10-K: Safety Shot Inc. 2023 Annual Report: Focus on Functional Beverage and Strategic Growth

Safety Shot Inc.'s 2023 annual report highlights the company's transition to a functional beverage focus, marked by the acquisition of the Safety Shot beverage and a strategic shift away from CBD products.

Summary

• Safety Shot Inc., formerly Jupiter Wellness Inc., completed the asset purchase of the Safety Shot beverage in August 2023, shifting its focus to consumer packaged goods.
• The company launched e-commerce sales of the Safety Shot beverage in December 2023, a dietary supplement formulated to reduce blood alcohol accumulation.
• Safety Shot Beverage contains 28 active ingredients, all considered Generally Regarded As Safe (GRAS).
• The company is developing a powdered stick pack version of Safety Shot and plans to relaunch Photocil in the US in Q4 2024.
• The company incurred research and development expenses of $100,591 in 2023, a significant decrease from $1,637,117 in 2022.
• The company's net loss for 2023 was $15,083,041, slightly improved from $15,223,028 in 2022.
• The company had cash of $3,833,349 at the end of 2023, compared to $1,477,552 at the end of 2022.
• The company has 15,758,126 warrants outstanding at an average exercise price of $1.45.
• The company's auditor has expressed doubt about its ability to continue as a going concern.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there are positive developments such as the launch of a new product and a diverse pipeline, the company's financial situation, legal challenges, and going concern warning from the auditor raise significant concerns. The sentiment is therefore cautiously negative.

Positives

• The company successfully launched the Safety Shot beverage, marking a shift towards a new product line.
• The company has a diverse product pipeline including hair loss treatments, vitiligo solutions, and sexual wellness products.
• The company has a diverse network of raw material suppliers.
• The company has a strong intellectual property portfolio.
• The company has a strategic alliance with established industry players for sourcing high-quality raw materials.
• The company has a clear product roadmap with planned launches for several products in 2024.
• The company has a strong focus on research and development.

Negatives

• The company's auditor has expressed doubt about its ability to continue as a going concern.
• The company has a history of net losses and negative cash flow from operations.
• The company has ceased marketing and selling CBD products due to regulatory changes and declining popularity.
• The company has limited experience in successfully obtaining regulatory approval for a product.
• The company is involved in several legal proceedings.
• The company has a limited operating history.

Risks

• The company faces competition from other companies in the health and wellness market.
• The company's products may not meet health and safety standards or could become contaminated.
• The company is subject to government regulation, and unfavorable changes could substantially harm its business.
• The company depends heavily on key personnel, and turnover of key senior management could harm its business.
• The company may not be able to obtain regulatory approvals for its product candidates.
• The company may not be able to manufacture its products in sufficient quantities or at defined quality specifications.
• The company may not be able to establish relationships with licensees or collaborators to carry out sales, marketing, and distribution functions.
• The company may not be able to obtain adequate reimbursement for its products from third-party payers.
• The company may be subject to various federal and state fraud and abuse laws.
• The company's operations could be disrupted by natural disasters or other events beyond its control.
• The company may not be able to effectively manage any growth associated with new markets.
• The company may not meet its product development and commercialization milestones.
• The company's operations in international markets involve inherent risks that it may not be able to control.
• The company may be unable to achieve some or all of the expected benefits of the SRM spin-off.
• The company's ability to meet its capital needs may be harmed by the loss of revenue from SRM.
• Raising additional capital may cause dilution to the company's existing stockholders.
• The company may not use the net proceeds from any offerings effectively.
• The company's management has limited experience in managing the day-to-day operations of a public company.
• The company's stock price could decline if securities or industry analysts publish inaccurate or unfavorable research.
• The company does not intend to pay dividends for the foreseeable future.
• The company's Second Amended and Restated Certificate of Incorporation contains an exclusive forum provision for certain claims.
• The company's issuance of additional common stock or preferred stock may cause its common stock price to decline.
• Anti-takeover provisions in the company's charter and bylaws may prevent or frustrate attempts by stockholders to change the board of directors or current management.
• The company's common stock may become subject to the SEC's penny stock rules.
• The company's business is highly dependent upon receiving approvals from various U.S. and international governmental agencies and will be severely harmed if it is not granted approval to manufacture and sell its product candidates.

Future Outlook

The company intends to continue its current product lines, except for its products which contain CBD, and focus its efforts on the commercialization of the Safety Shot Beverage. The company plans to launch several new products in 2024, including a powdered stick pack version of Safety Shot, Photocil, JW-700, and JW-500.

