BONK, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company’s management, including its Chief Executive Officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company’s desired disclosure control objectives. In designing periods specified in the SEC’s rules and forms, and that such information is accumulated and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company’s certifying officers have concluded that the Company’s disclosure controls and procedures are effective in reaching that level of assurance. At the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and principal financial officer concluded that our disclosure controls and procedures were ineffective to ensure that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officer, recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to the Company, based on the assessment and control of disclosure decisions currently performed by a small team. The Company plans to expand its management team and build a fulsome internal control framework required by a more complex entity. Management’s Report on Internal Control over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. As of December 31, 2020, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on the criteria established by COSO management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020. This Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting as smaller reporting companies are not required to include such report and EGC’s are exempt from this requirement entirely until they are no longer an EGC. Management’s report is not subject to attestation by the Company’s independent registered public accounting firm. 38 Table of Contents Limitations on the Effectiveness of Controls Management has confidence in its internal controls and procedures. The Company’s management believes that a control system, no matter how well designed and operated can provide only reasonable assurance and cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all internal control systems, no evaluation of controls can provide absolute assurance that all control issuers and instances of fraud, if any, within the Company have been detected. Changes in Internal Controls There were no changes in the Company’s internal controls over financial reporting that occurred during the fiscal year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation. ITEM 9B. OTHER INFORMATION None. 39 Table of Contents PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Our directors and executive officers and their respective ages as of the date of this prospectus are as follows: Name Age Position(s) Brian S. John 52 Chief Executive Officer and Director Douglas O. McKinnon 70 Chief Financial Officer Richard Miller 53 Chief Operating Officer and Director Dr. Glynn Wilson 73 Chairman, Head of Research and Development Ryan Allison 40 Vice President of Business Development Dr. Hector Alila 68 Director Nancy Torres Kaufman 40 Director Christopher Marc Melton 49 Director Byron T. Young 47 Director The following describes the business experience of each of our directors and executive officers, including other directorships held in reporting companies: Brian S. John, Chief Executive Officer and Director, is one of our founders and has served as our Chief Executive Officer since October 2018. For the past 20 years, Brian has been an investor and advisor to companies around the globe. He is the founder of Caro Partners, LLC, a financial consulting firm specializing in assisting emerging growth companies primarily in the sub- $100 million space, and has worked with hundreds of companies in dozens of countries over the last 25 years. Mr. John was the Chief Executive Officer of Teeka Tan Products Inc., a sun care company he co-founded in 2004 and later sold. He also serves on the board of directors of The Learning Center at the Els Center of Excellence–a school for children with autism in Jupiter, Florida. In August 2015, Mr. John voluntarily petitioned the United States Bankruptcy Court in the Southern District of Florida (case #15-24036-PGH) for personal bankruptcy under Chapter 7 of the United States bankruptcy Code. The debtor, Mr. John, was discharged in February 19, 2016 and the matter was terminated in April 2017. There were no allegations of fraud made in the proceedings. Douglas O. McKinnon, Chief Financial Officer, has served as our Chief Financial officer since August 15, 2019. Mr. McKinnon has served as the Chief Executive Officer of AppYea, Inc. since March 2016. Mr. McKinnon has served as a director of Surna, Inc. since March, 2014 and as Surna’s Executive Vice President and Chief Financial Officer since April, 2014. Prior to Surna, Inc., Mr. McKinnon served as Chief Executive Officer of 1 st Resource Group, Inc. for four years. Mr. McKinnon's 45+ year professional career includes financial, advisory and operation experience across a broad spectrum of industry sectors, including oil and gas, technology, cannabis and communications. He has served in C-level positions in both private and public sectors, including Chairman and CEO of an American-Stock-Exchange traded company, VP - Chief Administrative Officer of a $12-billion market cap Nasdaq-traded company for which the management team raised over $2.2 billion, CFO of several publicly-held US, Canadian and Australian companies, and CEO/CFO of various other private enterprises. As an entrepreneur, Mr. McKinnon has been involved in organizations ranging from start-up companies using venture capital funding to publicly traded institutional backed companies. Additionally, Mr. McKinnon has extensive merger and acquisition, and turnaround experience. Richard Miller, Chief Operating Officer and Director, has served as our Chief Operating Officer since October 2018 and served as our Chief Financial Officer from November 2018 until August 2019. Since 2003, Mr. Miller has served as president of Caro Consulting, Inc. a consulting firm that advises emerging growth companies. Over the last twenty years Mr. Miller has provided strategic advice to hundreds of companies across diverse industries. He has assisted C Level executives with expanding, financing and other challenges emerging companies face. Mr. Miller was co-founder of Teeka Tan Suncare Products. Prior to the company’s sale, he was instrumental in the design and launch a full line of boutique sun care products. He is an advocate for school safety and local schools through his grass roots group My School Counts. Dr. Glynn Wilson, Chairman, Head of Research and Development, has served as one of our directors since November 2018. Mr. Wilson was appointed our Chairman and Head of Research and Development on October 15, 2019. Dr. Wilson previously served as a Director of TapImmune, Inc. from February 2005 until October, 2018 and as Chief Executive Officer from July 2009 through September 2017. Dr. Wilson also served as President of Auriga Laboratories, Inc. from June 1, 2005 through March 13, 2006, and as Chief Scientific Officer from March 13, 2016 through August 25, 2006. He was the Chief Scientific Officer at Tacora Corporation from 1994 to 1997 and was the Vice-President, R&D, at Access Pharmaceuticals from 1997 to 1998. Dr. Wilson was Research Area Head, Cell and Molecular Biology in Advanced Drug Delivery at Ciba-Geigy Pharmaceuticals from 1984-1989 and Worldwide Head of Drug Delivery at SmithKline Beecham from 1989 to 1994. He was a faculty member at Rockefeller University, New York, in the laboratory of the Nobel Laureates, Sanford Moore and William Stein, from 1974 to 1979. Dr. Wilson is a recognized leader in the development of drug delivery systems and has been involved in taking lead products & technologies from concept to commercialization. Dr. Wilson has a Ph. D. in Biochemistry and conducted medical research at The Rockefeller University, New York. Dr. Wilson brings an extensive background of success in corporate management and product development with tenures in both multinational and start-up biotech organizations. 40 Table of Contents Ryan Allison, Vice President of Business Development, has been a management consultant since 2018 operating his own business. Prior to that, Mr. Allison was a senior partner at Interprise Partners, LLC (“Interprise”) from 2016 to 2018. Interprise is a middle market investment and management group. From 2013 to 2016, Mr. Allison was the chief executive officer of Strategy Associates, a professional services firm specializing in large-scale enterprise technology adoption, purchasing guidance and business strategy development and implementation. Mr. Allison founded Strategy Associates in 2013. Mr. Allison received his B.S. in computer science from The College of New Jersey. He also completed a masters program while a scholar in residence at Oxford University, Mansfield College. Mr. Allison received his MBA from George Mason University. Dr. Hector Alila, Director, has served as one of our directors since February 2019. Dr. Alila brings 30 years of demonstrated scientific experience in product development and successful management leadership in biopharmaceutical industry. He is the Founding President and Chief Executive Officer of Esperance Pharmaceutical Inc., a clinical stage biopharmaceutical company that has successfully developed novel targeted cancer therapeutics currently in clinical development. Dr. Alila founded Esperance Pharmaceutical, Inc. in 2006. Prior to Esperance, Dr. Alila served as Senior Vice President of Drug Development at Protalex, Inc., where he led the development of a drug currently in clinical trials for treatment of autoimmune diseases. He was previously Vice President of Product Development at Cell Pathways, Inc., where he was responsible for the development cancer drugs, and a director of Biology/pharmacology at GeneMedicine, Inc., where he led product development of gene medicines. He also held several research, product development and management positions at SmithKline Beecham Pharmaceuticals. He obtained his Ph.D. in physiology and immunology from Cornell University. Nancy Torres Kaufman, Director, has served as one of our directors since January 2021. Ms. Kaufman is the Chairman and CEO of Beacon Capital LLC, a New York family office, recently relocated to Jupiter, Florida. Ms. Kaufman officially founded Beacon Capital as her family office and investment platform in 2010 with a focus on investing in life sciences businesses globally. In 2003, Nancy started a mortgage correspondent lending company called Wall St. Mortgage, a first and second lien corresponding lender and brokerage company which book and operations she sold to Countrywide in 2006. In 2004, she joined the investment banking boutique Violy & Co and focused increasingly on her first passion, life sciences. Nancy is a Cuban born and raised entrepreneur focused on bringing venture impact philanthropy into the life science and healthcare space. She left Cuba 1994 for the US unaccompanied as a 14-years old. In 1999, Nancy was awarded a full academic scholarship to the College of St. Elizabeth, consisting of an accelerated medical program with UMDNJ for a Bachelor of Science Major in Biology with a Chemistry minor. Nancy also entered the Women’s Leadership Program at Yale School of Management in 2020. Christopher Marc Melton, Director, has served as one of our directors since August 2019. Mr. Melton has served as director of SG Blocks, Inc. since November of 2011 and currently