UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended June 30, 2021March 31, 2022

For the transition period from _____ to ______

000-55735

(Commission file number)

VERONI BRANDS CORP.

(Exact name of registrant as specified in its charter)

2275 Half Day Rd.Suite 346,, Bannockburn, IL 60015

(Address of principal executive offices) (Zip Code)

(888)794-2999

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the numberAs of May 19, 2022, there were 28,282,028 shares outstanding of each of the issuer’s classes ofregistrant’s common stock, as of the latest practicable date: 27,112,029 shares as of November 12, 2021stock.

VERONI BRANDS CORP.

FORM 10-Q

FOR THE QUARTER ENDED

June 30, 2021March 31, 2022

INDEX

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

VERONI BRANDS CORP.

Index to the Financial Statements

(Unaudited)

Veroni Brands, Corp.

BALANCE SHEETS

June 30, 2021March 31, 2022 and December 31, 20202021

The accompanying notes are an integral part of these financial statements

Veroni Brands, Corp.

STATEMENTS OF OPERATIONS

For the three and six months ended June 30,March 31, 2022 and 2021 and 2020

Unaudited

The accompanying notes are an integral part of these financial statements

Veroni Brands, Corp.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the sixthree months ended June 30, 2021March 31, 2022

Unaudited

Veroni Brands, Corp.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the sixthree months ended June 30, 2020March 31, 2021

Unaudited

The accompanying notes are an integral part of these financial statements

Veroni Brands, Corp.

STATEMENTS OF CASH FLOW

For the sixthree months ended June 30,March 31, 2022 and 2021 and 2020

Unaudited

The accompanying notes are an integral part of these financial statements

VERONI BRANDS CORP.

Notes to Unaudited Financial Statements

June 30,March 31, 2022 and 2021 and 2020

Note 1 - Nature of Operations and Financial Condition

Veroni Brands Corp. (the “Company”) was incorporated on December 7, 2016 under the laws of the state of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisition.

The Company has been formed to acquire, operate, develop, grow and import premium European products into the U.S. market. Veroni Brands was created to search out desirable premium products across Europe and make them accessible to discerning consumers in the U.S. Veroni Brands strives to import the extraordinary and delight its consumers with experiences that had previously only been attainable in Europe. In January 2018, the Company became an exclusive importer and distributor of “Iron Energy” by Mike Tyson. The beverage became available to consumers in select Chicago area markets in May 2018 in three different flavors such as “Mojito,” “Zero Sugar” and “Original.” During 2019, the Company built the distribution of the Iron Energy product nationwide. Beginning in February 2019, the Company expanded its import and distribution network with the distribution of chocolate products and significantly grew its sales and distribution volumes. The Company entered into long term supply agreements with major U.S national retailers to import chocolate products under “Private Label Brands” that are currently being sold in over 20,000 retail locations across the U.S. The Company takes pride in the variety of consumer products it imports and is proud to share them with its consumers nationwide. The Company’s recent expansion of the import and distribution of snacks, chocolate and chocolate related products that are currently being sold to U.S. national retailers presents the Company with a substantial growth opportunity to introduce to its retail partners to many other consumer products and to increase its network of retailers.

Basis of presentation: unaudited interim financial information

The accompanying interim condensed financial statements are unaudited. In the opinion of management, the accompanying unaudited condensed financial statements contain all of the normal recurring adjustments necessary to present fairly the financial position and results of operations as of and for the periods presented. The interim results are not necessarily indicative of the results to be expected for the full year or any future period.

Certain information and footnote disclosures normally included in the condensed financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company believes that the disclosures are adequate to make the interim information presented not misleading. These condensed financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Report on Form 10-K filed on October 12, 2021 for the years ended December 31, 2020 and 2019.

Going Concern

The Company has generated revenue this year of approximately $$2,483,000148,644 and incurred a net loss of $$109,460533,215 for the sixthree months ended June 30, 2021ending March 31, 2022 and has an accumulated deficit of $$1,495,5682,625,889 since its inception. As of June 30, 2021,March 31, 2022, the Company had a cash balance available of approximately $$90,78413 and negative working capital of ($($392,716)1,020,080 which is not sufficient to meet its operating requirements for the next twelve months. Therefore, the Company’s ability to continue as a going concern is dependent on its ability to grow its revenue and generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its shareholders or other sources, as may be required.

