Safety Shot(SHOT) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion, and related disclosures for the company Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with notes highlighting going concern considerations Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | Total Current Assets | $9,170,351 | $6,751,489 | | Cash | $2,772,641 | $1,931,068 | | Marketable Securities | $4,583,987 | $0 | | Total Assets | $11,079,508 | $8,690,763 | | Total Current Liabilities | $4,997,277 | $4,505,510 | | Total Liabilities | $5,411,004 | $5,025,169 | | Total Shareholders' Equity | $5,668,504 | $3,665,594 | - Total assets increased primarily due to the addition of $4.58 million in marketable securities. Total shareholders' equity grew from $3.67 million to $5.67 million, driven by capital raising activities[20] Condensed Consolidated Statement of Operations This section outlines the company's revenues, expenses, and net loss for the three and six months ended June 30, 2023 and 2022 Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2023 ($) | Three Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Sales | $2,365,258 | $3,000,582 | $3,486,934 | $3,722,211 | | Gross Profit | $503,749 | $505,243 | $750,394 | $622,454 | | Total Operating Expenses | $1,998,701 | $1,397,810 | $3,495,238 | $4,414,083 | | Net Loss | $(359,591) | $(1,440,756) | $(1,667,765) | $(4,360,531) | | Basic Net Loss Per Share | $(0.01) | $(0.07) | $(0.06) | $(0.19) | - The net loss for the three and six months ended June 30, 2023, significantly decreased compared to the same periods in 2022. The improvement was largely driven by a substantial increase in 'Other income', which included an unrealized gain on marketable securities of $1.19 million in Q2 2023[23] Condensed Consolidated Statement of Changes in Shareholders' Equity This section details the changes in shareholders' equity, including capital contributions and net loss, for the six months ended June 30, 2023 - In the first quarter of 2023, the company issued 4,315,787 shares in a public offering, resulting in proceeds of $3.45 million, which significantly bolstered additional paid-in capital[26] - Total shareholders' equity increased from $3.67 million at the end of 2022 to $5.67 million as of June 30, 2023, despite a net loss of $1.67 million for the six-month period[26] Condensed Consolidated Statement of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Cash Flow Summary for Six Months Ended June 30 (Unaudited) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,097,191) | $(3,709,580) | | Net cash used in investing activities | $(550,609) | $(2,273,512) | | Net cash provided by/(used in) financing activities | $3,489,373 | $(770,782) | | Net increase/(decrease) in cash | $841,573 | $(6,753,874) | - The company's cash position improved in the first half of 2023, with cash and cash equivalents increasing by $0.84 million. This was primarily due to $3.45 million in proceeds from a public offering, which offset cash used in operations and investments[28] Notes to the Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements, including significant accounting policies and subsequent events - The company's auditors have noted that its accumulated deficit of $52.3 million and cash used in operations of $2.1 million for the quarter raise substantial doubt about its ability to continue as a going concern[34] - The company has two reportable segments: (i) sales and development of skin, hair care, and therapeutic products, and (ii) sales of merchandise to theme parks through its subsidiary SRM Entertainment[44][114] - The company received 1.66 million restricted shares of Chijet (Nasdaq: CJET) from its investment in a SPAC. These are classified as marketable securities with a fair value of $4.58 million as of June 30, 2023, resulting in an unrealized gain of $1.17 million for the period[75][76] - Subsequent to the quarter end, on July 10, 2023, the company entered into an Asset Purchase Agreement to acquire intellectual property for "Safety Shot," a rapid alcohol detoxification product, for $0.2 million cash and 5 million shares of common stock[116] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial performance, including revenue trends, net loss reduction, business strategy, and significant accounting policies for the reporting periods Business Overview and Strategy This section describes the company's core business, product development focus, and strategic initiatives, including licensing and subsidiary operations - The company focuses on developing and commercializing over-the-counter (OTC) products for health and wellness, with a pipeline including treatments for hair loss (JW-700), vitiligo (Photocil), and women's sexual wellness (JW-500)[123][127] - A key part of the strategy involves licensing products in overseas markets. The