Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
1. ORGANIZATION AND NATURE OF BUSINESS
Iconic Brands, Inc., formerly Paw Spa, Inc. (“Iconic Brands” or “Iconic”), was incorporated in the State of Nevada on October 21, 2005. Effective December 31, 2016, Iconic closed on a May 15, 2015 agreement to acquire a 51% interest in BiVi LLC (“BiVi”), the brand owner of “BiVi 100 percent Sicilian Vodka,” and closed on a December 13, 2016 agreement to acquire a 51% interest in Bellissima Spirits LLC (“Bellissima”), the brand owner of Bellissima sparkling wines. These transactions involved entities under common control of the Company’s chief executive officer and represented a change in reporting entity. The financial statements of the Company have been retrospectively adjusted to reflect the operations at BiVi and Bellissima from their inception.
BiVi was organized in Nevada on May 4, 2015. Bellissima was organized in Nevada on November 23, 2015.
Effective May 9, 2019, Iconic closed on a Share Exchange Agreement to acquire a 51% interest in Green Grow Farms, Inc. (“Green Grow”), an entity organized on February 28, 2019 to grow hemp for CBD extraction. Effective December 31, 2019, Iconic sold its 51% interest in Green Grow Farms, Inc. to Can B Corp (see Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements include the accounts of Iconic, its two 51% owned subsidiaries BiVi and Bellissima, and United Spirits, Inc., a variable interest entity of Iconic (see Note 6) (collectively, the “Company”). All inter-company balances and transactions have been eliminated in consolidation.
(b) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
(c) Fair Value of Financial Instruments
Generally accepted accounting principles require disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.
In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and notes payable, it was estimated that the carrying amount approximated fair value because of the short maturities of these instruments.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
(d) Cash and Cash Equivalents
The Company considers all liquid investments purchased with original maturities of ninety days or less to be cash equivalents.
(e) Accounts Receivable, Net of Allowance for Doubtful Accounts
The Company extends unsecured credit to customers in the ordinary course of business but mitigates risk by performing credit checks and by actively pursuing past due accounts. The allowance for doubtful accounts is based on customer historical experience and the aging of the related accounts receivable. At June 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $83,762 and $83,617, respectively.
(f) Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or market, with due consideration given to obsolescence and to slow moving items. Inventories at June 30, 2021 and December 31, 2020 consists of cases of BiVi Vodka and cases of Bellissima sparkling wines purchased from our Italian suppliers and cases of alcoholic beverages and packaging materials relating to our Hooters line of products introduced in August 2019.
(g) Revenue Recognition
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) which establishes revenue recognition standards. ASU 2014-19 was effective for annual reporting periods beginning after December 15, 2017. We adopted ASU 2014-09 effective January 1, 2018. ASU 2014-09 has not had a significant effect on the Company’s financial position and results of operations.
Our revenue (referred to in our financial statements as “sales”) consists primarily of the sale of wine and spirits imported for cash or otherwise agreed-upon credit terms. Our customers consist primarily of retailers. Our revenue generating activities have a single performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the related goods are shipped or delivered to the customer, depending upon the method of distribution, and shipping terms. We have elected to treat shipping as a fulfillment activity. Revenue is measured as the amount of consideration we expect to receive in exchange for the sale of our product. The Company has no obligation to accept the return of products sold other than for replacement of damaged products. Other than quantity price discounts negotiated with customers prior to billing and delivery (which are reflected as a reduction in sales), the Company does not offer any sales incentives or other rebate arrangements to customers.
(h) Shipping and Handling Costs
Shipping and handling costs to deliver product to customers are reported as operating expenses in the accompanying statements of operations. Shipping and handling costs to purchase inventory are capitalized and expensed to cost of sales when revenue is recognized on the sale of product to customers.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
(i) Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation-Stock Compensation”. For the three and six months ended June 30, 2021 and 2020, stock-based compensation was $589,000, $769,752, $274,751, and $517,832, respectively.
(j) Income Taxes
Income taxes are accounted for under the assets and liability method. Current income taxes are provided in accordance with the laws of the respective taxing authorities. Deferred income taxes are provided for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized.
(k) Net Income (Loss) per Share
Basic net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during the period of the financial statements.
Diluted net income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options, warrants, and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation.
(l) Recently Issued Accounting Pronouncements
Effective January 1, 2019, we adopted ASU 2016-2 (Topic 842) which establishes a new lease accounting model for lessees. Under the new guidance, lessees are required to recognize right of use assets and liabilities for most leases having terms of 12 months or more. We adopted this new accounting guidance using the effective date transition method, which permits entities to apply the new lease standards using a modified retrospective transition approach at the date of adoption. As such, historical periods were continued to be measured and presented under the previous guidance while current and future periods are subject to this new accounting guidance. Upon adoption we recorded a total of $223,503 for right-of-use assets related to our two operating leases (see Note 12g) and a total of $223,503 for lease liabilities.
Certain other accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
(m) Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has sustained significant net losses which have resulted in an accumulated deficit at June 30, 2021 of $28,840,322 and has experienced periodic cash flow difficulties, all of which raise substantial doubt regarding the Company’s ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining additional working capital and attaining profitable operations. The management of the Company has developed a strategy which it believes will accomplish these objectives and which will enable the Company to continue operations for the coming year. However, there is no assurance that these objectives will be met. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from the outcome of this uncertainty.
