Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 13, 2021 | |
Document And Entity Information | ||
Entity Registrant Name | Jupiter Wellness, Inc. | |
Entity Incorporation State | DE | |
Entity File Number | 001-39569 | |
Entity Central Index Key | 0001760903 | |
Entity Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,410,188 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 |
Balance Sheets
Balance Sheets - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash | $ 3,007,792 | $ 4,262,168 |
Inventory | 249,321 | 225,924 |
Account receivable | 12,665 | 255,111 |
Prepaid expenses and deposits | 295,109 | 215,904 |
Right of use assets | 23,622 | 29,157 |
Total current assets | 3,588,509 | 4,988,264 |
Fixed assets | 33,392 | 35,592 |
Intangible assets, net of $19,403 amortization | 518,097 | 559,800 |
Goodwill | 941,937 | 941,937 |
Total assets | 5,081,935 | 6,525,593 |
Liabilities and Shareholders Equity | ||
Accounts Payable | 453,328 | 688,835 |
Convertible notes payable to related parties | 525,000 | |
Note payable issued in acquisition | 691,500 | |
Current portion of lease liability | 24,606 | 23,754 |
Covid 19 SBA Loan | 84,578 | 84,578 |
Accrued liabilities | 88,243 | 112,001 |
Total current Liabilities | 650,755 | 2,125,668 |
Long-term portion lease liability | 6,384 | |
Total Liabilities | 650,755 | 2,132,052 |
Preferred stock, $0.001 par value, 100,000 shares authorized of which none are issued and outstanding | ||
Common stock, $.001 par value, 100,000,000 shares authorized, of which 11,260,188 shares and 10,655,833 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 11,260 | 10,656 |
Additional paid-in capital | 13,554,234 | 11,657,286 |
Common stock payable | 335,850 | |
Accumulated deficits | (9,470,164) | (7,274,401) |
Total Shareholders Equity | 4,431,180 | 4,393,541 |
Total Liabilities and Shareholders Equity | $ 5,081,935 | $ 6,525,593 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Accumulated amortization | $ 19,403 | $ 19,403 |
Common Stock, par value | $ .001 | $ .001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 11,260,188 | 10,655,833 |
Common Stock, shares outstanding | 11,260,188 | 10,655,833 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue | ||
Sales | $ 48,846 | $ 117,727 |
Cost of Sales | 23,452 | 99,903 |
Gross profit | 25,394 | 17,824 |
Operating expense | ||
General and administrative expenses | 2,888,294 | 482,253 |
Other income (expense) | ||
Interest income | 1,278 | 846 |
Interest Expense | (3,341) | (18,215) |
Other income | 669,200 | |
Total other income (expense) | 667,137 | (17,369) |
Net (loss) | $ (2,195,763) | $ (481,698) |
Net (loss) per share: | ||
Basic | $ (0.20) | $ (0.07) |
Weighted average number of shares | ||
Basic | 11,169,673 | 6,983,000 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Common Stock Payable | Additional Paid-In Capital | Subscription Receivable | Retained Earnings / Accumulated Deficit | Total |
Beginning Balance, shares at Dec. 31, 2019 | 6,893,000 | |||||
Beginning Balance, amount at Dec. 31, 2019 | $ 6,893 | $ 325,000 | $ 1,032,511 | $ (985,196) | $ 379,208 | |
Stock options issued in aquisition | 156,612 | 156,612 | ||||
Stock options issued to Officers and employees | 251,526 | 251,526 | ||||
Common stock payable issued as compensation, shares | 700,000 | |||||
Common stock payable issued as compensation, amount | $ 700 | (325,000) | 549,300 | 225,000 | ||
Common Stock issued in Initial Public Offering ("IPO"), shares | 933,333 | |||||
Common Stock issued in Initial Public Offering ("IPO"), amount | $ 933 | 5,860,353 | 5,861,286 | |||
Common stock issued upon exercise of warrants, shares | 1,146,000 | |||||
Common stock issued upon exercise of warrants, amount | $ 1,146 | 487,854 | 489,000 | |||
Common stock issued for services, shares | 475,000 | |||||
Common stock issued for services, amount | $ 475 | 1,761,650 | 1,762,125 | |||
Common stock issued upon conversion of notes, shares | 300,000 | |||||
Common stock issued upon conversion of notes, amount | $ 300 | 349,700 | 350,000 | |||
Common Stock issued in debt settlement, shares | 8,500 | |||||
Common stock issued in debt settlement, amount | $ 9 | 8,491 | 8,500 | |||
Common stock issued in acqusition, shares | 200,000 | |||||
Common stock issued in acqusition, amount | $ 200 | 1,039,800 | 1,040,000 | |||
Common stock issued in Endorsement Agmt | 159,489 | 159,489 | ||||
Common stock payable | ||||||
Common stock issued upon exercise of cashless options, shares | ||||||
Common stock issued upon exercise of cashless options, amount | ||||||
Stock options granted to DIrector | ||||||
Net (loss) | (6,289,205) | (6,289,205) | ||||
Ending Balance, shares at Dec. 31, 2020 | 10,655,833 | |||||
Ending Balance, amount at Dec. 31, 2020 | $ 10,656 | 11,657,286 | (7,274,401) | 4,393,541 | ||
Stock options issued in aquisition | ||||||
Stock options issued to Officers and employees | ||||||
Common stock payable issued as compensation, shares | 11,000 | |||||
Common stock payable issued as compensation, amount | $ 11 | $ 77,209 | $ 77,220 | |||
Common Stock issued in Initial Public Offering ("IPO"), shares | ||||||
Common Stock issued in Initial Public Offering ("IPO"), amount | ||||||
Common stock issued upon exercise of warrants, shares | ||||||
Common stock issued upon exercise of warrants, amount | ||||||
Common stock issued for services, shares | 200,000 | |||||
Common stock issued for services, amount | $ 200 | $ 1,077,800 | $ 1,078,000 | |||
Common stock issued upon conversion of notes, shares | 186,832 | |||||
Common stock issued upon conversion of notes, amount | $ 187 | $ 560,309 | $ 560,496 | |||
Common Stock issued in debt settlement, shares | ||||||
Common stock issued in debt settlement, amount | ||||||
Common stock issued in acqusition, shares | ||||||
Common stock issued in acqusition, amount | ||||||
Common stock issued in Endorsement Agmt | ||||||
Common stock payable | 335,850 | 335,850 | ||||
Common stock issued upon exercise of cashless options, shares | 206,523 | |||||
Common stock issued upon exercise of cashless options, amount | $ 206 | (206) | ||||
Stock options granted to DIrector | 181,836 | 181,836 | ||||
Net (loss) | $ (2,195,763) | $ (2,195,763) | ||||
Ending Balance, shares at Mar. 31, 2021 | 11,260,188 | |||||
Ending Balance, amount at Mar. 31, 2021 | $ 11,260 | $ 335,850 | $ 13,554,234 | $ (9,470,164) | $ 4,431,180 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net (loss) | $ (2,195,763) | $ (481,698) | $ (6,289,205) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Stock based compensation | 1,672,906 | 47,159 | |
Gain on settlement | (669,200) | ||
Depreciation and amortization | 21,603 | 20,858 | |
