10-Q: Elite Performance Holding Corp. Reports Q1 2024 Results: Revenue Dips Amid Increased Consulting Expenses

Elite Performance Holding Corp. reports a net loss of $496,619 for Q1 2024, with revenues significantly decreasing to $70 compared to $9,908 in Q1 2023, primarily due to increased consulting expenses and shares issued for services.

Summary

• Elite Performance Holding Corp. reported a net loss of $496,619 for the three months ended March 31, 2024, compared to a net loss of $363,959 for the same period in 2023.
• Revenues decreased significantly to $70 for Q1 2024 from $9,908 in Q1 2023.
• The company's gross profit for Q1 2024 was $70, compared to a gross loss of $5,350 for Q1 2023.
• Operating expenses increased to $455,064 in Q1 2024 from $321,379 in Q1 2023, primarily due to higher consulting expenses.
• As of March 31, 2024, the company had a working capital deficit of $3,116,172.
• The company's ability to continue as a going concern is dependent on raising additional capital and implementing its business plan.
• During Q1 2024, the company issued 860,000 shares for consulting services and 140,000 shares for the conversion of convertible notes.
• On March 1, 2024, the company reduced its outstanding shares by 25,000,000 through the retirement of shares by Jon McKenzie and Joey Firestone.
• As of May 31, 2024, there were 109,381,270 shares of the registrant's common stock issued and outstanding.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to decreased revenues, increased net losses, a significant working capital deficit, and an auditor's doubt about the company's ability to continue as a going concern. While there were some decreases in certain expenses, the overall financial performance is concerning.

Positives

• General and administrative expenses decreased by $27,821, from $113,038 in Q1 2023 to $85,217 in Q1 2024, due to a decrease in operations.
• Advertising expenses decreased by $21,624, from $24,654 in Q1 2023 to $3,030 in Q1 2024.
• Legal and accounting expenses decreased by $6,306, from $66,723 in Q1 2023 to $60,417 in Q1 2024, due to a decrease in operations and legal filings.
• Cash provided by financing activities was $102,408, primarily from proceeds from notes payable and advances.

Negatives

• The company's revenues decreased significantly to $70 for Q1 2024 from $9,908 in Q1 2023.
• The company's net loss increased to $496,619 for Q1 2024, up from $363,959 in Q1 2023.
• Consulting expenses surged to $306,400 in Q1 2024, a substantial increase from $116,964 in Q1 2023.
• The company has a working capital deficit of $3,116,172 as of March 31, 2024.
• The company's auditors have expressed substantial doubt about its ability to continue as a going concern.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital and implementing its business plan.
• The company has a limited operating history, making it difficult to evaluate its business and future prospects.
• The company's operations have been and continue to be affected by the recent and ongoing outbreak of the coronavirus disease (COVID-19).
• The company is involved in a trademark dispute with BYLT Basics, LLC, which could have a material adverse effect on its financial condition or results of operations.
• The company's future operations are contingent upon increasing revenues and raising capital for on-going operations and the anticipated expansion of our product lines.

Future Outlook

The company's future operations are contingent upon increasing revenues and raising capital for on-going operations and the anticipated expansion of its product lines. The company is currently trying to raise new debt or equity to set up and market its line of sports drinks.

Management Comments

• Management acknowledges that there are deficiencies in disclosure controls and procedures due to the lack of personnel and outside directors.
• The Company anticipates that with further resources, the Company will expand both management and the board of directors with additional officers and independent directors in order to provide sufficient disclosure controls and procedures.

Industry Context

The company is operating in the sports drink and nutrition and performance drink industry, which is expected to grow to $15 billion by 2027. The company is positioning its BYLT beverage to capitalize on healthy living trends and the demand for better-for-you products.

Comparison to Industry Standards

• It is difficult to compare Elite Performance Holding Corp.'s performance directly to industry standards due to its small size and limited operating history.
• Larger players in the sports drink industry, such as PepsiCo (Gatorade) and Coca-Cola (Powerade), have significantly higher revenues and established distribution networks.
• The company's focus on a unique product formulation that combines hydration, endurance, mental focus, fat oxidation, and muscle recovery could differentiate it from competitors, but it needs to scale its operations and marketing efforts to compete effectively.
• Celsius is a comparable company in the beverage industry.
• Celsius has a market cap of over $15 billion and is a global company.
• Elite Performance Holding Corp. has a market cap of less than $10 million and is a microcap company.

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.
• BYLT Basics filed a lawsuit since the company filed the two oppositions and the company is filing counterclaims for trademark infringement and breach of settlement agreement.

Related Party Transactions

• For the three months ended March 31, 2024 and 2023, we had $9,000 and $9,000, respectively, in consulting expense to I Know a Dude, Inc. owned by Laya Clark.
• As of March 31, 2024, we had an outstanding balance due of $122,922, which is included in accounts payable related party.
• As of March 31, 2024 and December 31, 20223 we also had an outstanding balance due to Joey Firestone of $36,000 and $36,000, respectively, for consulting services, and $484,687 and $448,203 for salary, respectively, which is included in accounts payable related party.
• As of March 31, 2024 and December 31, 2023, we had an outstanding balance due of $4,500, respectively, which is included in accounts payable related party.
• On May 6, 2022, the Company entered into a lease agreement with its CEO, Joey Firestone, for three cargo vans to be used for delivery and distribution of its products.

Stakeholder Impact

• Shareholders may be concerned about the company's financial performance and its ability to continue as a going concern.
• Employees may be concerned about job security due to the company's financial difficulties.
• Customers may be concerned about the company's ability to continue providing its products and services.
• Suppliers and creditors may be concerned about the company's ability to pay its debts.

Next Steps

• The company needs to focus on increasing revenues and raising capital for on-going operations and the anticipated expansion of its product lines.
• The company needs to address the deficiencies in its disclosure controls and procedures by expanding its management and board of directors.
• The company needs to resolve the trademark dispute with BYLT Basics, LLC.

Key Dates

Keywords

Elite Performance Holding Corp, BYLT, Financial Results, Convertible Notes, Going Concern, Q1 2024, Beverage Industry, Sports Drink, Shares, Debt