3. DISCONTINUED OPERATIONS
Effective December 31, 2019, the Company sold its 51% equity interest in Green Grow Farms, Inc. (“Green Grow”) to Can B Corp. in exchange for 37,500,000 shares of Can B Corp. common stock and a Can B Corp. obligation to issue additional shares (“Additional Purchases Shares”) of Can B Corp. common stock to the Company on June 30, 2020 in such number so that the aggregate value of the aggregate shares issued to the Company equaled $1,000,000. We acquired this equity interest on May 9, 2019 in exchange for a $200,000 note payable to NY Farms Group Inc. and 2,000,000 shares of Company common stock valued at $1,250,000.
Effective March 6, 2020, CANB effected a 1 share for 300 shares reverse stock split resulting in a reduction of the number of the Company’s shares of CANB common stock from 37,500,000 shares to 125,000 shares. On July 8, 2020, CANB delivered 418,714 additional shares of CANB common stock required under the December 31, 2019 agreement. The fair value of the 543,714 shares of CANB common stock at June 30, 2020 was $1,073,835 and the Company recognized an unrealized gain of $73,835 in the quarterly period ended June 30, 2020.
On July 29, 2020, the Company executed an exchange agreement with CANB and delivered the 543,714 shares of CANB common stock to CANB in exchange for CANB’s delivery of 1,000,000 shares of common stock to the Company. The July 29, 2020 closing price of CANB common stock was $0.95 per share. In the balance sheet as of September 30, 2020, the Company recorded treasury stock in the amount of $516,528. The Company recognized a loss of $557,307 from the Company’s investment in CANB common stock in the quarterly period ended September 30, 2020.
4. INVESTMENT IN BIVI LLC
On May 15, 2015, Iconic entered into a Securities Exchange Agreement by and among the members of BiVi LLC, a Nevada limited liability company (“BiVi”), under which Iconic acquired a 51% majority interest in BiVi in exchange for the issuance of (a) 1,000,000 shares of restricted common stock and (b) 1,000 shares of newly created Series C Convertible Preferred Stock.
Prior to May 15, 2015, BiVi was beneficially owned and controlled by Richard DeCicco, the controlling shareholder, President, CEO and Director of Iconic Brands, Inc.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
5. INVESTMENT IN BELLISSIMA SPIRITS LLC
On December 13, 2016, Iconic entered into a Securities Purchase Agreement with Bellissima Spirits LLC (“Bellissima”) and Bellissima’s members under which Iconic acquired a 51% majority interest in Bellissima in exchange for the issuance of a total of 10 shares of newly designated Iconic Series D Convertible Preferred Stock. Each share of Iconic Series D Convertible Preferred Stock was convertible into the equivalent of 5.1% of Iconic common stock issued and outstanding at the time of conversion.
Prior to December 13, 2016, Bellissima was controlled by Richard DeCicco, the controlling shareholder, President, CEO and Director of Iconic.
6. UNITED SPIRITS, INC.
To July 26, 2021, United Spirits, Inc. (“United”) was owned and managed by Richard DeCicco, the former controlling shareholder, President, CEO, and Director of Iconic. United provides distribution services for BiVi and Bellissima (see Note 12d) and is considered a variable interest entity (“VIE”) of Iconic. Since Iconic has been determined to be the primary beneficiary of United, we have included United’s assets, liabilities, and operations in the accompanying consolidated financial statements of Iconic. Summarized financial information of United follows:
Balance Sheets:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
228,807
|
|
|
$
|
448,254
|
|
Intercompany receivable from Iconic (A)
|
|
|
2,370,609
|
|
|
|
1,693,012
|
|
Right-of-use asset
|
|
|
-
|
|
|
|
4,441
|
|
Total assets
|
|
$
|
2,599,416
|
|
|
$
|
2,145,707
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
191,396
|
|
|
$
|
210,693
|
|
Loans payable to officer and affiliated entity
|
|
|
35,865
|
|
|
|
58,582
|
|
SBA Paycheck Protection Program loan
|
|
|
-
|
|
|
|
28,458
|
|
Intercompany payable to Bellissima (A)
|
|
|
2,733,744
|
|
|
|
2,242,243
|
|
Intercompany payable to BiVi (A)
|
|
|
66,876
|
|
|
|
66,876
|
|
Operating lease liability
|
|
|
-
|
|
|
|
4,441
|
|
Total Liabilities
|
|
|
3,027,881
|
|
|
|
2,611,293
|
|
Noncontrolling interest in VIE
|
|
|
(428,465
|
)
|
|
|
(465,586
|
)
|
Total liabilities and stockholders’ deficiency
|
|
$
|
2,599,416
|
|
|
$
|
2,145,707
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
Statements of operations:
|
|
2021
|
|
|
2020
|
|
Intercompany distribution income (A)
|
|
$
|
9,266
|
|
|
$
|
6,615
|
|
Forgiveness of SBA PPP loan income
|
|
|
28,458
|
|
|
|
-
|
|
Total income
|
|
|
37,724
|
|
|
|
6,615
|
|
Royalty expense
|
|
|
-
|
|
|
|
-
|
|
Officers’ compensation
|
|
|
-
|
|
|
|
-
|
|
Other operating expenses – net
|
|
|
603
|
|
|
|
10,252
|
|
Total operating expenses
|
|
|
603
|
|
|
|
10,252
|
|
Net income (loss)
|
|
$
|
37,121
|
|
|
$
|
(3,637
|
)
|
(A) Eliminated in consolidation
|
|
|
|
|
|
|
|
|
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
7. INVENTORIES
Inventories consist of:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Finished goods:
|
|
|
|
|
|
|
Hooters brands
|
|
$
|
232,459
|
|
|
$
|
259,837
|
|
Bellissima brands
|
|
|
328,909
|
|
|
|
163,258
|
|
BiVi brands
|
|
|
47,439
|
|
|
|
47,439
|
|
Total finished goods
|
|
|
608,807
|
|
|
|
470,534
|
|
|
|
|
|
|
|
|
|
|
Raw materials:
|
|
|
|
|
|
|
|
