10-Q: Elite Performance Holding Corp. Reports Q3 2024 Results with Ongoing Financial Challenges

Elite Performance Holding Corp. reported a net loss of $358,322 for the third quarter of 2024 and continues to face substantial doubt about its ability to continue as a going concern.

Summary

• Elite Performance Holding Corp. reported a net loss of $358,322 for the three months ended September 30, 2024, compared to a net loss of $400,174 for the same period in 2023.
• The company's revenue was $0 for the quarter, a decrease from $13,433 in the prior year's quarter.
• For the nine months ended September 30, 2024, the company's net loss was $1,089,953, compared to $1,137,234 for the same period in 2023.
• Revenue for the nine-month period was $681, a significant decrease from $40,141 in the prior year.
• The company's accumulated deficit has reached $9,880,141 as of September 30, 2024.
• The company has a working capital deficit of $3,296,995 as of September 30, 2024.
• The company's auditors have expressed substantial doubt about its ability to continue as a going concern.
• The company is trying to raise new debt or equity to market its sports drinks.

Sentiment

Score: 2

Explanation: The document indicates significant financial distress, with no revenue, substantial losses, a large accumulated deficit, and a going concern warning from auditors. The company's reliance on debt and related party transactions further contributes to a negative outlook.

Positives

• The net loss for the three months ended September 30, 2024, decreased by $41,852 compared to the same period in 2023.
• General and administrative expenses decreased by $41,032 for the three months ended September 30, 2024, compared to the same period in 2023.
• Advertising expenses decreased by $9,269 for the three months ended September 30, 2024, compared to the same period in 2023.
• Consulting expenses decreased by $77,744 for the three months ended September 30, 2024, compared to the same period in 2023.

Negatives

• The company's revenue was $0 for the three months ended September 30, 2024.
• The company's gross profit was $0 for the three months ended September 30, 2024.
• The company's accumulated deficit has reached $9,880,141.
• The company has a working capital deficit of $3,296,995.
• The company's cash balance is only $94 as of September 30, 2024.
• The company's auditors have expressed substantial doubt about its ability to continue as a going concern.
• Interest expenses increased by $64,278 for the three months ended September 30, 2024, compared to the same period in 2023.

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 COVID-19 pandemic.
• The company faces competition within its chosen industry, including from much larger competitors.
• The company's future operations are contingent upon increasing revenues and raising capital.
• The company has a material weakness in its internal controls related to a lack of sufficient finance personnel.

Future Outlook

The company's future operations are contingent upon increasing revenues and raising capital for ongoing 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 believes that the consolidated financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition as of the Evaluation Date, and results of our operations and cash flows for the Evaluation Date, in conformity with GAAP.
• Management has identified a material weakness related to the lack of a sufficient complement of competent finance personnel to appropriately account for, review and disclose the completeness and accuracy of transactions.

Industry Context

The company operates in the sports drink market, which is projected to grow significantly. The company's product, B.Y.L.T., is positioned to succeed due to its unique formulation and the growing demand for better-for-you products. The company is targeting the US Sports and Performance Drink Market which is experiencing strong growth.

Comparison to Industry Standards

• The company's revenue of $0 for the quarter is significantly below industry standards for established beverage companies.
• The company's net loss of $358,322 for the quarter is concerning, especially when compared to profitable companies in the beverage sector such as Monster Beverage Corp or Keurig Dr Pepper.
• The company's negative working capital of $3,296,995 indicates a severe liquidity issue, which is not typical for companies with established operations.
• The company's reliance on convertible debt and related party transactions is higher than industry norms for companies with more established access to capital markets.
• The company's lack of revenue and significant losses are not comparable to industry leaders like PepsiCo or Coca-Cola, which have diversified product portfolios and strong distribution networks.

Legal Proceedings

• The company is involved in a trademark dispute with BYLT Basics, with a trial scheduled for June 2025.

Related Party Transactions

• The company had consulting expenses with I Know a Dude, Inc., owned by a former board member.
• The company had un-reimbursed business expenses with Joey Firestone.
• The company had an outstanding balance due to Joey Firestone for consulting services and salary.
• 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 business closure if the company cannot secure additional funding.
• Customers may experience disruptions in product availability if the company's financial situation worsens.
• Suppliers may face payment delays or losses if the company is unable to meet its financial obligations.
• Creditors face a high risk of not being repaid due to the company's financial difficulties.

Next Steps

• The company needs to raise additional capital to continue operations.
• The company needs to implement its business plan to generate revenue.
• The company needs to address the material weakness in its internal controls.

Key Dates

Keywords

sports beverage, nutritional products, financial results, convertible notes, going concern, debt financing, equity financing, operating loss, working capital, BYLT