized in financial statements.
Sale of SRM Entertainment, Inc.
On December 9,
2022, The Company entered into a stock exchange agreement (the “Exchange Agreement”) with SRM Entertainment, Inc. (“SRM”)
to govern the separation of SRM from the Company. On May 26, 2023, we amended and restated the Exchange Agreement (the “Amended
and Restated Exchange Agreement”) to include additional information regarding the distribution and the separation of SRM the Company.
The separation as set forth in the Amended and Restated Exchange Agreement with Jupiter closed August 14, 2023. Pursuant to the Amended
and Restated Exchange Agreement, on May 31, 2023, SRM issued to the Company shares of SRM Common Stock (representing
| F-9 |
Trading Securities
Securities that the Company intends to sell are classified as trading securities. Trading securities are carried at fair value with gains and losses recognized in current period earnings.
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments such as options, warrants, convertible securities and preferred stock, unless the effect is to reduce a loss or increase earnings per share. As such, options, warrants, convertible securities, and preferred stock are not considered in the calculations, as the impact of the potential common shares would be to decrease the loss per share.
| For the Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Numerator: | ||||||||
| Net (loss) from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Income (loss) from discontinued operations | ( | ) | ( | ) | ||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Deemed Dividend | ( | ) | ||||||
| Loss attributable to shareholders | $ | ( | ) | ( | ||||
| Denominator: | ||||||||
| Denominator for basic earnings per share - Weighted- average common shares issued and outstanding during the period | ||||||||
| Denominator for diluted earnings per share | ||||||||
| Basic (loss) per share | $ | ( | ) | $ | ( | ) | ||
| Diluted (loss) per share | $ | ( | ) | $ | ( | ) | ||
| Loss per shares attributed to common shareholders | $ | ( | ) | |||||
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Revenue Recognition
The Company generates its revenue from the sale of its products directly to the end user or through a distributor (collectively the “customers”).
The Company recognizes revenues by applying the following steps in accordance with FASB Accounting Standards Codification 606 “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfils its obligations under each of its agreements:
| ● | identify the contract with a customer; |
| ● | identify the performance obligations in the contract; |
| ● | determine the transaction price; |
| ● | allocate the transaction price to performance obligations in the contract; and |
The Company’s performance obligations are satisfied when goods or products are shipped on a FOB shipping point basis as title passes when shipped. Our products are generally paid in advance of shipment or standard net 30 days and we offer no specific right of return, refund or warranty related to our products except for cases of defective products of which there have been none to date.
| F-10 |
Accounts Receivable and Credit Risk
Accounts receivable
are generated from sales of the Company’s products. The Company provides an allowance for doubtful collections, which is based
upon a review of outstanding receivables, historical collection information, and existing economic conditions. During the year ended
December 31, 2024 and 2023, the Company recognized
Impairment of Long-Lived Assets
We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.
Goodwill and Intangible Assets
Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit.
Intangible assets consist of patents and trademarks, purchased customer contracts, purchased customer and merchant relationships, purchased trade names, purchased technology, and non-compete agreements. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to twenty years. No significant residual value is estimated for intangible assets. We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.
Foreign Currency Translation
Assets and liabilities in foreign currencies are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the period. Equity accounts are translated at historical exchange rates. Cumulative gains and losses from foreign currency transactions and translation for the years ended December 31, 2024 and 2023 were not material.
Research and Development
The Company accounts
for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development
(“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly,
internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted
work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both
present and future products are expensed in the period incurred. The Company incurred research and development expenses of $
| F-11 |
Stock Based Compensation
The Company recognizes compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation - Stock Compensation” (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant- date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options and warrants. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.
On October 24, 2018, the inception date, the Company adopted ASU No. 2018-07 “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to non-employees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on October 24, 2018, the evaluation was performed for 2018 tax year which would be the only period subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.
