10-Q: Safety Shot Reports Q2 Net Income Amid Revenue Decline

Sentiment:

Quarterly Report 14 August 2025 5:16 PM

Safety Shot, Inc. reported a significant net income for Q2 2025, primarily driven by an unrealized gain on an equity investment, alongside the strategic acquisition of Yerba Brands Corp. and ongoing efforts to address financial challenges.

Capital raiseDuring the six months ended June 30, 2025, the company issued 9,038,650 unrestricted shares of common stock through five take-downs under its S-3 Registration Statement, with a fair value of $4,971,971.During the six months ended June 30, 2025, the company issued 3,093,817 shares of common stock for cash, valued at $1,778,108.On July 24, 2025, the company completed a registered direct offering of 22,993,492 common shares at $0.461 per share and a concurrent private placement of warrants to purchase up to 45,986,984 shares at $0.125 per warrant, generating approximately $16.3 million in gross proceeds.On August 8, 2025, the company entered into a Securities Purchase Agreement for a private investment in public equity (PIPE Offering) of 35,000 shares of Series C Convertible Preferred Stock, convertible into 62,701,541 common shares, for a $25 million purchase price to be paid in BONK tokens.On August 8, 2025, the company also entered into a Revenue Sharing Agreement to issue 100,000 shares of Series C Preferred Stock, convertible into 179,147,260 common shares, in exchange for 10% of all gross revenue of LetsBonk.fun in perpetuity.

Worse than expectedRevenue declined significantly by approximately 93.7% for the three months ended June 30, 2025, and 90.1% for the six months ended June 30, 2025, compared to the same periods in the prior year.The reported net income is primarily attributable to a non-operating unrealized gain on an equity investment ($18.19 million), masking a substantial operational loss from core business activities.The company continues to operate with negative working capital and has raised substantial doubt about its ability to continue as a going concern, indicating underlying financial instability despite the one-time gain.

Summary

Reported a net income of $13,374,947 for the three months ended June 30, 2025, a substantial improvement from a net loss of $8,274,094 for the same period in 2024.
Achieved a net income of $8,048,014 for the six months ended June 30, 2025, compared to a net loss of $23,948,765 for the six months ended June 30, 2024.
Revenue significantly decreased to $44,948 for Q2 2025 from $710,240 in Q2 2024, and to $87,049 for H1 2025 from $880,972 in H1 2024.
Completed the acquisition of Yerba Brands Corp., a premium energy beverage company, on June 27, 2025, for approximately $6.0 million in common shares.
Cash balance increased to $466,791 at June 30, 2025, from $348,816 at December 31, 2024.
Total assets grew to $42,067,222 at June 30, 2025, from $7,338,403 at December 31, 2024, largely due to an $18.2 million investment in SRM and $12.59 million in goodwill from the Yerba acquisition.
Negative working capital improved to $3,016,005 at June 30, 2025, from $6,816,954 at December 31, 2024.
Received a NASDAQ notice of non-compliance with the minimum bid price requirement, with an extension granted until December 29, 2025, to regain compliance.
Engaged in significant capital raising activities post-period, including a $16.3 million registered direct offering and private placement in July 2025, and a $25 million PIPE offering in BONK tokens in August 2025.

Sentiment

Score: 3

Explanation: While the company reported a net income, this was primarily due to a non-operating unrealized gain on an equity investment, masking a severe decline in core business revenue. The company faces significant going concern doubt, NASDAQ delisting risk, and multiple ongoing legal challenges. Although recent capital raises provide liquidity, they are highly dilutive and introduce new risks, indicating a precarious financial position and poor underlying operational performance.

Positives

Reported a significant shift to net income of $13.37 million in Q2 2025 and $8.05 million in H1 2025, primarily driven by an $18.19 million unrealized gain on an equity investment in SRM Entertainment, Inc.
Successfully completed the strategic acquisition of Yerba Brands Corp. on June 27, 2025, expanding the company's presence in the functional beverage market.
Total assets increased substantially from $7.34 million at December 31, 2024, to $42.07 million at June 30, 2025, reflecting growth in investments and acquired goodwill.
Improved its negative working capital position from $6.82 million at December 31, 2024, to $3.02 million at June 30, 2025.
Completed clinical trials for the Sure Shot Dietary Supplement, which showed a statistically significant reduction in Blood Alcohol Content (BAC) and observable enhancements in cognitive abilities.
Was granted a new U.S. Patent No. 12,156,878 for the current version of the Sure Shot Dietary Supplement, strengthening its intellectual property portfolio.