Changes in current operating assets and liabilities: | |||
Due from third party | 400 | ||
Prepaid expenses | (79,205) | (110,375) | |
Right of Entry asset | 5,535 | 5,015 | |
Accounts receivable | 242,446 | (30,149) | |
Inventory | (23,397) | (57,006) | |
Security deposits and other assets | (1,200) | ||
Accounts payable | (245,508) | 12,465 | |
Accrued liabilities | 11,739 | 27,752 | |
Lease liability | (5,532) | (4,771) | |
Net cash (used in) operating activities | (1,254,376) | (457,638) | |
Cash flows from investing activities: | |||
Purchase of fixed assets | (44,000) | ||
Net cash (used in) investing activities | (44,000) | ||
Cash flows from financing activities: | |||
Proceeds from convertible debt | 575,000 | ||
Net cash paid in acquisition | (245,391) | ||
Net cash provided by financing activities | 329,609 | ||
Net increase (decrease) in cash and cash equivalents | (1,254,376) | (172,029) | |
Cash and cash equivalents at the beginning of the period | 4,262,168 | 531,026 | 531,026 |
Cash and cash equivalents at the end of the period | 3,007,792 | 358,997 | $ 4,262,168 |
SUPPLEMENTAL CASH FLOW INFORMATION: | |||
Cash paid for interest | |||
Cash paid for income taxes | |||
Acquisition of Magical Beasts, LLC (see note 12) | 1,111,648 | ||
Common stock issued in conversion of promissory notes | $ 560,496 |
Note 1 - Organization and Busin
Note 1 - Organization and Business Operations | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Note 1 - Organization and Business Operations | Note 1 - Organization and Business Operations Jupiter Wellness, Inc. (the “Company”) was formed on October 24, 2018 as CBD Brands, Inc. under the laws of the State of Delaware, and is headquartered in Jupiter, Florida. The Company is a leading cutting-edge wellness brand dedicated to exploring and developing multiple therapeutic and medical use for Cannabidiol (CBD) in the treatment of various ailment and diseases such as cancer, arthritis, anxiety, insomnia, psoriasis, chronic pain amongst others. Going Concern Consideration As of March 31, 2021 and December 31, 2020, the Company had $3,007,792 and $4,262,168 in cash, an accumulated deficit of $9,470,164 and $7,274,401 and cash flow used in operations of $1,254,376 and $2,732,736, 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. Management has taken certain action and continues to implement changes designed to improve the Company’s financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies, including (a) engaging in very limited activities without incurring any liabilities that must be satisfied in cash; and (b) offering noncash consideration and seeking equity financing as a means of financing its operations. Additionally, the Company’s plan includes certain scheduled research and development activities and related clinical trials which may be deferred as needed. 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 substantially curtail its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders. |
Note 2 - Significant Accounting
Note 2 - Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Note 2 - Significant Accounting Policies | 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, Inc., a Florida corporation, Magical Beasts, LLC, a Nevada limited liability company and SRM Entertainment, Limited, a Hong Kong private limited company. All intercompany accounts and transactions have been eliminated. 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. 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 no cash equivalents as of March 31, 2021. 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. Net Loss per Common 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. 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 Three Months Ended March 31, 2021 For the Three Months Ended March 31, 2020 Numerator: Net (loss) $ (2,195,763 ) $ (481,798 ) Denominator: Denominator for basic earnings per share - Weighted-average common shares issued and outstanding during the period 11,169,673 6,893,000 Denominator for diluted earnings per share 11,169,673 6,893,000 Basic (loss) per share $ (0.20 ) $ (0.07 ) Diluted (loss) per share $ (0.20 ) $ (0.07 ) 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 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 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. Our revenue currently is generated from one general product category of health care products with one performance obligation and geographically there are no specific concentrations of our customer base to disaggregate our revenue stream. 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. As of December 31, 2020, the Company recorded an allowance of $118,761 against accounts receivable acquired in connection with the acquisition of SRM Entertainment and as of March 31, 2021, the Company had recognized no additional allowance for doubtful collections. 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 three months ended March 31, 2021 and year ended December 31, 2020 and the cumulative translation gains and losses as of March 31, 2021 and December 31, 2020 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 $60,529 and $24,350 for the three months ended March 31, 2021 and 2020, respectively. 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 nonemployees 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, 2020 consists of net operating loss carry forwards calculated using federal and state effective tax rates equating to approximately $936,311 less a valuation allowance in the amount of approximately $936,311. Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance in the year ended December 31, 2020. 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. 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 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. |
Note 3 - Accounts Receivable
Note 3 - Accounts Receivable | 3 Months Ended |
Mar. 31, 2021 | |
Accounts, Notes, Loans and Financing Receivable, Unclassified [Abstract] | |
Note 3 - Accounts Receivable | Note 3 - Accounts Receivable As of March 31, 2021 and December 31, 2020, the Company had accounts receivable of $12,665 (net of an allowance of $118,761) and $255,111, respectively. |
Note 4 - Prepaid Expenses
Note 4 - Prepaid Expenses | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Note 4 - Prepaid Expenses | Note 4 - Prepaid Expenses As of March 31, 2021 and December 31, 2020, the Company had prepaid expenses of $295,109 and $215,904, respectively consisting primarily of deposits and prepayments on purchase orders. |
Note 5 - Inventory
Note 5 - Inventory | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Note 5 - Inventory | Note 5 - Inventory As of March 31, 2021 and December 31, 2020, the Company had inventory of $249,321 and $225,924, consisting of finished goods, raw materials and packaging supplies. |
