Safety Shot(SHOT) - 2024 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Safety Shot, Inc Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Safety Shot, Inc., including balance sheets, statements of operations, changes in shareholders' equity, and cash flows for the periods ended June 30, 2024 and 2023, along with detailed notes explaining the company's accounting policies and specific financial line items Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2024, and December 31, 2023 Balance Sheet Summary | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :----------------------------------- | :-------------------------- | :-------------------------- | | Assets | | | | Cash | $3,223,783 | $3,833,349 | | Marketable Securities | $54,720 | $842,976 | | Inventory | $739,432 | $795,824 | | Total current assets | $5,948,758 | $7,690,824 | | Total assets | $10,694,624 | $12,709,180 | | Liabilities & Equity | | | | Accounts Payable | $1,106,080 | $1,493,809 | | Convertible notes | $1,569,669 | $1,500,000 | | Total current Liabilities | $3,371,286 | $3,587,137 | | Total liabilities | $4,225,173 | $3,892,044 | | Total Shareholders' Equity | $6,469,451 | $8,817,136 | - The company's total assets decreased from $12.7 million at December 31, 2023, to $10.7 million at June 30, 2024. Total shareholders' equity also decreased from $8.8 million to $6.5 million during the same period[10] Condensed Consolidated Statements of Operations This section outlines the company's financial performance, including revenue, cost of sales, operating expenses, and net loss for the three and six months ended June 30, 2024 and 2023 Statements of Operations Summary | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue (Sales) | $710,240 | $23,305 | $880,972 | $58,093 | | Cost of Sales | $504,528 | $27,575 | $2,887,813 | $51,540 | | Gross profit (loss) | $205,712 | $(4,270) | $(2,006,841) | $6,553 | | Total operating expenses | $8,618,618 | $1,741,739 | $21,575,170 | $2,986,692 | | Total other income (expense) | $138,812 | $1,179,528 | $(366,754) | $1,121,246 | | Loss from operations | $(8,274,094) | $(566,481) | $(23,948,765) | $(1,858,893) | | Net income (loss) | $(8,274,094) | $(359,591) | $(23,948,765) | $(1,667,765) | | Net (loss) per share: Basic | $(0.16) | $(0.01) | $(0.48) | $(0.07) | | Weighted average shares Basic | 51,735,158 | 25,551,752 | 49,581,561 | 26,117,310 | - Revenue significantly increased for the six months ended June 30, 2024, to $880,972 from $58,093 in the prior year, primarily due to the launch of the Safety Shot Dietary Supplement in December 2023. However, gross profit turned into a substantial loss of $(2,006,841) for the six months ended June 30, 2024, compared to a profit of $6,553 in the prior year, largely due to increased cost of sales and a one-time inventory write-off of $1,649,473 for rebranding[11][152] - Net loss widened considerably to $(23,948,765) for the six months ended June 30, 2024, from $(1,667,765) in the same period last year, driven by a significant increase in total operating expenses, particularly general and administrative expenses and stock-based compensation[11][153] Condensed Consolidated Statements of Changes in Shareholders' Equity This section details changes in the company's shareholders' equity, reflecting net loss, stock issuances, and warrant conversions for the period ended June 30, 2024 - Total Shareholders' Equity decreased from $8,817,136 at December 31, 2023, to $6,469,451 at June 30, 2024, primarily due to a net loss of $(8,274,094) for the six months ended June 30, 2024, partially offset by increases in additional paid-in capital from warrant conversions and shareholder investments[12] Shareholders' Equity Changes | Item | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | | Balance, December 31, 2023 | $8,817,136 | | Common Stock issued from stock payable for services | - | | Common Stock issued from stock payable on extinguishment of debt | - | | Common Stock due for services | $48,400 | | Common Stock due on warrant conversions | $2,800 | | Common Stock issued for services | $614,500 | | Common Stock issued for warrant conversions | $3,792,215 | | Fair value of options granted | $7,970,134 | | Net loss for the three months ended March 31, 2024 | $(15,674,671) | | Shares issued from Stock Payable - services for services | - | | Shares issued from Stock Payable - Conv note extinguishment | $344,196 | | Shares due for services | $31,500 | | Share due on warrant conversion | $(2,800) | | Shares issued for employee bonus | $347,500 | | Shares issued for private placement | $5,000,000 | | Warrant conversions | $154,000 | | Shareholder Investment | $1,000,000 | | Fair value of options granted | $2,298,635 | | Net loss for the six months ended June 30, 2024 | $(8,274,094) | | Balance June 30, 2024 | $6,469,451 | Condensed Consolidated Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2024 and 2023 Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) continuing operating activities | $(12,100,942) | $(2,370,752) | | Net cash (used in) investing activities | $880,195 | $(469,700) | | Net cash (used in) provided by financing activities | $10,611,181 | $3,450,351 | | Net (decrease) in cash and cash equivalents | $(609,566) | $609,262 | | Cash and cash equivalents at the end of the period | $3,223,783 | $2,086,814 | - Net cash used in operating activities significantly increased to $(12,100,942) for the six months ended June 30, 2024, from $(2,370,752) in the prior year, primarily due to a larger net loss from continued operations and increased operating expenses[13] - Cash flows from investing activities turned positive, generating $880,195 for the six months ended June 30, 2024, compared to a net use of $(469,700) in the prior year, mainly driven by cash received from sales of SRM stock and marketable securities[13] - Net cash provided by financing activities increased to $10,611,181 for the six months ended June 30, 2024, from $3,450,351 in the prior year, largely due to proceeds from warrant conversions, private placements, and shareholder investments[13] Notes to Financial Statements This section provides detailed explanations of the company's accounting policies, significant financial line items, and other disclosures supporting the consolidated financial statements Note 1 - Organization and Business Operations This note describes Safety Shot Inc.'s corporate history, acquisition of the Safety Shot product, and its going concern status as of June 30, 2024 - Safety Shot Inc. (formerly Jupiter Wellness Inc.) acquired the functional beverage Safety Shot from GBB Drink Lab, Inc. in August 2023, gaining intellectual property, trade secrets, and trademarks. The company subsequently changed its name and NASDAQ trading symbol to SHOT and launched the Safety Shot Dietary Supplement in December 2023[16] - As of June 30, 2024, the Company had accumulated deficits of $(89,629,480) and cash flow used in operations of $12,100,942 for the six months ended June 30, 2024, raising substantial doubt about its ability to continue as a going concern[19] Note 2 - Significant Accounting Policies This note details the company's key accounting principles, including revenue recognition, inventory valuation, and stock-based compensation, and its emerging growth company status - The company accounts for investments in unconsolidated affiliates using the equity method and asset purchases using the cost accumulation and allocation method, without recording goodwill[21][22] - As an 'emerging growth company,' Safety Shot has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards, which may affect comparability with other public companies[24][25] - During the six months ended June 30, 2024, the Company recorded a $1,649,473 write-down of certain raw materials and finished goods due to rebranding issues[29] - The company recognizes revenue when control of goods is transferred to a customer, typically upon shipment (FOB shipping point), with payment generally in advance or net 30 days[32][33] - Research and development costs are expensed as incurred, totaling $261,404 for the six months ended June 30, 2024, a significant increase from $36,928 in the prior year[38] - The company recognizes stock-based compensation costs based on grant-date fair value, amortized over vesting periods, and has a fully offset deferred tax asset of $8,658,484 by a valuation allowance due to lack of earnings history[39][43] Note 3 - Accounts Receivable This note provides a breakdown of the company's accounts receivable balance as of June 30, 2024, and December 31, 2023 Accounts Receivable Balances | Metric | June 30, 2024 | December 31, 2023 | | :--------------- | :------------ | :---------------- | | Accounts Receivable | $162,295 | $5,585 | - Accounts receivable increased significantly from $5,585 at December 31, 2023, to $162,295 at June 30, 2024[48] Note 4 - Prepaid Expenses and Deposits This note details the composition of the company's prepaid expenses and