Tron Inc. 10-K/A

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 effective 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. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. With the participation of our Chief Executive Officer and Chief Financial Officer (principal financial officer), our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the framework in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the assessment and those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2023. 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. 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. 25 Table of Contents 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, 2023 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. Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS. Not applicable. 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 Form 10-K are as follows: Name Age Position(s) Richard Miller 56 Chief Executive Officer Douglas O. McKinnon 73 Chief Financial Officer Christopher Marc Melton 52 Independent Director Gary Herman 59 Independent Director Hans Haywood 55 Independent Director The following describes the business experience of each of our directors and executive officers, including other directorships held in reporting companies: Richard Miller, Chief Executive Officer and Chairman , has served as Chief Executive Officer and Director of the Company since November 2020. Previously, Mr. Miller served as the Chief Operating Officer and Chief Compliance Officer of Jupiter Wellness from November 2018 until November 2020. Prior to his service to Jupiter Wellness, Mr. Miller 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 co-founded of Teeka Tan Suncare Products in 2004 and oversaw the development, design and launch of a diverse sun care product line along with the public offering of the company. He is an advocate for school safety and local schools through his grass roots group My School Counts. Douglas O. McKinnon, Chief Financial Officer, has served as our Chief Financial Officer since April 2022. Mr. McKinnon previously served as Chief Financial Officer of Jupiter from August 2019 to April 2022 and has served as the Chief Executive Officer of AppYea, Inc. since March 2016. Mr. McKinnon has also 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 1st Resource Group, Inc. for four years. Mr. McKinnon’s 35+ year professional career includes financial, advisory and operation experience across a broad spectrum of industry sectors, including oil and gas, technology, 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. Christopher Marc Melton, Director, has served as one of our directors since April 2022. 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. 26 Table of Contents Gary Herman has served on our Board since 2022. Mr. Herman is a seasoned investor with many years of investment and business experience. From 2005 to 2020 he co-managed Strategic Turnaround Equity Partners, LP (Cayman) and its affiliates. From January 2011 to August 2013, he was a managing member of Abacoa Capital Management, LLC, which managed Abacoa Capital Master Fund, Ltd., focused on a Global-Macro investment strategy. From 2005 to 2020, Mr. Herman was affiliated with Arcadia Securities LLC, a New York-based broker-dealer. From 1997 to 2002, he was an investment banker with Burnham Securities, Inc. From 1993 to 1997, he was a managing partner of Kingshill Group, Inc., a merchant banking and financial firm with offices in New York and Tokyo. Mr. Herman has a B.S. from the University at Albany with a major in Political Science and minors in Business and Music. Mr. Herman has many years of experience serving on the boards of public and private companies. He presently sits on the boards of Siyata Mobile, Inc. (NASDAQ: SYTA), LQR House, Inc. (NASDAQ: LQR), SusGlobal Energy Corp. (OTCQB: SNRG) and XS Financial, Inc. (CSE: XS). We believe Mr. Herman’s extensive board and investment experience makes him well-qualified to serve as a member of our board of directors. Hans Haywood, Director , has served as a director of the Company since April 2022 and is currently a principal of HKA Capital Advisors, a platform from which to offer consulting services and develop proprietary trading algorithms, which he founded in 2010. From May 2011 to April 2018 Mr. Haywood was the Co-Chief Investment Officer and a Director of Tempest Capital AG, a Zurich-based family office/private equity fund, responsible for structuring and making activist investments in the technology and natural resource sectors. From May 2009 to March 2011, Mr. Haywood was the Chief Investment Officer of Panda Global Advisors, an emerging markets oriented Global Macro fund with a focus on liquid assets, sovereign credit, interest rates, foreign exchange, equity and commodities, which he founded in 2011. From July 2005 to December 2007, Mr. Haywood was a Partner and Senior Portfolio Manager for Sailfish Capital Partners, a multi-strategy fund, where he co-founded and managed the fund’s global Emerging Markets strategy. From December 1997 to June 2005, he was a Managing director at Credit Suisse where he managed the firm’s proprietary credit portfolio and was jointly responsible for the creation of the firm’s customer-oriented trading platform. Mr. Haywood received a master’s degree in Chemical Engineering from Imperial College, University of London in 1990. Mr. Haywood has served as a board