Note 6 - Intangible Assets
Note 6 - Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Note 6 - Intangible Assets | Note 6 Intangible Assets In connection with the acquisition of Magical Beasts (see Note 12 below), the Company allocated the purchase price to intangible assets as follows: Tradenames & trademarks $ 151,800 Customer base 651,220 Non-compete 154,500 Goodwill 308,690 $ 1,266,210 The Non-compete has an estimated life of two years, the Customer base has an estimated life of fifteen years and the Tradenames & trademarks and Goodwill have indefinite lives and will be reviewed at each subsequent reporting period to determine if the assets have been impaired. At December 31, 2020, Goodwill was analyzed by management, assisted by a third party valuation company, and determined that the Goodwill associated with the acquisition of Magical Beasts has been impaired and as a result the Company recognized a charge to earnings of $308,690 in the year ended December 31, 2020. Additionally, the Intangibles were analyzed by management, assisted by a third-party valuation company, and determined that the Intangible associated with the acquisition of Magical Beasts had also been impaired and as a result the Company recognized an additional charge to earnings of $731,628 in the year ended December 31, 2020. The balance of the Intangible Assets at March 31, 2021 and December, 31, 2020 attributable to Magical Beasts totals $99,018 and $122,501, respectively. In connection with the acquisition of SRM Entertainment, Limited (see Note 13 below), the Company allocated the purchase price to intangible assets as follows: Distribution Agreements $ 437,300 Goodwill 941,937 $ 1,379,237 The Distribution Agreements have an estimated life of six years and Goodwill has an indefinite life and will be reviewed at each subsequent reporting period to determine if the assets have been impaired. Amortization for the three months ended March 31, 2021 totaled $41,704 and amortization for the year ended December 31, 2020 was $103,392. |
Note 7 - Convertible Notes Paya
Note 7 - Convertible Notes Payable – Related Parties | 3 Months Ended |
Mar. 31, 2021 | |
Loans Payable, Noncurrent [Abstract] | |
Note 7 - Convertible Notes Payable – Related Parties | Note 7 - Convertible Notes Payable – Related Parties The 2019 Notes: On June 10, 2019, the Company entered into a Twenty-Five Thousand Dollar ($25,000) Convertible Promissory Note (the “Caro Note”) with Caro Partners, LLC (“Caro”), a consulting firm owned by Brian S. John, our Chief Executive Officer and a member of our Board of Directors. The term of the Caro Note was one year. The interest rate was ten percent (10%) non compounded and payable semi-annually. The Caro Note was convertible at any time by Caro at a conversion price of $0.25 per share of common stock. The Caro Note was paid in full in September 2019. As a result, no value was allocated to the conversion feature. On July 25, 2019, the Company issued a Convertible Promissory Note for $50,000 to its Chairman, with a term of one year, an annual interest rate of ten percent (10%), which is non compounded and payable semi-annually, and convertible into the Company’s common stock at any time by the holder at a conversion price of $0.25 per share. The conversion feature was considered the fair value of the Company’s common stock based on the arm’s length equity transactions since there was no open market for the Company’s common stock when issued. As a result, the Company determined that the conversion features contained in this Convertible Promissory Note should carry neither beneficial conversion feature nor derivative liabilities. This note was converted into 200,000 shares of the Company’s common stock along with the cash payment of $7,028 for the accrued interest in December 2020. On December 31, 2019, the Company issued a Convertible Promissory Note for $250,000 to a related party, with a term of one year, an annual interest rate of eight percent (8%), which is non compounded and payable semi-annually, and convertible into the Company’s common stock at any time by the holders at a conversion price of $3.00 per share, which was considered the fair value of the Company’s common stock based on the arm’s length equity transactions since there was no open market for the Company’s common stock. As a result, the Company determined that the conversion features contained in the Note should carry neither beneficial conversion feature nor derivative liabilities. The note and accrued interest were paid in full in November 2020 with cash payments totaling $267,178. The 2020 Notes: During the year ended December 31, 2020, the Company issued nine convertible promissory notes totaling $1,075,000 (the “2020 Notes”) as follows: Amount Dated Conversion Rate $ 25,000 (1) 01/02/20 $ 3.00 250,000 (2) 01/23/20 3.00 300,000 (1) 03/09/20 3.00 50,000 (2) 05/01/20 3.00 50,000 (2) 05/27/20 3.00 50,000 (2) 05/27/20 3.00 100,000 (3) 06/24/20 5.00 125,000 (4) 09/11/20 5.00 125,000 (4) 09/16/20 5.00 $ 1,075,000 1. Issued to a non-affiliate. 2. Issued to a Secured and Collateralized Lending LLC, an entity run by a consultant of the Company. 3. Issued to BBBY, Ltd, an LLC of which Byron Young, a Company Director, is a manager and a member. 4. Issued to Asia Pacific Partners Inc., an entity run by a consultant of the Company. In November 2020, the $300,000 note was converted into 100,000 shares of the Company’s common stock along with a payment of $16,067 for accrued interest. Additionally, in November 2020 the $250,000 note plus accrued interest was paid in full by cash payments totaling 267,177 and the two $125,000 notes plus accrued interest of $2,778 were paid in full for total cash payments of $252,778. At December 31, 2020, the Company had a total of $525,000 plus accrued interest of $32,856 due on convertible promissory notes. In January 2021, the Company received conversion notices from all of the note holders to convert the $525,000 principal balance of its convertible promissory notes plus $35,489 accrued interest through the date of conversion, into 186,832 shares of the Company’s common stock ($3.00 per share conversion price). The shares were issued in January 2021. The following table sets forth a summary of the Company’s convertible promissory notes activity for the three months ended March 31, 2021 and year ended December 31, 2020: Balance, December 31, 2019 $ 300,000 2020 Notes 1,075,000 Conversions of Notes (350,000 ) Payments on Notes (500,000 ) Balance, December 31, 2020 $ 525,000 Conversions of Notes (525,000 ) Balance, March 31, 2021 $ — The Company recorded interest expense of $2,633 and $74,326 related to the Convertible Promissory Notes during the three months ended March 31, 2020 and year ended December 31, 2020. |