deposits as of June 30, 2024, and December 31, 2023 Prepaid Expenses and Deposits Breakdown | Metric | June 30, 2024 | December 31, 2023 | | :-------------------------- | :------------ | :---------------- | | Total Prepaid Expenses and Deposits | $1,709,835 | $1,469,733 | | - Prepaid orders | $858,977 | $339,575 | | - Prepaid insurance | $407,857 | $56,335 | | - Deposits on raw materials | $443,001 | $1,073,823 | - Prepaid expenses and deposits increased to $1,709,835 at June 30, 2024, from $1,469,733 at December 31, 2023, with notable shifts in the composition of prepaid orders and deposits on raw materials[49] Note 5 - Inventory This note provides a breakdown of the company's inventory, including raw materials and finished goods, as of June 30, 2024, and December 31, 2023 Inventory Composition | Metric | June 30, 2024 | December 31, 2023 | | :--------------- | :------------ | :---------------- | | Total Inventory | $739,432 | $795,824 | | - Raw materials | $385,125 | $746,663 | | - Finished goods | $354,307 | $49,161 | - Total inventory decreased slightly to $739,432 at June 30, 2024, from $795,824 at December 31, 2023, with a significant shift from raw materials to finished goods[50] Note 6 - Marketable Securities This note details the company's marketable securities holdings and related sales activities for the period ended June 30, 2024 - The Company held 0 CJET Shares valued at $0 as of June 30, 2024, down from 1,200,821 shares valued at $842,976 at December 31, 2023. During the six months ended June 30, 2024, the Company sold 386,881 CJET shares, resulting in a $269,723 realized loss[52] Note 8 - Intangible Assets This note describes the acquisition and amortization of the company's patents related to the Safety Shot product - On July 10, 2023, the Company acquired patents for the Safety Shot product for a purchase price of $2,668,500 (5,000,000 shares of restricted common stock valued at $2,468,500 plus $200,000 cash). An additional $2,000,000 was paid in December 2023 under earn-out provisions, all allocated to patents[52][53] - The patents are amortized over twelve years. Amortization expense was $203,700 for the six months ended June 30, 2024[55] Intangible Assets Details | Item | Amount | | :-------------------------- | :------------- | | Purchase price: Cash | $2,200,000 | | Purchase price: Fair value of stock issued | $2,468,500 | | Total Purchase Price | $4,668,500 | | Allocation of Purchase price: Patents | $4,668,500 | | Amortization | $(361,143) | | Balance (Intangible Assets) | $4,307,357 | Note 9 – Accrued Interest and Liabilities This note presents the company's accrued interest and liabilities balances as of June 30, 2024, and December 31, 2023 Accrued Interest and Liabilities Balances | Metric | June 30, 2024 | December 31, 2023 | | :------------------- | :------------ | :---------------- | | Accrued interest | $4,548 | $269,152 | | Accrued liabilities | $404,870 | $60,450 | - Accrued interest decreased significantly from $269,152 at December 31, 2023, to $4,548 at June 30, 2024, while accrued liabilities increased from $60,450 to $404,870[57] Note 10 - Convertible Notes Payable – Related Parties This note details the company's convertible notes payable to related parties, including amendments and interest expenses - On June 28, 2024, convertible notes were amended to extend the due date to September 30, 2024, and allow accrued interest payment in common stock. The Company assigned 150,000 shares of SRM Entertainment, Inc. common stock (valued at $189,000) to the Note Holder as consideration for the extension[61] Convertible Notes Payable Activity | Metric | Amount | | :------------------------------------------------------------------------------------ | :------- | | Principal Balance, December 31, 2022 | $2,000,000 | | Conversion of one of the notes | $(500,000) | | Principal Balance, December 31, 2023 | $1,500,000 | | Conversion of one of the notes paid interest then principal leaving new balance | $69,669 | | Principal Balance, June 30, 2024 | $1,569,669 | | Interest expense related to Notes (Six months ended June 30, 2024) | $152,986 | | Interest expense related to Notes (Six months ended June 30, 2023) | $39,013 | Note 11 – Covid-19 SBA Loans This note outlines the balance and terms of the company's Covid-19 SBA Economic Injury Disaster Loan (EIDL) EIDL Loan Balance | Metric | June 30, 2024 | December 31, 2023 | | :---------------- | :------------ | :---------------- | | EIDL Loan Balance | $48,687 | $48,974 | - The balance of the Covid-19 SBA Economic Injury Disaster Loan (EIDL) was $48,687 at June 30, 2024, with a 30-year term and 3.75% interest rate[63] Note 12 - Capital Structure This note details the company's common stock issuances and outstanding shares, including those from warrant conversions and private placements - As of June 30, 2024, there were 52,015,949 shares of common stock issued and outstanding, an increase from 45,634,154 shares at December 31, 2023[65] Common Stock Issuances | Common Stock Issuances (Six months ended June 30, 2024) | Number of Shares | | :------------------------------------------------------ | :--------------- | | Balance December 31, 2023 | 45,634,154 | | Shares issued for stock payable | 382,000 | | Shares issued for services | 700,000 | | Shares issued for private placement | 2,369,668 | | Stock issued for conversion of warrants | 2,930,127 | | Balance June 30, 2024 | 52,015,949 | - During the six months ended June 30, 2024, the Company issued 700,000 shares for services ($962,000 value), 2,930,127 shares from warrant conversions ($3,946,214 cash received), and 2,369,668 shares for private placement ($5,000,000 cash received)[74][75][13] Note 13 - Warrants and Options This note provides information on the company's outstanding warrants and options, including activity and fair value of grants Warrants Activity Summary | Warrants Activity | Number of Warrants | Exercise Price (Weighted Average) | | :------------------------------------------------------------------------------------ | :----------------- | :-------------------------------- | | Balance at December 31, 2022 | 15,958,126 | $1.74 | | Warrants issued in Public Offering | 9,260,554 | $0.093 | | Warrants issued for services | 1,000,000 | $1.23 | | Warrants exercised in connection with Convertible notes | (1,200,000) | $0.093 | | Warrants exercised in connection with public offering | (10,266,845) | $0.093 | | Balance at December 31, 2023 | 14,751,835 | $2.06 | | Warrants exercised in connection with public offering | (2,950,127) | $1.40 | | Balance at June 30, 2024 | 11,801,708 | $3.46 | | Warrants Exercisable at June 30, 2024 | 11,801,708 | $3.46 | - The number of outstanding warrants decreased from 14,751,835 at December 31, 2023, to 11,801,708 at June 30, 2024, with a corresponding increase in the weighted average exercise price from $2.06 to $3.46[86] - During the six months ended June 30, 2024, the Company issued 4,820,000 options for consulting agreements (fair value $10,359,336) and 5,555,000 options to officers, directors, and employees (fair value $6,734,614), recognizing $4,433,804 and $5,834,966 in expense, respectively[87][88] Note 14 - Commitments and Contingencies This note describes the company's lease commitments, including Right of Use assets and lease liabilities - The Company has an office lease with a primary term of five years and one three-year renewal option. As of June 30, 2024, the Right of Use (ROU) asset was $391,289, and the total lease liability was $426,353 ($237,432 current, $188,921 non-current)[90] - The Company recognized $19,242 in accreted interest expense and $106,980 in rent expense for the lease during the six months ended June 30, 2024[91] Note 15 – Investment in SRM Entertainment, Inc. This note details the company's equity method investment in SRM Entertainment, Inc., including spin-off, share sales, and losses - Effective August 14, 2023, the Company spun off 52% of SRM Entertainment Ltd into SRM Entertainment Inc., receiving 4,109,166 shares of SRM Inc. common stock valued at $1,521,025. The Company now uses the equity method for its investment in SRM Inc[100] - During the six months ended June 30, 2024, the Company sold 350,000 shares of SRM Inc. common stock for $490,000, realizing a gain of $432,548. It also transferred 150,000 SRM Inc. shares (valued at $189,000) to a convertible promissory Note Holder[101] Investment in SRM Inc. Summary | Metric | Amount | | :--------------------------------------------------- | :------- | | Investment in SRM Inc Balance at December 31, 2023 | $657,183 | | Basis in the 350,000 shares of SRM Inc sold | $(58,028) | | Equity in SRM Inc losses * | $(599,155) | | Investment in SRM Inc Balance at June 30, 2024 | $0 | Note 16 - Subsequent Events This note confirms that no additional material subsequent events occurred after June 30, 2024, up to the financial statement issuance date - The Company has determined that there are no additional material subsequent