|
Hooters brands
|
|
|
36,966
|
|
|
|
36,966
|
|
Total raw materials
|
|
|
36,966
|
|
|
|
36,966
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
645,773
|
|
|
$
|
507,500
|
|
8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Accounts payable
|
|
$
|
1,779,507
|
|
|
$
|
1,444,213
|
|
Accrued officers compensation
|
|
|
848,473
|
|
|
|
843,050
|
|
Accrued royalties
|
|
|
978,830
|
|
|
|
792,295
|
|
Other
|
|
|
(2,303
|
)
|
|
|
10,215
|
|
Total
|
|
$
|
3,604,507
|
|
|
$
|
3,089,773
|
|
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
9. NOTES PAYABLE
Notes payable consist of:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Small Business Administration Paycheck
Protection Program forgivable loan payable
|
|
$
|
-
|
|
|
$
|
28,458
|
|
Original issue discount promissory note payable to
The Special Equities Opportunity Fund, LLC
(“SEG”), noninterest bearing, due July 16, 2021 –
Less unamortized debt discount of $5,575 and $0,
respectively (A)
|
|
|
324,425
|
|
|
|
-
|
|
Original issue discount promissory note payable to
SEG, noninterest bearing, due September 7, 2021
– Less unamortized debt discount of $7,046 and
$0, respectively (A)
|
|
|
96,287
|
|
|
|
-
|
|
Original issue discount promissory note payable to
Gregory Castaldo, noninterest bearing, due
September 7, 2021 – Less unamortized debt
discount of $9,775 and $0, respectively (A)
|
|
|
133,600
|
|
|
|
-
|
|
Bridge loan payable to SEG, noninterest bearing,
due on demand
|
|
|
400,000
|
|
|
|
-
|
|
Total
|
|
$
|
954,312
|
|
|
$
|
28,458
|
|
(A) These notes were cancelled as part of the July 26, 2021 acquisition of Top Pop LLC. See Note 13,
Subsequent Events.
10. CAPITAL STOCK
Preferred Stock
The one share of Series A Preferred Stock, which was issued to Richard DeCicco on September 10, 2009, entitles the holder to two votes for every share of Common Stock Deemed Outstanding and has no conversion or dividend rights.
The 1000 shares of Series C Preferred Stock, which were issued to Richard DeCicco on May 15, 2015 pursuant to the Securities Exchange Agreement (see Note 4) for the Company’s 51% investment in BiVi, entitled the holder in the event of a Sale (as defined) to receive out of the proceeds of such Sale (in whatever form, be it cash, securities, or other assets), a distribution from the Company equal to 76.93% of all such proceeds received by the Company prior to any distribution of such proceeds to all other classes of equity securities, including any series of preferred stock designated subsequent to this Series C Preferred Stock. Effective March 27, 2019, pursuant to a Preferred Stock Exchange Agreement, Mr. DeCicco exchanged the 1,000 shares of Series C Preferred Stock for 1,000,000 shares of Company common stock.
The 10 shares of Series D Preferred Stock, which were issued to Richard DeCicco and Roseann Faltings (5 shares each) on December 13, 2016 pursuant to the Securities Purchase Agreement (See Note 5) for the Company’s 51% investment in Bellissima, entitled the holders to convert each share of Series D Preferred Stock to the equivalent of 5.1% of the common stock issued and outstanding at the time of conversion. Effective March 27, 2019, pursuant to a Preferred Stock Exchange Agreement, Mr. DeCicco and Ms. Faltings exchanged the 10 shares of Series D Preferred Stock for 1,000,000 shares of Company common stock (500,000 shares each).
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
Effective May 21, 2018, the Company entered into a Share Purchase Agreement with the four investors who purchased 480,000 shares of common stock pursuant to a Securities Purchase Agreement dated October 27, 2017. The Exchange Agreement provided for the exchange of the 480,000 shares of common stock for 1,200,000 shares of Series E Preferred Stock. Each share of Series E Preferred Stock is convertible into 0.4 shares of common stock, is entitled to 0.4 votes on all matters to come before the common stockholders or shareholders generally, is entitled to dividends on an as-converted-to-common stock basis, is entitled to a distribution preference of $0.25 upon liquidation, and is not redeemable.
Also effective May 21, 2018, the Company sold a total of 1,200,000 shares of Series E Preferred Stock and 480,000 warrants to the four investors referred to in the preceding paragraph for $300,000 cash pursuant to an Amendment No. 1 to Securities Purchase Agreement.
Effective October 4, 2018, the Company closed on the first tranche of the Securities Purchase Agreement dated September 27, 2018 with nine (9) accredited investors for the sale of an aggregate of 4,650,000 shares of our Series E convertible preferred stock and warrants to acquire 1,860,000 shares of our common stock (at an exercise price of $1.25 per share for a period of five years) for gross proceeds of $1,162,500. The first tranche sale was for 1,550,000 shares of our Series E Preferred stock and warrants to acquire 620,000 shares of our common stock for gross proceeds of $387,500.
As a condition to the closing of the first tranche, the Company entered into Securities Exchange Agreements with holders of convertible notes totaling $519,499 who exchanged their convertible notes for an aggregate of 2,077,994 shares of our Series E Preferred stock plus warrants to acquire 831,198 shares of our common stock. Also, holders of convertible notes totaling $76,569 exchanged their notes for an aggregate of 122,510 shares of our common stock and holders of convertible notes totaling $90,296 were paid off with cash.