Note 8 - Note payable issued in
Note 8 - Note payable issued in acquisition | 3 Months Ended |
Mar. 31, 2021 | |
Note 8 - Note Payable Issued In Acquisition | |
Note 8 - Note payable issued in acquisition | Note 8 - Note payable issued in acquisition In connection with the Acquisition of Magical Beasts, LLC (see Note 12), the Company issued a non-interest bearing $1,000,000 promissory note (“Note”), due upon the earlier of i) the closing of a public offering or ii) December 31, 2020. The note has been valued at its discounted amount of $950,427. During the year ended December 31, 2020, the Company recognized $49,573 of interest expense for the accretion of the discount. In August 2020, a Nevada court imputed a judgement of Ms. Whitley (the former owner of Magical Beasts, LLC) to Magical Beasts (see Note 14 Legal proceedings) and advised the Company that before paying any funds under the note to Ms. Whitley, the Company must first satisfy the judgement to the Plaintiff. In October 2020, the Company, Ms. Whitley and the Plaintiff in the judgement action against Ms. Whitley reached an agreement whereby Ms. Whitley agreed that of the $1,000,000 payable to Ms. Whitley, the first $336,450 would be paid to the Plaintiff which the Company has paid in full with a cash payment of $300,000 and the issuance of 8,500 shares of its common stock leaving a balance of $691,500 at December 31, 2020. In January 2021, the Company entered into an Omnibus Amendment to the original Purchase Agreement (see Note 12) which satisfied the Company’s obligation on the Note. |
Note 9 - Covid-19 SBA Loans
Note 9 - Covid-19 SBA Loans | 3 Months Ended |
Mar. 31, 2021 | |
Note 9 - Covid-19 Sba Loans | |
Note 9 - Covid-19 SBA Loans | Note 9 – Covid-19 SBA Loans During the year ended December 31, 2020, the Company applied for and received $28,878 under the Federal Paycheck Protection Program (“PPP”) and $55,700 under the Economic Injury Disaster Loan Program (“EIDL”), both of which are administered through the Small Business Administration (“SBA”). Under the guidelines of the PPP, the SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses. Under the guidelines of the EIDL, the maximum term is 30 years; however, terms are determined on a case-by-case basis based on each borrower’s ability to repay and carry an interest rate of 3.75%. The Company has not received any notification from the SBA as to whether the PPP will be forgiven or what terms the EIDL will ultimately be. |
Note 10 - Capital Structure
Note 10 - Capital Structure | 3 Months Ended |
Mar. 31, 2021 | |
Note 10 - Capital Structure | |
Note 10 - Capital Structure | Note 10 - Capital Structure Common Stock Founder Shares During 2018, 5,000,000 shares of the Company’s common stock were issued to the Founders of the Company (“Founder Shares”) for an aggregate amount of $5,000 to the management of the Company, of which $4,550 was collected as of December 31, 2018 and $450 was collected during the year ended December 31, 2019. Subscription Shares During 2018 and 2019, fourteen (14) investors submitted subscription agreements to the Company for the purchase of a total 1,158,000 shares of the Company’s Common Stock by cash payment of total $289,500, or $0.25 per share, of which $239,500 was collected as of December 31, 2018 and $50,000 was collected in 2019. The transaction was independently negotiated between the Company and the investors. Regulation A Offering On June 21, 2019, the Company filed a Form 1-A Regulation A Offering Statement Under the Securities Act of 1933, as amended, and subsequent amendments thereto on July 29, 2019 and August 19, 2019 (the “Form 1-A”). On September 5, 2019, the Form 1-A was qualified by the Securities and Exchange Commission. Pursuant to the Form 1-A, as of December 31, 2019, the Company has sold 735,000 shares of its common stock, $0.001 par value per share, at a purchase price of $1.00 per share, resulting in gross proceeds of $735,000, before deducting offering expenses of $23,000 Year ended December 31, 2020 issuances: Warrant exercise: During 2020, all of the 1,158,000 warrants issued in connection with the sale of the Subscription Shares were exercised for cash of $489,000 and utilization of the cashless exercise feature. As a result, the Company issued a total of 1,146,000 shares of its common stock. Initial Public Offering On November 3, 2020, the Company completed an initial public offering (“IPO”) of 933,333 units (the “Units”). Each Unit consisted of one share of common stock of the Company, par value $0.001 per share (“Common Stock”), and one warrant of the Company (“Warrant”), with each Warrant entitling the holder thereof to purchase one share of Common Stock for $8.50 per share. The Units were sold at a price of $7.50 per Unit, generating gross proceeds to the Company of approximately $7,000,000. The Company granted the underwriters in the IPO a 45-day option to purchase up to 140,000 additional shares of Common Stock and 140,000 Warrants solely to cover over-allotments, if any. Simultaneously with the closing of the IPO, the Company consummated the sale of the additional 140,000 Warrants that were subject to the underwriters’ over-allotment option at $0.01 per Warrant, generating gross proceeds of $1,400. Net proceeds to the Company after all offering expenses, including legal, accounting and professional fees, registration and other fees and expenses were approximately $5,900,000. Conversion of Convertible Promissory Notes: During 2020, the Company converted $350,000 of convertible promissory notes into 300,000 shares of its common stock. The Notes were converted per the terms of the respective Notes and the Company did not recognize any gain or loss on the conversion. (see Note 7 – Convertible Promissory Notes). Endorsement shares: In connection with the execution of an Endorsement Agreement with Tee-2-Green, the Company issued 50,000 shares of its common stock valued at $3.94 per share (value at date of the 11/10/20 agreement) for total of stock-based compensation of $197,125. Consulting Services shares: During 2020, the Company entered into two Consulting Agreements under the terms of which the Company issued 425,000 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 agreements. The Company recognized a total of $1,565,000 as stock-based compensation in the year ended December 31, 2020. Whitley Settlement: In connection with the Settlement of creditors of Ms. Whitley, the former owner of Magical Beasts, LLC (see Note 