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What changed in Tron Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Tron Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+128 added−100 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-01)

Top changes in Tron Inc.'s 2024 10-K

128 paragraphs added · 100 removed · 71 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe create whimsical, fun and unique products that enable fans to express their affinity for their favorite “something”—whether it is a movie, TV show, favorite celebrity, or favorite restaurant. We infuse our distinct designs and aesthetic sensibility into a wide variety of product categories, including figures, plush, accessories, apparel, and homewares.
Biggest changeOur business is built on the principle that almost everyone is a fan of something and the evolution of pop culture is leading to increasing opportunities for fan loyalty. We create whimsical, fun and unique products that enable fans to express their affinity for their favorite “something”—whether it is a movie, TV show, favorite celebrity, or favorite restaurant.
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).
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 Safety Shot in exchange for 2 ordinary shares of SRM Ltd (representing all of the issued and outstanding ordinary shares of SRM Ltd).
As of March 20, 2024, Jupiter owns 35% shares of our common stock. 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”).
As of March 6, 2025, Safety Shot owns 13.6% of our issued and outstanding shares of common stock. 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”).
With our unique style, expertise in pop culture, broad product distribution and highly accessible price points, we have developed a passionate following for our products that has underpinned our growth.
We infuse our distinct designs and aesthetic sensibility into a wide variety of product categories, including figures, plush, accessories, apparel, and homewares. With our unique style, expertise in pop culture, broad product distribution and highly accessible price points, we have developed a passionate following for our products that has underpinned our growth.
Consumers, who value us for our distinct, stylized products, remain at the center of everything we do. Content Providers : We have licensing relationships with many established content providers, and our products appear in venues such as Walt Disney Parks and Resorts, Universal Studios, SeaWorld, Cedar Fair, Herschend Family Entertainment and Merlin Entertainment.
Content Providers : We have licensing relationships with many established content providers, and our products appear in venues such as Walt Disney Parks and Resorts, Universal Studios, United Parks and Resorts (f/k/a SeaWorld), Cedar Fair, Six Flags and Herschend Family Entertainment and Merlin Entertainment.
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.
On December 9, 2022, we entered into a stock exchange agreement (the “Exchange Agreement”) with Safety Shot, Inc. (formerly Jupiter Wellness, Inc.)(“Safety Shot”) to govern the separation of our business from Safety Shot.
This has allowed us to deliver significant growth while lessening our dependence on individual content releases. Recent Developments On December 8, 2022, the Company entered into the Exchange Agreement with Jupiter Wellness, Inc. (“Jupiter”) to govern the separation of the Company’s business from Jupiter.
This has allowed us to deliver significant growth while lessening our dependence on individual content releases.
Business The Company is a trusted toy and souvenir designer and developer, selling into the world’s largest theme parks and entertainment venues. Our business is built on the principle that almost everyone is a fan of something and the evolution of pop culture is leading to increasing opportunities for fan loyalty.
The combined SRM Inc and SRM Ltd are collectively referred to as the “Company” or “SRM.” Business The Company is a trusted toy and souvenir designer and developer, selling into the world’s largest theme parks and entertainment venues.
The separation as set forth in the Share Exchange with Jupiter closed August 14, 2023.
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 SHOT. The separation as set forth in the Share Exchange with Safety Shot closed August 14, 2023.
Removed
On May 26, 2023, the parties entered into the Amended and Restated Exchange Agreement to include additional information regarding the distribution and separation of our business from Jupiter under the terms of which, Jupiter acquired 6,500,000 shares of common stock on May 31, 2023, in exchange for all of the issued and outstanding ordinary shares of SRM Limited, an entity formed in Hong Kong in 1981 and acquired by Jupiter in 2020.
Added
Consumers, who value us for our distinct, stylized products, remain at the center of everything we do.
Removed
The 6.5 million newly-issued shares of the common stock represented approximately 79.3% of the outstanding shares post-issuance. Jupiter distributed 2,000,000 shares of the Company’s common stock to Jupiter’s stockholders and certain warrant holders (the “Distribution”). The Distribution occurred on the effective date of the Registration Statement but prior to the closing of the IPO.
Added
Recent Developments CFO Employment Agreement On January 13, 2025, the Compensation Committee of the Board of Directors (the “Board”) of the Company reviewed and recommended approval that the Company enter into a new Employment Agreement (the “CFO Employment Agreement”) with Douglas McKinnon as Chief Financial Officer (the “CFO”).