The
Company’s deferred tax asset at December 31, 2024 and 2023 consists of net operating loss carry forwards calculated using
federal and state effective tax rates equating to approximately $
Related parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
| F-12 |
The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, enhancing segment reporting requirements under ASC 280. This ASU aims to provide investors with more detailed information about a public entity’s reportable segments, including those with a single reportable segment. The Key Provisions include :
| 1. | Enhanced Expense Disclosures: Public entities must now disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included in each reported measure of segment profit or loss. | |
| 2. | Disclosure of Other Segment Items: Entities are required to disclose an amount for “other segment items” by reportable segment, representing the difference between reported segment revenues and the sum of significant segment expenses and the reported measure of segment profit or loss. A qualitative description of the composition of these other segment items is also required. | |
| 3. | Interim Reporting Requirements: All annual disclosures about a reportable segment’s profit or loss and assets, including the new disclosures introduced by ASU 2023-07, must now be provided in interim periods as well. | |
| 4. | Single Reportable Segment Entities: Public entities with a single reportable segment are explicitly required to provide all segment disclosures mandated by ASC 280, including those introduced by ASU 2023-07. This clarification ensures that users receive comprehensive information about the entity’s operations and performance. | |
| 5. | Disclosure of CODM Information: Entities must disclose the title and position of the CODM and explain how the CODM uses the reported measure(s) of segment profit or loss in assessing performance and allocating resources. |
These amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted the ASU for the year ended December 31, 2024.
Note 3 - Accounts and other receivables
At December 31,
2024 and 2023, the Company had accounts and other receivables of $
Note 4 - Prepaid Expenses and Deposits
At December 31,
2024, the Company had prepaid expenses and deposits of $
Note 5 - Inventory
At December 31,
2024 and 2023, the Company had inventory of $
| F-13 |
Note 6 - Marketable Securities
At December 31,
2022, the Company had invested $
JWAC filed a Current Report on Form 8-K filed with the Securities Exchange Commission on May 2, 2023. JWAC’s stockholders approved JWAC’s business combination with Chijet Inc. and its affiliates including Chijet Motor Company Inc. (collectively “Chijet”), at its Special Meeting of Stockholders held on May 2, 2023 and closed the transaction on June 1, 2023. As a result, on June 27, 2023, the Company received a total of shares of restricted common stock of Chijet (Nasdaq: CJET) in exchange for its Loans. In August 2023, the Company received additional shares of Chijet due to downside protection clauses in the business combination agreements.
In May 2023, the
Company purchased shares of JWAC (now Chijet) common stock for $
During the year ended December 31,
2023 the Company sold Chijet shares for a realized gain of $
At December 31,
2023 the Company, the Company held
In connection
with the Chijet transaction, our CEO Brian John is “entitled to a twenty percent (20%) bonus based on the net profits realized
from any investment made by the Company.” At June 30, 2023 the Company had recorded a contingent liability of $
At December 31, 2024, the Company did not hold any shares of Chijet.
Note 7 - Investment in and Loans to Affiliates
On December 9,
2022, The Company entered into a stock exchange agreement (the “Exchange Agreement”) with SRM Entertainment, Inc. (“SRM”)
to govern the separation of SRM from the Company. On May 26, 2023, we amended and restated the Exchange Agreement (the “Amended
and Restated Exchange Agreement”) to include additional information regarding the distribution and the separation of SRM the Company.