serves as the Audit Committee Chairman. From 2000 to 2008, Mr. Melton was a Portfolio Manager for Kingdon Capital Management (" Kingdon ") in New York City, where he ran in excess of $1 Billion book in media, telecom, and Japanese investment. Mr. Melton opened Kingdon's office in Japan, where he set up a Japanese research company. From 1997 to 2000, Mr. Melton served as a Vice President at JPMorgan Investment Management as an equity research analyst, where he helped manage $1 Billion plus in REIT funds under management. Mr. Melton was a Senior Real Estate Equity Analyst at RREEF Funds in Chicago from 1995 to 1997. Mr. Melton is Principal and co-founder of Callegro Investments, a specialist land investor. He currently serves on several Public and Private Boards as well as Chairman of the Audit Committee of a Nasdaq listed company. Byron T. Young, Director, was appointed as one of our directors in October of 2019. Additionally, Mr. Young has served as Treasurer and Chairman of the Board of Zenergy Brands, Inc. since December 2015. Zynergy brands was a technology company engaged in the energy and utilities space. Zynergy provided building automation systems, retail energy and energy conservation solutions to commercial and industrial users. In 2010, Mr. Young founded Assist Wireless, a wireless communication company, and currently serves as its CEO. Mr. Young founded a retail energy provider in 2005 under the name Young Energy, LLC, which provides electricity and natural gas services to residential and commercial customers in Texas and where Mr. Young currently serves as a senior advisor and board member. In 2001, Mr. Young founded a competitive local exchange carrier (C-LEC) under the name of Extel Enterprises, which was ultimately sold to publicly traded Usurf America, Inc. in 2004. Term of Office Our Board is elected annually by our stockholders. Each director shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal. Family Relationships There are no family relationships among and between the issuer’s directors, officers, persons nominated or chosen by the issuer to become directors or officers, or beneficial owners of more than ten percent of any class of the issuer’s equity securities. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and officers, and the persons who beneficially own more than 10% of our Common Stock, to file reports of ownership and changes in ownership with the SEC. Copies of all filed reports are required to be furnished to us pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons have complied with all applicable filing requirements during the year ended December 31, 2020. 41 Table of Contents Board Composition Director Independence Our business and affairs are managed under the direction of our Board, which consist of seven members. Under Nasdaq rules, independent directors must comprise a majority of a listed company’s board of directors, subject to certain exceptions. In addition, Nasdaq rules require that each member of a listed company’s audit, compensation and nominating and governance committees be independent, subject to certain phase-ins for newly-public companies. Under Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or (2) be an affiliated person of the listed company or any of its subsidiaries. Our Board has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that Ms. Kaufman and Messrs. Melton, Alila and Young do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of Nasdaq. In making this determination, our Board considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. In making this determination, our Board considered the current and prior relationships that each non-employee director has with us and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. Board Committees Our Board has established Audit, Compensation, and Nominating and Corporative Governance Committees. Our Board may establish other committees to facilitate the management of our business. The composition and functions of the audit committee, compensation committee and nominating and corporate governance committee are described below. Members will serve on committees until their resignation or removal from the Board or until otherwise determined by our Board. Audit Committee Our audit committee consists of Mr. Melton, Mr. Alila and Ms. Kaufman, with Mr. Melton serving as the chairman. Our Board has determined that Mr. Melton is an “audit committee financial expert” within the meaning of the SEC regulations. Our Board has also determined that each member of our audit committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, the Board has examined each audit committee member’s scope of experience and the nature of their employment in the corporate finance sector. The functions of this committee include: • selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements; • helping to ensure the independence and performance of the independent registered public accounting firm; • discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, our interim and year-end operating results; • developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; • reviewing our policies on risk assessment and risk management; • reviewing related party transactions; • obtaining and reviewing a report by the independent registered public accounting firm at least annually, that describes our internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and • approving (or, as permitted, pre-approving) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm. 42 Table of Contents Compensation Committee Our compensation committee consists of Messrs. Melton, Alila and Young with Mr. Young serving as the chairman. The functions of the compensation committee will include: • reviewing and approving, or recommending that our Board approve, the compensation of our executive officers; • reviewing and recommending that our Board approve the compensation of our directors; • reviewing and approving, or recommending that our Board approve, the terms of compensatory arrangements with our executive officers; • administering our stock and equity incentive plans; • selecting independent compensation consultants and assessing conflict of interest compensation advisers; • reviewing and approving, or recommending that our Board approve, incentive compensation and equity plans; and • reviewing and establishing general policies relating to compensation and benefits of our employees and reviewing our overall compensation philosophy. Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Messrs. Melton and Young with Mr. Young serving as the chairman. The functions of the nominating and governance committee will include: • identifying and recommending candidates for membership on our Board; • including nominees recommended by stockholders; • reviewing and recommending the composition of our committees; • overseeing our code of business conduct and ethics, corporate governance guidelines and reporting; and • making recommendations to our Board concerning governance matters. The nominating and corporate governance committee also annually reviews the nominating and corporate governance committee charter and the committee’s performance. Board Leadership Structure and Role in Risk Oversight Our Board is primarily responsible for overseeing our risk management processes. Our Board receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our assessment of risks. Our Board focuses on the most significant risks we face our general risk management strategy, and also ensures that risks we undertake are consistent with our Board’s appetite for risk. While our Board oversees our risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks we face and that our Board leadership structure supports this approach. Our amended and restated bylaws provide our Board with flexibility in its discretion to combine or separate the positions of Chairman of the Board and Chief Executive Officer. The Board currently separates the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. Our Chief Executive Officer, who is also a member of our Board, is responsible for setting the strategic direction of the Company and the day-to-day leadership and performance of the Company, while the Chairman of the Board provides guidance to the Chief Executive Officer, sets the agenda for the Board meetings, presides over meetings of the Board and tries to reach a consensus on Board decisions. Although these roles are currently separate, the Board believes it should be able to freely select the Chairman of the Board based on criteria that it deems to be in the best interest of the Company and its stockholders, and therefore one person may, in the future, serve as both the Chief Executive Officer and Chairman of the Board. Code of Ethics We have adopted a code of ethics and conduct applicable to all of our directors, officers, employees and all persons performing similar functions. A copy of that code is attached as Exhibit 14.1 to the Registration Statement of which this prospectus forms a part thereof. We expect that any amendments to the code, or any waivers of its requirements, will be disclosed in our public filings with the Commission. Corporate Governance Guidelines We have adopted a corporate governance guidelines that serve as a flexible framework within which our Board and its committees operate. These guidelines cover a number of areas including the size and composition of the Board, Board membership criteria and director qualifications, director responsibilities, Board agenda, roles of the chairman of the Board and Chief Executive Officer and Chief Financial Officer, meetings of independent directors, committee responsibilities and assignments, Board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning. A copy of our corporate governance guidelines is attached hereto as Exhibit 14.2 to the Registration Statement of which this prospectus forms a part thereof. 43 Table of Contents Involvement in Certain Legal Proceedings To our knowledge, except as set forth in the biography of Brian John, our directors and executive officers have not been involved in any of the following events during the past ten years: 1. any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; 4. being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; 5. being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 6. being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 44 Table of Contents ITEM 11. EXECUTIVE COMPENSATION No compensation was paid to our principal executive officer and our two other most highly compensated executive officers during the fiscal years indicated below. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) All Other Compensation ($) (4) Total Compensation ($) Brian S. John (1) 2020 $ 114,583 $ 105,000 $ — $ — $ 4,000 $ 223,583 Chief Executive Officer 2019 $ — $ 5,000 $ — $ — $ — $ 5,000 Richard Miller (2) 2020 $ 85,000 $ 35,000 $ — $ — $ 4,000 $ 124,000 Chief Operating Officer and former Chief Financial Officer 2019 $ 85,000 $ 5,000 $ — $ — $ — $ 90,000 Dr. Glynn Wilson (3) 2020 $ — $ — $ 200,000 $ — $ 4,000 $ 204,000 Chairman of the Board and Head of Research and Development 2019 $ — $ 5,000 $ 75,000 $ — $ — $ 80,000 1. Mr. John was appointed as Chief Executive Officer on October 28, 2018. 2. Mr. Miller was appointed as Chief Financial Officer on November 1, 2018. Mr. Miller transitioned from Chief Financial Officer to Chief Operating Officer on August 15, 2019. 