On November 30, 2018 and December 20, 2018, the Company received two payments of $71,875 and $71,875 respectively (totaling $143,750) in exchange for 287,500 and 287,500 shares of Series E Preferred Stock (totaling 575,000 shares) respectively at $0.25 per share. These payments represented advance payments in connection with the second tranche of the Securities Purchase Agreement dated September 27, 2018 which closed on February 7, 2019.
Effective February 7, 2019, the Company closed on the second tranche of the Securities Purchase Agreement dated September 27, 2018. The Company received the remaining $243,750 (of the $387,500 total second tranche proceeds) and issued the investors the remaining total of 975,000 shares of Series E Preferred Stock (of the 1,550,000 total second tranche shares) and warrants to acquire 620,000 shares of our common stock.
On February 12, 2019 and March 18, 2019, the Company received two payments of $71,880 and $25,000 respectively (totaling $96,880) in exchange for 287,520 and 100,000 shares of Series E Preferred Stock (totaling 387,520 shares) respectively at $0.25 per share. These payments represent advance payments in connection with the third tranche of the Securities Purchase Agreement dated September 27, 2018. Closing of the third tranche of $387,500 has not occurred.
On April 25, 2019 and September 4, 2019, the Company received payments of $71,875 and $96,875 respectively (totaling $168,750) in exchange for 287,500 and 387,500 shares of Series E Preferred Stock (totaling 675,000 shares) respectively at $0.25 per share. These payments represent advance payments in connection with the third tranche of the Securities Purchase Agreement dated September 27, 2018. Closing of the third tranche of $387,500 has not occurred.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
On April 23, 2019, a holder converted 673,398 shares of Series E Preferred Stock into 269,359 shares of Iconic common stock.
On May 17, 2019, a holder converted 800,000 shares of Series E Preferred Stock into 320,000 shares of Iconic common stock.
On July 18, 2019, Iconic entered into Securities Purchase Agreements with certain accredited investors (the “Investors”) for the sale of an aggregate of 3,125 shares of newly designated Series F Convertible Preferred Stock plus 5,000,000 warrants at a price of $1,000 per share of Series F Convertible Preferred Stock or for a total of $3,125,000 (which was collected in full from July 18, 2019 to August 2, 2019). On August 2, 2019, Iconic paid $322,500 in commissions and expenses to the placement agent of this offering. Each share of Series F Convertible Preferred Stock has a stated value of $1,000, is convertible into 1,600 shares of common stock (subject to adjustment under certain circumstances), has no voting rights, is entitled to dividends on an as-converted-to common stock basis, is entitled to a distribution preference of $1,000 upon liquidation, and is not redeemable. Each warrant is exercisable into one share of common stock at an exercise price of $0.625 per share (subject to adjustment under certain circumstances) for a period of five years from the date of issuance.
We also entered into separate Registration Rights Agreements with the purchasers of the Series F Preferred Stock, pursuant to which the Company agreed to file a registration statement to register the resale of the shares underlying the Series F Convertible Preferred Stock and Warrants within thirty (30) days following the closing date (the “Filing Date”), to cause such registration statement to be declared effective within 60 days following the earlier of (i) the date that the registration statement is filed with the Securities and Exchange Commission (the “SEC”) and (ii) the Filing Date, and to maintain the effectiveness of the registration statement until all of such shares of Common Stock have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any restrictions. We filed the Form S-1 registration statement on September 9, 2019 which was declared effective by the SEC on September 18, 2019. If we fail to maintain the effectiveness of the registration statement for the required time period, the Company is obligated to pay liquidated damages in the amount of 1% of their subscription amount, per month, until such event is satisfied.
Concurrently with the closing of the financing transaction described above, we entered into Securities Exchange Agreements with certain holders of our Series E Convertible Preferred Stock and exchanged their 2,725,000 shares of Series E Convertible Preferred Stock for an aggregate of 681.25 shares of our Series F Convertible Preferred Stock.
From July 26, 2019 to August 28, 2019, three holders converted a total of 1,000,000 shares of Series E Preferred Stock into a total of 400,000 shares of Iconic common stock.
From September 19, 2019 to September 27, 2019, three holders converted a total of 14.20 shares of Series E Preferred Stock into a total of 227,200 shares of Iconic common stock.
On October 25, 2019 and December 28, 2019, two holders converted a total of 651,892 shares of Series E Preferred Stock into a total of 260,757 shares of Iconic common stock.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
From October 2, 2019 to December 31, 2019, six holders converted a total of 508.50 shares of Series F Preferred Stock into a total of 813,600 shares of Iconic common stock.
On January 12, 2020, the Company entered into securities purchase agreements with certain accredited investors for the sale of a total of 1,500 shares of Series G Convertible Preferred Stock and warrants o purchase 1,200,000 shares of our common stock for gross proceeds of $1,500,000 (of which $1,475,000 was collected on January 13, 2020 and January 14, 2020). Each share of Series G Convertible Preferred Stock (designated on January 13, 2020) has a stated value of $1,000, is convertible into shares of common stock at a price of $1.25 per share (subject to adjustment under certain circumstances), has no voting rights, is entitled to dividends on an as-converted-to common stock basis, is entitled to a distribution preference of $1,000 upon liquidation, and is not redeemable. Each warrant is exercisable into one share of common stock at an exercise price of $1.25 per share (subject to adjustment under certain circumstances) for a period of five years from the date of issuance.
On February 12, 2020, February 13, 2020, and February 14, 2020, three holders converted a total of 675,000 shares of Series E Preferred Stock into a total of 270,000 shares of Iconic common stock.
From January 16, 2020 to February 24, 2020, two holders converted a total of 190 shares of Series F Preferred Stock into a total of 304,000 shares of Iconic common stock.
