10-Q: Bergio International Reports Q3 2024 Results, Including Gain from Discontinued Operations

Bergio International's Q3 2024 results show a net income driven by a gain from the sale of a subsidiary, despite a decrease in revenue from continuing operations.

Summary

• Bergio International reported a net income of $1.83 million for the three months ended September 30, 2024, compared to a net loss of $495,525 for the same period in 2023.
• The company's net revenue decreased to $684,571 for the quarter, down from $767,060 in the prior year.
• The cost of revenues also decreased to $424,080 from $487,162 year-over-year.
• Operating expenses were reduced to $399,352 from $602,026 in the same quarter of the previous year.
• The company experienced a loss from operations of $138,861, an improvement from the $322,128 loss in the prior year.
• A significant gain of $1 million was recorded from the disposal of discontinued operations.
• For the nine months ended September 30, 2024, the company reported a net income of $1.26 million, compared to a net loss of $2.01 million for the same period in 2023.
• Net revenues for the nine months were $2.04 million, down from $2.78 million in the prior year.
• The company's accumulated deficit stood at approximately $22.5 million as of September 30, 2024.
• The company had a working capital deficit of approximately $3.3 million at September 30, 2024.

Sentiment

Score: 6

Explanation: The document presents a mixed picture. While the company achieved a net income due to a one-time gain, the underlying business shows declining revenues and a significant working capital deficit. The company's ability to continue as a going concern is also in doubt. The sentiment is cautiously optimistic due to the cost-cutting measures and the gain from the sale of a subsidiary, but the financial challenges remain significant.

Positives

• The company achieved a net income in Q3 2024, driven by a gain from discontinued operations.
• Operating expenses were significantly reduced, indicating successful cost-cutting measures.
• The company improved its loss from operations compared to the same period last year.
• The sale of the Aphrodites Marketing subsidiary resulted in a $1 million gain.
• The company's working capital deficit decreased by over $1 million compared to the end of 2023.

Negatives

• Net revenues decreased in both the three and nine-month periods compared to the previous year.
• The company continues to operate with a significant accumulated deficit of approximately $22.5 million.
• The company has a working capital deficit of approximately $3.3 million.
• The company's gross profit decreased in both the three and nine-month periods compared to the previous year.
• The company's revenue decrease was primarily due to declining memberships in the GearBubble software as a service offering.

Risks

• The company's ability to continue as a going concern is in doubt due to recurring losses and a significant accumulated deficit.
• The company's future operations are contingent upon increasing revenues and raising capital.
• The company's retail operations may be affected by future outbreaks of COVID-19.
• The company has outstanding convertible notes that are in default.
• The company has a significant amount of debt, including notes payable and a mandatorily redeemable preferred stock liability.

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 potential partners.

Management Comments

• The Bergio brand is the company's most important asset.
• The company intends to establish Bergio as a holding company for the purpose of establishing retail stores worldwide.
• The company is in negotiations with some potential partners, but, at this time, there is nothing concrete, but the Company remains positive about its prospects.

Industry Context

The company operates in the fine jewelry retail sector, which is subject to consumer spending trends and economic conditions. The company's strategy of focusing on its brand and expanding its retail presence is a common approach in this industry. The company's acquisition and subsequent sale of Aphrodites Marketing reflects the challenges and opportunities in the e-commerce space for traditional retailers.

Comparison to Industry Standards

• The company's gross profit margin of 30.90% for the nine months ended September 30, 2024, is below the industry average for luxury goods, which typically ranges from 40% to 60%.
• Companies like Tiffany & Co. and Signet Jewelers, which are larger and more established, generally have higher gross profit margins due to economies of scale and brand recognition.
• The company's operating expenses as a percentage of revenue are high, indicating a need for further cost management compared to industry leaders.
• The company's reliance on debt financing and convertible notes is a common practice for smaller companies in the growth phase, but it also increases financial risk compared to companies with stronger balance sheets.
• The company's decision to sell Aphrodites Marketing is similar to other retailers who have divested non-core assets to focus on their primary business.

Related Party Transactions

• The Company receives periodic advances from the Companys Chief Executive Officer (CEO) based upon the Companys cash flow needs.
• The Companys majority owned subsidiary, Aphrodites Marketing, had a loan with Jonathan Foltz, the President and CEO of Digital Age Business.
• Through the Companys 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.
• The Company, through the Companys majority owned subsidiary, Aphrodites Marketing and GearBubble Tech, purchased inventory from an affiliated company which was majority owned (50% interest) by the CEO of the Company.

Stakeholder Impact

• Shareholders may be concerned about the company's recurring losses and accumulated deficit.
• Employees may be affected by cost-cutting measures and potential changes in operations.
• Customers may be impacted by changes in product offerings and retail locations.
• Suppliers may be affected by the company's financial challenges and potential changes in purchasing patterns.
• Creditors may be concerned about the company's ability to repay its debts.

Next Steps

• The company intends to continue to manage its retail operations and develop new product lines.
• The company will continue to investigate various strategies to increase sales and expand its business.
• The company will continue to negotiate with potential partners.
• The company intends to effectuate a reverse stock split.

Key Dates

Keywords

financial results, net income, discontinued operations, revenue, operating expenses, convertible notes, debt, retail, jewelry, Bergio International, GearBubble, Aphrodites Marketing