3. Dr. Wilson was appointed as a director in November 2018 and as Chairman on October 15, 2019. 4. Each were paid $4,000 in Director fees Employment Agreements with Named Officers On February 1, 2020, we entered into a written employment agreement with Brian John, pursuant to which Mr. John shall serve as our Chief Executive Officer (the “ John Employment Agreement ”). The John Employment Agreement has an initial term from February 1, 2020 through January 1, 2021, and shall automatically renew for one (1) year periods unless otherwise terminated by either party. Mr. John shall be paid a salary of $150,000 (the “ Base Salary ”) for the period commencing February 1, 2020 and ending January 1, 2021, with such Base Salary increasing by 10% for each renewal term. Mr. John shall also be entitled to a quarterly cash bonus as follows: 5% of net revenues up to $1 Million; plus 4% of the second $1 Million in net revenues; plus 3% of the third $1 Million in net revenues; plus 2% of the fourth $1 Million in net revenues; plus 1% of all net revenues in excess of $4 Million; provided, that: (i) the bonus is subject to a cap of $2 Million; and (ii) the bonus may be paid, at the election of Mr. John, in cash or shares of our common stock (calculated at the fair market value of such shares as determined by the Board). In the event of Mr. John’s death during the term of the John Employment Agreement, his Base Salary at that time shall be paid to his designated beneficiary, or, in the absence of such designation, to his estate or other legal representative, for three (3) months from the date of death. In addition, all granted but unvested stock options shall immediately vest and all vested but unexercised stock options shall remain exercisable by Mr. John’s designated beneficiary, or, in the absence of such designation, to his estate or other legal representative, through the term of such stock options. In the event of Mr. John’s disability, he shall be entitled to compensation in accordance with our disability compensation practice for senior executives, including any separate arrangement or policy covering him, but in all events he shall continue to receive his Base Salary at the time of his disability for a for a period of three (3) months beginning on the date the disability is deemed to have occurred. In addition, all granted but unvested stock options shall immediately vest and all vested but unexercised stock options shall remain exercisable by Mr. John through the term of such stock options. In the event we terminate the John Employment Agreement without cause, Mr. John shall continue to carry out his responsibilities under the John Employment Agreement for one month and shall be paid his normal Base Salary. In addition, upon such termination without cause, we shall pay Mr. John a lump sum equal to his entire remaining Base Salary under the John Employment Agreement, all granted but unvested stock options shall immediately vest and all vested but unexercised stock options shall remain exercisable by Mr. John through the term of such stock options. In the event of a Change in Control or Attempted Change in Control, each as defined in the John Employment Agreement attached hereto as Exhibit 10.8, during the term of the John Employment Agreement, Mr. John shall have the right to terminate the John Employment Agreement upon thirty (30) days’ written notice given at any time within one year after the occurrence of such event, and Mr. John shall be entitled to the same compensation as if the John Employment Agreement was terminated without cause. On February 1, 2020, we entered into a written employment agreement with Richard Miller, pursuant to which Mr. Miller shall serve as our Chief Operating Officer (the “ Miller Employment Agreement ”). The Miller Employment Agreement has a term of one (1) year and shall automatically renew for one (1) year periods unless otherwise terminated by either party. Mr. Miller shall be paid a salary of $125,000 (the “ Miller Base Salary ”) for the period commencing February 1, 2020 and ending February 1, 2021, with such Miller Base Salary increasing by 10% for each renewal term. Mr. Miller shall also be entitled to a quarterly cash bonus as follows: 5% of net revenues up to $1 Million; plus 4% of the second $1 Million in net revenues; plus 3% of the third $1 Million in net revenues; plus 2% of the fourth $1 Million in net revenues; plus 1% of all net revenues in excess of $4 Million; provided, that: (i) the bonus is subject to a cap of $2 Million; and (ii) the bonus may be paid, at the election of Mr. Miller, in cash or shares of our common stock (calculated at the fair market value of such shares as determined by the Board). In the event of Mr. Miller’s death during the term of the Miller Employment Agreement, his Miller Base Salary at that time shall be paid to his designated beneficiary, or, in the absence of such designation, to his estate or other legal representative, for three (3) months from the date of death. In addition, all granted but unvested stock options shall immediately vest and all vested but unexercised stock options shall remain exercisable by Mr. Miller’s designated beneficiary, or, in the absence of such designation, to his estate or other legal representative, through the term of such stock options. In the event of Mr. Miller’s disability, he shall be entitled to compensation in accordance with our disability compensation practice for senior executives, including any separate arrangement or policy covering him, but in all events he shall continue to receive the Miller Base Salary at the time of his disability for a for a period of three (3) months beginning on the date the disability is deemed to have occurred. In addition, all granted but unvested stock options shall immediately vest and all vested but unexercised stock options shall remain exercisable by Mr. Miller through the term of such stock options. In the event we terminate the Miller Employment Agreement without cause, Mr. Miller shall continue to carry out his responsibilities under the Miller Employment Agreement for one month and shall be paid his normal Miller Base Salary. In addition, upon such termination without cause, we shall pay Mr. Miller a lump sum equal to his entire remaining Miller Base Salary under the Miller Employment Agreement, all granted but unvested stock options shall immediately vest and all vested but unexercised stock options shall remain exercisable by Mr. Miller through the term of such stock options. In the event of a Change in Control or Attempted Change in Control, each as defined in the Miller Employment Agreement attached hereto as Exhibit 10.9, during the term of the Miller Employment Agreement, Mr. Miller shall have the right to terminate the Miller Employment Agreement upon thirty (30) days’ written notice given at any time within one year after the occurrence of such event, and Mr. Miller shall be entitled to the same compensation as if the Miller Employment Agreement was terminated without cause. On August 5, 2019 (the “ McKinnon Execution Date ”), we entered into a written employment agreement with Douglas McKinnon, pursuant to which Mr. McKinnon shall serve as our Chief Financial Officer (the “ McKinnon Employment Agreement ”). Pursuant to the McKinnon Employment Agreement, we shall grant Mr. McKinnon up to 300,000 shares of our common stock, whereby 100,000 shares shall be granted to Mr. McKinnon and vest on the McKinnon Execution Date, either i) 100,000 shares or ii) an option to purchase 100,000 shares, issued pursuant to our contemplated equity incentive plan, shall be granted to Mr. McKinnon on the first anniversary of the McKinnon Execution Date, and either i) 100,000 shares or ii) an option to purchase 100,000 shares, issued pursuant to our contemplated equity incentive plan, shall be granted to Mr. McKinnon on the second anniversary of the McKinnon Execution Date. The McKinnon Employment Agreement has a term of three (3) years and shall automatically renew for one (1) year periods unless otherwise terminated by either party. Mr. McKinnon shall be paid a salary in an amount commensurate with his position and responsibilities at similar companies, subject to the mutual agreement between us and Mr. McKinnon. In the event we terminate the McKinnon Employment Agreement without cause, we shall pay to Mr. McKinnon his base salary, including participation in all benefit programs, for one (1) year or the remainder of the then-current term, whichever is more. In the event of either i) a change of control of the Company or ii) we change the responsibilities of Mr. McKinnon, Mr. McKinnon shall have the option to terminate the McKinnon Employment Agreement and shall be entitled to all compensation remaining to be paid during the then-current term of the McKinnon Employment Agreement plus an additional one-year period. During 2020, Mr. McKinnon was issued 200,000 shares of the Company’s common stock representing the 100,000 shares due for 2019 and 100,000 shares due for 2020. 45 Table of Contents Employment Agreements with Senior Management On October 15, 2019, (the “ Wilson Execution Date ”), we entered into a written employment agreement with Dr. Glynn Wilson, pursuant to which Dr. Wilson shall serve as our Chairman of the Board and Head of Research and Development (the “ Wilson Employment Agreement ”). Pursuant to the Wilson Employment Agreement, we shall grant Dr. Wilson up to 800,000 shares of our common stock, whereby 300,000 shares shall be granted to Dr. Wilson and vest on the Wilson Execution Date, either i) 200,000 shares or ii) an option to purchase 200,000 shares, issued pursuant to our contemplated equity incentive plan, shall be granted to Dr. Wilson on the first anniversary of the Wilson Execution Date, and either i) 200,000 shares or ii) an option to purchase 200,000 shares, issued pursuant to our contemplated equity incentive plan, shall be granted to Dr. Wilson on the second anniversary of the Wilson Execution Date. The Wilson Employment Agreement has a term of three (3) years and shall automatically renew for one (1) year periods unless otherwise terminated by either party. In the event we terminate the Wilson Employment Agreement without cause, we shall pay to Dr. Wilson his base salary, including participation in all benefit programs, for one (1) year or the remainder of the then-current term, whichever is more. In the event of either i) a change of control of the Company or ii) we change the responsibilities of Dr. Wilson, Dr. Wilson shall have the option to terminate the Wilson Employment Agreement and shall be entitled to all compensation remaining to be paid during the then-current term of the Wilson Employment Agreement plus an additional one-year period. During 2020, Dr. Wilson was issued 500,000 shares of the Company’s common stock representing the 300,000 shares due for 2019 and 200,000 shares due for 2020. Stock Incentive Plan On April 22, 2020, our Board of Directors and majority shareholders approved the Jupiter Wellness, Inc. 2020 Equity Incentive Plan (the “ Plan ”), to be administered by the our Compensation Committee. Pursuant to the Plan, we are authorized to grant options and other equity awards to officers, directors, employees and consultants. The purchase price of each share of common stock purchasable under an award issued pursuant to the Plan, shall be determined by our Compensation Committee, in its