member of SRM since December 2022. We believe Mr. Haywood’s extensive management and board experience makes him well-qualified to serve as a member of our board of directors. Board Diversity The table below provides information relating to certain voluntary self-identified characteristics of our directors. Each of the categories listed in the table below has the meaning as set forth in NASDAQ Rule 5605(f). Board Diversity Matrix (As of December 31, 2023) Total Number of Directors 5 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors Part II: Demographic Background African American or Black Alaskan Native or Native American Asian Hispanic or Latinx Native Hawaiian or Pacific Islander White 5 Two or More Races or Ethnicities LGBTQ Did Not Disclose Demographic Background 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, 2023. Board Composition Director Independence Our business and affairs are managed under the direction of our Board, which consist of five 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 Messrs. Melton, Herman and Haywood 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. 27 Table of Contents 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. The charter of each committee is available on our corporate website at https://corporate.srmentertainment.com/corporate-governance. 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. Herman and Mr. Haywood, 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. Compensation Committee Our compensation committee consists of Messrs. Melton, Haywood and Herman with Mr. Herman 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. 28 Table of Contents Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Messrs. Melton and Haywood and Herman, with Mr. Herman 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 does not separate the roles of Chief Executive Officer and Chairman of the Board and both positions are held by Richard Miller. Our Chief Executive Officer is responsible for setting the strategic direction of the Company and the day-to-day leadership and performance of the Company and as the Chairman he sets the agenda for the Board meetings, presides over meetings of the Board and tries to reach a consensus on Board decisions. 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 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 this filing. 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. Involvement in Certain Legal Proceedings To our knowledge, 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. 29 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. Stock Option All Other Total Name and Principal Salary Bonus Awards Awards Compensation Compensation Position Year ($) ($) ($) (3) ($) (3) ($) (4) ($) Richard Miller (1)(4) 2023 $ 175,000 $ 50,000 $ $ $ 25,000 $ 250,000 Chief Executive Officer 2022 $ 145,833 $ - $ - $ $ 5,000 $ 150,833 Douglas O. McKinnon (2)(4) 2023 $ 61,875 $ 25,000 $ $ $ 12,500 $ 99,375 Chief Financial Officer 2022 $ - $ - $ - $ $ - $ - Taft Flitner 2023 $ 100,000 $ 68,717 $ $ $ - $ 168,617 President 2022 $ 100,000 $ 4,321 $ $ $ $ 104,321 Deborah McDaniel-Hand 2023 $ 90,000 $ 58,717 $ $ $ $ 158,617 Vice President of Production, Development and Operations 2022 $ 90,000 $ 17,820 $ $ $ $ 107,820 1. Mr. Miller was appointed as Chief Executive Officer on January 1, 2023. 2. Mr. McKinnon was appointed Chief Financial Officer on August 14, 2023. 3. There were no equity incentive plan compensation, option awards, nor stock awards in 2023 and 2022. 4. Mr. Miller and Mr. McKinnon were paid $25,000 and $12,500 respectively for Director fees in 2023. Employment Agreements with Named Officers Richard Miller We entered into an employment agreement with Richard Miller on January 1, 2023, pursuant to which we employ Mr. Miller as Chief Executive Officer. The agreement provides for an annual base salary of $175,000 and $175,000 in stock options annually. The options have a cashless exercise. The base salary and stock options will increase 10% annually for the following two (2) years of the agreement in 2023 and 2024. Mr. Miller is eligible for periodic bonuses in addition to his base salary, as may be determined by our board of directors and the compensation committee. The agreement also contains the following material provisions: eligible to participate in pension and other retirement plans, group life insurance, hospitalization, surgical and major medical coverage, sick leave, disability and salary continuation, vacation and holidays, cellular telephone and all related costs and expenses, long-term disability, and other fringe benefits and entitled to reimbursement for all reasonable and necessary business expenses. Mr. Miller agreed to non-compete and non-solicit terms under his agreement. Douglas McKinnon On August 5, 2019 (the “McKinnon Execution Date”), Jupiter Wellness, Inc. (“Jupiter”) entered into a written employment agreement with Douglas McKinnon, pursuant to which Mr. McKinnon shall serve as Jupiter’s Chief Financial Officer (the “McKinnon Employment Agreement”). Pursuant to the McKinnon Employment Agreement, Mr. McKinnon was granted 300,000 shares of Jupiter common stock. 