On May 29, 2020 and June 5, 2020, four holders converted a total of 552 shares of Series F Preferred Stock into a total of 883,200 shares of Iconic common stock.
Common Stock
On January 22, 2020, the Company issued a total of 375,000 shares of its common stock to the placement agent and four associated individuals for services relating to the offering of 1,500 shares of Series G Preferred Stock that concluded on January 14, 2020 (see Preferred Stock above).
On January 22, 2020, and February 27, 2020, the Company issued a total of 160,000 shares of its common stock to an investor relations firm for services rendered to the Company. The $101,018 total fair value of the 160,000 shares of Iconic common stock on the respective dates of issuance was expensed as investor relations in the three months ended March 31, 2020.
On January 26, 2020, the Company issued 150,000 shares of its common stock to a consulting firm for services rendered to the Company. The $100,500 fair value of the 150,000 shares of Iconic common stock was expensed as consulting fees in the three months ended March 31, 2020.
On February 24, 2020, the Company issued 100,000 shares of its common stock to William Clyde Elliot II pursuant to an Endorsement Agreement dated February 15, 2020 (see Note 12h). The $67,500 fair value of the 100,000 shares of Iconic common stock was charged to prepaid expenses and was expensed over the term of the Endorsement Agreement.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
On February 24, 2020, the Company issued 50,000 shares of its common stock to a consulting firm for services rendered to the Company. The $33,750 fair value of the 50,000 shares of Iconic common stock was expensed as consulting fees in the three months ended March 31, 2020.
On February 12, 2020, February 13, 2020, and February 14, 2020, three holders converted a total of 675,000 shares of Series E Preferred Stock into a total of 270,000 shares of Iconic common stock.
From January 16, 2020 to February 24, 2020, two holders converted a total of 190 shares of Series F Preferred Stock into a total of 304,000 shares of Iconic common stock.
On May 1, 2020, the Company issued 275,000 shares of its common stock to an investor relations firm for services rendered to the Company. The $167,750 fair value of the 275,000 shares of Iconic common stock was expensed as investor relations in the three months ended June 30, 2020.
On June 1, 2020, the Company issued 75,000 shares of its common stock to a consultant for services rendered to the Company. The $51,750 fair value of the 75,000 shares of Iconic common stock was expensed as consulting fees in the three months ended June 30, 2020.
On June 2, 2020, the Company issued 50,000 shares of its common stock to a consulting firm entity for services rendered to the Company. The $35,500 fair value of the 50,000 shares of Iconic common stock was expensed as consulting fees in the three months ended June 30, 2020.
On May 29, 2020 and June 5, 2020, four holders converted a total of 552 shares of Series F Preferred Stock into a total of 883,200 shares of Iconic common stock.
On March 23, 2021, the Company issued 401,670 shares of its common stock to an investors relations firm for services rendered to the Company. The $180,752 fair value of the 401,670 shares of Iconic common stock was expensed as investors relations in the three months ended March 31, 2021.
On May 12, 2021, the Company issued a total of 1,100,000 shares of its common stock to 10 individuals for prior services rendered to the Company. The $429,000 fair value of the 1,100,000 shares of Iconic common stock was expensed as consulting fees in the three months ended June 30, 2021.
On May 19, 2021, the Company issued 300,000 shares of its common stock to Richard DeCicco and 100,000 shares of its common stock to Roseann Faltings for prior services rendered to the Company. The $160,000 fair value of the 400,000 shares of Iconic common stock was expensed as officers compensation in the three months ended June 30, 2021.
Warrants
A summary of warrants activity for the period January 1, 2019 to June 30, 2021 follows:
|
|
Common
shares
Equivalent
|
|
|
|
|
|
Balance, January 1, 2019
|
|
|
2,895,198
|
|
Issued in the three months ended March 31, 2019
|
|
|
620,000
|
|
|
|
|
|
|
Balance, March 31, 2019
|
|
|
3,515,198
|
|
|
|
|
|
|
Exercise of warrants in connection with Warrant Exercise Agreements dated May 8, 2019
|
|
|
(960,000
|
)
|
|
|
|
|
|
Issuance of New Warrants in connection with Warrant Exercise Agreements dated May 8, 2019
|
|
|
1,920,000
|
|
|
|
|
|
|
Balance, June 30, 2019 4,475,198 Issued in the three months ended September 30, 2019
|
|
|
5,000,000
|
|
|
|
|
|
|
Balance, September 30, 2019 and December 31, 2019 9,475,198 Issued in the three months ended March 31, 2020
|
|
|
1,180,000
|
|
|
|
|
|
|
Balance, March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020
|
|
|
10,655,198
|
|
|
|
|
|
|
Expired in the three months ended March 31, 2021
|
|
|
(400,000
|
)
|
|
|
|
|
|
Balance, March 31, 2021 and June 30, 2021
|
|
|
10,255,198
|
|
Issued and outstanding warrants at June 30, 2021 consist of:
Year Granted
|
|
Number Common Shares Equivalent
|
|
|
Exercise Price Per Share
|
|
|
Expiration Date
|
|
2017
|
|
|
54,000
|
|
|
$
|
2.50
|
|
|
June 22, 2022 to June 30, 2022
|
|
2018
|
|
|
30,000
|
|
|
$
|
2.50
|
|
|
May 21, 2023
|
|
2018
|
|
|
831,198
|
|
|
$
|
1.25
|
|
|
September 20, 2023
|
|
2018
|
|
|
620,000
|
|
|
$
|
1.25
|
*
|
|
September 20, 2023
|
|
2019
|
|
|
620,000
|
|
|
$
|
1.25
|
*
|
|
February 7, 2024
|
|
2019
|
|
|
1,920,000
|
|
|
$
|
2.25
|
*
|
|
May 8, 2024
|
|
2019
|
|
|
5,000,000
|
|
|
$
|
0.625
|
|
|
August 2, 2024
|
|
2020
|
|
|
1,180,000
|
|
|
$
|
1.25
|
|
|
January 12, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
10,255,198
|
|
|
|
|
|
|
|
|
* These warrants contain a “down round” provision and thus the exercise price is reduceable to $0.625 per share as a result of the Series F Preferred Stock financing that closed on August 2, 2019.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
Effective October 4, 2018, the Company closed on the first tranche of the Securities Purchase Agreement dated September 27, 2018 with nine (9) accredited investors for the sale of an aggregate of 4,650,000 shares of our Series E convertible preferred stock and warrants to acquire 1,860,000 shares of our common stock (at an exercise price of $1.25 per share for a period of five years) for gross proceeds of $1,162,500. The first tranche sale was for 1,550,000 shares of our Series E convertible preferred stock and warrants to acquire 620,000 shares of our common stock for gross proceeds of $387,500. The second tranche of $387,500 closed on February 7, 2019 and also was for 1,550,000 shares of our Series E convertible preferred stock and warrants to acquire 620,000 shares of our common stock.