The separation as set forth in the Amended and Restated Exchange Agreement with Jupiter closed August 14, 2023. Pursuant to the Amended
and Restated Exchange Agreement, on May 31, 2023, SRM issued to the Company shares of SRM Common Stock (representing
At December 31,
2022, the Company had an outstanding unsecured, non-interest bearing loan receivable balance of $
On September 23, 2024, in anticipation of the acquisition of Yerbae Brands
Corp. (“Yerbae”) described in detail in the “ITEM 1. BUSINESS, Recent Developments” section of this document
(the “Acquisition”), the Company entered into a loan agreement with Yerbae whereby it agreed to provide a loan in the
aggregate principal amount of up to $
| F-14 |
Note 8 - Intangible Assets
SRM Entertainment
Effective
August 14, 2023 the Company spun-off
| Summary of deconsolidation loss: | ||||
| Goodwill and Intangibles | $ | |||
| Net assets of SRM Ltd at deconsolidation | ||||
| Equity of SRM Ltd | ||||
| Effect of deconsolidation | ||||
| Fair value of Consideration | ( | ) | ||
| Loss on deconsolidation | $ | ( | ) | |
| Summary of Changes to Equity Method Investment | ||||
| Fair value of Consideration | $ | |||
| Equity in SRM losses | ( | ) | ||
| Balance, December 31, 2023 | $ | |||
| Sale of shares of SRM common stock | ( | ) | ||
| Equity in SRM losses | ( | ) | ||
| Balance,
December 31, 2024 | $ | - |
| F-15 |
Safety Shot Acquisition
On July 10, 2023,
the Company entered into an Asset Purchase Agreement (the “APA”) with GBB Drink Lab, Inc. (“GBB”) under the terms
of which the Company acquired certain assets of GBB (the “Purchased Assets”) which included the patents for a blood alcohol
detox drink Safety Shot, an over-the- counter drink that can lower blood alcohol content to allow recovery from the effects of alcohol
at a rate faster than would occur normally. The purchase price was shares of the Company’s restricted common stock, valued
at $
The patents will
be amortized over twelve years (the remaining
Summary of transaction and carrying value:
| Purchase price: | Allocation of Purchase price: | |||||||||
| Cash | $ | Patents | $ | |||||||
| Fair value of stock issued | Accumulated Amortization | ( | ) | |||||||
| $ | Balance | $ | ||||||||
Note 9 - Accrued Expense and Other Accrued Liabilities
At December 31,
2024 and December 31, 2023, the Company had accrued expenses on the convertible notes below of $
Note 10 - Convertible Notes Payable
On April 20,
2022, the Company entered into a $
| F-16 |
The Notes have
an original issuance discount of five percent (
The fair value
of origination shares and warrants issued in connection with the 2022 Note totals $
Interest expense
for the year ended December 31, 2024 on the Notes totals $
During the year
ended December 31, 2023, the Notes were amended to change the conversion price of the Notes and exercise price of all outstanding warrants
was reduced to $
On January
20, 2025 the Company entered into a convertible note agreement with Bigger Capital LLP (i)
a secured convertible note in the principal amount of $
The following table sets forth a summary of the principal balances of the Company’s convertible promissory notes activity for the years ended December 31, 2024 and 2023:
| Principal Balance, December 31, 2023 | $ | |||
| Note converted to stock – paid in full | ( | ) | ||
Convertible Note issued in settlement to Bigger Capital | $ | |||
| Principal Balance, December 31, 2024 | $ |
Note 11 - Covid-19 SBA Loans
During the year
ended December 31, 2020, the Company applied for and received $
Note 12 - Capital Structure
Preferred Stock - The Company is authorized to issue a total of shares of preferred stock with par value of $. shares of preferred stock are issued and outstanding.
Common Stock - The Company is authorized to issue a total of shares of common stock with par value of $. As of December 31, 2024 and 2023, there were and shares of common stock issued and outstanding, respectively.
| F-17 |
Year ended December 31, 2023 issuances:
Shares issued in Public Offering
Concurrently to
the PIPE Agreement and Offering of Stock Warrants (see Note 13 below), the Company entered into a Securities Purchase Agreement (the
“RD Agreement”) with certain purchasers, pursuant to which on January 23, 2023, shares of common stock, par value
$ (the “Common Stock”), at a price of $ per share were issued to the purchasers (the “RD Offering”).
The Common Stock was issued pursuant to a Registration Statement on Form S-3 filed by the Company with the Securities and Exchange Commission
(the “Commission”) on September 28, 2022 (File No. 333- 267644) and declared effective on November 9, 2022. The aggregate
gross proceeds to the Company from both the PIPE Offering and the RD Offering were approximately $
$
Shares issued for services
During the year ended December 31, 2023, the Company entered into Consulting Agreements under the terms of which the Company issued shares of its common stock. The shares were issued at their respective fair value based on the Company’s Nasdaq closing price of the shares on the date of the issuance of the shares. The Company recognized $ as stock-based compensation in the year ended December 31, 2023.
