10-Q: Bergio International Reports Q1 2024 Results: Revenue Declines, Focus Shifts to Cost Management

Bergio International's Q1 2024 results reveal a decrease in net revenues and a net loss, prompting cost-saving measures and a strategic shift.

Summary

• Bergio International reported net revenues of $624,855 for the three months ended March 31, 2024, a decrease of $305,731 compared to the same period in 2023.
• The company's cost of revenues decreased by $148,754 to $440,244 for the quarter.
• Gross profit decreased by $156,977 to $184,611, with gross profit as a percentage of sales declining from 36.71% to 29.54%.
• Operating expenses decreased by $117,065 to $530,054 due to cost-cutting measures.
• The company experienced a loss from operations of $345,443, compared to a loss of $305,531 in the prior year.
• Net loss attributable to Bergio International from continuing operations was $251,759, compared to $404,790 in 2023.
• The company's working capital deficit increased to $4,725,199 at March 31, 2024, from $4,351,014 at December 31, 2023.
• Aphrodites Marketing is classified as discontinued operations, with a loss of $13,077 for the quarter.
• The company is in negotiations to sell Aphrodites Marketing and has entered into a letter of intent in March 2024.
• The company's future operations are contingent upon increasing revenues and raising capital.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to declining revenues, a net loss, and concerns about the company's ability to continue as a going concern. While cost-cutting measures are a positive step, the overall financial situation is precarious.

Positives

• Operating expenses decreased by $117,065 due to cost-cutting measures.
• Cash used in operating activities from continuing operations decreased from $467,633 to $150,687.
• The company is actively negotiating with potential partners to increase sales and expand its business.

Negatives

• Net revenues decreased by $305,731 compared to the same period in 2023.
• Gross profit decreased by $156,977.
• The company experienced a loss from operations of $345,443.
• The company has a significant working capital deficit of $4,725,199.
• There is substantial doubt about the company's ability to continue as a going concern.

Risks

• The company's future operations are contingent upon increasing revenues and raising capital.
• The company has a limited operating history, making it difficult to evaluate its business and future prospects.
• The company's retail operations may be affected by potential future outbreaks of COVID-19.
• The company's ability to obtain capital through additional equity and/or debt financing, and joint venture partnerships will also be important to its expansion plans.
• The company may have to reduce the growth of its operations if it experiences any significant problems assimilating acquired assets into its operations or cannot obtain the necessary capital to pursue its strategic plan.

Future Outlook

The company's future operations are contingent upon increasing revenues and raising capital for ongoing operations and expansion of product lines. The company is also investigating various strategies to increase sales and expand its business and is in negotiations with some potential partners.

Management Comments

• It is our intention to establish Bergio as a holding company for the purpose of establishing retails stores worldwide.
• Our branded product lines are products and/or collections designed by our designer and CEO Berge Abajian and will be the centerpiece of our retail stores.
• We also intend to complement our own quality-designed jewelry with other products and our own specially designed handbags.
• Aphrodites Marketing and GearBubble Tech were expected to increase our online presence and provide for expansion of the Bergio Brand.
• The Company has instituted various cost saving measures to conserve cash and has worked with its debtors in an attempt to negotiate the debt terms.
• The Company remains positive about its prospects.

Industry Context

The decline in revenue and the strategic decision to sell Aphrodites Marketing suggest a challenging environment for Bergio International, potentially reflecting broader trends in the jewelry and e-commerce sectors. The company's focus on cost management and exploration of new partnerships aligns with common strategies for businesses facing financial headwinds.

Comparison to Industry Standards

• Without specific industry benchmarks for companies of Bergio International's size and business model, it's difficult to provide a precise comparison.
• However, the company's revenue decline and net losses are concerning and would likely place it below average compared to more successful peers in the jewelry and e-commerce sectors.
• For example, larger, more established jewelry retailers like Tiffany & Co. or Signet Jewelers typically maintain higher gross profit margins and demonstrate more consistent revenue growth.
• Similarly, successful e-commerce platforms like Shopify or Etsy exhibit strong user growth and positive net income.
• Bergio's current financial situation suggests it is struggling to compete effectively and needs to implement significant changes to improve its performance.

Related Party Transactions

• The company receives periodic advances from the company's Chief Executive Officer (CEO) based upon the company's cash flow needs.
• The company's majority owned subsidiary, Aphrodites Marketing, has a loan with Jonathan Foltz, the President and CEO of Digital Age Business.
• Through the company's majority owned subsidiary, Aphrodites Marketing, has loan agreements with Nationwide dated in October 2020 and November 2020. Nationwide is owned by the father of Jonathan Foltz.
• During the three months ended March 31, 2024 and the year ended December 31, 2023, the company, through the company's majority owned subsidiary, Aphrodites Marketing and GearBubble Tech, purchased inventory for a total of $0 and $108,412 from an affiliated company which was majority owned (50% interest) by the CEO of the company.

Stakeholder Impact

• Shareholders: The declining financial performance and going concern uncertainty could negatively impact shareholder value.
• Employees: Cost-cutting measures and potential sale of Aphrodites Marketing could lead to job losses or restructuring.
• Creditors: The company's ability to repay its debts is uncertain, posing a risk to creditors.
• Customers: The company's financial difficulties could impact its ability to maintain product quality and customer service.

Next Steps

• The company intends to sell Aphrodites Marketing.
• The company is in negotiations with potential partners to increase sales and expand its business.
• The company will continue to implement cost-saving measures.
• The company may seek to raise additional capital through debt and/or equity financings.

Key Dates

Keywords

financial results, net revenue, operating expenses, net loss, Bergio International, Aphrodites Marketing, GearBubble, going concern, convertible notes, cost cutting