8-K: Safety Shot Completes Acquisition of Yerba Brands, Expanding Wellness Beverage Portfolio Amidst Significant Financial Losses

Safety Shot, Inc. has successfully completed its acquisition of Yerba Brands Corp., integrating a plant-based energy beverage company into its operations, while pro forma financial statements reveal substantial combined net losses.

Summary

• Safety Shot, Inc. (SHOT) completed its acquisition of Yerba Brands Corp. (Yerba) on June 27, 2025, through a court-approved plan of arrangement.
• Under the terms, Safety Shot acquired all outstanding Yerba Shares, including settled performance and restricted share units, by issuing an aggregate of 19,881,948 Safety Shot Shares.
• Post-acquisition, pre-existing Safety Shot stockholders own approximately 81.64% of the combined company, while former Yerba holders own approximately 18.36%.
• Yerba's outstanding options, warrants, and debentures were adjusted to be exercisable or convertible into Safety Shot Shares based on an exchange ratio of 0.2918 Safety Shot Shares per Yerba Share.
• Immediately following the acquisition, Safety Shot had approximately 108,300,254 common shares outstanding, along with options to purchase up to 15,546,992 shares and warrants to purchase up to 24,893,438 shares.
• The company also has up to 6,667,802 shares issuable from a Convertible Note and up to 3,362,742 shares from a Secured Convertible Note, both issued on January 20, 2025.
• Yerba's shares will be delisted from the TSX Venture Exchange and OTCQX effective June 30, 2025.
• Pro forma combined sales for the three months ended March 31, 2025, were $1,255,984, resulting in a gross profit of $531,188 and a net loss of $(8,700,230).
• For the year ended December 31, 2024, pro forma combined sales were $6,607,508, with a gross profit of $568,450 and a net loss of $(59,933,677).
• Total pro forma combined assets as of March 31, 2025, were $25,937,972, with total liabilities of $19,780,610 and total stockholders' equity of $6,157,362.
• Goodwill of $12,858,429 and intangible assets of $2,728,000 were recognized as part of the transaction.

Sentiment

Score: 4

Explanation: The completion of the acquisition and the significant increase in marketable securities value are positive, but these are heavily outweighed by the substantial and ongoing net losses, high operating expenses, and significant debt burden, indicating a challenging financial position for the combined entity.

Positives

• The successful completion of the acquisition of Yerba Brands Corp. expands Safety Shot's product portfolio into the plant-based energy beverage market, potentially creating synergies and market diversification.
• The value of Safety Shot's marketable securities, specifically its holding in SRM Entertainment, Inc., significantly increased from approximately $1.0 million as of March 31, 2025, to approximately $14.7 million as of June 26, 2025, representing a gain of $13.7 million.
• The appointment of Todd Gibson, former CEO of Yerba and an experienced beverage industry entrepreneur, to Safety Shot's Board of Directors brings valuable industry expertise and leadership to the combined entity.

Negatives

• The pro forma combined entity reported a significant net loss of $(8,700,230) for the three months ended March 31, 2025, and a net loss of $(59,933,677) for the year ended December 31, 2024, indicating substantial unprofitability.
• Operating expenses remain very high, with general and administrative expenses alone reaching $8,603,897 for the three months ended March 31, 2025, and $51,170,394 for the year ended December 31, 2024.
• The combined entity carries substantial liabilities, totaling $19,780,610 as of March 31, 2025, including significant convertible notes and various other loans assumed from Yerba.
• Yerba's assumed loan agreements include high effective interest rates, such as 42% on a previous MaximCash loan (paid off) and 27% on a new MaximCash loan, and a 10% effective interest rate on a related-party loan from a director, indicating high cost of debt.