Removed
Following the Distribution, Jupiter 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. 4 Table of Contents Pursuant to the IPO, the Company sold 1,250,000 shares of common stock at a price of $5.00 per share, resulting in gross proceeds to the Company of approximately $6.25 million.
Added
Following approval from the Compensation Committee and the Board, the Company entered into the CFO Employment Agreement on January 22, 2025 with an effective date of January 1, 2024, which cancels and supersedes Mr. McKinnon’s previous employment agreement with the Company as of the Effective Date.
Removed
Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses paid by the Company, were approximately $5.3 million. All shares sold in our IPO were registered pursuant to the Registration Statement, declared effective by the SEC on August 14, 2023.
Added
The CFO Employment Agreement is for an initial term of 3 years from the date thereof and automatically renews for successive 1-year periods. Pursuant to the Employment Agreement, the Company will compensate Mr. McKinnon a base salary of $215,000.
Removed
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.
Added
Thereafter, his base salary shall increase at the rate of at least ten percent (10%) on January 1 of each following year. 4 Table of Contents CEO and CFO Stock Options Issuance On January 6, 2025, the Board approved to issued 75,000 stock options (the “Options”) to each of Richard Miller (the Company’s Chief Executive Officer) and Douglas McKinnon (the Company’s Chief Financial Officer).
Removed
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 common stock, representing 4.0% of the aggregate shares sold in the offering.
Added
The Options were issued as compensation for the service of Messrs. Miller and McKinnon on the Board. The Options were issued pursuant to the Company’s 2024 Equity Incentive Plan.
Removed
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.
Added
The Options have a purchase price per share of $0.65 (the closing price of the common stock on January 3, 2025), vested and become exercisable immediately, and will expire on January 6, 2030.
Removed
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.
Added
December Registered Direct Offering On December 5, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with the institutional investors named on the signature page thereto (the “Purchasers”), pursuant to which the Company agreed to sell and issue, in a registered direct offering, an aggregate of (i) 1,580,000 shares of the Company’s common stock, at a purchase price of $0.7385 per share, and (ii) 712,133 pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 712,133 shares of common stock (the “Pre-Funded Warrant Shares”) at a purchase price of $0.7384 per Pre-Funded Warrant, for aggregate gross proceeds to the Company of approximately $1.7 million, before deducting the placement agent fees and estimated offering expenses payable by the Company (the “December Registered Offering”).
Added
Pursuant to a placement agency agreement dated as of December 5, 2024 (the “Placement Agency Agreement”), the Company engaged D. Boral Capital LLC (the “Placement Agent”) to act as the sole placement agent in connection with the offering.
Added
The Company agreed to (i) pay the Placement Agent a cash fee equal to 8.0% of the aggregate gross proceeds of the December Registered Offering, and (ii) reimburse the Placement Agent for all reasonable and documented out-of-pocket expenses, including the reasonable fees, costs, and disbursements of its legal counsel of $50,000.
Added
The shares of common stock, the Pre-Funded Warrants and the Pre-Funded Warrant Shares were offered pursuant to a shelf registration statement on Form S-3 (File No. 333-282028), which was declared effective by the U.S. Securities and Exchange Commission on September 19, 2024, and a related prospectus supplement, dated December 5, 2024, related to the December Registered Offering.
Added
The December Registered Offering closed on December 6, 2024.
Added
Nasdaq Listing Deficiency On October 21, 2024, the Company received a deficiency letter (from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, based upon the closing bid price of the Company’s common stock, par value $0.0001 per share, for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).
Added
The Notice has no immediate effect on the continued listing status of the common stock on The Nasdaq Capital Market, and, therefore, the Company’s listing remains fully effective.
Added
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company is provided a compliance period of 180 calendar days from the date of the Notice, or until April 21, 2025, to regain compliance with the Minimum Bid Requirement.
Added
To regain compliance, the closing bid price of the common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to April 21, 2025. If the Company is not in compliance with the Minimum Bid Requirement by April 21, 2025, the Company may be afforded a second 180 calendar day compliance period.
Added
To qualify for this additional compliance period, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price requirement.
Added
The Company intends to actively monitor the closing bid price of the common stock and will evaluate available options to regain compliance with the Minimum Bid Requirement.
Added
However, there can be no assurance that the Company will regain compliance with the Minimum Bid Requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance, or maintain compliance with the other Nasdaq listing requirements.
Added
If the Company does not regain compliance within the allotted compliance period, including any extensions that Nasdaq grants, Nasdaq will provide notice that the common stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel.
