Safety Shot(SHOT) - 2021 Q2 - Quarterly Report

PART I Item 1. Financial Statements The company's financial statements for the six months ended June 30, 2021, show a significant increase in net loss to $6.35 million from $0.92 million in the prior year period, primarily driven by higher general and administrative expenses, including substantial stock-based compensation. Total assets slightly decreased to $6.32 million. A major subsequent event was the closing of a public offering in July 2021, which raised net proceeds of $28.3 million, alleviating previous going concern doubts Condensed Consolidated Balance Sheets As of June 30, 2021, the company's total assets were $6.32 million, a slight decrease from $6.53 million at year-end 2020. The decrease was mainly due to a reduction in cash. Total liabilities increased to $2.61 million from $2.13 million, driven by a rise in convertible notes. Consequently, total shareholders' equity declined from $4.39 million to $3.72 million, reflecting the net loss for the period Condensed Consolidated Balance Sheet Highlights (Unaudited) | Financial Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash | $3,940,968 | $4,262,168 | | Total Current Assets | $4,802,409 | $4,988,264 | | Total Assets | $6,324,661 | $6,525,593 | | Liabilities & Equity | | | | Total Current Liabilities | $2,607,580 | $2,125,668 | | Total Liabilities | $2,607,580 | $2,132,052 | | Accumulated Deficit | $(13,621,238) | $(7,274,401) | | Total Shareholders' Equity | $3,717,081 | $4,393,541 | Condensed Consolidated Statement of Operations For the three and six months ended June 30, 2021, revenues saw modest growth compared to the same periods in 2020. However, net loss widened significantly. The six-month net loss increased to $6.35 million from $0.92 million year-over-year, primarily due to a substantial increase in general and administrative expenses. This resulted in a net loss per share of ($0.56) for the first half of 2021, compared to ($0.13) in H1 2020 Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Sales | $595,088 | $457,667 | $643,934 | $575,394 | | Gross Profit | $181,175 | $220,873 | $206,569 | $238,697 | | General & Administrative Expenses | $3,839,316 | $618,113 | $6,727,610 | $1,100,366 | | Net Loss | $(4,151,074) | $(433,375) | $(6,346,837) | $(915,173) | | Net Loss Per Share (Basic) | $(0.37) | $(0.06) | $(0.56) | $(0.13) | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2021, net cash used in operating activities was $3.24 million, a significant increase from $0.85 million in the prior-year period, mainly due to the higher net loss. Net cash provided by financing activities was $2.97 million, primarily from proceeds from convertible debt. Overall, cash and cash equivalents decreased by $0.32 million during the period, ending at $3.94 million Cash Flow Summary for the Six Months Ended June 30 (Unaudited) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(3,237,054) | $(849,345) | | Net Cash Used in Investing Activities | $(51,646) | $(289,391) | | Net Cash Provided by Financing Activities | $2,967,500 | $909,578 | | Net (Decrease) in Cash | $(321,200) | $(229,158) | | Cash at End of Period | $3,940,968 | $301,868 | Notes to Financial Statements The notes detail key accounting policies and events. A going concern warning was issued due to significant costs and operating cash outflow, but was alleviated by a subsequent public offering in July 2021 that raised $28.3 million. The company completed acquisitions of Magical Beasts, LLC and SRM Entertainment, Limited, which resulted in the recognition of intangible assets and goodwill, some of which were later impaired. The capital structure changed due to an IPO in November 2020, issuance of convertible notes, and various stock-based compensation arrangements. Subsequent events include the public offering, a new five-year office lease, and the full repayment of outstanding convertible notes - A going concern doubt was raised due to an accumulated deficit of $13.6 million and cash used in operations of $3.2 million. However, a subsequent public offering in July 2021 raised net proceeds of $28.3 million, which management believes alleviates this concern[27] - In May 2021, the Company issued $3.15 million in convertible promissory notes. These notes were fully paid off in July and August 2021 following the public offering[69][137] - The company acquired Magical Beasts, LLC in February 2020 and SRM Entertainment, Limited in November 2020. Intangible assets and goodwill from the Magical Beasts acquisition were significantly impaired by year-end 2020[59][109][122] - Subsequent to the quarter end, in July 2021, the company closed an underwritten public offering, raising net proceeds of $28,318,314 through the sale of common stock and warrants[136] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business as a developer of CBD-based medical therapeutics and wellness products under brands like CaniSun and CaniDermRX. The analysis highlights a significant increase in operating expenses and net loss for the first six months of 2021 compared to 2020, primarily driven by higher stock-based compensation and