sole discretion, at the time of grant, but shall not be less than 100% of the fair market of such share of common stock on the date the award is granted, subject to adjustment. Our Compensation Committee shall also have sole authority to set the terms of all awards at the time of grant. Pursuant to the Plan, a maximum of 1,183,950 shares of our common stock shall be set aside and reserved for issuance, subject to adjustments as may be required in accordance with the terms of the Plan. Outstanding Equity Awards at Fiscal Year-End In connection with the employment agreements described above, Mr. McKinnon, our CFO, and Dr. Wilson, our Chairman, were granted 100,000 shares and 300,000 shares, respectively, of our common stock during the year ended December 31, 2019 which were not issued as of December 31, 2019. Additionally, in connection with the employment agreements, Mr. McKinnon and Dr. Wilson were granted 100,000 shares and 200,000 shares, respectively, of our common stock during the year ended December 31, 2020. During 2020, Mr. McKinnon and Dr. Wilson were issued 200,000 and 500,000 shares of the Company’s common stock, respectively. There were no outstanding equity awards as of December 31, 2020. Director Compensation During the year ended December 31, 2018 we did not pay any compensation to our Directors. The following table sets forth the amounts paid to Directors during the years ended December 31, 2020 and 2019. Directors 2020 2019 Brian John $ 4,000 5,000 Richard Miller $ 4,000 5,000 Glynn Wilson $ 4,000 5,000 Hector Alila $ 4,000 4,000 Tim Glynn $ 4,000 4,000 Christopher Melton $ 4,000 2,000 Byron Young $ 4,000 1,000 $ 28,000 26,000 Agreements with Directors On February 25, 2019 (the “ Alila Execution Date ”), we entered into an independent director’s agreement with Dr. Hector Alila, pursuant to which Dr. Alila shall serve as one of our directors (the “ Alila Agreement ”). Pursuant to the Alila Agreement, we shall pay Dr. Alila $1,000 per quarter, per annum. Additionally, we shall issue to Mr. Alila an option to purchase 33,330 shares of our common stock on the Alila Execution Date and for each additional year Dr. Alila serves as a director (the “ Alila Options ”). The Alila Options shall have a three (3) year term and an exercise price of $0.25 per share and shall be issued on each anniversary date of his election. On March 13, 2019 (the “ Glynn Execution Date ”), we entered into an independent director’s agreement with Timothy Glynn, pursuant to which Mr. Glynn shall serve as one of our directors (the “ Glynn Agreement ”). Pursuant to the Glynn Agreement, we shall pay Mr. Glynn $1,000 per quarter, per annum. Additionally, we shall issue to Mr. Glynn an option to purchase 50,000 shares of our common stock on the Glynn Execution Date and for each additional year Mr. Glynn serves as a director (the “ Glynn Options ”). The Glynn Options shall have a three (3) year term and an exercise price of $0.25 per share and shall be issued on each anniversary date of his election. Mr. Glynn resigned from the board of directors, effective January 15, 2021. On July 29, 2019 (the “ Melton Execution Date ”), we entered into an independent director’s agreement with Christopher Melton, pursuant to which Mr. Melton shall serve as one of our directors and our Audit Committee Chairperson (the “ Melton Agreement ”). Pursuant to the Melton Agreement, we shall pay Mr. Melton $1,000 per quarter, per annum. Additionally, we shall issue to Mr. Melton an option to purchase 33,000 shares of our common stock on the Melton Execution Date and for each additional year Mr. Melton serves as a director (the “ Melton Options ”). The Melton Options shall have a three (3) year term and an exercise price of $0.25 per share and shall be issued on each anniversary date of his election. On January 20, 2021 (the “ Kaufman Execution Date ”), we entered into an independent director’s agreement with Nancy Torres Kaufman, pursuant to which Ms. Kaufman shall serve as one of our directors and one of our audit committee members (the “ Kaufman Agreement ”). Pursuant to the Kaufman Agreement, we shall pay to Ms. Kaufman as director’s fee of $20,000 per annum. Additionally, we issued to Ms. Kaufman an option to purchase 20,000 shares of our common stock on the Kaufman Execution Date and for each additional year she serves as a director (the “ Kaufman Options ”). The Kaufman Options shall have a three (3) year term, an exercise price equal to the current market price of the Company’s common stock on the date of issuance, and shall be issued on each anniversary date of her election. 46 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) any person or group beneficially owning more than 5% of any class of voting securities; (ii) our directors, and; (iii) each of our named executive officers; and (iv) all executive officers and directors as a group as of March 31, 2021. The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. Unless otherwise indicated, the address of all listed stockholders is c/o Jupiter Wellness, Inc., 725 N. Hwy A1A, Suite C-106, Jupiter, FL 33477. Name of Beneficial Owner Shares of Common Stock Beneficially Owned % of Shares of Common Stock Beneficially Owned Directors and Officers: Brian S. John Chief Executive Officer and Director 2,990,000 28.1 % Doug McKinnon Chief Financial Officer 200,000 1.9 % Richard Miller Chief Operating Officer and Director 1,150,000 10.8 % Glynn Wilson Chairman and Head of Research and Development 800,000 7.5 % Ryan Allison Vice President of Business Development 25,000 (1) 0.2 % Dr. Hector Alila Director 66,660 (2) 0.5 % Nancy Kaufman Director 20,000 (3) 0.1 % Christopher Melton Director 66,000 (4) 0.5 % Byron Young* Director 84,926 (5) 0.7 % All officers and directors (8 persons) 5,402,586 45.0 % *The shares of common stock are owned by BBBY Ltd. of which Mr. Young is a beneficiary. (1) Includes 25,000 shares issuable upon exercise of options. (2) Includes 66,660 shares issuable upon exercise of options. (3) Includes 20,000 shares issuable upon exercise of options. (4) Includes 66,000 shares issuable upon exercise of options. (5) Includes 50,000 shares issuable upon exercise of options. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE On June 20, 2019, we issued a Twenty-Five Thousand Dollar ($25,000) convertible promissory note (the “ Caro Note ”) for funds lent by Caro Partners, LLC, a consulting company owned by our Founder, Chief Executive Officer and director, Brian S. John. The term of the Caro Note is one year. The interest rate is ten percent (10%) non-compounded and payable semi-annually. The Caro Note is convertible at any time by the Note holder 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. On July 25, 2019, we issued a Fifty Thousand Dollars ($50,000) convertible promissory note the (“ Wilson Note ”) for funds lent by Dr. Glynn Wilson, one of our directors. The term of the Wilson Note is one year. The interest rate is ten percent (10%) non–compounded and payable semi-annually. The Wilson Note is convertible at any time by the holder at a conversion price of $0.25 per share of common stock. Subsequent to September 30, 2020, the Wilson Note was converted into 200,000 shares of the Company’s common stock. On December 31, 2019, the Company issued a convertible promissory note for $250,000 to an entity run by a consultant of the Company. The note has a term of one year, an annual interest rate of eight percent (8%), 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. Subsequent to September 30, 2020, the Company has paid the $250,000 principal balance of this note and related accrued interest. 47 Table of Contents During the year ended December 31, 2020, the Company issued nine convertible promissory notes totaling $1,075,000 (the “ 2020 Notes ”) as follows: Amount Dated $ 25,000 1 01/02/20 250,000 2 01/23/20 300,000 1 03/09/20 50,000 2 05/01/20 50,000 2 05/27/20 50,000 2 05/27/20 100,000 3 06/24/20 125,000 4 09/11/20 125,000 4 09/16/20 $ 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. Subsequent to September 30, 2020, the Company paid the balance of the note. 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 Notes are convertible into the Company’s common stock at any time by the note holder 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 at the time of issuance, there was no open market for the Company’s common stock. In November 2020, the $300,000 note was converted into 100,000 shares of the Company’s common stock along with a payment of $16,067 for accrued interest. Additionally, in November 2020 the $250,000 note plus accrued interest was paid in full by cash payments totaling 267,177 and the two $125,000 notes plus accrued interest of $2,778 were paid in full for total cash payments of $252,778. The following table sets forth a summary of the Company’s convertible promissory notes activity for the years ended December 31, 2020 and 2019: Balance December 31, 2018 $ - 2019 Notes 325,000 Payments on Notes (25,000 ) Balance December 31, 2019 300,000 2020 Notes 1,075,000 Conversion of Notes (350,000 ) Payments on Notes (500,000 ) Balance December 31, 2020 $ 525,000 At December 31, 2020 and 2019 the aggregate outstanding balance of the convertible notes payable (the “Convertible Promissory Notes”) was $525,000 and $300,000, respectively. Subsequent to December 31, 2020, all of the remaining notes were converted into shares of the Company’s common stock. 48 Table of Contents ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees totaling $52,075 and $16,700 were paid to M&K CPAS during the year ended December 31, 2020 and 2019, respectively. No other fees were paid to M&K CPAS. 49 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules EXHIBIT INDEX Exhibit No. Description (a) Exhibits. 1.1 Form of Underwriting Agreement, incorporated by reference to Exhibit 1.1 of the Company’s Registration Statement filed with the SEC on June 17, 2020 . 3.1 Amended and Restated Certificate of Incorporation, incorporated herein by reference to Exhibit 2.1 to Jupiter Wellness, Inc.’s Form 1-A filed with the Securities and Exchange Commission on June 21, 2019 . 3.2 Bylaws, incorporated herein by reference to Exhibit 2.2 to Jupiter Wellness, Inc.’s Form 1-A filed with the Securities and Exchange Commission on June 21, 2019 . 3.3 Amended and Restated Bylaws, incorporated by reference to Exhibit 3.3 of the Company’s Registration Statement filed with the SEC on July 14, 2020 . 3.4 Certificate of Amendment of Certificate of Incorporation, incorporated by reference to Exhibit 3.4 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 3.5 Second Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.5 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 4.1 Common Stock Purchase Warrant, incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement filed with the SEC on July 14, 2020. 4.2 Representative’s Warrant, incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 4.3 Form of Warrant included in Unit, incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 4.4 Form of Warrant Agent Agreement, incorporated by reference to Exhibit 4.4 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 10.1 Common Stock and Warrant Subscription Agreement, incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement filed with the SEC on July 14, 2020. 10.2 Independent Director’s Contract between the Company and Dr. Hector Alila, dated February 25, 2019, incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement filed with the SEC on July 14, 2020 . 