14 Legal proceedings), the Company issued 8,500 shares of its common stock valued at $8,500. Officer Shares: During 2020, the company issued a total of 700,000 shares of its common stock to its Chairman and its CFO of which 400,000 shares valued at $325,000 were recorded as common stock payable and stock-based compensation in 2019. The additional 300,000 shares were valued at $225,000 and recorded as stock-based compensation in 2020. The respective values were determined based upon the last sales of shares of common stock to third parties. SRM Entertainment Shares: In connection with the acquisition of SRM Entertainment, Limited (see Note 13 SRM Acquisition), the Company issued 200,000 shares of its common stock valued at $1,040,000 based on the closing Nasdaq price at date of agreement. Three months ended March 31, 2021 issuances: Conversion of Convertible Promissory Notes: During the three months ended March 31, 2021, the Company converted $525,000 of convertible promissory notes into 186,832 shares of its common stock. The Notes were converted per the terms of the respective Notes and the Company did not recognize any gain or loss on the conversion. (see Note 7 – Convertible Promissory Notes). Exercise of Cashless Stock Options During the three months ended March 31, 2021, a former Director of the Company exercised a portion of his stock options under the cashless provisions and was issued 47,470 shares of the Company’s stock and Ms. Whitley (see Note 12) exercised her stock options under the cashless provisions and was issued 159,053 shares of the Company’s stock. Shares issued as compensation During the three months ended March 31, 2021, the Company entered into two Consulting Agreements under the terms of which the Company issued 200,000 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 agreements. Additionally, the Company issued 11,000 shares of its common stock to an employee. The Company recognized a total of $1,078,000 as stock-based compensation in the three months ended March 31, 2021. The following table sets forth the issuances of the Company’s shares of common stock for the three months ended March 31, 2021 and year ending December 31, 2020: Balance December 31, 2019 6,893,000 Warrant Exercise Shares 1,146,000 Initial Public Offering Shares 933,333 Conversion of Promissory Notes 300,000 Endorsement Shares 50,000 Consulting Services Shares 425,000 Whitley Settlement Shares 8,500 Officer Shares 700,000 SRM Entertainment Acquisition Shares 200,000 Balance December 31, 2020 10,655,833 Conversion of Promissory Notes 186,832 Exercise of stock options 205,523 Stock compensation 211,000 Balance March 31, 2021 11,260,188 Common Stock Payable In January 2021, the Company amended the employment agreements of its Officers and a Director to have a portion of their compensation be paid in shares of the Company’s common stock. During the three months ended March 31, 2021, the Company accrued $75,000 of compensation to be paid in stock. In January 2021, the Company granted an employee 21,000 shares of the Company’s Common Stock, of which 11,000 has been issued and the remaining 10,000 shares to be issued at management’s discretion. The shares were valued at market on the date of grant and the Company recorded $70,200 as the value of the shares remaining to be issued. The Company entered into three consulting agreement which call for a cash component and a stock component. At March 31, 2021 the Company had accrued a total of $190,650 of stock payable relating to the agreements. Total Common Stock Payable at March 31, 2021 was $335,850. |
Note 11 - Warrants and Options
Note 11 - Warrants and Options | 3 Months Ended |
Mar. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Note 11 - Warrants and Options | Note 11 - Warrants and Options Warrants In connection with the sales of subscription shares of common stock, discussed in Note 10 above, the Company granted the subscribers a total of 1,158,000 warrants to purchase up to 1,158,000 shares of common stock at an exercise price of $0.50 per share, with a term of two years. During 2020, all of these warrants were exercised. The fair value of these warrants 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. The market price was valued based upon the last price paid by a third party for shares of our common stock. Reporting Relative Fair Value Term Exercise Market Volatility Risk-free Rate 11/26/2018 $ 108,163 2 $ 0.50 $ 0.25 717 % 0.0286 2/18/2019 $ 30,000 2 $ 0.50 $ 0.25 717 % 0.0227 4/3/2019 $ 20,000 2 $ 0.50 $ 0.25 717 % 0.0233 IPO Warrants: Initial Public Offering The fair value of these warrants 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. The market price was valued based upon the Nasdaq closing price for shares of the Company’s common stock on the date of issuance. Reporting Relative Fair Value Term Exercise Market Volatility Risk-free Rate 11/03/2020 $ 3,905,739 5 $ 8.50 $ 4.90 256 % 0.039 Endorsement Warrants: The fair value of these warrants 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. The market price was valued based upon the Nasdaq closing price for shares of the Company’s common stock on the date of issuance. Reporting Relative Fair Value Term Exercise Market Volatility Risk-free Rate 11/10/2020 $ 159,489 5 $ 3.90 $ 3.94 261 % 0.0041 The following tables summarize all warrants outstanding as of March 31, 2021 and December 31, 2020, and the related changes during the period. Number of Exercise Stock Warrants Balance at December 31, 2019 1,158,000 $ 0.50 Warrants issued in connection with the IPO 1,073,333 8.50 Exercised (1,158,000 ) 0.50 Warrants issued in Endorsement Agreement 50,000 3.90 Balance at December 31, 2020 1,123,333 $ 8.30 Issued or expired — — Balance at March 31, 2021 1,123,333 $ 8.30 Warrants Exercisable at March 31, 2021 1,123,333 $ 8.50 Options During 2020, certain Directors and a consultant were granted stock options to purchase a total of 211,330 additional shares of the Company’s common stock. The options have a three-year term with an exercise price between $0.25 and $4.49. On January 25, 2021, the Company issued 20,000 options with an exercise price of $5.59 (market price) and a three-year term to its new Director. On February 25, 2021 the Company issued 33,330 options, pursuant to the Director’s agreement, with an exercise price of $0.25 with a three-year term. The fair value of these warrants 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. Reporting Date Number of Options Term Exercise Price Market Price on Grant Date Volatility Percentage Fair Value 2/25/20 – 11/18/20 211,330 3 $ 0.25 - 4.49 $ 1.00 - 449 169% - 209 % $ 251,526 1/25/21 20,000 3 $ 5.59 $ 5.59 209 % $ 79,237 2/25/21 33,330 3 $ 0.25 $ 5.66 161 % $ 180,830 The Company recognized $241,411 and $251,526 as compensation expense in the financial statements for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively. At March 31, 2021, the Company had 355,990 options outstanding. |