On May 8, 2019, Iconic executed Warrant Exercise Agreements with four holders of Company warrants. The holders exercised a total of 960,000 warrants (which were acquired from September 2017 to November 2017 and on May 21, 2018) at an agreed price of $0.32 per share and paid the Company a total of $307,200. Pursuant to the Warrant Exercise Agreements, the holders were issued a total of 1,920,000 New Warrants that are exercisable into Company common stock at a price of $2.25 per share for a period of five years and contain “down round” price protection.
As discussed in Preferred Stock above, the Company issued a total of 5,000,000 warrants to investors as part of the offering of 3,125 shares of Series F Preferred Stock that concluded on August 2, 2019. Each warrant is exercisable into one share of common stock at an exercise price of $0.625 per share for a period of five years from the date of issuance and contains “down round” price protection.
As also discussed in Preferred Stock above, the Company issued a total of 1,180,000 warrants to investors as part of the offering of 1,500 shares of Series G Preferred Stock that concluded on January 14, 2020. Each warrant is exercisable into one share of common stock at an exercise price of $1.25 per share for a period of five years from the date of issuance and contains “down round” price protection.
11. INCOME TAXES
No income taxes were recorded in the periods presented since the Company had taxable losses in these periods.
The provision for (benefit from) income taxes differs from the amount computed by applying the statutory United States federal income tax rate of 21% for the periods presented to income (loss) before income taxes. The sources of the difference are as follows:
|
|
Six months ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Expected tax at 21%
|
|
$
|
(486,785
|
)
|
|
$
|
(289,002
|
)
|
|
|
|
|
|
|
|
|
|
Nontaxable gain on forgiveness of SBA PPP loan
|
|
|
5,976
|
|
|
|
-
|
|
Nontaxable unrealized gain on investment in and receivable from Can B Corp
|
|
|
-
|
|
|
|
(15,505
|
)
|
Nondeductible stock-based compensation
|
|
|
161,648
|
|
|
|
108,745
|
|
Increase (decrease) in valuation allowance
|
|
|
319,161
|
|
|
|
195,762
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
$
|
-
|
|
|
$
|
-
|
|
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
Significant components of the Company’s deferred income tax assets are as follows:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
|
5,168,712
|
|
|
|
4,849,551
|
|
|
|
|
|
|
|
|
|
|
Less valuation allowance
|
|
|
(5,168,712
|
)
|
|
|
(4,849,551
|
)
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets - net
|
|
$
|
-
|
|
|
$
|
-
|
|
Based on management’s present assessment, the Company has not yet determined that a deferred tax asset attributable to the future utilization of the net operating loss carryforward as of June 30, 2021 and December 31, 2020 will be realized. Accordingly, the Company has maintained a 100% valuation allowance against the deferred tax asset in the financial statements at June 30, 2021 and December 31, 2020. The Company will continue to review this valuation allowance and make adjustments as appropriate.
Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
All tax years remain subject to examination by major taxing jurisdictions.
12. COMMITMENTS AND CONTINGENCIES
a. Iconic Guarantees
On May 26, 2015, BiVi LLC (“BiVi”) entered into a License Agreement with Neighborhood Licensing, LLC (the “BiVi Licensor”), an entity owned by Chazz Palminteri (“Palminteri”), to use Palminteri’s endorsement, signature and other intellectual property owned by the BiVi Licensor. Iconic has agreed to guarantee and act as surety for BiVi’s obligations under certain sections of the License Agreement and to indemnify the BiVi Licensor and Palminteri against third party claims.
On November 12, 2015, Bellissima Spirits LLC (“Bellissima”) entered into a License Agreement with Christie Brinkley, Inc. (the “Bellissima Licensor”), an entity owned by Christie Brinkley (“Brinkley”), to use Brinkley’s endorsement, signature, and other intellectual property owned by the Bellissima Licensor. Iconic has agreed to guarantee and act as surety for Bellissima’s obligations under certain sections of the License Agreement and to indemnify the Bellissima Licensor and Brinkley against third party claims.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
b. Royalty Obligations of BiVi and Bellissima
Pursuant to the License Agreement with the Bivi Licensor (see Note 12a. above), BiVi is obligated to pay the BiVi Licensor a Royalty Fee equal to 5% of monthly gross sales of BiVi Brand products payable monthly subject to an annual Minimum Royalty Fee of $100,000 in year 1, $150,000 in year 2, $165,000 in year 3, $181,500 in year 4, $199,650 in year 5, and $219,615 in year 6 and each subsequent year. The Minimum Royalty Fee has been waived until such time as the parties agree to reinstate the Minimum Royalty Fee.
