Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 16, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | Jupiter Wellness, Inc. | |
Entity Incorporation State | DE | |
Entity File Number | 001-39569 | |
Entity Central Index Key | 0001760903 | |
Entity Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,032,333 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash | $ 131,113 | $ 531,026 |
Due from third party | 400 | |
Inventory | 293,859 | 135,478 |
Account receivable | 22,481 | 1,911 |
Prepaid expenses | 50,000 | 25,000 |
Right of use assets | 34,555 | 49,974 |
Other | 3,200 | 2,000 |
Total current assets | 535,208 | 745,789 |
Fixed assets, net of accumulated depreciation of $6,208 | 37,792 | |
Intangible assets, net of accumulated amortization of $73,225 | 884,295 | |
Goodwill | 308,690 | |
Total assets | 1,765,985 | 745,789 |
Liabilities and Shareholders Equity | ||
Accounts Payable | 7,768 | 10,721 |
Convertible notes payable to related parties | 1,375,000 | 300,000 |
Note payable issued in acquisition, net of discount of $14,525 | 985,475 | |
Current portion of lease liability | 5,396 | 20,566 |
Covid 19 SBA Loan | 84,578 | |
Accrued liabilities | 68,627 | 5,517 |
Total current Liabilities | 2,526,844 | 336,444 |
Long-term portion lease liability | 30,138 | 30,137 |
Total Liabilities | 2,556,982 | 366,581 |
Preferred stock, $0.001 par value, 100,000 shares authorized of which none are issued and outstanding | ||
Common stock, $.001 par value, 100,000,000 shares authorized, of which 6,893,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 6,893 | 6,893 |
Additional paid-in capital | 1,264,768 | 1,032,511 |
Common stock payable | 445,000 | 325,000 |
Accumulated deficits | (2,507,658) | (985,196) |
Total Shareholders Equity | (790,997) | 379,208 |
Total Liabilities and Shareholders Equity | $ 1,765,985 | $ 745,789 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 6,208 | |
Accumulated amortization | 73,225 | |
Note payable discount | $ 14,525 | |
Common Stock, par value | $ .001 | $ .001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 6,158,000 | 5,958,000 |
Common Stock, shares outstanding | 6,158,000 | 5,958,000 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | ||||
Sales | $ 178,335 | $ 5,068 | $ 753,729 | $ 6,399 |
Cost of Sales | 96,608 | 3,122 | 433,305 | 5,072 |
Gross profit | 81,727 | 1,946 | 320,424 | 1,327 |
Operating expense | ||||
General and administrative expenses | 650,412 | 128,978 | 1,750,778 | 270,927 |
Other income / (expense) | ||||
Interest income | 1,068 | 66 | 1,983 | 66 |
Interest Expense | (39,672) | (930) | (94,091) | (930) |
Total other income / (expense) | (38,604) | (864) | (92,108) | (864) |
Net (loss) | $ (607,289) | $ (127,896) | $ (1,522,462) | $ (270,464) |
Net (loss) per share: | ||||
Basic | $ (0.09) | $ (0.02) | $ (0.22) | $ (0.04) |
Weighted average number of shares | ||||
Basic | 6,893,000 | 6,158,000 | 6,893,000 | 6,124,007 |
Shareholders Equity (Unaudited)
Shareholders Equity (Unaudited) - USD ($) | Common Stock | Common Stock Payable | Additional Paid-In Capital | Subscription Receivable | Retained Earnings / Accumulated Deficit | Total |
Beginning Balance, shares at Dec. 31, 2018 | 5,958,000 | |||||
Beginning Balance, amount at Dec. 31, 2018 | $ 5,958 | $ 238,542 | $ (450) | $ (59,734) | $ 184,316 | |
Common stock issued for cash (net of offering expenses), shares | 935,000 | |||||
Common stock issued for cash (net of offering expenses), amount | $ 935 | 761,065 | 762,000 | |||
Collection of subscription receivable | $ 450 | 450 | ||||
Common stock warrants issued as compensation | 32,904 | 32,904 | ||||
Common stock payable | $ 325,000 | 325,000 | ||||
Net (loss) | (925,462) | (925,462) | ||||
Ending Balance, shares at Dec. 30, 2019 | 6,893,000 | |||||
Ending Balance, amount at Dec. 30, 2019 | $ 6,893 | 325,000 | 1,032,511 | (985,196) | 379,208 | |
Beginning Balance, amount at Dec. 31, 2019 | 379,208 | |||||
Acquisition consolidation - stock options | 156,612 | 156,612 | ||||
Common stock options issued as compensation | 75,645 | 75,645 | ||||
Exercise of stock warrants - shares not issued | 45,000 | 45,000 | ||||
Common stock payable as compensation - shares not issued | 75,000 | 75,000 | ||||
Net (loss) | (1,522,462) | (1,522,462) | ||||
Ending Balance, shares at Sep. 30, 2020 | 6,893,000 | |||||
Ending Balance, amount at Sep. 30, 2020 | $ 6,893 | $ 445,000 | $ 1,264,768 | $ (2,507,658) | $ (790,997) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net (loss) | $ (1,522,462) | $ (270,464) |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Stock based compensation | 150,645 | |
Depreciation and amortization | 114,481 | |
Changes in current operating assets and liabilities: | ||
Due from third party | 400 | 30,000 |
Prepaid expenses | (25,000) | (71,000) |
Right of Entry asset | 15,419 | |
Accounts receivable | (20,570) | (2,483) |
Inventory | (72,161) | (74,831) |
Security deposits and other assets | (1,200) | (2,000) |
Accounts payable | (2,953) | 9,325 |
Accrued liabilities | 63,470 | 2,097 |
Lease liability | (15,169) | |
Net cash (used in) operating activities | (1,315,100) | (379,356) |
Cash flows from investing activities: | ||
Purchase of fixed assets | (44,000) | |
Net cash paid in acquisition | (245,391) | |
Net cash (used in) investing activities | (289,391) | |
Cash flows from financing activities: | ||
Proceeds from convertible debt | 1,075,000 | |
Proceeds from notes payable - related party | 75,000 | |