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 Jupiter and Mr. McKinnon. Effective June 1, 2021, the McKinnon Employment Agreement was amended such that if Mr. McKinnon is terminated either Voluntarily or Involuntarily other than for Cause, including but not limited to (i) a Change of Control or Attempted Change of Control, (ii) material merger or other material business combination, (iii) change of Board of Directors or Executive Officers or (iv) or other events as set forth in the respective Employment Agreement, the Employee is entitled to all compensation remaining to be paid during the then-current term of the Employment Agreement or one year whichever is greater plus an additional two-years. In connection with the “spin-off” of SRM from Jupiter, effective August 14, 2023, SRM assumed the responsibilities, terms, and conditions of the McKinnon Employment Agreement. 30 Table of Contents Taft Flittner We entered into an employment agreement with Taft Flittner on January 1, 2023, pursuant to which we employ Mr. Flittner as President. The agreement replaced the previous employment agreement Mr. Flittner had with Jupiter Wellness dated July 22, 2021. This agreement provides for an annual base salary of $100,000 and fifty thousand (50,000) ISO options to purchase shares of the Company’s Common Stock pursuant to the 2022 Equity Incentive Plan. The ISO options will vest in annually tranches and be fully vested two years from the date of the agreement. The option’s strike price will be the closing price on the date of issuance. Mr. Flittner shall receive an annual bonus(s’) based on a percentage of EBITDA, growth and other factors which will be determined by the Board. The agreement also contains the following material provisions: eligible to participate in pension and other retirement plans, group life insurance, hospitalization, surgical and major medical coverage, sick leave, disability and salary continuation, vacation and holidays, cellular telephone and all related costs and expenses, long-term disability, and other fringe benefits and entitled to reimbursement for all reasonable and necessary business expenses. Mr. Flittner agreed to non-compete and non-solicit terms under his agreement. Deborah McDaniel-Hand We entered into an employment agreement with Deborah McDaniel-Hand on January 1, 2023, pursuant to which we employ Ms. McDaniel-Hand as Vice President of Product Development & Operations. The agreement replaced the previous employment agreement Ms. McDaniel-Hand had with Jupiter Wellness dated July 22, 2021. This agreement provides for an annual base salary of $96,000 and fifty thousand (50,000) ISO options to purchase shares of the Company’s Common Stock pursuant to the 2022 Equity Incentive Plan. The ISO options will vest in annual tranches and be fully vested two years from the date of the agreement. The option’s strike price will be the closing price on the date of issuance. Ms. McDaniel-Hand shall receive a bonus of 1% of recognized revenues in addition to her base salary, which may be paid, at the election of Ms. McDaniel-Hand, in cash or shares of Common Stock (calculated at the fair market value of such shares as determined by the Board). A cash bonus will be paid semi-annually. The agreement also contains the following material provisions: eligible to participate in pension and other retirement plans, group life insurance, hospitalization, surgical and major medical coverage, sick leave, disability and salary continuation, vacation and holidays, cellular telephone and all related costs and expenses, long-term disability, and other fringe benefits and entitled to reimbursement for all reasonable and necessary business expenses. Ms. McDaniel-Hand agreed to non-compete and non-solicit terms under her agreement. 31 Table of Contents Stock Incentive Plan On March 21, 2023, our Board of Directors and majority shareholders, respectively, approved the SRM Entertainment, Inc. 2023 Equity Incentive Plan (the “2023 Plan”), to be administered by our Compensation Committee. Pursuant to the 2023 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 2023 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 2023 Plan, a maximum of 1,500,000 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 2023 Plan. At December 31, 2023 the Company had issued a 100,000 stock grant to one of the company’s consultants and a total of 90,000 stock options to three of our Directors. Director Compensation The following table sets forth the amounts paid to Directors during the years ended December 31, 2023 and 2022. Directors 2023 2022 Richard Miller 25,000 5,000 Douglas O. McKinnon 12,500 - Christopher Marc Melton 25,000 5,000 Gary Herman 25,000 5,000 Hans Haywood 25,000 5,000 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table as of March 29, 2024 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 29, 2024. 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 SRM Entertainment, Inc., 1061 E. Indiantown Rd., Ste. 110, Jupiter, FL 33477. 32 Table of Contents Shares of % of Shares of Common Stock Common Stock Beneficially Beneficially Name of Beneficial Owner Owned Owned Directors and Officers: Richard Miller (1) 900,000 8.2 % Chief Executive Officer and Director Douglas McKinnon (2) 436,388 4.0 % Chief Financial Officer and Director Taft Flitner (3) 450,000 4.1 % President Deborah McDaniel-Hand (4) 200,000 1.8 % Vice President of Production, Development and Operations Gary Herman (5) 70,000 0.6 % Director Hans Haywood (6) 70,000 0.6 % Director Christopher Melton (7) 70,000 0.6 % Director All officers and directors (8 persons) 2,196,388 19.6 % *. (1) Includes 300,000 shares issuable upon exercise of options. (2) Includes 200,000 shares issuable upon exercise of options. (3) Includes 150,000 shares issuable upon exercise of options. (4) Includes 100,000 shares issuable upon exercise of options. (5) Includes 70,000 shares issuable upon exercise of options. (6) Includes 70,000 shares issuable upon exercise of options. (7) Includes 70,000 shares issuable upon exercise of options. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The Company has established policies and other procedures regarding approval of transactions between the Company and any employee, officer, director, and certain of their family members and other related persons. These policies and procedures are generally not in writing but are evidenced by long standing principles adhered to by our Board. The disinterested members of the Board review, approve and ratify transactions that involve “related persons” and potential conflicts of interest. Related persons must disclose to the disinterested members of the Board any potential related person transactions and must disclose all material facts with respect to such transaction. All such transactions will be reviewed by the disinterested members of the Board and, in their discretion, approved or ratified. In determining whether to approve or ratify a related person transaction the disinterested members of the Board will consider the relevant facts and circumstances of the transaction, which may include factors such as the relationship of the related person with the Company, the materiality or significance of the transaction to the Company and the related person, the business purpose and reasonableness of the transaction, whether the transaction is comparable to a transaction that could be available to the Company on an arms-length basis, and the impact of the transaction on the Company’s business and operations. Since the beginning of fiscal year 2023 , the Company did not have any transactions to which it has been a participant that involved amounts that exceeded or will exceed the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any of the Company’s directors, executive officers or any other “related person” as defined in Item 404(a) of Regulation S-K had or will have a direct or indirect material interest. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees totaling $65,000 and $90,000 were paid to M&K CPAS during the year ended December 31, 2023 and 2022, respectively. No other fees were paid to M&K CPAS. 33 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES EXHIBIT INDEX Incorporated by Reference Filed or Furnished Herewith Exhibit Number Exhibit Description Form Exhibit Filing Date 3.1 Articles of Incorporation of SRM Entertainment, Inc. S-1 3.1 05/26/2023 3.2 Bylaws of SRM Entertainment, Inc. S-1 3.2 05/26/2023 3.3 Amendment to the Bylaws of SRM Entertainment, Inc. S-1 3.3 05/26/2023 4.1 Form of Common Stock Certificate of SRM Entertainment, Inc. S-1 4.1 05/26/2023 4.2 Form of Representative’s Warrant S-1 4.2 07/28/2023 4.3 Description of Securities 10-K 4.1 04/01/2024 10.1 Share Exchange Agreement between Jupiter Wellness, Inc. and SRM Entertainment, Inc. dated December 9, 2022 S-1 10.1 05/26/2023 10.2 Employment Agreement between SRM Entertainment, Inc. and Richard Miller dated January 1, 2023 † S-1 10.2 05/26/2023 10.3 Employment Agreement between SRM Entertainment, Inc. and Taft Flittner dated January 1, 2023† S-1 10.3 05/26/2023 10.4 Employment Agreement between SRM Entertainment, Inc. and Deborah McDaniel-Hand dated January 1, 2023† S-1 10.4 05/26/2023 10.5 License Agreement between SRM Entertainment, Inc. and LAFIG Belgium s.a. dated July 28, 2022 S-1 10.5 05/26/2023 10.6 License Agreement between SRM Entertainment, Inc. and Zoonicorn, LLC dated July 17, 2022 S-1 10.6 05/26/2023 10.7 License Agreement between SRM Entertainment, Inc., Taylored Concepts, LLC and ProToyTypes, LLC dated September 1, 2021 S-1 10.7 05/26/2023 10.8 Addendum to License Agreement between SRM Entertainment, Inc., Taylored Concepts, LLC and ProToyTypes, LLC dated June 18, 2022 S-1 10.8 05/26/2023 10.9 2023 Equity Incentive Plan† S-1 10.9 05/26/2023 10.10 Amended and Restated Exchange Agreement between Jupiter Wellness, Inc. and SRM Entertainment, Inc. dated May 26, 2023 S-1 10.10 05/26/2023 10.11 Employment Agreement between Jupiter Wellness, Inc., formerly known as CBD Brands, Inc., and Douglas O. McKinnon dated August 5, 2019† S-1 10.11 07/18/2023 10.12 Assignment and Assumption Agreement dated August 3, 2023, between Jupiter Wellness, Inc. and SRM Entertainment, Inc. 8-K 10.1 08/16/2023 14.1 Code of Business Conduct and Ethics 10-K 14.1 04/01/2024 21.1 List of Subsidiaries S-1 21.1 05/26/2023 31.1 Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 # X 32.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 # X 97.1 SRM Entertainment, Inc. Compensation Recovery Policy 10-K 97.1 04/01/2024 101.INS Inline XBRL Instance Document X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File - The cover page iXBRL tags are embedded within the inline XBRL document. X † Management or compensatory plan or arrangement. # This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. 