Negatives

Experienced a substantial decline in revenue, with Q2 2025 sales at $44,948 compared to $710,240 in Q2 2024, and H1 2025 sales at $87,049 compared to $880,972 in H1 2024.
Incurred and expects to continue incurring significant costs, leading to substantial doubt about its ability to continue as a going concern.
Received a NASDAQ notice of non-compliance with the minimum bid price requirement, with a deadline of December 29, 2025, to regain compliance, potentially requiring a reverse stock split.
Faces multiple ongoing legal proceedings, including a successful appeal against the company by Sabby Volatility Warrant Master Fund Ltd. regarding a breach of contract claim.
General and administrative expenses remain high at $4,363,514 for Q2 2025 and $9,774,838 for H1 2025, despite a decrease from the prior year.
Experienced significant dilution with common shares outstanding increasing from 62.64 million at December 31, 2024, to 101.73 million at June 30, 2025, with further dilution from recent and planned capital raises.
The net income reported is largely due to an unrealized gain on an equity investment, rather than strong operational performance, which saw a significant revenue decline.

Risks

Substantial doubt about the company's ability to continue as a going concern due to significant costs and negative working capital.
Risk of delisting from NASDAQ if the minimum bid price requirement is not met by December 29, 2025, potentially requiring a reverse stock split.
Uncertainty and potential material adverse effects from ongoing legal proceedings, including claims for significant damages and specific performance.
Reliance on a limited number of contract manufacturers and logistics providers, which could pose supply chain and operational risks.
Dependence on e-commerce platforms like Amazon for sales, subjecting the company to platform policies and intense competition.
Exposure to various U.S. federal, state, and local regulations, including those related to product formulation, labeling, advertising, and potential new regulations like California Proposition 65 and PFAS.
Significant dilution risk for existing shareholders due to the substantial issuance of common stock, warrants, and convertible notes in recent and planned capital raises.
Uncertainty regarding the final settlement with Brian John and the registrability of certain stock shares.
The August 2025 PIPE offering involves payment in BONK tokens, introducing cryptocurrency volatility and liquidity risks.
The Series C Preferred Stock conversion is capped at 19.99% of currently outstanding common stock until stockholder approval, potentially limiting future capital access or conversion flexibility.
Holders of Series C Preferred Stock are entitled to elect 50% of the company's directors, which could significantly impact corporate control and governance.
50% of the Series C Preferred Stock issued under the Revenue Sharing Agreement is subject to automatic rescission if LetsBonk.fun ceases operations within six months, posing a risk to the capital raised through this mechanism.

Future Outlook

Management expects revenues to increase in the third quarter of 2025 as a result of a new marketing strategy and the Yerba acquisition. The company intends to cure its NASDAQ minimum bid price deficiency by December 29, 2025, considering a reverse stock split if necessary. The research and development team is continually working to develop new therapeutic products and enhance existing ones.

Management Comments

"We have been redirecting our focus on closing the acquisition of Yerba along with a new marketing strategy, which will be implemented in the third quarter of 2025. We expect revenues to increase as a result of this."
"Our research and development team is continually looking to develop new therapeutic products, while continually improving and enhancing our existing products and product candidates to address customer demands and emerging trends."
"We believe that the Safety Shot Dietary Supplement stands as a unique product in the liquid dietary supplement market."
"Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity."
"The Company plans to expand its management team and build a fulsome internal control framework required by a more complex entity."

Industry Context

The company operates within the competitive functional beverage and dietary supplement markets. The acquisition of Yerba Brands Corp. expands its product portfolio into the premium energy beverage segment, complementing its existing alcohol reduction supplement. The industry is characterized by evolving consumer demands for health and wellness products, with a focus on innovation and scientific backing. The company emphasizes its patent portfolio and clinical research to differentiate its products in this landscape.

Comparison to Industry Standards

No specific comparable companies, projects, or results are detailed in the filing for direct industry comparison of financial performance or product efficacy beyond the company's own clinical trial results for the Sure Shot Dietary Supplement.
The company positions the Safety Shot Dietary Supplement as a 'unique product in the liquid dietary supplement market' but acknowledges a competitive landscape with many health and welfare product companies.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Director	NA	Todd Gibson	2025-06-27	Appointed to the Board of Directors, but ultimately did not accept the appointment and is not currently serving as a director.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Ineffectiveness	Disclosure controls and procedures were deemed ineffective due to insufficient segregation of duties and lack of formalized policy and procedure documentation. Management plans to expand its team and build a comprehensive internal control framework.	2025-06-30	Raises concerns about the reliability of financial reporting, but management is implementing remediation measures to address these deficiencies.
Preferred Stock Designation	Filed a Certificate of Designation for Series B Convertible Preferred Stock (10,000 shares, $750 stated value per share) outlining specific dividend, voting, liquidation, and conversion rights.	2025-07-02	Introduces a new class of preferred stock with specific rights that could impact common shareholders' voting power and liquidation preferences.
Preferred Stock Designation and Board Control	Filed a Certificate of Designation for Series C Preferred Stock ($1,000 stated value per share). Holders of Series C Preferred Stock are entitled to elect 50% of the company's directors.	2025-08-11	Significantly impacts corporate control by granting Series C Preferred Stock holders the ability to elect half of the board, potentially shifting governance dynamics.