Risks

• The combined company faces significant financial risk due to substantial accumulated deficits and ongoing net losses, which could impact its ability to achieve profitability and sustain operations.
• The assumption of Yerba's diverse debt obligations, including debentures and various loan agreements with high effective interest rates (e.g., 27% on a $1,000,000 loan), increases the financial burden and interest expense for Safety Shot.
• Safety Shot is required to offer to purchase Yerba Debentures at 105% of principal plus accrued interest within 10 days of the acquisition's effective time, which could result in a significant cash outflow if debenture holders accept the offer.
• The company's reliance on unregistered sales of equity securities (e.g., shares issued in the acquisition under Section 3(a)(10) exemption) and the presence of restrictive legends on securities may limit liquidity and transferability for certain investors.
• The delisting of Yerba Shares from the TSX Venture Exchange and OTCQX could impact the liquidity and valuation of the shares for former Yerba shareholders.
• The company operates in competitive beverage and dietary supplement markets, facing risks related to market acceptance, product development, and competition from established brands.
• Future dilution risk exists from the exercise of a large number of outstanding options (15,546,992 shares) and warrants (24,893,438 shares), as well as the conversion of convertible notes (totaling up to 10,030,544 shares).

Future Outlook

Safety Shot plans to introduce business-to-business sales of its Sure Shot product to distributors, retailers, restaurants, and bars throughout 2025, indicating a focus on expanding its market reach for its flagship wellness product.

Management Comments

• Todd Gibson, Chief Executive Officer and Co-Founder of Yerba Brands Corp., stated, 'We are pleased to announce the successful completion of the previously announced business combination pursuant to which Safety Shot has acquired all of the issued and outstanding commons shares of Yerbae.'

Industry Context

This acquisition represents a strategic move by Safety Shot, a wellness and dietary supplement company, to integrate a plant-based energy beverage company, Yerba Brands Corp., into its operations. This aligns with broader industry trends towards consolidation and diversification within the health and wellness beverage sector, as companies seek to offer a wider range of products to health-conscious consumers and capture a larger share of the functional beverage market. The combination aims to leverage Yerba's established presence in plant-based energy drinks with Safety Shot's patented wellness product, Sure Shot, potentially creating a more comprehensive offering in the competitive beverage landscape.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess the combined entity's performance against global industry benchmarks. Therefore, a direct comparison to industry standards is not feasible based solely on the provided information.
• However, the reported pro forma net losses of $(8.7) million for Q1 2025 and $(59.9) million for FY 2024 suggest that the combined entity is currently operating significantly below profitability benchmarks common for established beverage or supplement companies, which typically aim for positive net income or at least break-even operations.
• The high effective interest rates on some of Yerba's assumed loans (e.g., 27% on a $1 million loan) are considerably higher than typical corporate borrowing rates for financially stable companies, indicating a higher cost of capital and potentially a weaker credit profile prior to the acquisition.

Management Changes

Corporate Governance

Related Party Transactions

• Yerba entered into a loan agreement with Karrie Gibson, a director of Yerba, on July 15, 2024 (effective July 1, 2024), for a principal amount of $330,000 with an original issue discount of $30,000 and an effective interest rate of 10%. This loan matured on June 1, 2025, and is payable on demand by the lender.

Stakeholder Impact

• Shareholders of Safety Shot (pre-acquisition) will experience dilution, as their ownership stake decreased to approximately 81.64% of the combined entity.
• Former shareholders of Yerba Brands Corp. will become shareholders of Safety Shot, owning approximately 18.36% of the combined company, and will need to exchange their Yerba shares for Safety Shot shares.
• Holders of Yerba's outstanding options, warrants, and debentures will see their instruments converted or adjusted to reflect Safety Shot shares, potentially impacting their future returns and conversion terms.
• Creditors of Yerba will now have Safety Shot as the obligor for the assumed financial obligations, including various loans and debentures, which could affect their risk exposure and repayment prospects.
• Employees of Yerba Brands Corp. are now part of the larger Safety Shot organization, which may lead to integration challenges or opportunities.

Next Steps

• Yerba Shares will be delisted from the TSX Venture Exchange and OTCQX effective June 30, 2025.
• Safety Shot is required to provide notice to Yerba Debenture holders within 10 days of June 27, 2025, with an offer to purchase the debentures at 105% of principal plus accrued interest, on a date within 90 days of the effective time.
• Safety Shot plans to introduce business-to-business sales of its Sure Shot product to distributors, retailers, restaurants, and bars throughout 2025.

Key Dates

Recommendation

Keywords

Safety Shot, Yerba Brands, Acquisition, Merger, SEC Filing, 8-K, Financial Performance, Net Loss, Debt, Convertible Notes, Warrants, Corporate Governance, Beverage Industry, Dietary Supplements, Plant-Based Energy, Todd Gibson, Nasdaq, TSX Venture Exchange, SEC Compliance