10-K: Elite Performance Holding Corp. Reports 2023 Financial Results Amidst Going Concern Doubts

Elite Performance Holding Corp.'s 2023 annual report reveals a net loss of $1.45 million and ongoing concerns about the company's ability to continue as a going concern.

Summary

• Elite Performance Holding Corp., a holding company focused on nutritional and sports beverages, reported a net loss of $1.45 million for the year ended December 31, 2023, compared to a $2.75 million loss in 2022.
• The company's revenue decreased to $42,569 in 2023 from $90,588 in 2022, primarily due to production delays.
• Cost of goods sold increased to $155,804 in 2023 from $126,586 in 2022, due to inventory write-downs of approximately $111,000 from expired product.
• The company's working capital deficit widened to $2.93 million in 2023 from $1.79 million in 2022.
• As of December 31, 2023, the company had a stockholders deficit of $2,966,360 and limited cash on hand, with approximately $820,000 in convertible debt and loans payable.
• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• Management plans to achieve profitability by increasing retail distribution and expanding its online presence, but there is no assurance that the company can raise the required capital or increase sales to achieve profitability.

Sentiment

Score: 2

Explanation: The document paints a very negative picture due to the significant losses, declining revenue, going concern warning, and material weaknesses in internal controls. The company's financial situation is precarious, and its future is highly uncertain.

Positives

• The net loss decreased by $1.3 million from 2022 to 2023.
• The company has a patented SmartCarb technology for its BYLT beverage.
• The company has hired a sales team of seasoned beverage professionals and is utilizing branded delivery vans.
• The company is targeting the growing $32 billion global sports drink market.
• The company has secured key executives with over 120 years of combined experience in the beverage industry.

Negatives

• The company experienced a significant decrease in revenue from $90,588 in 2022 to $42,569 in 2023.
• The cost of goods sold increased due to a large inventory write-down of $111,000.
• The company has a substantial working capital deficit of $2.93 million.
• The company has a significant amount of convertible debt and loans payable totaling $820,000.
• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company has a history of recurring losses and a stockholders deficit of $2,966,360.

Risks

• The company's ability to continue as a going concern is uncertain due to recurring losses and a working capital deficit.
• The company needs additional capital to execute its business plan and may not be able to obtain it on acceptable terms.
• A decline in discretionary consumer spending could adversely affect the company's industry and profitability.
• The company's operations may be affected by the ongoing COVID-19 pandemic.
• The loss of key employees, particularly the CEO, could harm the business.
• The company's future success depends on its ability to attract and retain qualified personnel.
• The company's growth strategy involves acquisitions, which carry risks.
• The company's ability to maintain or increase revenues could be harmed if it is unable to strengthen and maintain its brand image.
• The company's common stock is not currently quoted on the OTC markets, which means there is no stock price quote, no trading in the stock, and no liquidity.
• The company's common stock will be considered a penny stock, which is subject to additional sale and trading regulations.
• The company has material weaknesses in its internal control over financial reporting.

Future Outlook

The company plans to increase retail distribution and expand its online presence to achieve profitability, but there is no assurance that it can raise the required capital or increase sales to achieve profitable operations.

Management Comments

• Management plans to achieve profitability by increasing its business through retail distribution and expanding its online ecommerce presence.
• Management believes that the functional beverage industry competes in the global marketplace and therefore must be adaptable to remain competitive.
• Management believes that a stronger economy, more spending by young professionals with an overall trend toward health and fitness will lead to future growth.

Industry Context

The company operates in the competitive functional beverage industry, which is experiencing growth due to healthy living trends and a demand for better-for-you products. The sports drink market is expected to reach $32 billion globally by 2027. The company is positioning its BYLT beverage to compete in this market by offering a unique combination of benefits.

Comparison to Industry Standards

• The company's financial performance is significantly below industry standards for established beverage companies.
• Companies like Celsius have demonstrated strong growth in the functional beverage space, while Elite Performance Holding Corp. is struggling with declining revenue and increasing losses.
• The company's reliance on convertible debt and the going concern warning from its auditor are not typical of well-performing companies in the industry.
• The company's lack of a trading symbol and the penny stock status of its common stock are also not typical of established companies in the beverage industry.

Legal Proceedings

• The Company discovered in September of 2021 that BYLT Basics, LLC, a party that it settled a previous trademark litigation case with, is in breach of its settlement agreement and sent a notice of breach to said party.
• The underlying matter is a trademark dispute for the mark B.Y.L.T. (Reg 6548069) of which the Company also filed two oppositions of the partys trademarks at the Trademark Trial and Appeal Board.

Related Party Transactions

• The company had consulting expenses with I Know a Dude, Inc., owned by Laya Clark, a former board member.
• The company has outstanding balances due to Joey Firestone for un-reimbursed business expenses, consulting services, and salary.
• The company had accounting expenses with The Mosely Group, owned by Reesa McKenzie, the sister of Jon McKenzie.
• The company entered into a lease agreement with its CEO, Joey Firestone, for three cargo vans.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern warning.
• Employees may be impacted by potential layoffs or restructuring if the company's financial situation does not improve.
• Customers may be affected by potential disruptions in product availability due to production delays and financial constraints.
• Suppliers may face increased risk of non-payment due to the company's financial difficulties.
• Creditors face increased risk of non-payment due to the company's financial instability.

Next Steps

• The company plans to increase retail distribution and expand its online presence.
• The company plans to hire personnel and resources to address material weaknesses in internal controls.
• The company is seeking a market maker sponsorship to obtain a trading symbol and have its common stock quoted on the OTC Markets.

Key Dates

Keywords

sports beverage, functional beverage, nutritional products, BYLT, SmartCarb technology, going concern, convertible debt, financial results, revenue, net loss, working capital, patent, M&K CPAS, M&K CPAS, PLLC