The Company failed to meet its minimum annual purchase requirements under the FoodCare Sp. z.o.o. (“FoodCare”) agreement, in part due to FoodCare’s failure to provide promised marketing support. In 2020, the Company terminated the agreement and relationship with FoodCare and no longer had exclusive rights to distribute FoodCare’s Iron Energy drinks. The Company has found greater success with the distribution of chocolate and snack products instead of beverages. In addition to importing products from ZWC Millano, the Company has recently established relationships with other European manufacturers that can manufacture wide range of “panned” products, meaning those that are coated with a sugar syrup and/or chocolate, such as nuts, raisin, pretzels, fruits and many other “panned” and healthy snacks items as well as chocolate bars, multi-flavor truffles, sticks, chocolate cups, 5-bites, chocolate covered gummies, chocolate Easter eggs, custom Christmas chocolate figures as well as Advent calendars and many other products to support demand of the Company’s national retailers.

VERONI BRANDS CORP.

Notes to Unaudited Financial Statements

June 30, 2021 and 2020

Note 1 - Nature of Operations and Financial Condition (continued)

The Company is continuing to evaluate various financing options in order to continue the funding of the expansion of its operations, the products being offered and its customer base. The Company is also focusing on broadening its customer base. As disclosed below in Accounts Receivable and Concentration of Credit Risk, a significant customer did not select the Company as a vendor for 2021.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

VERONI BRANDS CORP.

Notes to Financial Statements

March 31, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies

Reclassifications

Certain reclassifications have been made in the 20202021 financial statements to conform to the 20212022 presentation. These reclassifications have no effect on net incomeloss for 2020.2021.

Advertising

The Company’s policy is to expense advertising costs as incurred. Advertising expense for the sixthree months ending June 30,March 31, 2022 and 2021 and 2020 is $$550 and $0, respectively..

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the carrying amount of inventory and associated reserves, and allowances and reserves in regards to receivables and revenue. Actual results could differ from those estimates.

Revenue Recognition

The Company’s significant accounting policy for revenue was updated as a result of the adoption of ASU Topic 606. The Company has adopted the new standard on January 1, 2019 and has used the modified retrospective method. The majority of the Company’s business is ship and bill. Based on our analysis, the Company did not identify a cumulative effect adjustment to retained earnings at December 31, 2018. The Company recognizes revenue in accordance with the five-step model as prescribed by ASU 606 in which the Company evaluates the transfer of promised goods or services and recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASU 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. See Note 1112 for revenue disaggregated by product line.

The Company recognizes revenue from the sale of products when title and risk of loss passes and the customer accepts the goods, which generally occurs at the time of delivery to a customer warehouse. Customer sales incentives such as volume-based rebates or discounts are treated as a reduction of sales at the time the sale is recognized. Shipping and handling costs are treated as fulfillment costs and presented in warehouse and selling expenses.

Payments that are received before performance obligations are recorded are shown as current liabilities.

VERONI BRANDS CORP.

Notes to Unaudited Financial Statements

June 30, 2021 and 2020

Note 2 – Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less.

Shipping Costs

Costs associated with shipping product to customers aggregating approximately $$95,29022,937 and $$125,90825,705 for the sixthree months ended June 30,March 31, 2022 and 2021, and 2020, respectively, is included in warehouse and selling expenses.

VERONI BRANDS CORP.

Notes to Financial Statements

March 31, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies (Continued)

Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation limit as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively.

Accounts Receivable and Concentration of Credit Risk

Accounts receivable are recorded at the invoiced amounts less an allowance for doubtful accounts. The allowance for doubtful accounts is based on the Company’s estimate of the amount of probable credit losses in its accounts receivable. The Company determines the allowance for doubtful accounts based upon an aging of accounts receivable, historical experience and management judgment. Accounts receivable balances are periodically reviewed for collectability, and balances are charged off against the allowance when the Company determines that the potential for recovery is remote. An allowance for doubtful accounts of approximately $$19,408 9,816and $-0- is reserved as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively.

We are exposed to credit risk in the normal course of business, primarily related to accounts receivable. To limit credit risk, management periodically reviews and evaluates the financial condition of its customers and maintains an allowance for doubtful accounts. For the sixthree months ended June 30,March 31, 2022, we had one customer who comprised approximately 100% or $15,580 of our contract receivables with recourse and one customer who comprised approximately 100% or $3,083 of our accounts receivable. For the three months ended March 31, 2021, we had one customer who comprised approximately 95%56% or $$1,165,360394,045 of our contract receivables with recourse and two customers who comprised approximately 57%82% or $$187,43517,282 of our accounts receivable. For the six months ended June 30, 2020, we had one customer who comprised approximately 85% or $1,030,675 of our contract receivables with recourse.