10.3 Independent Director’s Contract between the Company and Timothy G. Glynn, dated March 13, 2019, incorporated by reference to Exhibit 10.3 of the Company’s Registration Statement filed with the SEC on July 14, 2020 . 10.4 Independent Director’s Contract between the Company and Christopher Melton, dated July 29, 2019, incorporated by reference to Exhibit 10.4 of the Company’s Registration Statement filed with the SEC on July 14, 2020). 10.5 Employment Agreement with Douglas O. McKinnon, dated August 5, 2019, incorporated by reference to Exhibit 10.5 of the Company’s Registration Statement filed with the SEC on July 14, 2020). 10.6 Form of Regulation A Subscription Agreement, incorporated herein by reference to Exhibit 4.1 to Jupiter Wellness, Inc.’s Form 1-A/A filed with the Securities and Exchange Commission on August 19, 2019. 10.7 Employment Agreement with Dr. Glynn Wilson, dated October 15, 2019, incorporated by reference to Exhibit 10.7 of the Company’s Registration Statement filed with the SEC on July 14, 2020. 10.8 Employment Agreement with Brian John, dated February 1, 2020, incorporated by reference to Exhibit 10.8 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 10.9 Employment Agreement with Richard Miller, dated February 1, 2020, incorporated by reference to Exhibit 10.9 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 10.10 2020 Equity Incentive Plan, incorporated by reference to Exhibit 10.10 of the Company’s Registration Statement filed with the SEC on June 17, 2020 . 10.11 Confidential Membership Interest Purchase Agreement dated February 20, 2020 by and between Jupiter Wellness, Inc., Magical Beasts LLC. and Krista Whitley, incorporated by reference to Exhibit 10.11 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 10.12 Sales Distribution Agreement dated February 20, 2020 between Jupiter Wellness Inc. and Ayako Holdings, Inc., incorporated by reference to Exhibit 10.12 of the Company’s Registration Statement filed with the SEC on June 17, 2020. 10.13 Distribution Agreement, dated November 5, 2020, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on November 9, 2020. 10.14 Endorsement Agreement, dated November 10, 2020, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on November 19, 2020. 10.15 Share Exchange Agreement, dated November 30, 2020, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on December 3, 2020 . 10.16 Independent Director’s Agreement, dated January 20, 2021, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on January 26, 2021. 10.17 Omnibus Amendment dated January 25, 2021, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on January 29, 2021. 10.18 First Amendment to Common Stock Option Agreement dated January 25, 2021, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on January 29, 2021. 10.19 Employment Agreement dated as of January 20, 2021, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on February 3, 2021. 14.1 Code of Ethics, incorporated by reference to Exhibit 14.1 of the Company’s Registration Statement filed with the SEC on July 14, 2020. 14.2 Corporate Governance Guidelines, incorporated by reference to Exhibit 14.2 of the Company’s Registration Statement filed with the SEC on July 14, 2020. 21.1* Subsidiaries of the Registrant 23.1* Consent of Independent Registered Public Accounting Firm 31.1* Certification of our Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 . 31.2* Certification of our Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of our Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) 32.2* Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *Filed herewith. 50 Table of Contents JUPITER WELLNESS, INC. INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets as of December 31, 2020 and 2019 F-2 Consolidated Statements of Operations for the years ended December 31, 2020 and 2019 F-3 Consolidated Statements of Changes in Stockholders' Deficit for the years ended December 31, 2020 and 2019 F-4 Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 F-5 Notes to the Consolidated Financial Statements F-6 i REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Jupiter Wellness, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Jupiter Wellness, Inc. (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity (deficit), and consolidated statements of cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has recurring net losses which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Evaluation of Intangibles and Goodwill As discussed in Note 6 to the financial statements, the Company evaluates intangibles and goodwill for impairment on an annual basis to determine if an impairment exists. Auditing management’s evaluation of impairment analysis can be a significant judgment, given the fact that the analysis uses managements estimates on future cash flows derived from the intangibles and goodwill. To evaluate the appropriateness and accuracy of the impairment determined by management, we examined the estimated future cash flows and management’s assessment of the probability of those future cash flows in conjunction with the historical evidence and signed agreements. /s/ M&K CPAS, PLLC We have served as the Company’s auditor since 2019. Houston, TX April 12 , 2021 F- 1 Index Jupiter Wellness, Inc. Condensed Consolidated Balance Sheets As of December 31, 2020 and 2019 2020 2019 Assets Cash $ 4,262,168 $ 531,026 Due from third party — 400 Inventory 225,924 135,478 Accounts receivable 255,111 1,911 Prepaid expenses 92,788 25,000 Right of use assets 29,157 49,974 Other 123,116 2,000 Total current assets 4,988,264 745,789 Fixed assets, net of accumulated depreciation of $8,408 35,592 — Intangible assets, net of accumulated amortization of $103,392 559,800 — Goodwill 941,937 — Total assets $ 6,525,593 $ 745,789 Liabilities and Shareholders’ Equity Accounts Payable 688,835 10,721 Convertible notes payable to related parties 525,000 300,000 Note payable issued in acquisition 691,500 — Current portion of lease liability 23,754 20,566 Covid 19 SBA Loan 84,578 — Accrued liabilities 112,001 5,517 Total current Liabilities 2,125,668 336,444 Long-term portion lease liability 6,384 30,137 Total liabilities 2,132,052 366,581 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 10,655,833 and 6,893,000 shares issued and outstanding as of December 31, 2020 and 2019, respectively 10,656 6,893 Additional paid-in capital 11,657,286 1,032,511 Common stock payable — 325,000 Accumulated deficits (7,274,401 ) (985,196 ) Total Shareholders’ Equity 4,393,541 379,208 Total Liabilities and Shareholders’ Equity $ 6,525,593 $ 745,789 The accompanying notes are an integral part of these unaudited financial statements F- 2 Index Jupiter Wellness, Inc. Condensed Consolidated Statement of Operations For the Years Ended December 31, 2020 and 2019 2020 2019 Revenue Sales $ 1,065,665 $ 6,455 Cost of Sales 624,570 18,024 Gross profit 441,095 11,569 Operating expense General and administrative expenses 5,576,217 908,717 Other income (expense) Interest income 3,037 1,381 Interest expense (116,802 ) (6,557 ) Goodwill and intangible assets impairment (1,040,318 ) — Total income (expense) (6,730,300 ) (5,176 ) Net (loss) $ (6,289,205 ) $ (925,462 ) Net (loss) per share: Basic (0.86 ) (0.15 ) Weighted average number of shares Basic 7,325,708 6,301,219 The accompanying notes are an integral part of these unaudited financial statements F- 3 Index Jupiter Wellness, Inc. Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) For the Years Ended December 31, 2020 and 2019 (Unaudited) Common Common Additional Stock Stock Paid-In Subscription Accumulated Shares Amount Payable Payable Receivable Deficits Total Balance, December 31, 2018 5,958,000 $ 5,958 $ — $ 238,542 (450 ) $ (59,734 ) $ 184,316 Common stock issued for cash (net of offering expenses) 935,000 935 — 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 ) Balance, December 31, 2019 6,893,000 $ 6,893 $ 325,000 $ 1,032,511 $ — $ (985,196 ) $ 379,208 Common Stock options issued in acquisition — — — 156,612 — — 156,612 Common stock options issued as compensation — — — 251,526 — — 251,526 Exercise of stock warrants 1,146,000 1,146 487,854 — — 489,000 Common stock payable issued as compensation 700,000 700 (325,000 ) 549,300 — — 225,000 Common Stock issued in Initial Public Offering (net of offering expenses) 933,333 933 — 5,860,353 — — 5,861,286 Common stock issued for services 475,000 475 — 1,761,650 — — 1,762,125 Common stock issued from promissory note conversions 300,000 300 — 349,700 — — 350,000 Common stock issued in debt settlement 8,500 9 — 8,491 — — 8,500 Common stock issued in endorsement agreement — — — 159,489 — — 159,489 Common stock issued in acquisition 200,000 200 — 1,039,800 — — 1,040,000 Net (loss) — — — (6,289,205 ) (6,289,205 ) Balance, December 31, 2020 10,655,833 $ 10,656 $ — $ 11,657,286 $ — $ (7,274,401 ) $ 4,393,541 The accompanying notes are an integral part of these unaudited financial statements F- 4 Index Jupiter Wellness, Inc. Consolidated Statement of Cash Flows For the Years Ended December 31, 2020 and 2019 2020 2019 Cash flows from operating activities: Net (loss) $ (6,289,205 ) $ (925,462 ) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Stock based compensation 2,398,140 357,904 Depreciation and amortization 161,373 — Changes in current operating assets and liabilities: Due from third party 400 29,600 Prepaid expenses (25,683 ) (25,000 ) Right of use asset 20,817 (49,974 ) Accounts receivable (96,107 ) (1,911 ) Inventory 44,666 (135,478 ) Security deposits and other assets (1,200 ) (2,000 ) Goodwill and Intangible assets impairment 1,040,318 — Accounts payable 788 3,721 Accrued liabilities 33,522 5,157 Lease liability (20,565 ) 50,703 Net cash (used in) operating activities (2,732,736 ) (692,740 ) Cash flows from investing activities: Purchase of fixed assets (44,000 ) — Cash received in acquisition 43,405 — Net cash paid in acquisition (245,391 ) — Net cash (used in) investing activities (245,986 ) — Cash flows from financing activities: Proceeds from convertible debt 1,075,000 250,000 Proceeds from note payable – related party — 75,000 Repayment of note payable – related party — (25,000 ) Proceeds from exercise of warrants 489,000 — Collection of subscription receivable — 450 Payments on promissory notes (500,000 ) — Proceeds from Covid-19 SBA Loan 84,578 — Payment on debt settlement (300,000 ) — Proceeds from sales of common stock (net of offering expenses) 5,861,286 762,000 Net cash provided by financing activities 6,709,864 1,062,450 Net increase in cash and cash equivalents 3,731,142 369,710 Cash and cash equivalents at the beginning of the period 531,026 161,316 Cash and cash equivalents at the end of the period $ 4,262,168 $ 531,026 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ — $ — Cash paid for income taxes $ — $ — Non-cash acquisition of Magical Beasts, LLC (see note 12) $ 1,111,648 $ — Non-cash acquisition of SRM Entertainment, Ltd (see note 13) $ 1,229,237 $ — The accompanying notes are an integral part of these unaudited financial statements F- 5 Index JUPITER WELLNESS, INC. Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 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 December 31, 2020, the Company had $4,262,168 in cash, accumulated deficit of $7,274,401 and cashflow used in operations of $2,732,736. The Company has incurred and expects to continue to incur significant costs in pursuit of its expansion and development plans. These conditions raise doubt about the Company’s ability to continue as a going concern. Management has taken certain action and continues to implement changes designed to improve the Company’s financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies, including (a) engage in very limited activities without incurring any liabilities that must be satisfied in cash; and (b) offer noncash consideration and seek for equity lines as a means of financing its operations. Additionally, the Company’s plan includes certain scheduled research and development activities and related clinical trials which may be deferred as needed. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders. 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, Magical Beasts, LLC, a Nevada limited liability company and SRM Entertainment, Limited, a Hong Kong private limited 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. F- 6 Index 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 December 31, 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. 2020 2019 Numerator: Net (loss) $ (6,289,205 ) $ (925,462 ) Denominator: Denominator for basic earnings per share - Weighted-average common shares issued and outstanding during the period 7,325,708 6,301,219 Denominator for diluted earnings per share 7,325,708 6,301,219 Basic (loss) per share $ (0.86 ) $ (0.15 ) Diluted (loss) per share $ (0.86 ) $ (0.15 ) 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. F- 7 Index 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 December 31, 2020 the Company recorded an allowance of $118,761 against accounts receivable acquired in connection with the acquisition of SRM Entertainment and as of December 31, 2019, the Company had recognized no allowance for doubtful collections. Foreign Currency Translation Assets and liabilities in foreign currencies are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the period. Equity accounts are translated at historical exchange rates. Gains and losses from foreign currency transactions and translation for the years ended December 31, 2020 and 2019 and the cumulative translation gains and losses as of December 31, 2020 and 2019 were not material. Research and Development The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $308,367 and $108,957 for the year ended December 31, 2020 and 2019, respectively. 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. The Company’s deferred tax asset at December 31, 2020 consists of net operating loss carry forwards calculated using federal and state effective tax rates equating to approximately $936,311 less a valuation allowance in the amount of approximately $936,311. Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance in the years ended December 31, 2020 and 2019. 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. F- 8 Index 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) (“ASU 2014-09”). ASU 2014-09 will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. ASU 2014-09 is to be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. The Company has elected to apply the impact (if any) of applying ASU 2014-09 to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. 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. F- 9 Index Note 3 - Accounts Receivable As of December 31, 2020 and 2019, the Company had accounts receivable of $255,111 and $1,911, respectively net of an allowance for doubtful accounts of $118,761 for 2020 and no allowance for 2019. Note 4 - Prepaid Expenses As of December 31, 2020 and 2019, the Company had prepaid expenses of $92,788 and $25,000, respectively consisting of deposits and prepayments on purchase orders for 2020 and offering expenses in connection with its Initial Public Offering for 2019. Note 5 - Inventory As of December 31, 2020 and 2019, the Company had inventory of $225,924 and $135,478, consisting of finished goods, raw materials and packaging supplies. Note 6 - Intangible Assets and Goodwill In connection with the acquisition of Magical Beasts (see Note 12 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. At December 31, 2020, Goodwill was analyzed by management, assisted by a third party valuation company, and determined that the Goodwill associated the acquisition of Magical Beasts has been impaired and as a result the Company recognized a charge to earnings of $308,690 in the year ended December 31, 2020. Additionally, the Intangibles were analyzed by management, assisted by a third party valuation company, and determined that the Intangible associated the acquisition of Magical Beasts had also been impaired and as a result the Company recognized an additional charge to earnings of $731,628 in the year ended December 31, 2020. The balance of the Intangible Assets at December, 31, 2020 attributable to Magical Beasts totals $122,501. Amortization for the year ended December 31, 2020 totaled $103,392. In connection with the acquisition of SRM Entertainment, Limited (see Note 13 below), the Company allocated the purchase price to intangible assets as follows: Distribution Agreements $ 437,300 Goodwill 941,937 $ 1,379,237 The Distribution Agreements have an estimated life of six years and Goodwill has an indefinite life and will be reviewed at each subsequent reporting period to determine if the assets have been impaired. F- 10 Index 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. On July 25, 2019, the Company issued a Convertible Promissory Note for $50,000 to its Chairman, with 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. The conversion feature was considered the fair value of the Company’s common stock based on the arm’s length equity transactions since there was no open market for the Company’s common stock when issued. 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. This note was converted into 200,000 shares of the Company’s common stock along with the cash payment of $7,028 for the accrued interest in December 2020. On December 31, 2019 the Company issued a Convertible Promissory Note for $250,000 to a related party, with a term of one year, an annual interest rate of eight percent (8%), 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 was considered 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. As a result, the Company determined that the conversion features contained in the Note should carry neither beneficial conversion feature nor derivative liabilities. The note and accrued interest were paid in full in November 2020 with cash payments totaling $267,178. The 2020 Notes: During the year ended December 31, 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. F- 11 Index 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 was 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. In November 2020, the $300,000 note was converted into 100,000 shares of the Company’s common stock along with a payment of $16,067 for accrued interest. Additionally, in November 2020 the $250,000 note plus accrued interest was paid in full by cash payments totaling 267,177 and the two $125,000 notes plus accrued interest of $2,778 were paid in full for total cash payments of $252,778. The following table sets forth a summary of the Company’s convertible promissory notes activity for the years ended December 31, 2020 and 2019: Balance December 31, 2018 $ - 2019 Notes 325,000 Payments on Notes (25,000 ) Balance December 31, 2019 300,000 2020 Notes 1,075,000 Conversions of Notes (350,000 ) Payments on Notes (500,000 ) Balance December 31, 2020 $ 525,000 A December 31, 2020 and 2019 the aggregate outstanding balance of the convertible notes payable (the “Convertible Promissory Notes”) was $525,000 and $300,000, respectively. The Company recorded interest expense of $74,326 and $2,181 related to the Convertible Promissory Notes during the years ended December 31, 2020 and 2019. At December 31, 2020, the Company had accrued interest payable of $32,856. F- 12 Index 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 year ended December 31, 2020, the company recognized $49,573 of interest expense for the accretion of the discount. In August 2020, a Nevada court imputed a judgement of Ms. Whitley (the former owner of Magical Beasts, LLC) to Magical Beasts (see Note 14 Legal proceedings) and advised the Company that before paying any funds under the note to Ms. Whitley, the Company must first satisfy the judgement to the Plaintiff. In October 2020, the Company, Ms. Whitley and the Plaintiff in the judgement action against Ms. Whitley reached an agreement whereby Ms. Whitley agreed that of the $1,000,000 payable to Ms. Whitley, the first $336,450 would be paid to the Plaintiff which the Company has paid in full with a cash payment of $300,000 and the issuance of 8,500 shares of its common stock. The balance of the note at December 31, 2020 was $691,500. Note 9 – Covid-19 SBA Loans During the nine months ended December 31, 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 Common and Preferred Stock - The Company is authorized to issue a total of 100,000,000 shares of common stock with par value of $0.001 and 100,000 shares of preferred stock with par value of $0.001. As of December 31, 2020 and 2019, the Company had 10,655,833 and 6,893,000 shares of common stock issued and outstanding, respectively, and no shares of its preferred stock were issued and outstanding. 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 before deducting offering expenses of $23,000. Warrant exercise: During 2020, all of the 1,158,000 warrants issued in connection with the sale of the Subscription Shares were exercised for cash of $489,000 and utilization of the cashless exercise feature. As a result, the Company issued a total of 1,146,000 shares of its common stock. F- 13 Index Initial Public Offering : On November 3, 2020, the Company completed an initial public offering (“IPO”) of 933,333 units (the “Units”). Each Unit consisted of one share of common stock of the Company, par value $0.001 per share (“Common Stock”), and one warrant of the Company (“Warrant”), with each Warrant entitling the holder thereof to purchase one share of Common Stock for $8.50 per share. The Units were sold at a price of $7.50 per Unit, generating gross proceeds to the Company of approximately $7,000,000. The Company granted the underwriters in the IPO a 45-day option to purchase up to 140,000 additional shares of Common Stock and 140,000 Warrants solely to cover over-allotments, if any. Simultaneously with the closing of the IPO, the Company consummated the sale of the additional 140,000 Warrants that were subject to the underwriters’ over-allotment option at $0.01 per Warrant, generating gross proceeds of $1,400. Net proceeds to the Company after all offering expenses, including legal, accounting and professional fees, registration and other fees and expenses were approximately $5,900,000. Conversion of Convertible Promissory Notes: During 2020, the Company converted $350,000 of convertible promissory notes into 300,000 shares of its common stock. . The Notes were converted per the terms of the respective Notes and the Company did not recognize any gain or loss on the conversion. (see Note 7 – Convertible Promissory Notes). Endorsement shares: In connection with the execution of an Endorsement Agreement with Tee-2-Green, the Company issued 50,000 shares of its common stock valued