34 Table of Contents 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 18 th day of December, 2024. SRM Entertainment Inc. By: /s/ Richard Miller Richard Miller Chief Executive Officer and Director /s/ Douglas McKinnon Douglas McKinnon Chief Financial Officer and Director 35 Table of Contents SRM ENTERTAINMENT, INC. INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 2738 ) F-1 Condensed Consolidated Balance Sheets as of December 31, 2023 and 2022 F-2 Condensed Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022 F-3 Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2023 and 2022 F-4 Condensed Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 F-5 Notes to the Consolidated Financial Statements F-6 36 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of SRM Entertainment, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of SRM Entertainment, Inc. (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations, statement of changes in shareholders’ deficit, and cash flows for the two-year period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its consolidated operations and its cash flows for the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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, audits of its internal control over financial reporting. As part of our audits, 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 audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audits Matters The critical audits matters communicated below are matters arising from the current period audits of the consolidated financial statements that were communicated or required to be communicated to the audits committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audits matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audits matter below, providing separate opinions on the critical audits matters or on the accounts or disclosures to which they relate. Revenue transactions and Improper Revenue Recognition As discussed in the Note 1 to the financial statements, the Company generates its revenue from the sales of its products directly to the end user and recognizes revenue when goods or products are shipped on a FOB shipping point. Understanding when the performance obligation has been completed can sometimes require significant judgement. We tested the Company’s support for all of the material revenue sources and the timing in which the Company completed the related performance obligation. /s/ M&K CPAS, PLLC www.mkacpas.com We have served as the Company’s auditor since 2022. The Woodlands, Texas April 1, 2024 F- 1 Table of Contents SRM Entertainment, Inc. Condensed Consolidated Balance Sheets As of December 31, 2023 and 2022 December 31, December 31, 2023 2022 Assets Cash $ 2,980,741 $ 453,516 Inventory 307,005 290,200 Account receivable 707,035 621,090 Prepaid expenses and deposits 468,687 629,897 Other current assets 34,144 75,528 Total current assets 4,497,612 2,070,231 Fixed assets, net of depreciation 45,462 9,333 Total assets $ 4,543,074 $ 2,079,564 Liabilities Accounts Payable $ 126,451 $ 378,804 Promissory note from Parent - 1,482,673 Accrued and other liabilities 292,425 220,681 Total Liabilities 418,876 2,082,158 Shareholders’ Equity Preferred stock, $ 0.001 par value, 100,000 shares authorized of which none are issued - - Common Stock, $ 0.0001 par value, 100,000,000 authorized shares 9,765,500 issued and outstanding on historical basis and 6,500,000 issued and outstanding on a pro forma basis 977 650 Additional paid-in capital 4,805,117 ( 699,207 ) Common stock payable 676,000 - Accumulated deficits ( 1,357,896 ) 695,963 Total Shareholders’ Equity 4,124,198 ( 2,594 ) Total Liabilities and Shareholders’ Equity $ 4,543,074 $ 2,079,564 The accompanying notes are an integral part of these financial statements. F- 2 Table of Contents SRM Entertainment, Inc. Condensed Consolidated Statement of Operations For the Years Ended December 31, 2022 and 2021 2023 2022 Years Ended December 31, 2023 2022 Revenue Sales $ 5,760,533 $ 6,076,116 Cost of Sales 4,443,083 4,845,217 Gross profit 1,317,450 1,230,899 Operating expense General and administrative expenses 3,354,382 872,914 Loss from operations ( 2,036,932 ) 357,985 Other income / (expense) Interest income 38,920 14 Interest expense ( 55,847 ) ( 30,052 ) Other income - 754 Total other income (expense) ( 16,927 ) ( 29,284 ) Net income (loss) $ ( 2,053,859 ) $ 328,701 Net income (loss) per share: Basic and fully diluted $ ( 0.27 ) $ 0.05 Weighted average number of shares Basic and fully diluted 7,688,523 6,500,000 The accompanying notes are an integral part of these financial statements. F- 3 Table of Contents SRM Entertainment, Inc. Condensed Consolidated Statement of Changes in Shareholders’ Deficit For the Years Ended December 31, 2023 and 2022 Shares Amount Payable Capital Earnings Total Common Stock Additional Paid-In Retained Shares Amount Payable Capital Earnings Total Balance, December 31, 2021 6,500,000 650 - $ ( 699,207 ) $ 367,262 $ ( 331,295 ) Net income - - - 328,701 328,701 Balance, December 31, 2022 6,500,000 650 - ( 699,207 ) 695,963 ( 2,594 ) Balance 6,500,000 650 - ( 699,207 ) 695,963 ( 2,594 ) Shares issued for services 315,500 32 612,768 612,800 Shares to be issued for services 676,000 676,000 Fair value of Director options granted 73,702 73,702 Net proceeds from public offering 1,250,000 125 5,168,325 5,168,450 Acquisition of SRM Entertainment Inc (Nevada) 1,700,000 170 ( 350,471 ) ( 350,471 ) Net loss ( 2,053,859 ) ( 2,053,859 ) Net income (loss) ( 2,053,859 ) ( 2,053,859 ) Balance December 31, 2023 9,765,500 977 676,000 4,805,117 ( 1,357,896 ) 4,124,198 Balance 9,765,500 977 676,000 4,805,117 ( 1,357,896 ) 4,124,198 The accompanying notes are an integral part of these financial statements. F- 4 