Shares issued for stock payable
During the year
ended December 31, 2023, the Company issued shares which were included in Common Stock Payable at December 31, 2022 with a fair
value of $
Shares issued for purchase of assets
In July 2023, the Company entered into an Asset Purchase Agreement for the purchase of intellectual property relating to Safety Shot (see Note 9). The purchase price included the issuance of shares of the Company’s restricted common stock.
Shares issued for exercise of warrants related to promissory notes
In August 2023,
the Company issued a total of shares upon exercise of warrants related to the Promissory Notes described in Note 11. The Company
received $
Shares issued for exercise of warrants related to the Pipe transaction
Beginning in August
2023, the certain holders of warrants related to the Company’s IPO and PIPE transaction above, exercised a portion of their warrant
holdings and the Company issued a total shares of its common stock upon exercise. The Company received $
Shares issued for conversion of promissory note
In December 2023, a $
| F-18 |
Year ended December 31, 2024 issuances:
Shares issued in Private Placement for Cash
During
the year ended December 31, 2024, the Company had three take-down under its S-3 Registration Statement under which the Company issued
a total of unrestricted shares of its common stock with a fair value of $
Shares issued for services
During
the year ended December 31, 2024 the Company issued a total of restricted shares of its common stock for services for a total
fair value of $
Shares issued for employee bonuses
During
the year ended December 31, 2024, the Company issued a total of restricted shares of its common stock for employee bonuses for
a total fair value of $
Shares issued for option exercises
During
the year ended December 31, 2024, the company issued a total of restricted shares of its common stock for cash payments of $
Shares issued for warrant conversions
During
the year ended December 31, 2024, the Company issued a total of restricted shares of its common stock for cash payments of $
Shares issued from stock in connection with extinguishment of convertible notes
During
the year ended December 31, 2024, the Company issued a total of restricted shares of its common stock for a fair value of $
The following table sets forth the issuances of the Company’s shares of common stock for the year ended December 31, 2024 and 2023 as follows:
| Balance December 31, 2022 | ||||
| Public offering | ||||
| Shares issued for stock payable | ||||
| Shares issued for services | ||||
| Stock issued for asset purchase | ||||
| Stock issued for conversion of warrants related to Notes | ||||
| Stock issued in connection with note conversion | ||||
| Stock issued for conversion of warrants related to IPO | ||||
| Balance December 31, 2023 | ||||
| Shares issued in Private Placements for cash | ||||
| Shares issued for services | ||||
| Shares issued for employee bonuses | ||||
| Shares issued for option exercises | ||||
| Shares issued for Warrant conversions | ||||
| Shares issued from Stock in connection with extinguishment of convertible notes | ||||
| Balance December 31, 2024 |
| F-19 |
Common Stock Payable
During the year
ended December 31, 2023, the Company issued shares for valued at $
During the year ended December 31, 2024, the Company issued $
Warrants
During
the year ended December 31, 2024, the Company reached a settlement with Bigger Capital Fund LP, (“Bigger”) for a resolution
to all issues and claims that relate to the previously filed action against the Company in the Supreme Court of the State of New York,
New York County, Index No. 65018/2024 (see Note 14). Under the terms of the Settlement the Company agreed to cancel original
warrants with an exercise price of $
| Reporting Date | Relative Fair Value | Term (Years) | Exercise Price | Market
Grant Date | Volatility Percentage | Risk-free Rate | ||||||||||||||||||
| $ | $ | $ | % | |||||||||||||||||||||
PIPE Warrants:
On January 19, 2023, in a private placement, the Company entered into a Securities Purchase Agreement (the “PIPE Agreement”)
with certain purchasers, for the issuance of
| Relative | Term | Exercise | Market Price on Grant | Volatility | Risk-free | |||||||||||||||||||
| Reporting Date | Fair Value | (Years) | Price | Date | Percentage | Rate | ||||||||||||||||||
| $ | $ | $ | % | |||||||||||||||||||||
| $ | $ | $ | % | |||||||||||||||||||||
During the year
ended December 31, 2023, the Company entered into four Investor Relations Consulting Agreements under the terms of which the Company
issued a total of
| Relative | Term | Market Price on | Volatility | Risk-free | ||||||||||||||||||||
| Reporting Date | Fair Value | (Years) | Exercise Price | Grant Date | Percentage | Rate | ||||||||||||||||||
| - | $ | $ | - | $ | - | % | - | |||||||||||||||||
| $ | $ | - | $ | % | ||||||||||||||||||||
| F-20 |
The following tables summarize all warrants outstanding as of December 31, 2024 and 2023, and the related changes during the period. Exercise price is the weighted average for the respective warrants at end of period.