at $3.94 per share (value at date of the 11/10/20 agreement) for total of stock-based compensation of $197,125. Consulting Services shares: During 2020, the Company entered into two Consulting Agreements under the terms of which the Company issued 425,000 shares of its common stock. The shares were issued at their respective fair value based on the Company’s Nasdaq closing price of the shares on the date of the agreements. The Company recognized a total of $1,565,000 as stock-based compensation in the year ended December 31, 2020. Whitley Settlement: In connection with the Settlement of creditors of Ms. Whitley, the former owner of Magical Beasts, LLC (see Note 14 Legal proceedings) the Company issued 8,500 shares of its common stock valued at $8,500. Officer Shares: During 2020, the company issued a total of 700,000 shares of its common stock to its Chairman and its CFO of which 400,000 shares valued at $325,000 were recorded as common stock payable and stock-based compensation in 2019. The additional 300,000 shares were valued at $225,000 and recorded as stock-based compensation in 2020. The respective values were determined based upon the last sales of shares of common stock to third parties. SRM Entertainment Shares: In connection with the acquisition of SRM Entertainment, Limited (see Note 13 SRM Acquisition) the Company issued 200,000 shares of its common stock valued at $1,040,000 based on the closing Nasdaq price at date of agreement. The following table sets forth the issuances of the Company’s shares of common stock for the years ending December 31, 2020 and 2019: Balance December 31, 2018, issued and outstanding 5,958,000 Subscription Shares 200,000 Regulation A Offering Shares 735,000 Balance December 31, 2019, issued and outstanding 6,893,000 Warrant Exercise Shares 1,146,000 Initial Public Offering Shares 933,333 Conversion of Promissory Notes 300,000 Endorsement Shares 50,000 Consulting Services Shares 425,000 Whitley Settlement Shares 8,500 Officer Shares 700,000 SRM Entertainment Acquisition Shares 200,000 Balance December 31, 2020, issued and outstanding 10,655,833 F- 14 Index Note 11 - Warrants and Options Warrants Subscription Warrants: 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 Date Relative Fair Value Term (Years) Exercise Price Market Price on Grant Date Volatility Percentage 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 IPO Warrants: In connection with the sales of shares of common stock under the Company’s Initial Public Offering (“IPO”) and S-1 Registration Statement (see Note 10, Initial Public Offering ), the Company issued a total of 1,073,333 warrants consisting of 933,333 warrants issued to the purchasers of the IPO Units and140,000 warrants issued to the Underwriters of the IPO. These warrants have an exercise price of $8.50 per share, with a term of five 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 Nasdaq closing price for shares of the Company’s common stock on the date of issuance. Reporting Date Relative Fair Value Term (Years) Exercise Price Market Price on Grant Date Volatility Percentage Risk-free Rate 11/03/2020 $ 3,905,739 5 $ 8.50 $ 4.90 256 % 0.039 Endorsement Warrants: In connection with the execution of an Endorsement Agreement with Tee-2-Green, the Company issued 50,000 warrants with an exercise price of $3.90 and a term of five (5) 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 Nasdaq closing price for shares of the Company’s common stock on the date of issuance. Reporting Date Relative Fair Value Term (Years) Exercise Price Market Price on Grant Date Volatility Percentage Risk-free Rate 11/10/2020 $ 159,489 5 $ 3.90 $ 3.94 261 % 0.0041 F- 15 Index The following tables summarize all warrant outstanding as of December 31, 2020 and 2019, and the related changes during this period. Number of Warrants Exercise Price 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 Warrants issued in connection with the IPO 1,073,333 8.50 Exercised (1,158,000 ) 0.50 Warrants issued in Endorsement Agreement 50,000 3.90 Balance at December 31, 2020 1,123,333 $ 8.30 Warrants Exercisable at December 31, 2020 1,123,333 $ 8.30 During the year ended December 31, 2020 a total of 978,000 warrants were exercised for cash totaling $489,000 and 180,000 were exercised using the cashless formula the number of shares of common stock issued is reduced to 168,000. Director Options 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 2020 certain Directors and a consultant were granted stock options to purchase a total of 211,330 additional shares of the Company’s common stock. The options have a three-year term with an exercise price between $0.25 and $4.49. 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 Date Number of Options Term (Years) Exercise Price Market Price on Grant Date Volatility Percentage Fair Value 2/25/19 – 10/25/19 141,330 3 $ 0.25 - 3.00 $ 0.25 - 1.00 194% - 281% $ 32,904 2/25/20 – 11/18/20 211,330 3 $ 0.25 - 4.49 $ 1.00 - 449 169% - 209% 251,526 352,600 $ 284,430 The Company recognized $251,526 and $32,904 as compensation expense in the financial statements for the years ended December 31, 2020 and 2019, respectively. For Pre-IPO options the market price was valued based upon the last price paid by third parties for shares of our common stock and for Post-IPO options the market price was valued at the closing NASQAC price on the date of grant. At December 31, 2020 the Company has 352,660 Director Options outstanding expiring from February 2022 to November 2023. Non-Officer and Director Options In connection with the acquisition of Magical Beasts (see note 12 below) 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 Date Number of Options Granted Term (Years) Exercise Price Market Price on Grant Date Volatility Percentage Fair Value 2/21/20 250,000 5 $ 1.00 $ 1.00 77 % $ 156,612 This option is outstanding as of December 31, 2020. F- 16 Index 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 Date Number of Options Granted Term (Years) Exercise Price Market Price on Grant Date Volatility Percentage 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 determination of the fair value of the consideration and related allocation of the purchase price was determined by management of the Company with the assistance of a qualified professional valuation firm. 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 $49,573 from the date of closing through December 31, 2020. In July 2020, certain actions were brought against Magical Beasts as a result of a judgement obtained against Krista Whitley, the former owner, that was imputed to Magical Beasts (see Note 14 – Legal Proceedings). In December, the Company began discussions with Krista Whitley regarding obligations to Ms. Whitley related to the acquisition of Magical Beasts (see Note 15 – Subsequent Events Litigation). In January 2021, the Company executed an Omnibus Agreement which settled all future obligations of the Company. At December 31, 2020, Goodwill was analyzed by management, assisted by a third party valuation company, and determined that the Goodwill associated with the acquisition of Magical Beasts has been impaired and as a result the Company recognized a charge to earnings of $308,690 in the year ended December 31, 2020. Additionally, the Intangibles were also analyzed by management, assisted by a third party valuation company, and determined that the Intangible associated with the acquisition of Magical Beasts had also been impaired and as a result the Company recognized an additional charge to earnings of $731,628 in the year ended December 31, 2020. The balance of the Intangible Assets at December, 31, 2020 attributable to Magical Beasts totals $122,501. F- 17 Index 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 December 31, 2020 Jupiter Wellness, Inc. Magical Jupiter Wellness, Inc. Consolidated Balance Beasts, LLC Proforma Adjustments Notes Proforma Balance Cash $ 4,262,168 — $ — $ 4,262,168 Current Assets 726,096 — — 726,096 Total current assets 4,988,264 — — 4,988,264 Intangible assets 559,800 — (67,523 ) (a) 492,277 Goodwill 941,937 — — 941,937 Other 35,592 — — 37,792 Total assets $ 6,525,593 — $ (67,523 ) $ 6,458,070 Liabilities $ 1,440,552 — $ — $ 1,440,552 Note payable issued in acquisition 691,500 — — 991,100 Total liabilities 2,132,052 — — 2,132,052 Common stock 10,656 — — 10,656 Additional paid-in capital 11,657,286 — — 11,657,286 Accumulated deficits (7,274,401 ) — (67,523 ) (b) (7,341,924 ) Total Shareholders’ Equity 4,393,541 — (67,523 ) 4,326,018 Total Liabilities and Shareholders’ Equity $ 6,525,593 — $ ( 67,523 ) $ 6,458,070 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 ) (c) $ 281,875 Current Assets 214,763 119,550 — 334,313 Total current assets 745,789 120,399 — 616,188 Intangible assets — — 907,270 (d) 907,270 Goodwill — — 308,690 (d) 308,690 Other Total assets $ 745,789 $ 120,399 $ — $ 1,832,148 Liabilities $ 366,581 $ 50,846 $ — $ 417,427 Note payable issued in acquisition — — 964,973 (d) 964,973 Total liabilities 366,581 50,846 964,973 1,382,400 Common stock 6,893 — — 6,893 Additional paid-in capital 1,032,511 174,951 65,783 (d) 1,273,245 Common stock payable 325,000 — — 325,000 Accumulated deficits (985,196 ) (105,398 ) (64,796 ) (e) (1,155,390 ) Total Shareholders’ Equity 379,208 69,553 987 449,748 Total Liabilities and Shareholders’ Equity $ 745,789 $ 120,399 $ 965,960 $ 1,832,148 Notes to Proforma Balance Sheets (a) Additional amortization of intangible assets (b) Income statement effects of notes (a) and (b) above (c) $250,000 paid at closing (d) Allocation of the purchase price to respective assets and paid in capital (net of related amortization) (e) Income statement effects of additional amortization of intangibles and acquisition note F- 18 Index JUPITER WELLNESS, INC. PROFORMA STATEMENT OF OPERATIONS Year Ended December 31, 2020 Jupiter Wellness, Inc. Magical Jupiter Wellness, Inc. Consolidated Balance Beasts, LLC Proforma Adjustments Notes Proforma Balance Sales $ 1,065,665 $ — $ 105,404 (a) $ 1,171,069 Cost of sales 624,570 — 83,428 (a) 707,998 Gross profit 441,095 — 21,976 463,071 Expenses 6,730,300 — 50,057 (a)(b) 6,782,357 Net Income (loss) $ (6,289,205 ) — $ (30,081 ) $ (6,319,286 ) 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 F- 19 Index Note 13 – Acquisition of SRM Entertainment On November 30, 2020, Jupiter Wellness, Inc. (the “Company”), entered into and closed on a share exchange agreement (the “Exchange Agreement”) with SRM Entertainment, LTD, a Hong Kong Special Administrative Region of the People's Republic of China limited company (“SRM”) and wholly owned subsidiary of Vinco Ventures, Inc., a Nevada corporation formerly known as Edison Nation, Inc. (“Vinco”), and the shareholders of SRM set forth in the Exchange Agreement (the “SRM Shareholders”), pursuant to which the Company acquired 100% of the shares of SRM’s common stock (the “SRM Common Stock”) from the SRM Shareholders in exchange for 200,000 shares of the Company’s common stock, valued at $1,040,000, subject to a leak out provision and escrow of 50,000 shares of the Company’s common stock. Upon closing, and pursuant to the Exchange Agreement, the Company delivered 150,000 shares of its common stock to SRM and placed 50,000 shares in escrow (“Escrow Shares”). Pursuant to the Exchange Agreement, the Company shall release the Escrow Shares upon SRM generating $200,000 in cash receipts and revenue prior to January 15, 2021. The SRM Shareholders shall forfeit their right to receive the Escrow Shares if SRM does not generate $200,000 in cash receipts and revenue prior to December 31, 2020. Pursuant to the Exchange Agreement, the Company assumed all of the financial obligations of SRM, as well as its employees and offices. As a result of the Exchange Agreement, SRM became a wholly-owned subsidiary of the Company. 