Repayment of note payable – related party | (25,000) | |
Proceeds from exercise of warrants | 45,000 | |
Collection of subscription receivable | 450 | |
Proceeds from Covid-19 SBA Loan | 84,578 | |
Proceeds from sales of common stock | 671,000 | |
Net cash provided by financing activities | 1,204,578 | 721,450 |
Net increase (decrease) in cash and cash equivalents | (399,913) | 342,094 |
Cash and cash equivalents at the beginning of the period | 531,026 | 161,316 |
Cash and cash equivalents at the end of the period | 131,113 | 503,410 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Acquisition of Magical Beasts, LLC (see note 12) | $ 1,111,648 |
Note 1 - Organization and Busin
Note 1 - Organization and Business Operations | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Note 1 - Organization and Business Operations | Note 1 - Organization and Business Operations Jupiter Wellness, Inc. (the “Company”) was formed on October 24, 2018 as CBD Brands, Inc. under the laws of the State of Delaware, and is headquartered in Jupiter, Florida. The Company is a leading cutting-edge wellness brand dedicated to exploring and developing multiple therapeutic and medical use for Cannabidiol (CBD) in the treatment of various ailment and diseases such as cancer, arthritis, anxiety, insomnia, psoriasis, chronic pain amongst others. Going Concern Consideration As of September 30, 2020, the Company had $131,113 in cash, accumulated deficit of $2,507,658, and the cash flow used in operation during the nine-month period ended September 30, 2020 was $1,315,100. The Company has incurred and expects to continue to incur significant costs in pursuit of its exploring and developing plans. Subsequent to September 30, 2020 the company completed an Initial Public Offering (“IPO”) with net proceeds of approximately $6,000,000 (see Note 14 Subsequent Events). Although the Company expects to continue to incur significant losses, the Company has sufficient capital to sustain our operations for at least the next 24 months, but, there can be no assurance that sufficient funds required during the subsequent year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on our existing stockholders. |
Note 2 - Significant Accounting
Note 2 - Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Note 2 - Significant Accounting Policies | Note 2 - Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of US Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Jupiter Wellness, Inc., a Florida corporation, and Magical Beasts, LLC, a Nevada limited liability company. All intercompany accounts and transactions have been eliminated. Emerging Growth Company Status The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of financial statements in conformity with US 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 expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with a maturity of three months or less when purchased to be cash and equivalents for purposes of the statement of cash flows. There were no cash equivalents as of September 30, 2020. Inventory Inventories are stated at the lower of cost or market. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Inventory is based upon the average cost method of accounting. Net Loss per Common Share Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments such as options, warrants, convertible securities and preferred stock, unless the effect is to reduce a loss or increase earnings per share. As such, options, warrants, convertible securities and preferred stock are not considered in the calculations, as the impact of the potential common shares would be to decrease the loss per share. For the Nine Months Ended September 30, 2020 For the Nine Months Ended September 30, 2019 Numerator: Net (loss) $ (1,522,462 ) $ (270,464 ) Denominator: Denominator for basic earnings per share - Weighted-average common shares issued and outstanding during the period 6,893,000 6,124,007 Denominator for diluted earnings per share 6,893,000 6,124,007 Basic (loss) per share $ (0.22 ) $ (0.04 ) Diluted (loss) per share $ (0.22 ) $ (0.04 ) Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. Revenue Recognition The Company generates its revenue from the sale of its products directly to the end user or distributor (collectively the “customer”). The Company recognizes revenues by applying the following steps in accordance with FASB Accounting Standards Codification 606 “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: • identify the contract with a customer; • identify the performance obligations in the contract; • determine the transaction price; • allocate the transaction price to performance obligations in the contract; and • recognize revenue as the performance obligation is satisfied. The Company’s performance obligations are satisfied when goods or products are shipped on a FOB shipping point basis as title passes when shipped. Our product is generally paid in advance of shipment or standard net 30 days and we offer no specific right of return, refund or warranty related to our products except for cases of defective products of which there have been none to date. Our revenue currently is generated from one general product category of health care products with one performance obligation and geographically there are no specific concentrations of our customer base to disaggregate our revenue stream. Accounts Receivable and Credit Risk Accounts receivable are generated from sales of the Company’s products. The Company provides an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. As of September 30, 2020 and December 31, 2019, the Company has not recognized any allowance for doubtful collections. Stock based compensation The Company recognizes compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation - Stock Compensation” (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share based compensation arrangements include stock options and warrants. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. On October 24, 2018, the inception date, the Company adopted ASU No. 2018-07 “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. Income Taxes The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on October 24, 2018, the evaluation was performed for 2018 tax year which would be the only period subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense. Related parties The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The standard will be effective for us in the first quarter of our fiscal year 2020, although early adoption is permitted (but no sooner than the adoption of Topic 606). The Company has adopted this standard beginning January 1, 2019. The adoption of this standard has not had a significant impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) In February 2016, Topic 842, “Leases” was issued to replace the leases requirements in Topic 840, “Leases”. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. Topic 842 will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods and is to be retrospectively applied. The Company has adopted this standard beginning January 1, 2019. The adoption of this standard has not had a significant impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures. |
Note 3 - Accounts Receivable
Note 3 - Accounts Receivable | 9 Months Ended |
Sep. 30, 2020 | |
Accounts, Notes, Loans and Financing Receivable, Unclassified [Abstract] | |
Note 3 - Accounts Receivable | Note 3 - Accounts Receivable As of September 30, 2020 and December 31, 2019, the Company had accounts receivable of $22,481 and $1,911, respectively. |
Note 4 - Prepaid Expenses
Note 4 - Prepaid Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Note 4 - Prepaid Expenses | Note 4 - Prepaid Expenses As of September 30, 2020 and December 31, 2019, the Company had prepaid expenses of $50,000 and $25,000, respectively consisting of offering expenses in connection with its pending Initial Public Offering. |
Note 5 - Inventory
Note 5 - Inventory | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Note 5 - Inventory | Note 5 - Inventory As of September 30, 2020 and December 31, 2019, the Company had inventory of $293,859 and $135,478, consisting of finished goods, raw materials and packaging supplies. |
Note 6 - Intangible Assets
Note 6 - Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Note 6 - Intangible Assets | Note 6 Intangible Assets In connection with the acquisition of Magical Beasts (see Note 11 below), the Company allocated the purchase price to intangible assets as follows: Tradenames & trademarks $ 151,800 Customer base 651,220 Non-compete 154,500 Goodwill 308,690 $ 1,266,210 The Non-compete has an estimated life of two years, the Customer base has an estimated life of fifteen years and the Tradenames & trademarks and Goodwill have indefinite life and will be reviewed at each subsequent reporting period to determine if the assets have been impaired. Amortization for the nine months ended September 30, 2020 totaled $73,225. |
Note 7 - Convertible Notes Paya
Note 7 - Convertible Notes Payable – Related Parties | 9 Months Ended |
Sep. 30, 2020 | |
Loans Payable, Noncurrent [Abstract] | |
Note 7 - Convertible Notes Payable – Related Parties | Note 7 - Convertible Notes Payable – Related Parties The 2019 Notes: On June 10, 2019, the Company entered into a Twenty-Five Thousand Dollar ($25,000) Convertible Promissory Note (the “Caro Note”) with Caro Partners, LLC (“Caro”), a consulting firm owned by Brian S. John, our Chief Executive Officer and a member of our Board of Directors. The term of the Caro Note was one year. The interest rate was ten percent (10%) non compounded and payable semi-annually. The Caro Note was convertible at any time by Caro at a conversion price of $0.25 per share of common stock. The Caro Note was paid in full in September 2019. As a result, no value was allocated to the conversion feature. As of September 30, 2020 and December 31, 2019, the aggregate outstanding balance of the two notes payable to related parties (the “Convertible Promissory Notes”) was $300,000. The terms of the Convertible Promissory Notes are as follows: The first Convertible Promissory Note for $50,000, dated July 2019, has a term of one year, an annual interest rate of ten percent (10%), which is non compounded and payable semi-annually, and convertible into the Company’s common stock at any time by the holder at a conversion price of $0.25 per share, which is considered as the fair value of the Company’s common stock based on the arm’s length equity transactions since there is no open market for the Company’s common stock yet. As a result, the Company determined that the conversion features contained in this Convertible Promissory Note should carry neither beneficial conversion feature nor derivative liabilities. The second Convertible Promissory Note for $250,000, dated December 31, 2019, has a term of one year, an