company has signed agreements with Taisho in Japan and Cosmofix Technovation in India for its JW-700 and Photocil products[126] - Through its wholly-owned subsidiary, SRM Entertainment, the company also develops, manufactures, and supplies exclusive merchandise to the amusement park industry[135][136] Results of Operations This section analyzes the company's financial performance, comparing key metrics like sales, gross profit, and net loss across reporting periods Q2 2023 vs. Q2 2022 Performance | Metric | Q2 2023 ($) | Q2 2022 ($) | | :--- | :--- | :--- | | Sales | $2,365,258 | $3,000,582 | | Gross Profit | $503,749 | $505,243 | | Total Operating Expenses | $(1,998,701) | $(1,397,810) | | Other Income/(Expense) | $1,135,361 | $(548,189) | | Net Loss | $(359,591) | $(1,440,756) | H1 2023 vs. H1 2022 Performance | Metric | H1 2023 ($) | H1 2022 ($) | | :--- | :--- | :--- | | Sales | $3,486,934 | $3,722,211 | | Gross Profit | $750,394 | $622,454 | | Total Operating Expenses | $(3,495,238) | $(4,414,983) | | Other Income/(Expense) | $1,077,079 | $(568,902) | | Net Loss | $(1,667,765) | $(4,360,531) | - The significant reduction in net loss for both the three and six-month periods of 2023 was primarily driven by 'Other income', which included a $1.17 million unrealized gain on marketable securities[179][187] Significant Accounting Policies This section outlines the critical accounting principles and methods used in preparing the financial statements, including revenue recognition and tax policies - The company is classified as an "emerging growth company" under the JOBS Act and has elected to use the extended transition period for adopting new or revised accounting standards[146][147] - Revenue is recognized when control of products is transferred to the customer, which is typically at the point of shipment (FOB shipping point)[158] - Due to a lack of earnings history, the company maintains a full valuation allowance of approximately $7.1 million against its deferred tax assets as of December 31, 2022[165] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that as a "smaller reporting company," it is not required to provide the information for this item - As a "smaller reporting company," Jupiter Wellness is exempt from providing quantitative and qualitative disclosures about market risk[191] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective due to team size, with remediation efforts underway including new hires and process enhancements - The CEO and principal financial officer concluded that the company's disclosure controls and procedures were ineffective[193] - The ineffectiveness is attributed to the assessment and control of disclosure decisions being performed by a small team. The company plans to expand its management team to address this[193] - The company has implemented remediation measures for previously identified internal control weaknesses, including hiring individuals with relevant experience and enhancing financial controls[194] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other required disclosures Item 1. Legal Proceedings This section details a settled lawsuit filed by the company against Robert Koch and others, which concluded with no payment from the company - A lawsuit filed by the company against Robert Koch and others, alleging extortion, was settled and the case was closed on February 17, 2023[198] - Jupiter Wellness did not pay any amount in the settlement of the claims[113][198] Item 1A. Risk Factors As a "smaller reporting company," Jupiter Wellness is exempt from providing a discussion of risk factors in its Form 10-Q - As a "smaller reporting company," Jupiter Wellness is exempt from providing a discussion of risk factors in its Form 10-Q[199] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports various unregistered sales of equity securities, including warrants from a private placement and restricted shares for advisory services - In January 2023, the company entered into a Securities Purchase Agreement for the issuance of 8.63 million common stock warrants in a private placement (PIPE Offering)[202] - On March 31, 2023, the company issued 0.5 million restricted shares of its common stock to Greentree Financial Group, Inc. in connection with a Financial Advisory Agreement[203] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[204] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the company's operations[205] Item 5. Other Information There is no other information to report for this item - There is no other information to report for this item[206] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications (Sections 302 and 906) and Interactive Data Files (XBRL) - The exhibits filed with the report include certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Interactive Data Files (XBRL)[207]