Safety Shot(SHOT) - 2022 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements The company's June 30, 2022 financial statements show increased revenue, reduced net loss, decreased assets due to cash, and increased liabilities from convertible notes Consolidated Balance Sheets Total assets decreased to $14.39 million by June 30, 2022, from $18.87 million primarily due to reduced cash, while liabilities increased to $3.69 million from $2.27 million from convertible notes Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2022 ($) | December 31, 2021 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $5,000,684 | $11,754,558 | | Total Current Assets | $10,647,544 | $16,279,745 | | Total Assets | $14,386,140 | $18,867,465 | | Liabilities & Equity | | | | Convertible notes, net | $1,397,450 | $0 | | Total Current Liabilities | $3,068,463 | $1,569,085 | | Total Liabilities | $3,689,331 | $2,265,046 | | Total Shareholders' Equity | $10,696,809 | $16,602,419 | Consolidated Statement of Operations For the three and six months ended June 30, 2022, sales and gross profit increased significantly, reducing net loss to $1.44 million (Q2) and $4.36 million (six-month) Three Months Ended June 30, (Unaudited) | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Sales | $3,000,582 | $595,088 | | Gross Profit | $505,243 | $181,175 | | General and administrative expenses | $1,397,810 | $3,839,316 | | Net (loss) | $(1,440,756) | $(4,151,074) | | Basic Net (loss) per share | $(0.07) | $(0.37) | Six Months Ended June 30, (Unaudited) | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Sales | $3,722,211 | $643,934 | | Gross Profit | $622,454 | $206,569 | | General and administrative expenses | $3,414,083 | $6,727,610 | | Impairment of Promissory Note | $1,000,000 | $0 | | Net (loss) | $(4,360,531) | $(6,346,837) | | Basic Net (loss) per share | $(0.19) | $(0.56) | Consolidated Statement of Cash Flows For the six months ended June 30, 2022, net cash used in operations was $3.71 million, investing $2.27 million, and financing $0.77 million, leading to a $6.75 million net cash decrease Cash Flow Summary for Six Months Ended June 30, (Unaudited) | Cash Flow Activity | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Net cash (used in) operating activities | $(3,709,580) | $(3,237,054) | | Net cash (used in) investing activities | $(2,273,512) | $(51,646) | | Net cash (used in) provided by financing activities | $(770,782) | $2,967,500 | | Net (decrease) in cash | $(6,753,874) | $(321,200) | | Cash at beginning of period | $11,754,558 | $4,262,168 | | Cash at end of period | $5,000,684 | $3,940,968 | Notes to the Consolidated Financial Statements The notes detail accounting policies, segment reporting, acquisitions, convertible notes, capital structure changes including share repurchases, and legal proceedings - The company operates in two segments: cannabidiol-based skin care and therapeutic products, and theme park merchandise sales via SRM Entertainment[39][128] - In April 2022, the company issued $2.0 million in convertible promissory notes at an 8% interest rate, convertible at $2.79 per share, maturing October 20, 2022[85][86] - The company repurchased 2,690,354 common shares for $2.78 million by June 30, 2022, subsequently cancelling 2,433,894 of them[100][129] Segment Gross Profit (Six Months Ended June 30) | Segment | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Jupiter Wellness | $20,446 | $59,494 | | SRM Entertainment | $602,008 | $147,075 | | Total Gross Profit | $622,454 | $206,569 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 2022 revenue growth to increased product demand, continues wellness R&D, diversified revenue via SRM Entertainment, and reduced net loss due to lower operating expenses General Overview Jupiter Wellness focuses on R&D and sales of wellness products, advancing clinical trials like JW-100 for eczema, and expanded into amusement park merchandise via SRM Entertainment - The company researches, develops, licenses, and sells wellness products for hair, skin, and sexual health, with products like Photocil licensed in over 30 countries[137] - Clinical trials for JW-100 (cannabidiol-aspartame) showed significant eczema improvement, with 50% of patients achieving clear or almost clear skin versus placebo[137] - The acquisition of SRM Entertainment provides a revenue stream from supplying exclusive products to the global amusement park industry[143][153] Recent Developments Recent developments include a $28.3 million public offering in July 2021, sponsoring a SPAC that raised $138 million, and resolving Nasdaq compliance issues regarding share issuances - Closed an underwritten public offering in July 2021, raising net proceeds of $28.3 million[156] - Sponsored Jupiter Wellness Acquisition Corporation (JWAC), a SPAC that completed a $138 million IPO in December 2021, with the company investing $2.9 million[157] - Resolved Nasdaq Listing Rule 5635(c) compliance issues related to share issuances by taking remedial actions to regain compliance[157][158] Results of Operations Financial performance improved in H1 2022, with Q2 revenues growing to $3.0 million and net loss narrowing to $1.4 million, driven by higher sales and lower operating expenses Results for the Three Months Ended June 30, | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Sales | $3,000,582 | $595,088 | | Gross Profit | $505,243 | $181,175 | | Total Expenses | $(1,945,999) | $(4,332,249) | | Net Loss | $(1,440,756) | $(4,151,074) | Results for the Six Months Ended June 30, | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Sales | $3,722,211 | $643,934 | | Gross Profit | $622,454 | $206,569 | | Total Expenses | $(4,982,985) | $(6,553,406) | | Net Loss | $(4,360,531) | $(6,346,837) | - Management attributes the increase in revenue to a greater demand for products as the impact of the Covid-19 pandemic subsided[189][196] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is not required to provide this information as it qualifies as a "smaller reporting company" - As a "smaller reporting company", Jupiter Wellness is not required to provide the information required by this item[202] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2022, after implementing remediation measures for internal control weaknesses - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures are effective[203] - The company implemented remediation measures for previously disclosed internal control weaknesses, including hiring experienced personnel and modifying accounting processes[204] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in an extortion lawsuit against Robert Koch, with a trial scheduled for November 2022, and settled a separate matter related to Magical Beasts LLC, recognizing a $669,200 gain - The company filed a lawsuit against Robert Koch and others for alleged extortion, seeking $5 million in actual and $5 million in punitive damages, with a jury trial scheduled for November 14, 2022[208] - A legal matter related to the Magical Beasts LLC acquisition was settled, involving debt forgiveness and resulting in a $669,200 gain recognized in 2021[209][210][211] Item 1A. Risk Factors The company is not required to provide this information as it qualifies as a "smaller reporting company" - As a "smaller reporting company", Jupiter Wellness is not required to provide the information required by this item[213] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On April 20, 2022, the company entered $2.0 million in loan agreements, issuing convertible notes, 250,000 origination shares, and warrants for 1,460,000 shares, maturing October 20, 2022 - On April 20, 2022, the company entered into loan agreements totaling $2.0 million[214][215] - In connection with the loans, the company issued convertible notes, 250,000 origination shares, and warrants to purchase 1,460,000 common shares[214][215] Other Items (Items 3, 4, 5, 6) No defaults on senior securities (Item 3), mine safety disclosures are not applicable (Item 4), no other information (Item 5), and Item 6 lists filed exhibits - Item 3, Defaults Upon Senior Securities: None[216] - Item 4, Mine Safety Disclosures: Not applicable[217] - Item 5, Other Information: None[218]