annual interest rate of eight percent (8%), effective on December 31, 2019, which is non compounded and payable semi-annually, and convertible into the Company’s common stock at any time by the holders at a conversion price of $3.00 per share, which is considered as the fair value of the Company’s common stock based on the arm’s length equity transactions since there is no open market for the Company’s common stock yet. As a result, the Company determined that the conversion features contained in the Note should carry neither beneficial conversion feature nor derivative liabilities. The 2020 Notes: During the nine months ended September 30, 2020, the Company issued nine convertible promissory notes totaling $1,075,000 (the “2020 Notes”) as follows: Amount Dated Conversion Rate $ 25,000 (1) 01/02/20 $ 3.00 250,000 (2) 01/23/20 3.00 300,000 (1) 03/09/20 3.00 50,000 (2) 05/01/20 3.00 50,000 (2) 05/27/20 3.00 50,000 (2) 05/27/20 3.00 100,000 (3) 06/24/20 5.00 125,000 (4) 09/11/20 5.00 125,000 (4) 09/16/20 5.00 $ 1,075,000 1. Issued to a non-affiliate. 2. Issued to a Secured and Collateralized Lending LLC, an entity run by a consultant of the Company. 3. Issued to BBBY, Ltd, an LLC of which Byron Young, a Company Director, is a manager and a member. 4. Issued to Asia Pacific Partners Inc., an entity run by a consultant of the Company. All of the 2020 Notes have a one-year term and accrue interest at an annual interest rate of eight percent (8%) non compounded and payable semi-annually. The 2020 Notes are convertible into the Company’s common stock at any time by the note holder at a conversion price of $3.00 - $5.00 per share, which is considered as the fair value of the Company’s common stock based on the arm’s length equity transactions since there is yet to be any open market for the Company’s common stock. As a result, the Company determined that the conversion features contained in the 2020 Notes should carry neither beneficial conversion feature nor derivative liabilities. A September 30, 2020 the aggregate outstanding balance of the convertible notes payable (the “Convertible Promissory Notes”) was $1,375,000. The Company recorded interest expense of $55,733 and $2,181 related to the Convertible Promissory Notes during the nine months ended September 30, 2020 and year ended December 31, 2019. At September 30, 2020, the Company had accrued interest payable of $57,914. |
Note 8 - Note payable issued in
Note 8 - Note payable issued in acquisition | 9 Months Ended |
Sep. 30, 2020 | |
Note 8 - Note Payable Issued In Acquisition | |
Note 8 - Note payable issued in acquisition | Note 8 - Note payable issued in acquisition In connection with the Acquisition of Magical Beasts, LLC (see Note 12) the Company issued a non-interest bearing $1,000,000 promissory note, due upon the earlier of i) the closing of a public offering or ii) December 31, 2020. The note has been valued at its discounted amount of $950,427. During the nine months ended September 30, 2020, the company recognized $35,048 of interest expense for the accretion of the discount. |
Note 9 - Covid-19 SBA Loans
Note 9 - Covid-19 SBA Loans | 9 Months Ended |
Sep. 30, 2020 | |
Note 9 - Covid-19 Sba Loans | |
Note 9 - Covid-19 SBA Loans | Note 9 – Covid-19 SBA Loans During the nine months ended September 30, 2020, the Company applied for and received $28,878 under the Federal Paycheck Protection Program (“PPP”) and $55,700 under the Economic Injury Disaster Loan Program (“EIDL”), both of which are administered through the Small Business Administration (“SBA”). Under the guidelines of the PPP, the SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses. Under the guidelines of the EIDL, the maximum term is 30 years; however, terms are determined on a case-by-case basis based on each borrower’s ability to repay and carry an interest rate of 3.75%. The Company has not received any notification from the SBA as to whether the PPP will be forgiven or what terms the EIDL will ultimately be. |
Note 10 - Capital Structure
Note 10 - Capital Structure | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Note 10 - Capital Structure | ||
Note 10 - Capital Structure | Note 10 - Capital Structure Common Stock Founder Shares During 2018, 5,000,000 shares of the Company’s common stock were issued to the Founders of the Company (“Founder Shares”) for an aggregate amount of $5,000 to the management of the Company, of which $4,550 was collected as of December 31, 2018 and $450 was collected during the year ended December 31, 2019. Subscription Shares During 2018 and 2019, fourteen (14) investors submitted subscription agreements to the Company for the purchase of a total 1,158,000 shares of the Company’s Common Stock by cash payment of total $289,500, or $0.25 per share, of which $239,500 was collected as of December 31, 2018 and $50,000 was collected in 2019. The transaction was independently negotiated between the Company and the investors. Regulation A Offering On June 21, 2019, the Company filed a Form 1-A Regulation A Offering Statement Under the Securities Act of 1933, as amended, and subsequent amendments thereto on July 29, 2019 and August 19, 2019 (the “Form 1-A”). On September 5, 2019, the Form 1-A was qualified by the Securities and Exchange Commission. Pursuant to the Form 1-A, as of December 31, 2019, the Company has sold 735,000 shares of its common stock, $0.001 par value per share, at a purchase price of $1.00 per share, resulting