Legal Proceedings

Sabby Volatility Warrant Master Fund Ltd. v. Jupiter Wellness, Inc. (No.1:23-cv-07874-KPF): Lawsuit alleging breach-of-contract, promissory estoppel, and negligent misrepresentation related to a delayed spin-off. Initially dismissed, but Sabby successfully appealed on the breach of contract claim. The company intends to vigorously defend itself.
Sabby Volatility Warrant Master Fund Ltd. v. Safety Shot, Inc. (No. 1:24-cv-920-NRB): Lawsuit alleging improper refusal to honor a warrant exercise for 2,105,263 common shares. Sabby seeks at least $750,000 in compensatory damages and $600,000 in liquidated damages. The company has offered $1.5 million to settle.
3i LP v. Safety Shot, Inc. (No. 650196/24): Lawsuit alleging denial of warrant exercise, seeking approximately $380,000 in damages. Settled in April 2025 by providing 3i with $400,000 in unregistered common stock.
Bigger Capital fund, L.P. v. Safety Shot, Inc. (No. 650148/2024): Lawsuit regarding a warrant to purchase 1,656,050 shares. Settled on January 20, 2025, by paying $375,000, issuing secured convertible notes ($1.75 million and $3.5 million), and 5,332,889 Bigger Warrants.
Preliminary settlement with Brian John (former CEO of Jupiter Wellness) regarding 75,000 shares of SRM (TRON) stock in exchange for the registration of 750,000 Caring Brand shares. A final settlement has not been reached due to a dispute over the registrability of the TRON stock.
Settlement with Iroquois Master Fund, Ltd. and Iroquois Capital Investment Group on July 29, 2025, for $2.5 million in exchange for a full release of all claims related to alleged ownership and cashless exercise of warrants.

Related Party Transactions

On May 2, 2025, the company entered into an exchange agreement with Core 4 Capital Corp., a related party, converting 6,575,025 shares of common stock to 40,000 shares of preferred stock.
On August 30, 2024, the company entered into a Securities Purchase Agreement with an affiliate for the purchase of 3,370,787 shares of common stock and 3,370,787 common warrants.
A significant shareholder of the company and Bigger Capital entered into a voting agreement in favor of Bigger Capital in addition to the Bigger Settlement Agreement.

Stakeholder Impact

Shareholders face significant dilution from recent and planned stock and warrant issuances, as well as potential further dilution from convertible notes. There is also a risk of NASDAQ delisting impacting stock liquidity.
Employees, numbering eight full-time, are impacted by the company's financial health and receive stock-based compensation.
Customers will continue to have access to the Sure Shot Dietary Supplement and Yerba's energy beverage, with potential for new product formats and formulations.
Suppliers and creditors are exposed to the company's ability to continue as a going concern and manage its liabilities, including substantial convertible notes and payables.

Next Steps

Implement a new marketing strategy in the third quarter of 2025 to increase revenues.
Integrate Yerba Brands Corp. into the overall internal control framework.
Actively monitor the bid price for common stock and consider available options, including a reverse stock split if necessary, to regain NASDAQ compliance by December 29, 2025.
File a registration statement on Form S-1 for the resale of Common Warrant Shares within 10 days of July 21, 2025, and ensure it becomes effective within 45-75 days.
Proceed with the expected issuance of SPA Preferred Stock Shares and RSA Preferred Stock Shares (Series C Preferred Stock) by August 20, 2025.
Seek stockholder approval for the conversion of Series C Preferred Stock beyond 19.99% of currently outstanding common stock.
Continue to vigorously defend against Sabby's claims in ongoing litigation.
Finalize the preliminary settlement with Brian John regarding SRM (TRON) stock and Caring Brand shares.