Management Comments

• The Management believes that as we continue to expand our product portfolio, we believe that these partnerships with trusted suppliers play a pivotal role in upholding the standards that we expect of our brand.
• We believe that the Safety Shot Beverage stands as a unique product in the dietary supplement beverage market.
• We believe that our focus on research and development is designed to enable us to stay ahead of the curve and provide our customers with products that are not only effective but also innovative.

Industry Context

The company's shift towards functional beverages aligns with the growing consumer interest in health and wellness products. The company's focus on innovation and strategic partnerships positions it to compete in the competitive dietary supplement market. The company's decision to discontinue CBD products reflects the changing regulatory landscape and declining popularity of CBD products.

Comparison to Industry Standards

• The company's research and development spending decreased significantly in 2023, which may be a concern compared to industry standards where companies often invest heavily in R&D.
• The company's net loss, while slightly improved, is still substantial and may be a concern compared to industry benchmarks for profitability.
• The company's cash position has improved, but the auditor's going concern opinion suggests that the company may need to raise additional capital to continue operations.
• The company's product pipeline is diverse, which is a positive compared to companies that rely on a single product line.
• The company's focus on e-commerce sales is in line with industry trends, but it will need to establish a strong retail presence to compete effectively.
• The company's reliance on contract manufacturers is common in the industry, but it also introduces risks related to quality control and supply chain management.
• The company's intellectual property portfolio is a strength, but it will need to continue to innovate to maintain a competitive edge.

Management Changes

Corporate Governance

Legal Proceedings

• Intracoastal Capital, LLC filed a lawsuit against the Company alleging breach of a common stock warrant.
• The Company filed a lawsuit against Capybara Research, Igor Appelboom and Accretive Capital LLC d/b/a Benzinga for securities fraud and tortious interference.
• Sabby Volatility Warrant Master Fund Ltd. filed a lawsuit against the Company alleging breach-of-contact, promissory estoppel, and negligent misrepresentation.
• Sabby Volatility Warrant Master Find Ltd. sued the Company alleging that the Company has improperly refused to honor Sabbys exercise of a Warrant.
• 3i LP filed a lawsuit against the Company alleging denial of 3is attempt to exercise certain warrants.
• Coachella Music Festival, LLC filed a lawsuit against the Company for Trademark Infringement, False Designation of Origin, False Advertising, violations of Cal. Bus. & Prof. Code Sections 17200 & 17500, Inducement of Trespass, Conversion, and Trespass to Chattels.
• Bigger Capital fund, L.P. filed a lawsuit against the Company alleging Breach of Contract, Specific Performance and Declaratory Relief.
• Alta Partners, LLC, filed a lawsuit against the Company alleging Breach of Contract Breach of the Implied Covenant of Good Faith and Fair Dealing and violation of Section 11 of the Securities Act of 1933.

Related Party Transactions

• The company had an outstanding unsecured, non-interest bearing loan receivable balance of $1,482,673 from SRM Entertainment, Ltd, its wholly owned subsidiary, which was converted to a six percent (6%) interest-bearing promissory note.
• The company invested $2,908,300 in Jupiter Wellness Sponsor LLC (JWSL), a limited liability company formed for the purpose of sponsorship of Jupiter Wellness Acquisition Corp. (JWAC).
• The company advanced Elite Health Partners Inc. $200,000 in connection with a potential licensing agreement.

Stakeholder Impact

• Shareholders face the risk of dilution from potential capital raises and the uncertainty of the company's future performance.
• Employees may be affected by potential restructuring or changes in compensation due to the company's financial challenges.
• Customers may benefit from the company's focus on innovative health and wellness products.
• Suppliers may be affected by changes in the company's supply chain or financial stability.
• Creditors face the risk of non-payment due to the company's financial challenges.

Next Steps

• The company plans to launch the Safety Shot beverage in Big Box stores by the end of the first quarter or early second quarter of 2024.
• The company plans to relaunch Photocil in the US in the fourth quarter of 2024.
• The company intends to launch JW-700 in the U.S in the fourth Quarter of 2024.
• The company plans to complete the formulation and test launch JW-500 in Q4, 2024.
• The company plans to set up a Pre-IND meeting with the FDA for SS-100.

Key Dates

Keywords

Safety Shot, functional beverage, dietary supplement, blood alcohol, consumer packaged goods, e-commerce, Photocil, hair loss, vitiligo, sexual wellness, CBD, intellectual property, research and development, clinical trials, FDA, GRAS, warrants, Orphan Drug Designation