Table of Contents S.R.M. Entertainment Limited Condensed Consolidated Statement of Cash Flows For the Years Ended December 31, 2023 and 2022 2023 2022 Cash flows from operating activities: Net income (loss) $ ( 2,053,859 ) $ 328,701 Depreciation 6,651 2,333 Stock based compensation 1,288,800 Fair value of director options 73,702 Adjustments to reconcile net income to net cash provided by (used in) operating activities Promissory Note Due to Jupiter Wellness - - Inventory ( 16,805 ) ( 290,200 ) Prepaid expenses and deposits 161,210 ( 23,039 ) Accounts receivable ( 85,945 ) 40,374 Accounts payable ( 252,353 ) ( 154,094 ) Accrued liabilities 78,037 100,232 Loans from related parties - 6,293 Other current assets 33,685 ( 40,525 ) Net cash (used in) operating activities ( 766,877 ) ( 29,925 ) Cash flows from investing activities: Purchase of fixed assets ( 42,780 ) ( 4,285 ) Acquisition of SRM Entertainment, Inc. (Nevada) ( 350,176 ) - Net cash (used in) investing activities ( 392,956 ) ( 4,285 ) Cash flows from financing activities: Cash loaned to affiliates 7,699 ( 7,699 ) Promissory notes paid in cash - Jupiter Wellness ( 1,488,966 ) ( 19,948 ) Net cash received from Initial Public Offering 5,168,325 - Net cash (used in) financing activities 3,687,058 ( 27,647 ) Net increase (decrease) in cash and cash equivalents 2,527,225 ( 61,857 ) Cash and cash equivalents at the beginning of the period 453,516 515,373 Cash and cash equivalents at the end of the period $ 2,980,741 $ 453,516 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 55,847 $ 30,052 Cash paid for income taxes $ - $ - The accompanying notes are an integral part of these financial statements. F- 5 Table of Contents SRM Entertainment, Inc. Notes to Financial Statements For the Years Ended December 31, 2023 and 2022 Note 1 - Organization and Business Operations General Overview SRM Entertainment, Inc. (“SRM Inc”) is a Nevada corporation and was incorporated on April 22, 2022 . SRM. Entertainment Limited (“SRM Ltd”), is a limited company incorporated in the Hong Kong, now a Special Administrative Region of the People’s Republic of China, on January 23, 1981 and formerly owned by Jupiter Wellness, Inc.. Effective August 14, 2023, SRM Inc acquired SRM Ltd. The acquisition of SRM Ltd by SRM Inc has been accounted for as a Reverse Acquisition (see Basis of Presentation below). The combined SRM Inc and SRM Ltd are collectively referred to as the Company or SRM. On December 9, 2022, we entered into a stock exchange agreement (the “Exchange Agreement”) with Jupiter Wellness, Inc. (“Jupiter”) to govern the separation of our business from Jupiter. On May 26, 2023, we amended and restated the Exchange Agreement (the “Share Exchange”) to include additional information regarding the distribution and the separation of our business from Jupiter. The separation as set forth in the Share Exchange with Jupiter closed August 14, 2023. Pursuant to the Share Exchange, on May 31, 2023, we issued 6,500,000 shares of our Common Stock (representing 79.3 % of our outstanding shares of Common Stock) to Jupiter in exchange for 2 ordinary shares of SRM Ltd (representing all of the issued and outstanding ordinary shares of SRM Ltd). Basis of Presentation The accompanying 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 acquisition of SRM Ltd and SRM Inc occurred on August 14, 2023. The financial statements are prepared using Reverse Acquisition Accounting and as such, for legal purposes SRM Inc was the acquiring company and for GAAP accounting, SRM Ltd was the acquiring company. Therefore, the financial statements are presented using the historical financial statements of SRM Ltd. Note 2 - Significant Accounting Policies Basis of Presentation 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 Table of Contents 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, 2023 and 2022. 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. Fixed Assets and Other Assets Fixed assets are stated at cost at the date of purchase. Depreciation is calculated using the straight-line method over the lesser of the estimated useful lives of the assets or the lease term. The Company purchases molds for the manufacture some of its products and are included in other assets at cost. Certain agreements call for the manufacturer to reimburse the Company for the cost of the molds upon first shipment of products produced using the molds and the costs of these molds are removed from other assets upon reimbursement. Molds that are not subject to reimbursement are reclassified to fixed assets and depreciated when the products are in production. Net Loss per share of Common Stock Net income (loss) per share of Common Stock 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 shares of Common Stock would be to decrease the loss per share. Schedule of Net Loss per share of Common Stock 2023 2022 For the Years Ended December 31, 2023 2022 Numerator: Net (loss) $ ( 2,053,859 ) $ 328,701 Denominator: Denominator for basic earnings per share - Weighted-average of shares of Common Stock issued and outstanding during the period 7,688,523 6,500,000 Denominator for diluted earnings per share 7,688,523 6,500,000 Basic (loss) per share $ ( 0.27 ) $ 0.05 Diluted (loss) per share $ ( 0.27 ) $ 0.05 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 (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. F- 7 Table of Contents The Company’s performance obligations are satisfied when goods or products are shipped on a FOB shipping point basis as title passes upon shipment. Our products are 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. 