in gross proceeds of $735,000. Summary of Common Stock Sales The following table sets forth the sales of the Company’s shares of common stock by year: Year Founders Subscription Reg – A Total Proceeds 2018 5,000,000 958,000 5,958,000 $ 244,500 2019 200,000 735,000 935,000 762,000 * 2020 5,000,000 1,158,000 735,000 6,893,000 $ 1,006,500 *Gross proceeds were $785,000 less $23,000 fees associated with the Reg-A Offering No shares were sold during the nine months ended September 30, 2020. Common Stock to be issued During 2019 the Company granted 100,000 shares of its common stock to the Chief Financial Officer and 300,000 shares to its Chairman. The shares were valued at $0.25 and $1.00 per share, respectively and the Company recognized a total of $325,000 as compensation expense for the year ended December 31, 2019. The shares had not been issued as of September 30, 2020 and December 31, 2019. The shares were valued based upon the last price paid by third parties for shares of our common stock. On September 16, 2020 the Company entered into a Services Agreement under the terms of which the Company would issue 75,000 shares of the Company’s common stock as payment. The shares have been valued at $1.00 per share and the Company recognized $75,000 as compensation expense for the nine months ended September 30, 2020. The market price was valued based upon the last price paid by third parties for shares of our common stock. These shares had not been issued as of September 30, 2020. |
Note 11 - Warrants and Options
Note 11 - Warrants and Options | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Note 11 - Warrants and Options | Note 11 - Warrants and Options In connection with the sales of subscription shares of common stock, discussed in Note 10 above, the Company granted the subscribers a total of 1,158,000 warrants to purchase up to 1,158,000 shares of common stock at an exercise price of $0.50 per share, with a term of two years. The fair value of these warrants was measured using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation model on the respective reporting date. The market price was valued based upon the last price paid by a third party for shares of our common stock. Reporting Relative Fair Value Term Exercise Market Volatility Risk-free Rate 11/26/2018 $ 108,163 2 $ 0.50 $ 0.25 717 % 0.0286 2/18/2019 $ 30,000 2 $ 0.50 $ 0.25 717 % 0.0227 4/3/2019 $ 20,000 2 $ 0.50 $ 0.25 717 % 0.0233 The following tables summarize all warrant outstanding as of September 30, 2020 and December 31, 2019, and the related changes during this period. Number of Exercise Stock Warrants Balance at December 31, 2018 958,000 $ 0.50 Granted 200,000 $ 0.50 Exercised — — Expired — — Balance at December 31, 2019 1,158,000 0.50 Granted — — Exercised (90,000 ) 0.50 Expired — — Balance at September 30, 2020 1,068,000 $ 0.50 Warrants Exercisable at September 30, 2020 1,068,000 $ 0.50 During the quarter ended September 30, 2020 two of the warrant holders exercised a total of 90,000 warrants into shares of the Company’s common stock for cash totaling $45,000. As of September 30, 2020 the shares had not been issued and are shown as Common Stock payable. During 2019, in connection with four of our Directors, Dr. Alila, Mr. Glynn, Mr. Melton and Mr. Young, each entering into an Independent Director’s Agreement, the Directors were granted stock options to purchase a total of 141,330 shares of the Company’s common stock. The options have a three-year term with an exercise price between $0.25 and $3.00. Additionally, the Agreements call for the grant of additional options in a like amount annually. During the nine months ended September 30, 2020, certain Directors were granted stock options to purchase a total of 116,330 additional shares of the Company’s common stock. The options have a three-year term with an exercise price between $0.25 and $3.00. The fair value of these warrants was measured using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation model on the respective reporting date. Reporting Number of Options Granted Term Exercise Market Volatility Fair Value 2/25/19 – 7/29/19 116,330 3 $ 0.25 $ 0.25 194-281 % $ 20,955 10/25/19 25,000 3 $ 3.00 $ 0.25 193 % $ 11,949 2/25/20 33,330 3 $ 0.25 $ 1.00 181 % $ 28,180 3/19/20 50,000 3 $ 3.00 $ 1.00 169 % $ 18,979 7/29/20 33,000 3 $ 0.25 1.00 117 % $ 28,486 The Company recognized $75,645 and $32,904 as compensation expense in the financial statements for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. The market price was valued based upon the last price paid by third parties for shares of our common stock. |
Note 12 - Acquisition of Magica
Note 12 - Acquisition of Magical Beasts, LLC | 9 Months Ended |
Sep. 30, 2020 | |
Business Combination, Description [Abstract] | |