| Number of Warrants | Wtd. Average Exercise Price | |||||||
| Balance at December 31, 2022 | ||||||||
| Warrants issued in Public Offering | ||||||||
| Warrants issued for services | ||||||||
| Warrants exercised in connection with Convertible notes | ( | ) | ( | ) | ||||
| Warrants exercised in connection with PIPE | ( | ) | ( | ) | ||||
| Balance at December 31, 2023 | $ | |||||||
| Warrants cancelled in the Bigger Settlement | ( | ) | ( | ) | ||||
| Warrants issued in the Bigger Settlement | ||||||||
| Warrants issued in a private placement | ||||||||
| Warrant conversions | ( | ) | ( | ) | ||||
| Balance at December 31, 2024 | $ | |||||||
| Warrants Exercisable at December 31, 2024 | $ | |||||||
Stock Options
During the year ended December 31, 2024, the Company granted a total of -year options to employees of the Company of which have vesting schedule from one to three years with an exercise price between $ and $ and which vested immediately upon grant with an exercise price of $. During the same period, the Company also granted a total of -year options to consultants to the Company, which have vesting schedule from six months to one year with an exercise price between $ and $. The total fair value of the options is $. The fair value of the options is being amortized over the vesting period. The Company recognized $ expense related to the options for the year ended December 31, 2024.
| Number of | Term | Grant | Market Price on Volatility | |||||||||||||||||||||
| Reporting Date | Options | (Years) | Exercise Price | Date | Percentage | Fair Value | ||||||||||||||||||
| – | $ | – | $ | – | % - | % | $ | |||||||||||||||||
| – | - | $ | – | $ | – | % - | % | |||||||||||||||||
During the year ended December 31, 2023, the Company entered into five employment and director agreements under the terms of which the Company issued options, with quarterly vesting, with an exercise price between $ and $ and options, immediately vesting with an exercise price of $. The total fair value of the options $. The fair value of the options is being amortized over the vesting period. The Company recognized $ expense for the year ended December 31, 2023.
The fair value of these options was measured using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation model on the respective reporting date.
| Number of | Term | Grant | Market Price on Volatility | |||||||||||||||||||||
| Reporting Date | Options | (Years) | Exercise Price | Date | Percentage | Fair Value | ||||||||||||||||||
| - | - | $ | - | $ | - | -% | $ | |||||||||||||||||
At December 31, 2024 the Company had options outstanding.