legal/professional fees. Revenue showed a modest increase despite weakened demand from the COVID-19 pandemic. The report emphasizes that a July 2021 public offering, which raised $28.3 million, has secured sufficient capital to execute the business plan and resolve previous going concern issues General Overview Jupiter Wellness develops CBD-based medical therapeutics and wellness products. Its clinical pipeline includes treatments for eczema, burns, and cold sores. The company markets consumer products under the CaniSun, CaniSkin, and CaniDermRX brands. A key clinical trial for its JW-100 eczema treatment showed statistically significant positive results. The company also acquired SRM Entertainment in November 2020 to supply the amusement park industry - The company is a developer of cannabidiol (CBD) based medical therapeutics and wellness products with a clinical pipeline addressing eczema, burns, herpes cold sores, and skin cancer[144] - A clinical trial for the JW-100 (CBD and aspartame combination) topical formulation for eczema showed statistically significant improvement, with 50% of subjects achieving clear or almost clear skin versus 15% in the placebo arm[144] - The company acquired SRM Entertainment in November 2020, which supplies exclusive products to the amusement park industry worldwide[147] Results of Operations For the six months ended June 30, 2021, revenues increased to $643,934 from $575,394 in the prior year. However, the net loss expanded dramatically to $6.35 million from $0.92 million. This was primarily due to a surge in operating expenses to $6.55 million, driven by a $3.66 million stock-based compensation charge and increased legal and professional fees. A one-time gain of $669,200 from a debt settlement partially offset the expenses Results of Operations for the Three Months Ended June 30 | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Sales | $595,088 | $457,667 | | Gross Profit | $181,175 | $220,873 | | Total Expenses | $(4,332,249) | $(654,248) | | Net Loss | $(4,151,074) | $(433,375) | Results of Operations for the Six Months Ended June 30 | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Sales | $643,934 | $575,394 | | Gross Profit | $206,569 | $238,697 | | Total Expenses | $(6,553,406) | $(1,153,870) | | Net Loss | $(6,346,837) | $(915,173) | - Operating expenses for H1 2021 included $3,663,349 in stock-based compensation and a gain of $669,200 on a note settlement related to the Magical Beast acquisition[202] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," Jupiter Wellness is not required to provide the information for this item - The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a "smaller reporting company"[206] Item 4. Controls and Procedures Management evaluated the company's disclosure controls and procedures as of June 30, 2021, and concluded they were effective. The company has implemented significant measures to remediate previously disclosed weaknesses in internal control over financial reporting, including hiring experienced personnel and enhancing accounting processes. No other material changes to internal controls were identified during the quarter - Management concluded that as of June 30, 2021, the company's disclosure controls and procedures are effective[207] - The company implemented remediation measures for previously disclosed ineffectiveness in internal controls, including hiring experienced personnel and modifying accounting processes[208] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in a lawsuit filed against Robert Koch and affiliated entities, alleging extortion attempts for company stock; most of the defendants' counterclaims have been dismissed. Additionally, a legal matter involving a judgment against the former owner of the subsidiary Magical Beasts, LLC was settled through an Omnibus Amendment in January 2021, resulting in a recognized gain of $669,200 for the company - The company filed a lawsuit against Robert Koch and others for alleged extortion, seeking $5 million in actual and $5 million in punitive damages. Most counterclaims by the defendants have been dismissed[212] - A legal issue related to a judgment against Krista Whitley, former owner of Magical Beasts LLC, was settled. This resulted in a gain of $669,200 for the company from forgiveness of debt and write-offs[213][214][215] Item 1A. Risk Factors As a "smaller reporting company," Jupiter Wellness is not required to provide the information for this item - The company is not required to provide risk factor disclosures as it qualifies as a "smaller reporting company"[217] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the six months ended June 30, 2021, the company did not sell any shares of its Common Stock for cash through unregistered sales - The Company did not sell any shares of its Common Stock for cash in unregistered sales during the six months ended June 30, 2021[218] Item 3. Defaults Upon Senior Securities None Item 4. Mine Safety Disclosures Not applicable Item 5. Other Information None Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications (Sections 302 and 906) and Interactive Data Files (XBRL)