Note 12 - Acquisition of Magical Beasts, LLC | Note 12 - Acquisition of Magical Beasts, LLC Effective February 21, 2020, Jupiter Wellness Inc., a Florida corporation (“Jupiter Sub”), our wholly-owned subsidiary, entered into a membership interest purchase agreement with Magical Beasts LLC (“Magical Beasts”), a Nevada limited liability corporation, and Krista Whitley, its sole interest holder, pursuant to which Jupiter Sub acquired all of the membership interests in Magical Beasts (the “Magical Beasts Acquisition”) in exchange for the following consideration: • $250,000 cash at closing; • A $1,000,000 promissory note, non-interest bearing payable by us, due upon the earlier of i) the closing of this offering or ii) December 31, 2020 valued at its discounted amount of $950,427; and • an option to purchase 250,000 restricted shares of our common stock at an exercise price of $1.00 per share valued at $156,612. The fair value of these options was measured using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation model on the reporting date. The market price was valued based upon the last price paid by third parties for shares of our common stock. Reporting Number of Options Granted Term Exercise Market Volatility Fair Value 2/21/20 250,000 5 $ 1.00 $ 1.00 77 % $ 156,612 In connection with the Magical Beasts Acquisition, Jupiter Sub shall enter into an executive employment agreement with Krista Whitley to act as our Director of Marketing, however, until such agreement is entered into, Jupiter Sub shall pay Krista Whitley an annual salary of $150,000. Valuation and Purchase Price Allocation According to ASC 805, the standard of value to be used in the application of purchase accounting rules is fair value. The Company utilized fair value defined in Statement of Financial Accounting Standard No. 820–10–35–37 Fair Value Measurements and Disclosures. The fair value of the consideration is as follows: Cash $ 250,000 Promissory Note, net of discount 950,427 Stock Options 156,612 Total Consideration paid $ 1,357,039 The purchase price allocation is as follows: Tangible assets Cash $ 4,609 Inventory 86,220 Total tangible assets 90,829 Intangible assets Tradename-Trademarks 151,800 Customer base 651,220 Non-compete 154,500 Total Intangibles 957,520 Goodwill 308,690 1,357,039 In connection with the promissory note above, the Company recognized amortization of the discount on the note as interest expense of $35,048 from the date of closing through September 30, 2020. Supplemental proforma financial information The following shows the proforma results of operations as if the transaction had occurred effective January 1, 2019. JUPITER WELLNESS, INC. PROFORMA BALANCE SHEETS September 30, 2020 Jupiter Wellness, Inc. Magical Jupiter Wellness, Inc. Consolidated Balance Beasts, LLC Proforma Adjustments Notes Proforma Balance Cash $ 131,113 — $ — $ 131,113 Current Assets 404,095 — — 404,095 Total current assets 535,208 — — 535,208 Intangible assets 884,295 — (67,275 ) (a) 817,020 Goodwill 308,690 — — 308,690 Other 37,792 — — 37,792 Total assets $ 1,765,985 — $ (67,275 ) $ 1,698,710 Liabilities $ 1,571,507 — $ — $ 1,571,507 Note payable issued in acquisition 985,475 — 5,625 (b) 991,100 Total liabilities 2,556,982 5,625 2,562,607 Common stock 6,893 — — 6,893 Additional paid-in capital 1,264,768 — — 1,264,768 Common stock payable 445,000 — — 445,000 Accumulated deficits (2,507,658 ) — (72,899 ) (c) (2,580,557 ) Total Shareholders’ Equity (790,997 ) — (72,899 ) (863,896 ) Total Liabilities and Shareholders’ Equity $ 1,765,985 — $ (67,275 ) $ 1,698,710 December 31, 2019 Jupiter Wellness, Inc. Magical Beasts, LLC Jupiter Wellness, Inc. Reported Balance Reported Balance Proforma Adjustments Notes Proforma Balance Cash $ 531,026 $ 849 $ (250,000 ) (d) $ 281,875 Current Assets 135,478 119,550 — 255,028 Total current assets 745,789 120,399 — 616,188 Intangible assets — — 907,270 (e) 907,270 Goodwill — — 308,690 (e) 308,690 Other Total assets $ 745,789 $ 120,399 $ — $ 1,832,148 Liabilities $ 10,721 $ 50,846 $ — $ 61,567 Note payable issued in acquisition — — 950,427 (e) 950,427 Total liabilities 366,581 50,846 1,367,854 Common stock 6,893 — — 6,893 Additional paid-in capital 1,032,511 — 240,734 (e) 1,273,245 Common stock payable 325,000 — — 325,000 Accumulated deficits (985,196 ) (105,398 ) (50,250 ) (f) (1,140,844 ) Total Shareholders’ Equity 379,208 69,553 — 464,294 Total Liabilities and Shareholders’ Equity $ 745,789 $ 120,399 $ — $ 1,832,148 Notes to Proforma Balance Sheets (a) Additional amortization of intangible assets (b) Additional amortization of debt discount on acquisition note (c) Income statement effects of notes (a) and (b) above (d) $250,000 paid at closing (e) Allocation of the purchase price to respective assets and paid in capital (net of related amortization) (f) Income statement effects of additional amortization of intangibles and acquisition note JUPITER WELLNESS, INC. PROFORMA STATEMENT OF OPERATIONS Nine Months Ended September 30, 2020 Jupiter Wellness, Inc. Magical Jupiter Wellness, Inc. Consolidated Balance Beasts, LLC Proforma Adjustments Notes Proforma Balance Sales $ 753,729 $ — $ 105,404 (a) $ 857,133 Cost of sales 433,305 — 83,428 (a) 516,733 Gross profit 320,424 — 21,976 342,401 Expenses 1,842,886 — 57,435 (a)(b) 1,900,321 Net Income (loss) $ (1,522,462 ) — $ (35,458 ) $ (1,557,920 ) Year Ended December 31, 2019 Jupiter Wellness, Inc. Magical Beasts, LLC Jupiter Wellness, Inc. Reported Balance Reported Balance Proforma Adjustments Notes Proforma Balance Sales $ 6,455 $ 121,248 $ — $ 127,703 Cost of sales 18,024 109,766 — 127,790 Gross profit (11,569 ) 11,482 — (87 ) Expenses 913,893 116,880 50,250 (b) 1,081,023 — Net Income (loss) $ (925,462 ) $ (105,398 ) $ (50,250 ) $ (1,081,110 ) (a) Magical Beasts income and cost of sales prior to closing date (b) Includes additional amortization of intangibles plus expenses of Magical Beasts prior to closing |
Note 13 - Commitments and Conti