events to disclose after June 30, 2024, up to the date these financial statements were issued[102] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting key business developments, product strategy, marketing efforts, and a detailed analysis of financial performance for the three and six months ended June 30, 2024 and 2023 General Overview This section provides an overview of Safety Shot Inc.'s business, its flagship dietary supplement, and its market positioning - Safety Shot Inc. (formerly Jupiter Wellness Inc.) acquired the Safety Shot dietary supplement in August 2023 and launched its e-commerce sales in December 2023. The product is formulated to reduce blood alcohol content by supporting its metabolism and contains 28 GRAS-category active ingredients[107][108] - The company's primary focus is on the commercialization of a 12-ounce dietary supplement, with plans to expand into powdered stick pack and four-ounce versions[110] Products Roadmap This section outlines the company's product development strategy, including new flavors, SKU expansions, and ongoing research for the Safety Shot Dietary Supplement - The Safety Shot Dietary Supplement launched on the company's website, Amazon, and several Big Box stores in December 2023. Future plans include developing new flavors for existing SKUs (12oz., 4 oz., and 'Stick Pack') and conducting research on dosage, ingredient selection, and efficacy[111] Research and Development This section details the company's R&D efforts focused on developing new therapeutic products and enhancing existing ones, supported by clinical trial results - The company's research and development team focuses on developing new therapeutic products and enhancing existing ones. Clinical trials for the Safety Shot Dietary Supplement have shown a statistically significant reduction in participants' Blood Alcohol Content (BAC) and observable enhancements in cognitive abilities[112] Sales and Marketing This section describes the company's sales channels, primarily e-commerce, and its comprehensive 360-degree marketing strategy for product promotion - Products are primarily sold through e-commerce (company website, Amazon). Marketing strategy includes a 360-degree approach with digital and retail activations, social media, radio, televised events, public relations, and brand promotion activities. The company is also in discussions with Big Box stores for a Q2 2024 launch[113][154] Manufacturing, Logistics and Fulfillment This section explains the company's outsourced manufacturing, third-party warehousing, and logistics strategy for efficient product distribution - Manufacturing is outsourced to contract manufacturers in India and the US, adhering to the company's formulation specifications. Products are shipped to third-party warehouses in the US for distribution to retailers or directly to customers, utilizing a limited number of logistics providers to optimize fulfillment and costs[114] Our Competitive Strengths This section highlights the company's competitive advantages, including continuous innovation, R&D investments, and a unique product offering backed by clinical research - The company emphasizes continuous improvement through innovation, significant R&D investments, and a growing intellectual property portfolio. Its Safety Shot Dietary Supplement is positioned as a unique product in the liquid dietary supplement market, backed by rigorous clinical research[115] Recent Developments This section summarizes key corporate events, including private placements and the acquisition of the Safety Shot Dietary Supplement assets - In January 2023, the Company completed a private placement (PIPE Offering) of 8,631,574 common stock warrants and an RD Offering of 4,315,787 common shares, generating aggregate gross proceeds of approximately $4.1 million and net proceeds of $3,450,675[116] - On July 10, 2023, the Company acquired assets related to the Safety Shot Dietary Supplement from GBB Labs, Inc. for $200,000 cash and 5,000,000 common shares[117] Intellectual Property This section details the company's patent portfolio for the Safety Shot Dietary Supplement, designed to mitigate alcohol's harmful effects - The Company owns five patents, including US 9,186,350 B2 and US 10,028,991 B2, for the composition of the Safety Shot Dietary Supplement, which is designed to minimize harmful effects of alcohol by supporting its metabolism[117] Government Regulation This section outlines the regulatory environment governing the