For the sixthree months ended June 30,March 31, 2022, we had one customer with sales in excess of 10% of our revenue and they represented 98% of our revenue. For the three months ended March 31, 2021, we had two customers with sales in excess of 10% of our revenue and they represented 80%89 of our revenue. For the six months ended June 30, 2020, we had two customers with sales in excess of 10% of our revenue and they represented 78%% of our revenue.

One of these customers had sales of approximately $1,270,257 and $1,512,608 for the six months ended June 30, 2021 and 2020, respectively. In April 2021, the Company received a letter from this customer stating that the Company was not selected as a vendor for 2021.

Distribution Agreements and Supplier Concentration

In January 2018, the Company entered into a distributor agreement with FoodCare, which was amended and restated on January 30, 2018. FoodCare is a company organized under the laws of Poland. FoodCare is a manufacturer and supplier of desserts, cereals, energy drinks and other beverage products. FoodCare manufactures the “Iron Energy” drink, a product sponsored by celebrity Mike Tyson.

Under the terms of the distribution agreement, the Company became the exclusive distributor of FoodCare products in the United States, Puerto Rico and the U.S. Virgin Islands. FoodCare is the sole supplier of Iron Energy to the Company. The term of the agreement was for ten years and gave the Company exclusive rights to distribute FoodCare products within the U.S. market, so long as the Company purchased the required quantity of product from FoodCare.

VERONI BRANDS CORP.

Notes to Unaudited Financial Statements

June 30, 2021 and 2020

Note 2 – Summary of Significant Accounting Policies (continued)

The Company failed to meet its minimum purchases in 2018, due in part to FoodCare’s failure to provide marketing support as promised. The Company terminated the agreement and relationship with FoodCare in 2020. Sales of Iron Energy were only $33,475 in 2020. The termination of the “Iron Energy” drink distribution agreement did not significantly affect the company or its revenue, as the Company has found greater success with the distribution of chocolate and snack products instead of beverages.

At the beginning of 2019, the Company established relationships with other European manufacturers that can manufacture a wide range of “panned” products such as nuts, raisin, pretzels, fruits and many other “panned” and healthy snacks items, as well as chocolate bars, multi-flavor truffles, sticks, chocolate cups, 5-bites, chocolate covered gummies, chocolate Easter eggs, custom Christmas chocolate figures as well as Advent calendars and many other products to support demand from the Company’s national retailers.

In June 2021, the Company entered into storage and procurement distribution agreement with a transportation company to store the chocolate products, as well as fulfill the purchase orders from the Company’s customers. The agreement is for a term of two years from the date of first inbound receipt and may be terminated at the option of the Company upon 60 days’ notice.

Vendor Concentration

Currently, the Company is sourcing all its chocolate products and snacks from the Millano Group, a related party. The Company has not entered into a distributor agreement but is currently negotiating an agreement with Millano Group. The Company, due to relationships with other European manufacturers could find other sources to replace its chocolate and snack products if the Company were to terminate Millano Group as itsit’s suppler for chocolate products. Total purchases for the sixthree months ended for June 30,2021ending March 31, 2022 and 20202021 were approximately $$1,614,8050 and $$1,921,624531,712, respectively which represents 100% and 100%100% of product purchases.purchases, respectively.

VERONI BRANDS CORP.

Notes to Financial Statements

March 31, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies (Continued)

Income Taxes

Under ASC 740, Income Taxes, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30,March 31, 2022 and 2021, and 2020, there were no net deferred tax assets, as the Company established a 100% valuation allowance, due to the uncertainty of the realization of net operating loss carryforwards prior to their expiration.expiration.

Loss Per Common Share

Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. As of June 30,March 31, 2022 and 2021, and 2020, there are 0 outstanding dilutive securities.

Fair Value of Financial Instruments

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

VERONI BRANDS CORP.

Notes to Unaudited Financial Statements

June 30, 2021 and 2020

Note 2 – Summary of Significant Accounting Policies (Continued)

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents and accounts payable approximate their fair values at June 30,March 31, 2022 and 2021 and 2020 due to their short-term nature and management’s belief that their carrying amounts approximate the amount for which the assets could be sold or the liabilities could be settled.

VERONI BRANDS CORP.

Notes to Financial Statements

March 31, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies (Continued)

Share-Based Compensation

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity–Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date. In June 2018, the Financial Accounting Standards Board adopted Accounting Standards Update 2018-07 Compensation – Stock

Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. In that update, ASC 505 has been rescinded in its entirety and share based compensation issued to nonemployees will now fall under ASC 718 and its associated fair value measurements. Due to the Emerging Growth Company (see below) status of the Company, the Company has adopted the update on January 1, 2020.2020 .