Pursuant to the License Agreement and Amendment No. 1 to the License Agreement effective September 30, 2017 with the Bellissima Licensor (see Note 12a. above), Bellissima is obligated to pay the Bellissima Licensor a Royalty Fee equal to 10% of monthly gross sales (12.5% for sales in excess of defined Case Break Points) of Bellissima Brand products payable monthly. The Bellissima Licensor has the right to terminate the endorsement if Bellissima fails to sell 10,000 cases of Bellissima Brand products in year 1, 15,000 cases in year 2, or 20,000 cases in year 3 and each subsequent year.
c. Brand Licensing Agreement relating to Hooters Marks
On July 23, 2018, United Spirits, Inc. (“United”) executed a Brand Licensing Agreement (the “Hooters Agreement”) with HI Limited Partnership (“the Licensor”). The Agreement provides United a license to use certain “Hooters” Marks to manufacture, market, distribute, and sell alcoholic products.
The Initial Term of the Hooters Agreement is from July 23, 2018 through December 31, 2020. Provided that United is not in breach of any terms of the Agreement, United may extend the Term for an additional 3 years through December 31, 2023.
The Hooters Agreement provides for United’s payment of Royalty Fees (payable quarterly) to the Licensor equal to 6% of the net sales of the licensed products subject to a minimum royalty fee of $65,000 for Agreement year 1 (ending December 31, 2018), $255,000 for Agreement year 2, $315,000 for Agreement year 3 and 4, $360,000 for Agreement year 5, and $420,000 for Agreement year 6.
The Hooters Agreement also provided for United’s payment of an advance payment of $30,000 to the Licensor to be credited towards royalty fees payable to Licensor. On September 6, 2018, the $30,000 advance payment was paid to the Licensor. The Hooters Agreement also provides for United’s payment of a marketing contribution equal to 2% of the prior year’s net sales of the Licensed Products. If United fails to spend the required marketing contribution in any calendar year, the deficiency will be paid to Licensor.
For the six months ended June 30, 2021 and 2020, royalties expense under this Agreement was $157,500 and $7,186, respectively.
d. Marketing and Order Processing Services Agreement
During October 2019, United Spirits, Inc. (“United”) executed a Marketing and Order Processing Services Agreement (the “QVC Agreement”) with QVC, Inc. (“QVC”). Among other things, the Agreement provides for United’s grant to QVC of an exclusive worldwide right to promote the Bellissima products through direct response television programs.
The Initial License Period commenced October 2019 and expires in December 2021 (i.e., two years after first airing of a Bellissima product). Unless either party notifies the other party in writing at least 30 days prior to the end of the Initial License Period or any Renewal License Period of its intent to terminate the QVC Agreement, the License continually renews for additional two-year periods.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
The QVC Agreement provides for United’s payment of “Marketing Fees” (payable no less than monthly) to QVC in amounts agreed to between United and QVC from time to time. For the six months ended June 30, 2021 and 2020, the Marketing Fees expense (payable to QVC) was $131,450 and $264,472, respectively, and the direct response sales generated from QVC programs was $687,005 and $1,094,869, respectively.
e. Distribution Agreements
On May 1, 2015, BiVi entered into a Distribution Agreement with United for United to distribute and wholesale BiVi’s product and to act as the licensed importer and wholesaler. The Distribution Agreement provides United the exclusive right for a term of ten years to sell BiVi’s product for an agreed distribution fee equal to $1.00 per case of product sold.
In November 2015, Bellissima and United agreed to have United distribute and wholesale Bellissima’s products under the same terms contained in the Distribution Agreement with BiVi described in the preceding paragraph.
Effective April 1, 2019, the Company and United agreed to have United distribute and wholesale Hooters brand products under the same terms contained in the Distribution Agreement with BiVi described in the second preceding paragraph.
f. Compensation Arrangements
Effective April 1, 2018, the Company executed Employment Agreements with its Chief Executive Officer Richard DeCicco (“DeCicco”) and its Vice President of Sales and Marketing Roseann Faltings (“Faltings”). Both agreements had a term of 24 months (to June 30, 2020) and have continued thereafter under the same terms. The DeCicco Employment Agreement provides for a base salary at the rate of $265,000 per annum. The Faltings Employment Agreement provides for a base salary at the rate of $150,000 per annum. For the year ended December 31, 2019, we accrued a total of $415,000 officers compensation pursuant to these two Employment Agreements which was allocated 50% to Iconic ($207,500), 40% to Bellissima ($166,000), and 10% to BiVi ($41,500). For the year ended December 31, 2020, we accrued a total of $415,000 officers compensation pursuant to these two Employment Agreements which was allocated 50% to Iconic ($207,500) and 50% to Bellissima ($207,500). For the six months ended June 30, 2021, we accrued a total of $207,500 officers compensation pursuant to these two Employment Agreements which were allocated 50% to Iconic ($103,750) and 50% to Bellissima ($103,750).
As of June 30, 2021 and December 31, 2020, accrued officers compensation was $848,473 and $843,050, respectively.
g. Lease Agreements
On March 27, 2018, United Spirits, Inc. executed a lease extension for the Company’s office and warehouse space in North Amityville New York. The extension had a term of three years from February 1, 2018 to January 31, 2021 and provided for monthly rent of $4,478.
On January 1, 2021, Iconic Brands, Inc. executed a cancellable Lease Agreement with Day Kay International (an entity controlled by Richard DeCicco) for the lease of the Company’s office and warehouse space in North Amityville New York. The agreement has a term of three years from January 1, 2021 to January 1, 2024 and provides for monthly rent of $4,893.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
On January 1, 2019, United Spirits, Inc. executed a lease agreement with the two officers of the Company to use part of their residence in Copiague, New York for Company office space. The agreement has a term of three years from January 1, 2019 to December 31, 2021 and provides for monthly rent of $3,930.