Safety Shot Dietary Supplement, including FDA standards and potential reclassification risks - The Safety Shot Dietary Supplement's production, distribution, and sale are subject to various federal, state, and local regulations, including the FD&C Act, Occupational Safety and Health Act, environmental statutes, and California Proposition 65[118][120] - All ingredients in the Safety Shot Dietary Supplement are deemed Generally Recognized as Safe (GRAS) and align with FDA standards. The product is classified as a dietary supplement, exempt from pharmaceutical drug approval requirements[122] - There is a risk that the FDA or a state regulatory agency could classify the Safety Shot Dietary Supplement as a drug, which would require significant product and labeling changes or the lengthy drug approval process, potentially limiting marketability and adversely affecting financial condition[220] Basis of Presentation (Accounting Policies) This section reiterates the company's significant accounting policies, covering areas such as revenue recognition, inventory, and stock-based compensation - This section reiterates the significant accounting policies detailed in Note 2 to the financial statements, including the basis of presentation, equity method for investments, asset purchases, marketable securities, emerging growth company status, use of estimates, cash and cash equivalents, net loss per common share, revenue recognition, accounts receivable, inventory, fair value of financial instruments, income taxes, research and development, stock-based compensation, and related parties[123][124][125][127][128][129][130][131][134][135][136][137][138][139][140][141][142][143][144][146][147][148][149] Results of Operations (Six Months Ended June 30, 2024 and 2023) This section analyzes the company's financial performance for the six months ended June 30, 2024 and 2023, focusing on revenue, gross profit, and net loss drivers Six-Month Operating Results | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Sales | $880,972 | $58,093 | | Cost of Sales | $2,887,813 | $51,140 | | Gross Profit (Loss) | $(2,006,841) | $46,553 | | Total operating expenses | $21,575,170 | $2,986,692 | | Other income (expense) | $(366,754) | $1,121,246 | | Loss from operations | $(23,948,765) | $(1,858,893) | | Net loss | $(23,948,765) | $(1,667,765) | - Revenues increased significantly to $880,972 (from $58,093 YoY) due to the Safety Shot Dietary Supplement launch. However, gross profit became a loss of $(2,006,841) (from $46,553 YoY) due to increased cost of sales and a $1,649,473 inventory write-off for rebranding[152] - Total operating expenses surged to $21,575,170 (from $2,986,692 YoY), driven by marketing ($4,044,095), legal and professional fees ($4,252,724), and stock-based compensation ($11,045,669)[153] - Net loss widened to $(23,948,765) (from $(1,667,765) YoY) due to higher operating expenses and a net loss from equity investment in SRM Entertainment Inc. of $(599,155)[154][156] Results of Operations (Three Months Ended June 30, 2024 and 2023) This section analyzes the company's financial performance for the three months ended June 30, 2024 and 2023, focusing on revenue, gross profit, and net loss drivers Three-Month Operating Results | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :----------------------------------- | :------------------------------- | :------------------------------- | | Sales | $710,240 | $23,305 | | Cost of Sales | $504,528 | $27,575 | | Gross Profit (Loss) | $205,712 | $(4,270) | | Total operating expenses | $8,618,618 | $1,741,739 | | Other income (expense) | $138,812 | $1,179,528 | | Loss from operations | $(8,274,094) | $(566,481) | | Net loss | $(8,274,094) | $(359,591) | - Revenues for the three months ended June 30, 2024, increased to $710,240 (from $23,305 YoY) due to the Safety Shot Dietary Supplement launch. Gross profit improved to $205,712 (from $(4,270) YoY)[158] - Total operating expenses for the three months ended June 30, 2024, increased to $8,618,618 (from $1,741,739 YoY), with significant increases in marketing ($2,593,322), legal and professional fees ($1,879,774), and stock-based compensation ($2,955,135)[159] - Net loss for the three months ended June 30, 2024, was $(8,274,094), a substantial increase from $(359,591) in the prior year, primarily due to the surge in operating expenses[162] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' Safety Shot, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a 'smaller