Note 12 - Acquisition of Magica
Note 12 - Acquisition of Magical Beasts, LLC | 3 Months Ended |
Mar. 31, 2021 | |
Business Combination, Description [Abstract] | |
Note 12 - Acquisition of Magical Beasts, LLC | Note 12 - Acquisition of Magical Beasts, LLC Effective February 21, 2020, Jupiter Wellness Inc., a Florida corporation (“Jupiter Sub”), our wholly-owned subsidiary, entered into a membership interest purchase agreement with Magical Beasts LLC (“Magical Beasts”), a Nevada limited liability corporation, and Krista Whitley, its sole interest holder, pursuant to which Jupiter Sub acquired all of the membership interests in Magical Beasts (the “Magical Beasts Acquisition”) in exchange for the following consideration: • $250,000 cash at closing; • A $1,000,000 promissory note, non-interest bearing payable by us, due upon the earlier of i) the closing of this offering or ii) December 31, 2020 valued at its discounted amount of $950,427; and • an option to purchase 250,000 restricted shares of our common stock at an exercise price of $1.00 per share valued at $156,612. 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 reporting date. The market price was valued based upon the last price paid by third parties for shares of our common stock. Reporting Number of Options Granted Term Exercise Market Volatility Fair Value 2/21/20 250,000 5 $ 1.00 $ 1.00 77 % $ 156,612 In connection with the Magical Beasts Acquisition, Jupiter Sub shall enter into an executive employment agreement with Krista Whitley to act as our Director of Marketing, however, until such agreement is entered into, Jupiter Sub shall pay Krista Whitley an annual salary of $150,000. Valuation and Purchase Price Allocation According to ASC 805, the standard of value to be used in the application of purchase accounting rules is fair value. The Company utilized fair value defined in Statement of Financial Accounting Standard No. 820–10–35–37 Fair Value Measurements and Disclosures. The fair value of the consideration is as follows: Cash $ 250,000 Promissory Note, net of discount 950,427 Stock Options 156,612 Total Consideration paid $ 1,357,039 The purchase price allocation is as follows: Tangible assets Cash $ 4,609 Inventory 86,220 Total tangible assets 90,829 Intangible assets Tradename-Trademarks 151,800 Customer base 651,220 Non-compete 154,500 Total Intangibles 957,520 Goodwill 308,690 $ 1,357,039 In connection with the promissory note above, the Company recognized amortization of the discount on the note as interest expense of $49,573 from the date of closing through December 31, 2020. On July 6, 2020, Brian Menke (the “Plaintiff”) in Nevada court seeking to enforce a judgement that he had obtained in 2012 against Krista Whitley, the former owner and manager of Magical Beasts LLC., in the amount of $250,000. In July 2020, the Plaintiff brought a claim in Nevada State Court to impute such judgement to the Company’s wholly owned subsidiary, Magical Beasts, LLC. On August 6, 2020, the court imputed the judgement to Magical Beasts and advised the Company that before paying any funds to Ms. Whitley, they must first satisfy the judgement to the Plaintiff. On October 12, 2020, the Company, Ms. Whitley and the Plaintiff reached a settlement agreement whereby the Company agreed that of the $1,000,000 note payable to Ms. Whitley, the first $336,450 be paid to the Plaintiff. Ms. Whitley in turn agreed that such payments would be applied to the $1,000,000 owed to Ms. Whitley that was to be paid from the proceeds of the offering and the Plaintiff agreed to withdraw the case against Magical Beasts without prejudice. In November, the Company made a cash payment of $300,000 to the Plaintiff and issued 8,500 shares of its common stock valued at $8,500. The $308,500 was recorded as an offset to the $1,000,000 note. On January 25, 2021, the Company entered into an Omnibus Amendment to: (1) the Confidential Membership Interest Purchase Agreement, dated February 21, 2020; (2) the Sales Distributor Agreement, dated February 21, 2020; and (3) the Executive Employment Agreement, dated March 31, 2020 (the “Agreements”). Pursuant to the Omnibus Amendment, the parties (i) acknowledge that the Company has fully satisfied its obligation of $334,000 to the Plaintiff as Ms. Whitley’s judgment creditors; (ii) agree that in satisfaction of the remaining balance due to Ms. Whitley under the Agreements, she is to be paid $150,000 in cash; (iii) agree that starting April 1, 2020, Whitley shall be entitled to individually market and sell the Bella line of products remaining in the Company’s inventory, as identified in the Omnibus Amendment, and the Company will relinquish its rights to the Bella brand; (iv) agree that the number of shares issuable upon exercise of the common stock purchase options granted to Ms. Whitley under the Agreements shall be reduced from 250,000 to 185,000, Ms. Whitely may utilize a cashless exercise feature to exercise such options, subject to a six (6) month holding period on the shares, and Ms. Whitley shall not be permitted to sell an amount of shares in any week which exceeds 10% of the Company’s total weekly trading volume in the prior week; (v) agree that Ms. Whitley’s Employment Agreement shall terminate on March 31, 2021 and shall not renew; (vi) acknowledge that Ms. Whitley has been paid $5,541 for unreimbursed expenses on or about December 30, 2020; and (vii) the balance of the note due Whitley be forgiven. As a result of the above, the Company recognized a gain of $669,200 comprised of the forgiveness of debt of $691,500 and the write-off of the unamortized portion of Whitley’s the non-compete agreement of $22,300. In February 2021, Ms. Whitley exercised her 185,000 options (see Omnibus Agreement above) using the cashless option feature and was issued 159,053 shares of the Company’s restricted common stock in full satisfaction of the option agreement. Supplemental proforma financial information The following shows the proforma results of operations as if the transaction had occurred effective January 1, 2019. JUPITER WELLNESS, INC. PROFORMA BALANCE SHEETS December 31, 2020 Jupiter Wellness, Inc. Magical Jupiter Wellness, Inc. Consolidated Balance Beasts, LLC Proforma Adjustments Notes Proforma Balance Cash $ 4,262,168 — $ — $ 4,262,168 Current Assets 726,096 — — 726,096 Total current assets 4,988,264 — — 4,988,264 Intangible assets 559,800 — (67,523 ) (a) 492,277 Goodwill 941,937 — — 