Added
October Registered Direct Offering On October 18, 2024, and October 19, 2024, the Company entered into four Securities Purchase Agreements (each an “SPA”) with four accredited investors (the “Investors”), for the purchase and sale in a registered direct offering of 1,711,477 shares of the Company’s common stock at a price of $0.61 per share, generating gross proceeds from the offering of approximately $1,044,000 (the “October Registered Direct Offering”).
Added
Three SPAs, each dated as of October 18, 2024, were entered into with three investors, and one SPA, dated as of October 19, 2024, was entered into with a single investor. The Company did not utilize a placement agent or underwriter in connection with the October Registered Direct Offering.
Added
CEO Employment Agreement On September 10, 2024, the Compensation Committee of the Board reviewed and recommended approval that the Company enter into a new Employment Agreement (the “CEO Employment Agreement”) with Richard Miller as Chief Executive Officer (the “CEO”).
Added
Following approval from the Compensation Committee and the Board, the Company entered into the CEO Employment Agreement effective January 1, 2024 (the “Effective Date”), which cancels and supersedes Mr. Miller’s previous employment agreement with the Company as of the Effective Date.
Added
The CEO Employment Agreement is for an initial term of 3 years from the date thereof and automatically renews for successive 1-year periods. Pursuant to the CEO Employment Agreement, the Company will compensate Mr. Miller a base salary of $225,000.
Added
Thereafter, his base salary shall increase at the rate of at least ten percent (10%) on January 1 of each following year. Asset Purchase Agreement with Suretone Entertainment On September 3, 2024, the Company (or “Buyer”) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”)with Suretone Entertainment, Inc.
Added
(“Suretone” or “Seller”) pursuant to which the Buyer has agreed to acquire certain assets related to the movie with the title The Kid(directed by Vincent D’Onofrio) from the Seller, for an aggregate purchase price of $3,000,000 (the “Purchase Price”). Jordan Schur, the owner and Chief Executive Officer of Suretone, is a board member and President of Safety Shot.
Added
As of March 6, 2025, Safety Shot holds 13.6% of the Company’s common stock.
Added
In consideration for the acquired assets, the Buyer paid the Purchase Price by: (i) paying $250,000 in cash on September 3, 2024); (ii) issuing 1,500,000 restricted shares of the Company’s common stock, par value $0.001 per share (valued at $0.8333 per share); and (iii) issuing a secured promissory note in the original amount of $1,500,000 (the “Secured Note”).
Added
The Secured Note will bear interest at the rate of 8%per annum and will mature on September 3,2025 (the “Maturity Date”), calculated on a 365-day year, and is due along with the principal on the Maturity Date. The Secured Note is secured by the assets purchased pursuant to the Asset Purchase Agreement.
Added
If the Company secures financing of at least $5 million during the term of the Secured Note, it must use the proceeds to repay the Secured Note. The Company can prepay the Secured Note at any time without penalty but must provide 15 days’ notice to Suretone.
Added
The Secured Note is subject to immediate acceleration if the Company commences bankruptcy proceedings, if it winds down its operations, if the Company fails to stay current in its SEC reporting obligations, or if the Company’s common stock is delisted from the Nasdaq Stock Market.
Added
At December 31, 2024, the Company owed $500,000 on the principal balance of the Secured Note.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

27 edited+10 added−3 removed138 unchanged
Biggest changeBecause our expenses are based on our revenue forecasts, a substantial reduction or delay in sales of our products to, or unexpected returns from, channel partners, or the loss of any significant channel partners, could materially adversely affect our business, results of operations and financial condition.
Biggest changeFor example: ● our channel partner agreements generally do not require minimum purchases; ● our retailers, distributors and other channel partners can stop purchasing and stop marketing our products at any time; and ● our channel partner agreements generally are not exclusive. 9 Table of Contents Because our expenses are based on our revenue forecasts, a substantial reduction or delay in sales of our products to, or unexpected returns from, channel partners, or the loss of any significant channel partners, could materially adversely affect our business, results of operations and financial condition.