| Options | Wtd. Ave. Ex Price | |||||||
| Balance at December 31, 2022 | $ | |||||||
| Options exercised | ||||||||
| Options Granted | ||||||||
| Balance at December 31, 2023 | ||||||||
| Options exercised | ( | ) | ( | ) | ||||
| Options Granted | ||||||||
| Balance at December 31, 2024 | $ | |||||||
| F-21 |
Note 14 - Commitments and Contingencies
The Company entered into a new office lease Effective July 1, 2021. The primary term of the lease is five years with one renewal option for an additional three years. Minimum annual lease payments for the primary term and one renewal are as follows:
Primary Period | Amount | Amount
During | Amount | |||||||
| July 1 to June 30, 2022 | $ | July 1 to June 30, 2027 | $ | |||||||
| July 1 to June 30, 2023 | $ | July 1 to June 30, 2028 | $ | |||||||
| July 1 to June 30, 2024 | $ | July 1 to June 30, 2029 | $ | |||||||
| July 1 to June 30, 2025 | $ | |||||||||
| July 1 to June 30, 2026 | $ | |||||||||
Under the new
standard for lease reporting, the Company recorded a Right of Use Asset (“ROU”) and an offsetting lease liability of
$
Additionally,
the Company recognized accreted interest expense of $
Legal Proceedings
The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity.
On
November 30, 2023, Intracoastal Capital, LLC (“Intracoastal”) filed a lawsuit against the Company in the New York County
Supreme Court, alleging that (i) the Company is in breach of a common stock warrant issued to Intracoastal on or about July 26, 2021,
and (ii) that the Company should be ordered by the court to deliver to Intracoastal free trading shares of Company common stock
(the “Intracoastal Litigation”). The Intracoastal Litigation seeks compensatory damages in an amount no less than $
On September 5, 2023, “Sabby” Volatility Warrant Master Fund Ltd. filed a lawsuit against the Company in the federal district court for the Southern District of New York case captioned Sabby Volatility Warrant Master Fund Ltd. v. Jupiter Wellness, Inc., No.1:23-cv-07874-KPF (the “Litigation”). Sabby’s initial complaint in the Litigation alleges that the Company’s delayed spin-off and distribution of the common stock of “SRM” Entertainment. Inc. give rise to claims of breach-of-contact, promissory estoppel, and negligent misrepresentation. On November 10, 2023, Jupiter sought judicial permission to move to dismiss Sabby’s complaint, arguing that Sabby had no legal right to the delayed distribution occurring on the original record date, and that regardless, no law requires the Company to compensate Sabby for the costs of covering its short position against the Company. In response, the Court allowed the parties to bypass that dismissal motion briefing so long as Sabby filed an amended complaint by December 15, 2023.
Sabby
seeks compensatory damages estimated to exceed $
On
February 9, 2024, “Sabby” Volatility Warrant Master Find Ltd. sued the Company in the federal district court for the Southern
District of New York, case captioned, Sabby Volatility Warrant Master Fund Ltd. v. Safety Shot, Inc., No. 1:24-cv-920-NRB (the “Litigation”).
Sabby’s initial complaint alleges that the Company has improperly refused to honor Sabby’s exercise of a Warrant to acquire
2,105,263 shares of common stock. On March 8, 2024, Sabby filed an amended complaint. The Company has answered the amended complaint
is due on March 29, 2024. Sabby seeks “liquidated and compensatory damages in an amount to be proven at trial,” including
compensatory damages “estimated to be at least $
On
January 16, 2024, 3i LP (“3i”), filed a lawsuit against the Company in the Supreme Court of the State of New York in the
County of New York, case captioned, 3i LP v. Safety Shot, Inc. No. 650196/24 (the “Litigation”). The case stems from the
Company’s alleged denial of 3i’s attempt to exercise certain warrants and states causes of action for actual damages and
liquidated damages in an amount of approximately $
On
January 10, 2024, Bigger Capital Fund, L.P. (“Bigger Capital”), filed a lawsuit against the Company in the Supreme Court
for the State of New York, Case No. 650148/2024 (the “Bigger Litigation”). The Litigation stemmed from the Company’s
warrant to purchase
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On
January 20, 2025, the Company entered into the Bigger Settlement Agreement. In exchange for a resolution to all issues and claims that
relate to the previously filed action against the Company in the Supreme Court of the State of New York, New York County, Index No. 65018/2024.