reporting company' and is therefore not required to provide the information typically required by this Item[162] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were ineffective as of June 30, 2024, primarily due to insufficient segregation of duties and lack of formalized policy documentation. Remediation efforts are underway, including hiring experienced personnel and enhancing financial controls - The Company's certifying officers concluded that disclosure controls and procedures were ineffective for the quarter ended June 30, 2024, due to an insufficient degree of segregation of duties and lack of formalized policy and procedure documentation[163][164][165] - Remediation measures include hiring individuals with appropriate experience in internal controls over financial reporting and modifying accounting processes and enhancing financial controls[165] - Management plans to expand its management team and build a comprehensive internal control framework to address the issues[164] PART II - OTHER INFORMATION This section details legal proceedings, risk factors, equity sales, and other disclosures for Safety Shot, Inc Item 1. Legal Proceedings Safety Shot, Inc. is currently involved in several legal proceedings, primarily class action lawsuits related to warrant exercises and a delayed spin-off. The company intends to vigorously defend itself against these claims and does not believe their ultimate disposition will have a material adverse effect on its financial position, results of operations, or liquidity - Intracoastal Capital, LLC filed a lawsuit on November 30, 2023, alleging breach of a common stock warrant and seeking delivery of 330,619 free trading shares and at least $2 million in compensatory damages[169] - Sabby Volatility Warrant Master Fund Ltd. filed two lawsuits: one on September 5, 2023, regarding a delayed spin-off and distribution of SRM Entertainment Inc. common stock, seeking over $500,000 in compensatory damages; and another on February 9, 2024, alleging improper refusal to honor a warrant exercise for 2,105,263 shares, seeking at least $750,000 in compensatory damages and $600,000 in liquidated damages[171][172][173] - 3i LP and Bigger Capital fund, L.P. filed separate lawsuits in January 2024, both stemming from alleged denials of warrant exercises, seeking damages ranging from approximately $380,000 to $3 million in compensatory damages and $4 million in liquidated damages[175][176] - Alta Partners, LLC filed a lawsuit on January 18, 2024, related to a warrant to purchase common stock, asserting claims for Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, and violation of Section 11 of the Securities Act of 1933, seeking compensatory and liquidated damages[177] Item 1A. Risk Factors This section outlines various risks that could materially affect Safety Shot, Inc.'s business, financial condition, and operating results, categorized into risks related to its business, financial position and capital needs, intellectual property, and securities Risks Related to Our Business This section details risks associated with the company's operations, including competition, regulatory compliance, product liability, and reliance on third parties - The company faces risks from rapid technological changes, intense competition, and the need to develop and maintain its brand and reputation. Failure to keep up with innovation or successfully compete could adversely affect market share and revenues[179][180][182] - Operations are subject to extensive government regulation (FDA, FTC, state laws), and unfavorable changes or non-compliance could increase costs, limit product sales, or lead to enforcement actions. There's a risk the Safety Shot Dietary Supplement could be reclassified as a drug, requiring costly and uncertain approval processes[183][210][211][214][215][216][220] - Dependence on key personnel, potential product liability claims, the need to continuously introduce new products, and adverse publicity regarding products or ingredients are significant risks. The company also relies on third parties for manufacturing, clinical trials, and sales/marketing, which introduces risks of delays, quality issues, and non-performance[184][185][186][188][189][190][192][193][196][197][201][202][203] - The company has a limited operating history, making it difficult to evaluate future prospects and manage growth effectively. International expansion also presents various uncontrollable risks, including macroeconomic conditions, currency