941,937 Other 35,592 — — 35,592 Total assets $ 6,525,593 — $ (67,523 ) $ 6,458,070 Liabilities $ 1,440,552 — $ — $ 1,440,552 Note payable issued in acquisition 691,500 — — 691,500 Total liabilities 2,132,052 — — 2,132,052 Common stock 10,656 — — 10,656 Additional paid-in capital 11,657,286 — — 11,657,286 Accumulated deficits (7,274,401 ) — (67,523 ) (b) (7,341,924 ) Total Shareholders’ Equity 4,393,541 — (67,523 ) 4,326,018 Total Liabilities and Shareholders’ Equity $ 6,525,593 — $ (67,523 ) $ 6,458,070 Notes to Proforma Balance Sheets (a) Additional amortization of intangible assets (b) Income statement effects of notes (a) and (b) above JUPITER WELLNESS, INC. PROFORMA STATEMENT OF OPERATIONS Year Ended December 31, 2020 Jupiter Wellness, Inc. Magical Jupiter Wellness, Inc. Consolidated Balance Beasts, LLC Proforma Adjustments Notes Proforma Balance Sales $ 1,065,665 $ — $ 105,404 (a) $ 1,171,069 Cost of sales 624,570 — 83,428 (a) 707,998 Gross profit 441,095 — 21,976 463,071 Expenses 6,730,300 — 50,057 (a)(b) 6,782,357 Net Income (loss) $ (6,289,205 ) — $ (30,081 ) $ (6,319,286 ) (a) Magical Beasts income and cost of sales prior to closing date (b) Includes additional amortization of intangibles plus expenses of Magical Beasts prior to closing |
Note 13 - Acquisition of SRM En
Note 13 - Acquisition of SRM Entertainment | 3 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Note 13 - Acquisition of SRM Entertainment | Note 13 – Acquisition of SRM Entertainment On November 30, 2020, Jupiter Wellness, Inc. (the “Company”), entered into and closed on a share exchange agreement (the “Exchange Agreement”) with SRM Entertainment, LTD, a Hong Kong Special Administrative Region of the People's Republic of China limited company (“SRM”) and wholly owned subsidiary of Vinco Ventures, Inc., a Nevada corporation formerly known as Edison Nation, Inc. (“Vinco”), and the shareholders of SRM set forth in the Exchange Agreement (the “SRM Shareholders”), pursuant to which the Company acquired 100% of the shares of SRM’s common stock (the “SRM Common Stock”) from the SRM Shareholders in exchange for 200,000 shares of the Company’s common stock, valued at $1,040,000, subject to a leak out provision and escrow of 50,000 shares of the Company’s common stock. Upon closing, and pursuant to the Exchange Agreement, the Company delivered 150,000 shares of its common stock to SRM and placed 50,000 shares in escrow (“Escrow Shares”). Pursuant to the Exchange Agreement, the Company shall release the Escrow Shares upon SRM generating $200,000 in cash receipts and revenue prior to January 15, 2021. The SRM Shareholders shall forfeit their right to receive the Escrow Shares if SRM does not generate $200,000 in cash receipts and revenue prior to December 31, 2020. Pursuant to the Exchange Agreement, the Company assumed all of the financial obligations of SRM, as well as its employees and offices. As a result of the Exchange Agreement, SRM became a wholly-owned subsidiary of the Company. Valuation and Purchase Price Allocation: According to ASC 805, the standard of value to be used in the application of purchase accounting rules is fair value. The Company utilized fair value defined in Statement of Financial Accounting Standard No. 820–10–35–37 Fair Value Measurements and Disclosures. The fair value of the consideration is as follows: Shares of the Company’s common stock issued 200,000 Market value of Company’s common stock (11/30/20 Nasdaq closing price) $ 5.20 Consideration paid $ 1,040,000 Net tangible liabilities assumed 339,237 Total consideration $ 1,379,237 The purchase price allocation is as follows: Disribution Agreements $ 437,300 Goodwill 941,937 Total purchase price allocation $ 1,379,237 Supplemental proforma financial information The following shows the proforma results of operations as if the transaction had occurred effective January 1, 2019. JUPITER WELLNESS, INC. PROFORMA BALANCE SHEETS December 31, 2020 Jupiter Wellness, Inc. SRM Proforma Jupiter Wellness, Inc. Consolidated Balance Entertainment, Ltd. Adjustments Notes Proforma Balance Cash $ 4,262,168 — $ — $ 4,262,168 Current Assets 726,096 — — 726,096 Total current assets 4,988,264 — — 4,988,264 Intangible assets 559,800 — (145,766 ) (a) 414,034 Goodwill 941,937 — — 941,937 Other 35,592 — — 35,592 Total assets $ 6,525,593 $ — $ (145,766 ) $ 6,379,827 Liabilities $ 1,440,552 $ — $ — $ 1,440,552 Note payable issued in acquisition 691,500 — — 691,500 Total liabilities 2,132,052 — — 2,132,052 Common stock 10,656 — — 10,656 Additional paid-in capital 11,657,286 — — 11,657,286 Accumulated deficits (7,274,401 ) — (145,766 ) (a) (7,420,167 ) Total Shareholders’ Equity 4,393,541 — (145,766 ) (4,247,775) Total Liabilities and Shareholders’ Equity $ 6,525,593 $ — $ (145,766 ) $ 6,379,827 Notes to Proforma Balance Sheets (a) Amortization of intangible assets JUPITER WELLNESS, INC. PROFORMA STATEMENT OF OPERATIONS Year Ended December 31, 2020 Jupiter Wellness, Inc. SRM Jupiter Wellness, Inc. Consolidated Balance Entertainment, Ltd. Proforma Adjustments Notes Proforma Balance Sales $ 1,065,665 $ — $ 2,727,346 (a) 3,793,011 Cost of sales 624,570 — 2,133,135 (a) 2,757,705 Gross profit 441,095 — 594,211 1,035,306 Expenses 6,730,300 — 572,885 (b)(a) 7,303,185 Net Income (loss) $ (6,289,205 ) — $ 21,326 (a)(b) (6,267,879) (a) SRM Entertainment income and cost for the period prior to closing date (b) Includes additional amortization of intangibles |
Note 14 - Commitments and Conti
Note 14 - Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 14 - Commitments and Contingencies | Note 14 - Commitments and Contingencies The Company entered into an office lease dated April 1, 2019 with a primary term of one-year, plus two one-year extensions at the Company’s option. The base lease rate during the primary term is $2,000 per month, and the monthly rate during the optional extension will be increased to $2,080 and $2,163, respectively. The Company paid a total of $12,258 and $4,310 in rent and related fees during the three months ended March 31, 2021 and 2020, respectively. Under the new standard for lease reporting, the Company recorded a Right of Use Asset (“ROU”) and an offsetting lease liability of $64,327 representing the present value of the future payments under the lease calculated using a 10% discount rate (the current borrowing rate of the company). The ROU and lease liability are amortized over the three-year life of the lease. The unamortized balances at March 31, 2021 and December 31, 2020 were ROU of $23,622 and $29,157, respectively, current lease liability of $24,606 and $23,754, respectively, and non-current lease liability of $-0- and $6,384, respectively. Additionally, the