Note 13 - Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 13 - Commitments and Contingencies | Note 13 - Commitments and Contingencies The Company entered into an office lease dated April 1, 2019 with a primary term of one-year, plus two one-year extension at the Company’s option. The base lease rate during the primary term is $2,000 per month, and the monthly rate during the optional extension will be increased to $2,080 and $2,163, respectively. The Company paid a total of $54,370 and $21,430 in rent and related fees during the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. Under the new standard for lease reporting, the company recorded a Right of Use Asset (“ROU”) and an offsetting lease liability of $64,327 representing the present value of the future payments under the lease calculated using a 10% discount rate (the current borrowing rate of the company). The ROU and lease liability are amortized over the three-year life of the lease. The unamortized balances at September 30, 2020 and December 31, 2019 were ROU of $34,555 and $49,974, respectively, current lease liability of $ 5,396 and $20,566, respectively, and non-current lease liability of $30,138 and $30,137, respectively. Additionally, the Company recognized accreted interest expense of $3,310 and $4,377 during the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. Legal Proceedings On July 6 , 2020, Brian Menke (the “Plaintiff”) in Nevada court seeking to enforce a judgement that he had obtained in 2012 against Krista Whitley, the former owner and manager of Magical Beasts LLC., in the amount of $250,00. In July 2020, the Plaintiff brought a claim in Nevada State Court to impute such judgement to the Company’s wholly owned subsidiary, Magical Beasts, LLC. On August 6, 2020, the court imputed the judgement to Magical Beasts and advised the Company that before paying any funds to Ms. Whitley, they must first satisfy the judgement to the Plaintiff. On October 12, 2020, the Company, Ms. Whitley and the Plaintiff reached a settlement agreement whereby the Company agreed that of the $1,000,000 payable to Ms. Whitley, the first $334,000 be paid to the Plaintiff. Ms. Whitley in turn agreed that such payments would be applied to the $1,000,000 owed to Ms. Whitley that was to be paid from the proceeds of the offering and the Plaintiff agreed to withdraw the case against Magical Beasts without prejudice. There will be no impact to the financial statements or financial position of the company related to this matter given the offset of the note payable already recorded. The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. 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. |
Note 14 - Subsequent Events
Note 14 - Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Note 14 - Subsequent Events | Note 14 - Subsequent Events Initial Public Offering On November 3, 2020, the Company completed an initial public offering (“ IPO Units Common Stock Warrant Warrants. As described in Note 11. above, the Company had 1,158,00 warrants outstanding at September 30, 2020. All of the warrants had an expiration date of November 1, 2020. Subsequent to September 30, 2020 all of the warrants were exercised follows: Warrants Exercise Price Proceeds Balance September 30, 2020 1,068,000 $ 0.50 — Granted — — — Exercised for cash (1) (888,000 ) 0.50 $ 444,000 Exercised under cashless option (2) (180,000 ) (2) (2) Balance November 1, 2020 — $ 444,000 (1) The Company received $444,000 in cash for the issuance of 888,000 shares of its common stock (2) The number of warrants exercised was 180,000 but under the cashless formula the number of shares to be issued is reduced to 168,000 shares. Convertible Promissory Notes. On November 5, 2020 the Company received a conversion notice from one of its note holders to convert the $300,000 principal balance of its convertible promissory note into 100,000 shares of the Company’s common stock ($3.00 per share conversion price) and pay the unpaid accrued interest of $16,667 in cash. The issuance of the shares and the payment have been made. Agreement to Issue Shares of Common Stock for Services. On October 14, 2020 the Company entered into a Services Agreement under the terms of which the Company would issue 50,000 shares of the Company’s common stock as payment. Summary of Issuances of Shares of Common Stock Subsequent to September 30, 2020 Shares Issued and Outstanding: Balance, September 30, 2020 6,893,000 IPO shares issued 933,333 Warrants exercised for cash 888,000 Warrants exercised under cashless option 168,000 Conversion of convertible promissory note 100,000 Shares issued for services 50,000 Balance, November 16, 2020 9,032,333 Litigation. The Company has received notice subsequent to September 30, 2020 that the former owner of Magical Beast has a judgment of approximately $300,000 plus penalties and interest that has been imputed to Jupiter. The Company and former owner have agreed that any amounts paid as a result of this judgment and matter will reduce the amount owed to the former owner related to the note payable discussed in Note 8 above. There will be no impact to the financial statements or financial position of the company related to this matter given the offset of the note payable already recorded. In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to September 30, 2020 to the date these financial statements were issued, and has determined that it does not have any additional material subsequent events to disclose in these financial statements. |
Note 2 - Significant Accounti_2