At June 30, 2021, the future minimum lease payments under the one remaining non-cancellable operating lease were:
Year ending December 31, 2021
|
|
$
|
23,580
|
|
|
|
|
|
|
Total
|
|
$
|
23,580
|
|
The operating lease liabilities totaling $22,909 at June 30, 2021 as presented in the Consolidated Balance Sheets represents the discounted (at our 10% estimated incremental borrowing rate) value of the future lease payments of $23,580 at June 30, 2021.
h. Endorsement Agreement
In February 2020, Iconic executed an Endorsement Agreement with an entity (“CEE”) controlled by Chase Elliott (“Elliott”), driver of the Hendrick Motorsports Number 9 NAPA/Hooter’s Chevrolet in races of the NASCAR Cup Series. The agreement, which has a term ending on December 31, 2021, provides Iconic the right to utilize Elliott’s name in connection with the promotion and distribution of Hooters brand products and requires CEE and Elliott to perform certain specified services for Iconic including certain promotional appearances. The agreement provides for compensation payable to CEE of (1) Initial Share Award of 100,000 shares of Iconic common stock (which was issued on February 24, 2020); (2) $75,000 year 2020 cash compensation (which was paid March 6, 2020); (3) $75,000 year 2021 cash compensation payable on or before February 15, 2021 (which has not yet been paid); and (4) Year 2021 Second Share Award of that number of shares of Iconic common stock equal to $75,000 based upon the average closing price of the common stock for the five trading days immediately preceding February 15, 2021 (which has not yet been issued).
For the year ended December 31, 2020, we expensed $142,500 in license fees relating to this Endorsement Agreement.
Iconic Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three and six months ended June 30, 2021 and 2020
i. Concentration of sales
For the six months ended June 30, 2021 and 2020, sales consisted of:
|
|
2021
|
|
|
2020
|
|
Bellissima product line:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QVC direct response sales
|
|
$
|
687,006
|
|
|
$
|
1,094,869
|
|
Other
|
|
|
494,856
|
|
|
|
267,683
|
|
Total Bellissima
|
|
|
1,181,862
|
|
|
|
1,362,552
|
|
BiVi product line
|
|
|
-
|
|
|
|
-
|
|
Hooters product line
|
|
|
37,585
|
|
|
|
98,934
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,219,447
|
|
|
$
|
1,461,486
|
|
13. SUBSEQUENT EVENTS
On July 26, 2021, the Company acquired all of the issued and outstanding membership interests of TopPop LLC (“TopPop”), a brand owner and contract manufacturing and packaging company specializing in flexible packaging solutions in the food, beverage, and health categories, in exchange for (a) $3,995,551 cash; (b) 26,009,600 shares of Company common stock (valued at $0.3125 per share or $8,128,000); (c) $4,900,000 Promissory Notes bearing interest at 10% and due July 26, 2022; and (d) earn-out payments for years ended July 31, 2022 and July 31, 2023 equal to the excess of 1.96 times TopPop’s EBITDA for each year over the amount of Promissory Notes repaid for each year. The earn-out payments shall be made, at the election of each TopPop Member, in cash or in shares of Company common stock or a combination thereof provided that not less than 45% of the value of each earn-out payment shall be paid in common stock.
In connection with the TopPop acquisition on July 26, 2021, the Company entered into securities purchase agreements for the sale of 32,303.11 shares of the Company’s newly created Series A-2 Convertible Preferred Stock, 11,320,201 shares of Company common stock, and Warrants to purchase 114,690,150 shares of Company common stock (at an exercise price of $0.3125 per share for a period of five years) for gross proceeds of $35,840,672. The first tranche for 20,724.70 shares of Series A-2 Preferred Stock, 7,019,196 shares of Company common stock, and 73,338,203 Warrants for gross proceeds of $22,918,203 (consisting of $18,147,354 cash and cancellation of a total of $4,770,849 of certain indebtedness) closed on July 26, 2021. The second tranche for 11,578.40 shares of Series A-2 Preferred Stock, 4,301,005 shares of Company common stock, and 41,351,901 Warrants for gross proceeds of $12,690,901 is to close in January 2022. The Placement Agent fee paid for the first tranche was $2,350,000 cash and 2,194 shares of Series A-2 Preferred Stock. The Placement Agent fee to be paid for the second tranche is $1,150,000 cash and 1,096 shares of Series A-2 Preferred Stock.
Each share of Series A-2 Convertible Preferred Stock has a par value of $0.001 per share, has a stated value of $1,000 per share, and is convertible at the option of the holder into shares of Company common stock at a conversion price of $0.3125 per share (subject to adjustment under certain circumstances).
Also in connection with the TopPop acquisition on July 26, 2021:
(1)
|
Holders of the Company’s Series E, F, and G Convertible Preferred Stock and Series E, F and G Common Stock Purchase Warrants exchanged their existing securities for 3704.80 shares of series A-2 Preferred Stock, 2,449,517 shares of Company common stock, and 14,304,880 Warrants.
|
|
|
(2)
|
Richard DeCicco, the Company’s chief executive officer to July 26, 2021, exchanged the one issued and outstanding share of Series A Preferred Stock for 25,600,000 shares of Company common stock.
|
|
|
(3)
|
Richard DeCicco, the Company’s chief executive officer to July 26, 2021, sold all of the issued and outstanding capital stock of United Spirits, Inc. to the Company for $1,000,000 cash.
|