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. At December 31, 2022 and 2021, the Company had not recognized any allowance for doubtful collections. Impairment of Long-Lived Assets We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate. 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, 2022 and 2021 and the cumulative translation gains and losses as of December 31, 2023 and 2022 were not material. 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. The Company has 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. 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, 2023 and 2022 consist of net operating loss carry forwards calculated using effective tax rates ( 16.5 %) equating to approximately $ 497,655 and $ 51,149 , respectively, less a valuation allowance in the amount of approximately $ 497,655 and $ 51,149 . 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, 2032 and 2022. F- 8 Table of Contents 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 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 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. Note 3 – Inventory On December 31, 2023 and 2022, the Company had inventory of finished goods of $ 307,005 and $ 290,200 , respectively. Note 4 - Accounts Receivable At December 31, 2023 and 2022, the Company had accounts receivable of $ 707,035 and $ 621,090 , respectively. Note 5 - Prepaid Expenses and Deposits At December 31, 2023, the Company had prepaid expenses and deposits of $ 468,687 , consisting of deposits on orders of $ 376,636 , prepaid insurance of $ 33,929 and other prepaid expenses of $ 58,122 . At December 31, 2022, the Company had prepaid expenses and deposits of $ 629,897 , consisting of deposits on orders of $ 533,516 , prepaid and other prepaid expenses of $ 96,381 . Note 6 – Fixed Assets and Other Assets At December 31, 2023 and 2022, the Company had fixed assets totaling $ 45,462 and $ 9,333 , net of depreciation of $ 8,984 and $ 2,333 , respectively as follows: Schedule of Fixed Assets Net 2023 2022 Asset Molds & tooling $ 43,161 $ 7,381 Computer equipment and software 11,285 4,285 Fixed assets, gross 54,446 11,666 Accumulated depreciation ( 8,984 ) ( 2,333 ) Total assets, net of depreciation $ 45,462 $ 9,333 At December 31, 2023 and 2022 other assets consisting of non-depreciable molds totaled $ 34,144 and $ 67,829 , respectively. F- 9 Table of Contents Note 7 – Related Party As of December 31, 2021, the Company had an outstanding unsecured, non-interest bearing loan balance of $ 1,502,621 to Jupiter Wellness, Inc., its Parent. On September 1, 2022, the loan was converted to a six percent ( 6 %) interest-bearing promissory note (the “Note”) due on the earlier of: (i) September 30, 2023 or (ii) the date on which Maker consummates an initial public offering of its securities. During 2022, the Company paid $ 50,000 to Jupiter related to the Note consisting of $ 19,948 principal reduction and $ 30,052 interest, leaving a Note balance of $1,482,673 at December 31, 2022. The total balance of $ 1,538,520 ($ 1,482,673 Note and $ 55,847 interest) due Jupiter was paid from proceeds of the Company’s Initial Public Offering (“IPO”) on August 14, 2023 (see IPO included in Note 8 below). Note 8 – Initial Public Offering Pursuant to the IPO, the Company sold 1,250,000 shares of its common stock at a price of $ 5.00 per share, resulting in gross proceeds to the Company of approximately $ 6.25 million. Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses paid by the Company, were $ 5,168,325 . All shares sold in the IPO were registered pursuant to the Registration Statement, declared effective by the SEC on August 14, 2023. EF Hutton acted as lead book-running manager for the offering and Dominari Securities LLC acted as co-manager for the offering. The underwriters did not exercise their option to purchase up to an additional 187,500 shares of common stock. The Company paid the underwriters an underwriting discount of eight percent ( 8 %) of the amount raised in the offering. Additionally, as partial consideration for services rendered in connection with the offering, the Company issued EF Hutton warrants to purchase an aggregate of 57,500 shares of Company common stock, representing 4.0 % of the aggregate shares sold in the offering. The warrants are exercisable at $ 6.00 per share, which represents 120 % of the initial public offering price per share in the IPO, at any time and from time to time, in whole or in part, commencing on February 10, 2024, 180 days from the effective date of the Registration Statement, and expiring on August 14, 2028. The Company has applied the net proceeds from the IPO for the development of licensed goods, expansion of SRM products, increased deposits, accounts receivable and inventory, marketing, advertising, and trade shows, general administrative expenses, repayment of a promissory note payable to Jupiter Wellness, and general corporate purposes. Note 9 - Capital Structure Reverse Merger - On December 9, 2022, The Company entered into a stock exchange agreement (the “Exchange Agreement”) with Jupiter Wellness, Inc. (“Jupiter”) to govern the separation of our business from Jupiter. On May 26, 2023, we amended and restated the Exchange Agreement (the “Amended and