exchange rates, and regulatory differences[208][209][238][239] Risks Related to our Financial Position and Capital Needs This section outlines financial risks, including going concern doubts, capital requirements, potential dilution, and challenges associated with rapid growth - The company's accumulated deficit of $65,480,715 and significant cash flow used in operations have led auditors to express substantial doubt about its ability to continue as a going concern[242] - Safety Shot may need to raise additional capital, which could dilute existing stockholders' interests, impose restrictive covenants, or require relinquishing rights to technologies or assets[246][247] - The company's rapid growth and entry into new markets may strain resources and management, potentially leading to operating inefficiencies. Changes in tax laws and unanticipated tax liabilities could also adversely affect profitability[248][249][250] Risks Related to our Intellectual Property This section addresses risks concerning the company's intellectual property, including protection costs, potential infringement, and reliance on proprietary know-how - The company may incur substantial costs from litigation or other proceedings related to patent and intellectual property rights, which could divert efforts and resources[251][252] - Inability to adequately protect its trademarks, trade secrets, copyrights, and patents could reduce the value of products and brands, affecting financial condition and ability to compete effectively[253][254][256][257] - Reliance on unpublished know-how held by key individuals and the finite protection period of patents and trademarks pose risks to long-term product manufacturing quality and licensing strategy[255][256] Risks Related to Our Securities and Other Risks This section covers risks related to the company's securities, including market attractiveness, compliance costs, management discretion, and potential stock dilution - As an 'emerging growth company,' reduced disclosure requirements may make common stock less attractive to investors, leading to a less active trading market and more volatile stock price[258][259] - Compliance with public company regulations strains resources and management, potentially increasing costs and diverting attention from business operations, especially after losing 'emerging growth company' status[259][260][262] - Management has broad discretion in using offering proceeds, which may not be effective. Limited experience in managing a public company could lead to additional expenses[263][264] - Significant ownership by officers and directors (approximately 20% at December 31, 2023) could reduce minority stockholders' ability to effect corporate actions. The company does not intend to pay dividends in the foreseeable future[266][268] - Issuance of additional common or preferred stock could dilute existing stockholders and cause the stock price to decline. The common stock may also become subject to SEC's 'penny stock' rules, adversely affecting trading activity[270][271][275][276] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the six months ended June 30, 2024, the Company did not issue any shares of common stock for services or related to promissory debt modification and extinguishment that were previously recorded as Common Stock Payable - During the six months ended June 30, 2024, the Company issued a total of 0 shares of common stock for services, and 0 shares related to consulting agreements or promissory debt modification and extinguishment that were recorded as Common Stock Payable at December 31, 2023[276][277] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[277] Item 4. Mine Safety Disclosures This item is not applicable to the Company's operations - This item is not applicable[277] Item 5. Other Information The Company reported no other information requiring disclosure under this item - There is no other information to disclose[277] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and interactive data files - Exhibits include Rule 13a-14(d)/15d-14d) Certifications (31.1, 31.2), Section 1350 Certifications (32.1, 32.2), and Interactive Data Files (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[273][277] SIGNATURES The report is duly signed on behalf of Safety Shot, INC. by Jarrett Boon, Chief Executive Officer (Principal Executive Officer) - The report was signed by Jarrett Boon, Chief Executive Officer (Principal Executive Officer), on August 13, 2024[279][280]