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 determination of the fair value of the consideration and related allocation of the purchase price was determined by management of the Company. The fair value of the consideration is as follows: Shares of the Company’s common stock issued 200,000 Market value of Company’s common stock (11/30/20 Nasdaq closing price) $ 5.20 Total Consideration paid $ 1,040,000 F- 20 Index Supplemental proforma financial information The following shows the proforma results of operations as if the transaction had occurred effective January 1, 2018. The Financial Statements of SM Entertainment Ltd have been translated from the Hong Kong Dollars to US Dollars using the currency exchange rate at the date of the respective balance sheets and the average exchange rate during the period as follows: 9/30/20 12/31/19 12/31/18 Exchange rate at B/S date 7.7500 7.8900 7.8304 Average rate for the period 7.7575 7.8342 7.8377 JUPITER WELLNESS, INC. PROFORMA BALANCE SHEETS December 31, 2020 Jupiter Wellness, Inc. SRM Proforma Jupiter Wellness, Inc. Consolidated Balance Entertainment, Ltd. Adjustments Notes Proforma Balance Cash $ 4,262,168 — $ — $ 4,262,168 Current Assets 726,096 — — 726,096 Total current assets 4,988,264 — — 4,988,264 Intangible assets 559,800 — (145,766 ) (b) 414,034 Goodwill 941,937 — — 941,937 Other 35,592 — — 35,592 Total assets $ 6,525,593 $ — $ (145,766 ) $ 6,379,827 Liabilities $ 1,440,552 $ — $ — $ 1,440,552 Note payable issued in acquisition 691,500 — — 691,500 Total liabilities 2,132,052 — — 2,132,052 Common stock 10,656 — — 10,656 Additional paid-in capital 11,657,286 — — 11,657,286 Accumulated deficits (7,274,401 ) — (145,766 ) (b) (7,420,167 ) Total Shareholders’ Equity 4,393,541 — (145,766 ) (4,247,775) Total Liabilities and Shareholders’ Equity $ 6,525,593 $ — $ (145,766 ) $ 6,379,827 December 31, 2019 Jupiter Wellness, Inc. SRM Jupiter Wellness, Inc. Reported Balance Entertainment, Ltd. Proforma Adjustments Notes Proforma Balance Cash $ 531,026 $ 190,617 $ — $ 721,643 Current Assets 214,763 2,289,322 (1,272,673) (c) 1,231,412 Total current assets 745,789 2,479,939 (1,272,673) 1,935,055 Intangible assets — — 364,417 (a) 364,417 Goodwill — — 941,937 (a) 941,937 Other 54,108 54,108 Total assets $ 745,789 $ 2,534,047 $ 33,681 $ 3,313,517 Liabilities $ 366,581 $ 2,800,728 $ (1,272,673) (c) $ 1,894,636 Total liabilities 366,581 2,800,728 (1,272,673) 1,894,636 Common stock 6,893 — 200 (a) 7,093 Additional paid-in capital 1,032,511 428,296 1,370,037 (c)(a) 2,839,844 Common stock payable 325,000 — — 325,000 Accumulated deficits (985,196 ) (694,977) (72,883) (b) (1,753,056 ) Total Shareholders’ Equity 379,208 (266,681) 1,306,354 1,418,881 Total Liabilities and Shareholders’ Equity $ 745,789 $ 2,534,047 $ 33,681 $ 3,313,517 Notes to Proforma Balance Sheets (a) Allocation of purchase price to intangible assets (net of amortization) (b) Amortization of intangible assets (c) Elimination of intercompany balances F- 21 Index JUPITER WELLNESS, INC. PROFORMA STATEMENT OF OPERATIONS Year Ended December 31, 2020 Jupiter Wellness, Inc. SRM Jupiter Wellness, Inc. Consolidated Balance Entertainment, Ltd. Proforma Adjustments Notes Proforma Balance Sales $ 1,065,665 $ — $ 2,727,346 (a) 3,793,011 Cost of sales 624,570 — 2,133,135 (a) 2,757,705 Gross profit 441,095 — 594,211 1,035,306 Expenses 6,730,300 — 572,885 (b) (a) 7,303,185 Net Income (loss) $ (6,289,205 ) — $ 21,326 (a)( b) (6,267,879) Year Ended December 31, 2019 Jupiter Wellness, Inc. SRM Jupiter Wellness, Inc. Consolidated Balance Entertainment, Ltd. Proforma Adjustments Notes Proforma Balance Sales $ 6,455 $ 7,046,072 — 7,052,527 Cost of sales 18,024 5,322,227 — 5,340,251 Gross profit (11,569 ) 1,723,845 — 1,712,276 Expenses 913,893 3,559,868 72,883 (b) 4,546,644 Net Income (loss) $ (925,462 ) $ (1,836,023) (72,883) (b) (2,834,368) (a) SRM Entertainment income and cost for the period prior to closing date (b) Includes additional amortization of intangibles F- 22 Index Note 14 - 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 $61,797 and $21,430 in rent and related fees during the years ended December 31, 2020 and 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 December 31, 2020 and 2019 were ROU of $29,157 and $49,974, respectively, current lease liability of $23,754 and $20,566, respectively, and non-current lease liability of $6,384 and $30,137, respectively. Additionally, the Company recognized accreted interest expense of $4,153 and $4,377 during the years ended December 31, 2020 and 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 $250,000. 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 note payable to Ms. Whitley, the first $336,450 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. In November, the Company made a cash payment of $300,000 to the Plaintiff and issued 8,500 shares of its common stock valued at 36,450. The $336,450 was recorded as an offset to the $1,000,000 note. On August 6, 2020, the Company, Messrs. John and Miller and certain affiliated entities filed a lawsuit in the United States District Court, Southern District of New York against Robert Koch, Bedford Investment Partners, LLC, Kaizen Advisors, LLC and certain other unnamed defendants. The lawsuit alleges that Mr. Koch and the other defendants are attempting to extort the Company and Messrs. John and Miller to issue the defendants shares of the Company’s common stock which they claim are owed to them. The Company asserts that they have no oral or written agreement with Mr. Koch or any of his affiliates that entitle him to shares of the Company’s common stock. The Company’s complaint seeks actual damages in the amount of $5,000,000 and punitive damages in the amount of $5,000,000. In response, the defendants filed their answer and asserted a counter claim repeating the same claims that caused the Company to file their suit. Subsequently, the Company moved for judgement on the pleadings to dismiss the defendant’s counterclaim in its entirety. That motion has been fully briefed and is pending adjudication. The Company intends to vigorously contest the claims. 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. F- 23 Index Note 15 - Subsequent Events Convertible Promissory Notes. At December 31, 2020, the Company had a total of $525,000 plus accrued interest of $32,856 due on convertible promissory notes. In January 2021, the Company received conversion notices from all of the note holders to convert the $525,000 principal balance of its convertible promissory notes plus $35,489 accrued interest, through the date of conversion, into 186,832 shares of the Company’s common stock ($3.00 per share conversion price). The shares were issued in January 2021. Stock Based Compensation On January 28, 2021 the Company amended a consulting agreement with a third, under the terms of which, the Company would issue 200,000 restricted shares of its common stock. In February 2021, the Company granted 11,000 restricted shares of its common stock to an employee under the Company’s Equity Incentive Plan. Warrants Exercised In February 2021, Ms. Whitley exercised her 185,000 options (see Litigation below) using the cashless option feature and was issued 159,053 shares of the Company’s restricted common stock in full satisfaction of the option agreement. Option Exercised In March 2021, our former Director exercised 50,000 of his options using the cashless option feature and was issued 47,470 shares of the Company’s restricted common stock. Summary of Issuances of Shares of Common Stock Subsequent to December 31, 2020 Shares Issued and Outstanding: Balance, December 31, 2020 10,655,833 Conversion of convertible promissory notes 186,832 Shares issued for services – stock-based compensation 211,000 Warrants exercised under cashless option 159,053 Options exercised under cashless option 47,470 Balance, April 5, 2021 11,260,188 Options. Subsequent to December 31, 2020, the Company granted 20,000 options to purchase shares of the Company’s common stock. The options have a three-year exercise period and a $5.59 exercise price, the Nasdaq closing price for the Company’s common stock on the date of grant. Litigation. On January 25, 2021, the Company entered into an Omnibus Amendment to: (1) the Confidential Membership Interest Purchase Agreement, dated February 21, 2020; (2) the Sales Distributor Agreement, dated February 21, 2020; and (3) the Executive Employment Agreement, dated March 31, 2020 (the “Agreements”). Pursuant to the Omnibus Amendment, the parties (i) acknowledge that the Company has fully satisfied its obligation of $334,000 to the Plaintiff as Ms. Whitley’s judgment creditors; (ii) agree that in satisfaction of the remaining balance due to Ms. Whitley under the Agreements, she is to be paid $150,000 in cash instead of $650,000 and, starting April 1, 2020, shall be entitled to individually market and sell the Bella line of products remaining in the Company’s inventory, as identified in the Omnibus Amendment, and the Company will relinquish its rights to the Bella brand; (iii) agree that the number of shares issuable upon exercise of the common stock purchase options granted to Ms. Whitley under the Agreements shall be reduced from 250,000 to 185,000, Ms. Whitely may utilize a cashless exercise feature to exercise such options, subject to a six (6) month holding period on the shares, and Ms. Whitley shall not be permitted to sell an amount of shares in any week which exceeds 10% of the Company’s total weekly trading volume in the prior week; (iv) agree that Ms. Whitley’s Employment Agreement shall terminate on March 31, 2021 and shall not renew; and (v) acknowledge that Ms. Whitley has been paid $5,541.50 for unreimbursed expenses on or about December 30, 2020. There will be no adverse impact to the financial statements or financial position of the company related to this matter given the offset of the balance of the $1,000,000 note payable already recorded. In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to December 31, 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. F- 24 Index SIGNATURES Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the day of April 12, 2021. Jupiter Wellness Inc. By: /s/ Brian S. John Brian S. John Chief Executive Officer and Director In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Brian S. John Director and Chief Executive Officer (principal executive officer) April 12, 2021 Brian S. John /s/ Douglas O. McKinnon Chief Financial Officer (principal financial and accounting officer) April 12, 2021 Douglas O. McKinnon /s/ Richard Miller Chief Operating Officer and Director April 12, 2021 Richard Miller /s/ Glynn Wilson Chairman and Head of Research and Development April 12, 2021 Dr. Glynn Wilson /s/ Dr.Hector Alila Director April 12, 2021 Dr. Hector Alila /s/ Christopher Marc Melton Director April 12, 2021 Christopher Marc Melton /s/ Nancy Torres Kaufman Director April 12, 2021 Nancy Torres Kaufman /s/ Byron T. Young Director April 12, 2021 Byron T. Young 51 Table of Contents