Restated Exchange Agreement”) to include additional information regarding the distribution and the separation of our business from Jupiter. The separation as set forth in the Amended and Restated Exchange Agreement with Jupiter closed August 14, 2023. Pursuant to the Amended and Restated Exchange Agreement, on May 31, 2023, we issued to Jupiter 6,500,000 shares of our Common Stock (representing 79.3 % of our outstanding shares of Common Stock) in exchange for 2 ordinary shares of SRM Ltd (representing all of the issued and outstanding ordinary shares of SRM Ltd) (the “Share Exchange”). Pursuant to the Share Exchange, we acquired from Jupiter by operation of law all assets and assumed all liabilities comprising our business, which were owned and held by SRM Ltd. Jupiter distributed 2,000,000 shares of the Company’s common stock to Jupiter’s stockholders and certain warrant holders (out of the 6.5 million shares issued in May 2023) and this occurred on the effective date of the Registration Statement but prior to the closing of the IPO. Following such distribution, Jupiter Wellness owns 4.5 million of the 9,450,000 shares of common stock outstanding and SRM Limited is a wholly owned subsidiary of the Company. The 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 merger of SRM Ltd and SRM Inc occurred on August 14, 2023. The financial statements are prepared using Reverse Acquisition Accounting and as such, for legal purposes SRM Inc was the acquiring company and for GAAP accounting, SRM Ltd was the acquiring company. Therefore, the financial statements are presented using the historical financial statements of SRM Ltd including the 6,500,000 shares of common stock issued to Jupiter. F- 10 Table of Contents Initial Public Offering - On August 14, 2023, the Company consummated its IPO, pursuant to which it sold 1,250,000 shares of its common stock at a price of $ 5.00 per share, resulting in gross proceeds to the Company of approximately $ 6.25 million. Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses paid by the Company, were approximately $ 5.2 million. All shares sold in our IPO were registered pursuant to a registration statement on Form S-1 (File No. 333-272250), as amended (the “Registration Statement”), declared effective by the SEC on August 14, 2023. EF Hutton acted as lead book-running manager for the offering and Dominari Securities LLC acted as co-manager for the offering. The underwriters did not exercise their option to purchase up to an additional 187,500 shares of common stock. The Company paid the underwriters an underwriting discount of eight percent ( 8 %) of the amount raised in the offering. Additionally, as partial consideration for services rendered in connection with the offering, the Company issued EF Hutton warrants to purchase an aggregate of 57,500 shares of Company common stock, representing 4.0 % of the aggregate shares sold in the offering. The warrants are exercisable at $ 6.00 per share, which represents 120 % of the initial public offering price per share in the IPO, at any time and from time to time, in whole or in part, commencing on February 10, 2024, 180 days from the effective date of the Registration Statement, and expiring on August 14, 2028. Preferred Stock – The Company has 100,000 shares, $ 0.001 par value, of Preferred Stock authorized of which none are issued Common Stock – The Company has 100,000,000 shares of Common Stock, par value $ 0.0001 authorized. At December 31, 2023, the Company had 9,765,500 shares of its common stock issued and outstanding Shares issuances The Company issued 1,700,000 Founder shares at par value. The Company issued 6,500,000 shares issued in connection with the Exchange Agreement described above. The Company issued 1,250,000 shares in connection with its IPO as described above. The Company entered into four Consulting Agreements (the “Agreements”) under the terms of which the Company issued 315,500 shares of its common stock valued at $ 612,800 . The shares were valued at the market rate of the Company’s stock on the date of the Agreements. Common Stock Payable During the year ended December 31, 2023, the Company entered into a Consulting Agreement that called for the issuance of 400,000 shares valued at $ 676,000 . At December 31, 2023, these shares had not been issued and are included in Common stock Payable. The shares were valued at the market rate of the Company’s stock on the date of the Agreements. Note 10 – Options During the year ended December 31, 2023, the Company granted a total of 90,000 to three of its Directors with an exercise price of $ 1.61 and a five -year term. The Company recorded an expense of $ 73,702 in connection with the Directors’ issuance. 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 respective reporting date. Schedule of Fair Value Option Assumption Reporting Date Number of Options Term (Years) Exercise Price Market Price on Grant Date Volatility Percentage Fair Value 10/24/2023 90,000 5 $ 1.61 $ 0.80 86 % $ 73,702 Note 11 - Commitments and Contingencies Legal Proceedings The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity. Note 12 – Subsequent Events Subsequent to December 31, 2023, the Company issued 400,000 shares of its common stock for services. The Company has analyzed its operations subsequent to December 31, 2023, to the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements. 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