Note 2 - Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of US Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Jupiter Wellness, Inc., a Florida corporation, and Magical Beasts, LLC, a Nevada limited liability company. All intercompany accounts and transactions have been eliminated. |
Emerging Growth Company Status | Emerging Growth Company Status The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US 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 expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term investments with a maturity of three months or less when purchased to be cash and equivalents for purposes of the statement of cash flows. There were no cash equivalents as of September 30, 2020. |
Inventory | Inventory Inventories are stated at the lower of cost or market. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Inventory is based upon the average cost method of accounting. |
Net Loss per Common Share | Net Loss per Common Share Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments such as options, warrants, convertible securities and preferred stock, unless the effect is to reduce a loss or increase earnings per share. As such, options, warrants, convertible securities and preferred stock are not considered in the calculations, as the impact of the potential common shares would be to decrease the loss per share. For the Nine Months Ended September 30, 2020 For the Nine Months Ended September 30, 2019 Numerator: Net (loss) $ (1,522,462 ) $ (270,464 ) Denominator: Denominator for basic earnings per share - Weighted-average common shares issued and outstanding during the period 6,893,000 6,124,007 Denominator for diluted earnings per share 6,893,000 6,124,007 Basic (loss) per share $ (0.22 ) $ (0.04 ) Diluted (loss) per share $ (0.22 ) $ (0.04 ) |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. |
Revenue Recognition | Revenue Recognition The Company generates its revenue from the sale of its products directly to the end user or distributor (collectively the “customer”). The Company recognizes revenues by applying the following steps in accordance with FASB Accounting Standards Codification 606 “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: • identify the contract with a customer; • identify the performance obligations in the contract; • determine the transaction price; • allocate the transaction price to performance obligations in the contract; and • recognize revenue as the performance obligation is satisfied. The Company’s performance obligations are satisfied when goods or products are shipped on a FOB shipping point basis as title passes when shipped. Our product is generally paid in advance of shipment or standard net 30 days and we offer no specific right of return, refund or warranty related to our products except for cases of defective products of which there have been none to date. Our revenue currently is generated from one general product category of health care products with one performance obligation and geographically there are no specific concentrations of our customer base to disaggregate our revenue stream. |
Accounts Receivable and Credit Risk | Accounts Receivable and Credit Risk Accounts receivable are generated from sales of the Company’s products. The Company provides an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. As of September 30, 2020 and December 31, 2019, the Company has not recognized any allowance for doubtful collections. |
Stock based compensation | Stock based compensation The Company recognizes compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation - Stock Compensation” (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share based compensation arrangements include stock options and warrants. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. On October 24, 2018, the inception date, the Company adopted ASU No. 2018-07 “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. |
Income Taxes | Income Taxes The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on October 24, 2018, the evaluation was performed for 2018 tax year which would be the only period subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense. |
Related parties | Related parties The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The standard will be effective for us in the first quarter of our fiscal year 2020, although early adoption is permitted (but no sooner than the adoption of Topic 606). The Company has adopted this standard beginning January 1, 2019. The adoption of this standard has not had a significant impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) In February 2016, Topic 842, “Leases” was issued to replace the leases requirements in Topic 840, “Leases”. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. Topic 842 will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods and is to be retrospectively applied. The Company has adopted this standard beginning January 1, 2019. The adoption of this standard has not had a significant impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures. |
Note 13 - Commitments and Con_2
Note 13 - Commitments and Contingencies (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Rent and related fees | $ 54,370 |
Note 14 - Subsequent Events (De
Note 14 - Subsequent Events (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($)shares | |
Subsequent Events [Abstract] | |
Initial Public Offering proceeds | $ | $ 7,000,000 |
Common stock issued for Initial Public Offering | shares | 933,333 |