Pursuant to the Bigger Settlement Agreement, the Company agreed to pay or issue to Bigger Capital the following: (i) pay Bigger Capital
$
On or about January
18, 2024, Alta Partners, LLC, (“Alta”) filed a lawsuit against the Company in the federal district court for the Southern
District of New York, case captioned, Alta Partners, LLC v. Safety Shot, Inc. No. 24-cv-373 (S.D.N.Y.) (the “Litigation”).
The Litigation stems from the Company’s warrant to purchase shares of Company common stock and asserted causes of action for Breach
of Contract Breach of the Implied Covenant of Good Faith and Fair Dealing (in the alternative) and violation of Section 11 of the Securities
Act of 1933. The Litigation sought compensatory general and liquidated damages in an amount to be proven at trial. On or about January
29, 2025, the Company settled the Litigation by agreeing to pay $
On December 8, 2023, the Company filed a lawsuit against Capybara Research (“Capybara”), Igor Appelboom (“Appelboom,” and together with Capybara Research, the “Capybara Parties”) and Accretive Capital LLC d/b/a Benzinga (“Capybara Parties and Accretive, together, the “Capybara Defendants”) in the United States District Court for the Southern District of New York. The Company’s complaint alleges that (i) the Capybara Parties are liable for securities fraud to the Company for making false representations that were made to manipulate the price of the Company’s common stock to the benefit of the Capybara Parties, and (ii) the Capybara Defendants are liable for tortious interference with prospective business relations to the Company by misleading the investing public to—absent a legitimate basis and, instead, for the benefit of the Capybara Defendants—take short positions against Company common stock to wrongfully depress the price of the same. On March 18, 2024, the United District Court for the Southern District of New York, awarded the Company a Default Judgment in its lawsuit against Capybara Research and Igor Appelboom for Securities Fraud and Tortious Interference for the defendants’ defamatory, unfounded and malicious article titled, Safety Shot Exposed $SHOT, Boca Raton Snake Oil: Unraveling the Fraud behind the Drink and Its Dubious Origins. In a separate settlement agreement, Defendant Accreative Capital LLC d/b/a Benzinga, agreed to retract and remove the defamatory story from its website and cease from any future publication.
On March 18, 2024, the United District Court for the Southern District of New York, awarded the Company a Default Judgment in its lawsuit against Capybara Research and Igor Appelboom for Securities Fraud and Tortious Interference for the defendants’ defamatory, unfounded and malicious article titled, Safety Shot Exposed $SHOT, Boca Raton Snake Oil: Unraveling the Fraud behind the Drink and Its Dubious Origins. In a separate settlement agreement, Defendant Accreative Capital LLC d/b/a Benzinga, agreed to retract and remove the defamatory story from its website and cease from any future publication.
On January 19, 2024, Coachella Music Festival, LLC filed a lawsuit against the Company in the federal district court for the Central District of California, Case No. 2:24-cv-537 (the “Litigation”). The Litigation asserts causes of action for Trademark Infringement under 15 U.S.C. Section 1114; False Designation of Origin under 15 U.S.C. Section 1125; False Advertising under 15 U.S.C. Section 1125; violations of Cal. Bus. & Prof. Code Sections 17200 & 17500; Inducement of Trespass; Conversion; and Trespass to Chattels. The Litigation seeks injunctive relief, profits resulting from the Company’s alleged infringement, the value of a Coachella beverage sponsorship, costs of corrective advertising, attorney’s fees and punitive damages. On or about February 26, 2024, the parties reached a settlement in this matter. As part of the settlement, the Company agreed to terminate all activities in connection with the Festival, and stipulated to the entry of a permanent injunction and final judgment and a monetary payment that does not have a material adverse effect on the Company’s financial position, results of operations or liquidity.
The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity.
Note 15 - Subsequent Events
Subsequent to December 31, 2024, the Company issued a total of shares of its common stock, consisting of shares for services and the balance upon conversion of warrants.
Subsequent to December 31, 2024, The Company had developments in certain legal and litigation matters which are included and detailed in Legal Proceedings above.
In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to December 31, 2024 to the date these financial statements were issued and has determined that it does not have any additional material subsequent events to disclose in these financial statements.
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