Company recognized accreted interest expense of $708 and $1,228 during the three months ended March 31, 2021 and 2020, respectively. Legal Proceedings On August 6, 2020, the Company, Messrs. John and Miller and certain affiliated entities filed a lawsuit in the United States District Court, Southern District of New York against Robert Koch, Bedford Investment Partners, LLC, Kaizen Advisors, LLC and certain other unnamed defendants. The lawsuit alleges that Mr. Koch and the other defendants are attempting to extort the Company and Messrs. John and Miller to issue the defendants shares of the Company’s common stock which they claim are owed to them. The Company asserts that they have no oral or written agreement with Mr. Koch or any of his affiliates that entitle him to shares of the Company’s common stock. The Company’s complaint seeks actual damages in the amount of $5,000,000 and punitive damages in the amount of $5,000,000. In response, the defendants filed their answer and counterclaim, repeating the same claims that caused the Company to file the lawsuit. On October 6, 2020, the Company moved for judgment on the pleadings to dismiss the defendants' counterclaim in its entirety. On April 24, 2021, the Company’s motion was granted and all claims were dismissed. 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
Note 15 - Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Note 15 - Subsequent Events | Note 15 - Subsequent Events On May 11, 2021, the Company entered into a $2,500,000 Loan Agreement (the “Loan”). The Loan calls for a Convertible Promissory Note in the principal amount of $2,500,000 (the “Note”) and the issuance of Common Stock Purchase Warrant for 416,667 shares of the Company’s common stock (the “Warrant”). The Note has a maturity date of November 10, 2021, has an original issuance discount of five percent (5%), an interest rate of eight percent (8%) and a conversion price of $6.00 per shares, subject to an adjustment downward to $5.00 per shares if the Company is in default of the terms of the Note. The Warrant has a five (5) year term, has an exercise price of $6.00 per share, has a cashless conversion feature until such time as the shares underlying the Warrant are included in an effective registration and a Down Round Protection feature. The Down Round Protection feature adjusts the exercise price prior to exercise, if the Company grants, issues or sells any Common Stock, options to purchase Common Stock, securities convertible into Common Stock or rights relating to Common Stock (the “Purchase Rights”) to any person or entity other than the Lender, at a price per share less than the Exercise Price, then the Exercise Price hereof shall be proportionately reduced to match the price per share of the Purchase Rights. In May 2021, the Company entered into two consulting agreements which called for a combined total of 150,000 shares of the Company’s Common Stock to be issued. In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to March 31, 2021 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. |
Note 2 - Significant Accounti_2
Note 2 - Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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, Inc., a Florida corporation, Magical Beasts, LLC, a Nevada limited liability company and SRM Entertainment, Limited, a Hong Kong private limited company. All intercompany accounts and transactions have been eliminated. |
Emerging Growth Company Status | 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. 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 | 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 | 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 no cash equivalents as of March 31, 2021. |
Inventory | 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. |
Net Loss per Common Share | Net Loss per Common 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. 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 Three Months Ended March 31, 2021 For the Three Months Ended March 31, 2020 Numerator: Net (loss) $ (2,195,763 ) $ (481,798 ) Denominator: Denominator for basic earnings per share - Weighted-average common shares issued and outstanding during the period 11,169,673 6,893,000 Denominator for diluted earnings per share 11,169,673 6,893,000 Basic (loss) per share $ (0.20 ) $ (0.07 ) Diluted (loss) per share $ (0.20 ) $ (0.07 ) |
Fair Value of Financial Instruments | 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 | 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 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. Our revenue currently is generated from one general product category of health care products with one performance obligation and geographically there are no specific concentrations of our customer base to disaggregate our revenue stream. |
Accounts Receivable and Credit Risk | 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. As of December 31, 2020, the Company recorded an allowance of $118,761 against accounts receivable acquired in connection with the acquisition of SRM Entertainment and as of March 31, 2021, the Company had recognized no additional allowance for doubtful collections. |
Foreign Currency Transactions | 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 three months ended March 31, 2021 and year ended December 31, 2020 and the cumulative translation gains and losses as of March 31, 2021 and December 31, 2020 were not material. |
Research and Development | 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 $60,529 and $24,350 for the three months ended March 31, 2021 and 2020, respectively. |
Stock based compensation | 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 nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. |
Income Taxes | 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, 2020 consists of net operating loss carry forwards calculated using federal and state effective tax rates equating to approximately $936,311 less a valuation allowance in the amount of approximately $936,311. Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance in the year ended December 31, 2020. |
Related parties | 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. 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 | Recent 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. |
Note 14 - Commitments and Con_2
Note 14 - Commitments and Contingencies (Details Narrative) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Rent and related fees | $ 12,258 |
Note 15 - Subsequent Events (De
Note 15 - Subsequent Events (Details Narrative) | May 11, 2021USD ($)shares |
Subsequent Events [Abstract] | |
Loan Agreement | $ | $ 2,500,000 |
Warrants | shares | 416,667 |