Emerging Growth Company

The Company has elected to be an emerging growth company as defined under the Jumpstart Our Business Startups Act of 2012 (“Jobs Act”). Included with this election, the Company has also elected to use the provisions within the Jobs Act that allow companies that go public to continue to use the private company adoption date rules for new accounting policies. Should the Company obtain revenues in excess of $1 billion on an annual basis, have its non-affiliated market capitalization increase to over $700 million as of the last day of its second quarter, or raise in excess of $1 billion in public offerings of its equity or instruments directly convertible into its equity, it will forfeit its status under the Jobs Act as an emerging growth company.company

Recent Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update should be applied on a prospective basis. The provisions of ASU 2017-04 are effective for the fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company has elected this accounting guidance as of January 1, 2020. It has had no effect on the Company’s financial statements.

VERONI BRANDS CORP.

Notes to Unaudited Financial Statements

June 30, 2021 and 2020.

Note 3 – Inventory

Finished Goods inventory consist of chocolates, and related products imported from Poland and is stated at the lower of actual cost (first-in, first-out method) or net realizable value. Inventory cost includes all freight (ocean, air and truck) costs to the warehouse, import duties, regulatory and miscellaneous fees. Inventory is as follows:

Schedule of Inventory

VERONI BRANDS CORP.

Notes to Financial Statements

March 31, 2022 and 2021

Note 4 – Prepaid Expenses

Prepaid inventory

The Company’s foreign suppliers will generally require that the Company pay in advance of an inventory shipment to it from Europe. The Company’s current agreement with FoodCare includes provisions in which title for the inventory passes upon FoodCare loading the product onto truck transport for delivery to the seaport in Poland. Amounts transferred to the Company’s suppliers to secure future delivery, but prior to transfer of title of those shipments, are recorded as prepaid inventory and are included in prepaid expenses and other current assets.

Schedule of Prepaid Expenses

Note 5 – Notes Payable Other

On February 22, 2019, the Company entered into a promissory note in the amount of $215,000. The note matured on December 31, 2019 and can be converted in shares of the Company’s common stock at $0.75 per share during the term of the note. The Company agreed to issue to the lender 150,000 shares of the Company’s common stock on or before December 31, 2019 as a one-time consideration for making the loan in lieu of a cash payment of interest. The common stock issuable under the term of the promissory note was valued at $112,500 with an effective interest rate of 88.5% and was amortized over the term of the note. Through December 31, 2019 approximately $112,500 has been amortized and recorded as Interest Expense. The lender in 2020 converted the promissory note into 286,667 shares of the Company’s common stock at the conversion price of $0.75 per share.

Under the Small Business Administration (“SBA”), the Company applied for the Paycheck Protection Program (“PPP”) loan. These loans are forgiven if used for payroll, payroll benefits, including health insurance and retirement plans, as well as certain rent payments, leases, and utility payments, which are limited to 40% of the loan proceeds, all of which if paid within either 8 weeks or 24 weeks of the receipt of the loan proceeds. At the timeproceeds. The SBA forgave $38,550 of this filing, we anticipate a significant amountprincipal and $558 of this loan will be forgiven; however, the forgiveness application process is not yet complete.interest on May 1, 2021 The Company has elected to record these advances under the debt treatment for these loans, under GAAP guidance. Unforgiven portions of these loansunforgiven portion will be repaid over 5 years, accruing6 months with a maturity date of May 4, 2022 at an interest at 1%rate of 1% per annum. The PPP loan has a loan balance of $3,965 and $56,25014,977 as June 30, 2021.March 31, 2022 and December 31, 2021, respectively.

VERONI BRANDS CORP.

Notes to Unaudited Financial Statements

June 30, 2021 and 2020

Note 6 – Contract Receivables Liability with Recourse

On February 21, 2019, the Company entered into a factoring agreement with Advance Business Capital d/b/a Interstate Capital for a term of one year. On September 11, 2019, the lender (now doing business as Triumph Business Capital), entered into an amended agreement with the Company which lowered the interest rate charged by the lender from 0.49%0.49% for every 10 days to Prime Rate (floor of 5.5%5.5%) plus 3%3%. On January 27, 2021, the agreement was further amended to include the factoring of purchase orders at the Wall Street Journal Prime Rate, which allows the Company to pre-pay for product shipped from the supplier.