Key Dates

Date	Description
2023-07-10	Company entered into Asset Purchase Agreement with GBB Drink Lab, Inc. to acquire Sure Shot assets.
2023-08-14	SRM Entertainment, Inc. completed its Initial Public Offering (IPO), and the Company received 4,500,000 shares of SRM's common stock.
2023-09-05	Sabby Volatility Warrant Master Fund Ltd. filed a lawsuit against the Company (then Jupiter Wellness, Inc.) regarding the delayed spin-off and distribution of SRM Entertainment, Inc. common stock.
2023-12-01	Company launched the Sure Shot Dietary Supplement for e-commerce sale.
2023-12-31	Company paid an additional $2,000,000 under the GBB earn-out provisions.
2024-01-10	Bigger Capital fund, L.P. filed a lawsuit against the Company regarding a warrant to purchase common stock.
2024-01-16	3i LP filed a lawsuit against the Company regarding alleged denial of warrant exercise.
2024-02-09	Sabby Volatility Warrant Master Fund Ltd. sued the Company regarding alleged improper refusal to honor a warrant exercise.
2024-08-30	Company entered into a Securities Purchase Agreement with an affiliate for the purchase of common stock and warrants.
2024-09-23	The lawsuit Sabby Volatility Warrant Master Fund Ltd. v. Jupiter Wellness, Inc. was dismissed with prejudice by the federal district court.
2024-10-10	Sabby filed an appeal of the Southern District's dismissal to the United States Court of Appeals for the Second Circuit.
2024-12-03	U.S. Patent No. 12,156,878 for the current version of the Sure Shot Dietary Supplement was granted.
2025-01-02	Company received a notice from Nasdaq regarding non-compliance with the minimum bid price requirement.
2025-01-08	Company entered into an Arrangement Agreement with Yerba Brands Corp. to acquire all of Yerba's common shares.
2025-01-20	Company settled the litigation with Bigger Capital fund, L.P. and entered into the Bigger Settlement Agreement.
2025-03-01	Sabby was successful in its appeal to the Second Circuit, overturning the lower court's ruling as to Sabby's breach of contract claim (approximate date).
2025-04-01	Company settled the 3i LP litigation by agreeing to provide $400,000 in unregistered shares of common stock (approximate date).
2025-05-02	Company entered into an exchange agreement with Core 4 Capital Corp., a related party, to convert common stock to preferred stock.
2025-06-12	Bigger Capital LLP sold its notes to Trajan and Fried.
2025-06-27	Company completed the acquisition of Yerba Brands Corp.
2025-07-01	The Second Circuit denied the Company's petition for reconsideration in the Sabby litigation (approximate date).
2025-07-02	Company executed an Amendment to the Securities Purchase Agreement to amend the exercise price of certain warrants.
2025-07-02	Company entered into an Exchange Agreement to exchange secured and convertible notes for Series B Preferred Stock.
2025-07-02	Company filed a Certificate of Designation with the Delaware Secretary of State designating Series B Convertible Preferred Stock.
2025-07-03	Company entered into a Securities Purchase Agreement with an accredited investor for the purchase of PIPE Shares.
2025-07-09	Company received an Extension Notice from Nasdaq, granting an additional 180 calendar days to regain compliance with the minimum closing bid price requirement.
2025-07-11	Company entered into a stock purchase agreement to sell 500,000 shares of SRM Entertainment, Inc. common stock.
2025-07-21	Company entered into a Securities Purchase Agreement with accredited investors for a registered direct offering and concurrent private placement.
2025-07-24	Closing of the Registered Direct Offering and PIPE Offering, resulting in the issuance of 22,993,492 common shares and warrants for 45,986,984 shares.
2025-07-29	Company settled a dispute with Iroquois Master Fund, Ltd. and Iroquois Capital Investment Group for $2.5 million.
2025-08-08	Company entered into a Securities Purchase Agreement with an institutional investor for a private investment in public equity (PIPE Offering) of Series C Convertible Preferred Stock.
2025-08-08	Company entered into a Revenue Sharing Agreement with the Investor for Series C Preferred Stock.
2025-08-11	Company filed a Certificate of Designation of Series C Preferred Stock with the Secretary of State of the State of Delaware.
2025-08-14	Date of this Form 10-Q filing.
2025-12-29	Deadline for the Company to regain NASDAQ minimum bid price compliance.
2026-01-01	Lock-up agreement for SRM common stock held by the Company expires (approximate date).
2026-12-31	Maturity date for the Secured Convertible Bigger Note.
2027-12-31	Maturity date for the Replacement Bigger Note (if issued).
2035-11-05	Expiration date of US Patent No. 10,028,991 B2 for the Sure Shot Dietary Supplement.

Recommendation

sell

Despite reporting a net income, this was primarily driven by a non-operating unrealized gain on an equity investment, masking a severe decline in core business revenue. The company faces significant going concern doubt, NASDAQ delisting risk, and multiple ongoing, costly legal challenges. While recent capital raises provide necessary liquidity, they are highly dilutive and introduce new risks, including cryptocurrency volatility and potential shifts in corporate control. The underlying operational weakness and substantial risks outweigh the one-time gain and strategic acquisition, making it a high-risk investment with poor fundamental performance.

Keywords

Safety Shot, Yerba Brands, dietary supplement, energy beverage, functional beverage, NASDAQ, SEC filing, 10-Q, financial results, acquisition, legal proceedings, capital raise, convertible notes, stock dilution, corporate governance, health and wellness, alcohol reduction, GRAS, clinical trials, intellectual property, patents, BONK tokens

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