As of June 30,March 31, 2022 and 2021 and December 31, 2020 the Company owes $$1,112,85613,531 and $$649,502843,102, respectively for advances on their receivables. Of the $1,112,856 amount, $116,119 is related to the purchase order financing. The Company bears all credit risk related to the receivables factored as well as purchase order financing.factored. The Company has given a security interest in substantially all of its assets and the president of the Company, and a major shareholder, have personally guaranteed the debt.

VERONI BRANDS CORP.

Notes to Financial Statements

March 31, 2022 and 2021

Note 7 – Long Term Debt

On August 27, 2020 the Company received an Economic Injury Disaster Loan (EIDL) from the U.S. Small Business Administration SBA) in the amount of $$150,000. The interest rate is 3.75%3.75% with payments of $$731 beginning twelve month from the date of the loan.loan. Interest is accrued monthly and payments are first applied to interest accrued to the date of receipt of payment and the balance, if any, will be applied to the principal. The balance of principal and interest is due 8/27/2050. As of June 30,December 31, 2021 the Company owes $$149,900150,000.

The maturity of the EIDL loan as of June 30, 2021March 31, 2022 is as follows:

Schedule of Maturities of Long Term Debt

Note 8 – Stockholders’ Equity

The Board of Directors is authorized to issue preferred stock by series that will establish the number of shares to be included and fix the designation, powers, preferences and rights of the shares each such series and the qualifications, limitations or restrictions thereof. At June 30, 2021,March 31, 2022, the Company has not established any series of preferred stock.

The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock.

From January 1 to June 30, 2021March 31, 2022 the Company issued 27,000900,000 shares of common stock to its chief executive officer Igor Gabal for FY 2022, in considerationlieu of servicesa reduction of Igor’s salary for FY 2022, $47,250.

From January 1 to June 30, 2020 the Company issued 60,000900,000 shares were issued as of commonFebruary 1, 2022. Per employment agreement a total of $1,575,000 in stock in considerationcompensation will be expense through the year. As of cash proceeds of March 31, 2022, $$45,000393,750. has been expensed as stock compensation.

At DecemberMarch 31, 2020,2022, the Company has 0 outstanding options or warrants.

VERONI BRANDS CORP.

Notes to Unaudited Financial Statements

June 30,March 31, 2022 and 2021 and 2020

Note 9 –Related Party Transactions

During 2018, two significant shareholdersthe first quarter of 2022, a shareholder lent the Company advanced the Company company $$157,059. The advance was evidenced by two individual notes totaling $155,000 which were due on or before August 1, 2019 and a payable of $2,059. The two notes have a fixed interest fee of $1,000 for each of the notes. One shareholder was repaid in June 2019 on his promissory note and accrued interest, which totaled $61,000. In December 2019 that shareholder paid $6,27630,000 of Company expenses and which $$14,72615,000 of Company liabilities. In January 2020was paid back. At December 31, 2021 the Company reimbursed the shareholder these amounts.

related party balances were as follows:

The due date for the second shareholder note was extended to be due on or before August 1, 2020, and asSchedule of December 31, 2019, $78,000Related Party Transaction has been repaid leaving an outstanding loan balance of $17,000 and a payable of $4,370. Unpaid interest of $1,000 has been accrued as of December 31, 2019 for the remaining balance of the promissory note. The Company repaid the remaining principal and accrued interest in February 2020 and paid $2,311 of the outstanding payable in March 2020.

During the year ended December 31, 2020, one of the significant shareholders paid certain expenses on behalf of the Company from time to time. These amounts were repaid during the year and no amount was owed to the shareholder at December 31, 2020.

The Company is purchasing all of its chocolate products from Millano Group, a related party (controlled by the father of a major shareholder), and owed $$910,961606,580 and $$783,417572,535 at June 30,March 31, 2022 and 2021, and December 31, 2020, respectively. The balance is reflected in accounts payable related party.

See note 8 for issuance of common stock to a related party.

Note 10– Office Lease

On February 4, 2019,2020, the Company entered into a sublease for office space located in Bannockburn, Illinois, with an unrelated third party. The sublease terminates on May 31, 2022. The sublease requires annual rent of $$55,860for the first year of the sublease, $$57,536 for the second year, $$59,262 for the third year, and $$61,040 for the last year. Rent for the three monthsyears ending June 30,March 31, 2022 and 2021 and 2020 was $$14,67053,031 and $$14,43353,031, respectively. The Company also paid a security deposit of $$9,310, which is reflected in Other Assets - Deposits– Deposits. As of June 30, 2021 and DecemberMarch 31, 2020,2022, our right of use asset and related liability was $$47,2974,822 and $-$74,7210-, respectively.