Other factors that could affect our quarterly and annual operating results include, but are not limited to: ● changes in the pricing policies of, or the introduction of new products by, us or our competitors; ● introductions of new technologies and changes in consumer preferences that result in either unanticipated or unexpectedly rapid product category shifts; ● slow or negative growth in the toy, souvenir, theme park, and related markets; ● seasonal shifts in end-market demand for our products; ● delays in the introduction of new products by us or market acceptance of these products; ● unanticipated decreases or delays in purchases of our products by our significant retailers, distributors and other channel partners; ● supply constraints from our vendors; 5 Table of Contents ● unanticipated increases in costs, including air freight, associated with shipping and delivery of our products; ● the inability to maintain stable operations by our suppliers and other parties with whom we have commercial relationships; ● discovery of security vulnerabilities in our products, services or systems, leading to negative publicity, decreased demand or potential liability; ● foreign currency exchange rate fluctuations in the jurisdictions where we transact sales and expenditures in local currency; ● excess levels of inventory and low turns; ● changes in or consolidation of our sales channels and wholesale distributor relationships or failure to manage our sales channel inventory and warehousing requirements; ● delay or failure to fulfill orders for our products on a timely basis; ● delay or failure of our retailers, distributors and other channel partners to purchase at their historic volumes or at the volumes that they or we forecast; ● changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities; ● changes in U.S. and international tax policy, including changes that adversely affect customs, tax or duty rates, as well as income tax legislation and regulations that affect the countries where we conduct business; ● operational disruptions, such as transportation delays or failure of our order processing system, particularly if they occur at the end of a fiscal quarter; ● disruptions or delays related to our financial and enterprise resource planning systems; ● our inability to accurately forecast product demand, resulting in increased inventory exposure; ● allowance for doubtful accounts exposure with our existing retailers, distributors and other channel partners and new retailers, distributors and other channel partners, particularly as we expand into new international markets; ● geopolitical disruption, including sudden changes in immigration policies, leading to disruption in our workforce or delay or even stoppage of our operations in manufacturing, transportation, technical support and research and development; ● terms of our contracts with channel partners or suppliers that cause us to incur additional expenses or assume additional liabilities; ● an increase in price protection claims, redemptions of marketing rebates, product warranty and stock rotation returns or allowance for doubtful accounts; ● litigation involving alleged patent infringement; ● epidemic or widespread product failure, or unanticipated safety issues, in one or more of our products; ● failure to effectively manage our third-party customer support partners, which may result in customer complaints and/or harm to the SRM brand; ● our inability to monitor and ensure compliance with our code of ethics, our anti-corruption compliance program and domestic and international anti-corruption laws and regulations, whether in relation to our employees or with our suppliers or retailers, distributors or other channel partners; 6 Table of Contents ● labor unrest at facilities managed by our third-party manufacturers; ● workplace or human rights violations in certain countries in which our third-party manufacturers or suppliers operate, which may affect the SRM brand and negatively affect our products’ acceptance by consumers; ● unanticipated shifts or declines in profit by geographical region that would adversely impact our tax rate; ● failure to implement and maintain the appropriate internal controls over financial reporting, which may result in restatements of our financial statements; and ● any changes in accounting rules.
Other factors that could affect our quarterly and annual operating results include, but are not limited to: ● changes in the pricing policies of, or the introduction of new products by, us or our competitors; ● introductions of new technologies and changes in consumer preferences that result in either unanticipated or unexpectedly rapid product category shifts; ● slow or negative growth in the toy, souvenir, theme park, and related markets; ● seasonal shifts in end-market demand for our products; ● delays in the introduction of new products by us or market acceptance of these products; ● unanticipated decreases or delays in purchases of our products by our significant retailers, distributors and other channel partners; ● supply constraints from our vendors; ● unanticipated increases in costs, including air freight, associated with shipping and delivery of our products; ● the inability to maintain stable operations by our suppliers and other parties with whom we have commercial relationships; ● discovery of security vulnerabilities in our products, services or systems, leading to negative publicity, decreased demand or potential liability; ● foreign currency exchange rate fluctuations in the jurisdictions where we transact sales and expenditures in local currency; ● excess levels of inventory and low turns; ● changes in or consolidation of our sales channels and wholesale distributor relationships or failure to manage our sales channel inventory and warehousing requirements; ● delay or failure to fulfill orders for our products on a timely basis; ● delay or failure of our retailers, distributors and other channel partners to purchase at their historic volumes or at the volumes that they or we forecast; ● changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities; 5 Table of Contents ● changes in U.S. and international tax policy, including changes that adversely affect customs, tax or duty rates, as well as income tax legislation and regulations that affect the countries where we conduct business; ● operational disruptions, such as transportation delays or failure of our order processing system, particularly if they occur at the end of a fiscal quarter; ● disruptions or delays related to our financial and enterprise resource planning systems; ● our inability to accurately forecast product demand, resulting in increased inventory exposure; ● allowance for doubtful accounts exposure with our existing retailers, distributors and other channel partners and new retailers, distributors and other channel partners, particularly as we expand into new international markets; ● geopolitical disruption, including sudden changes in immigration policies, leading to disruption in our workforce or delay or even stoppage of our operations in manufacturing, transportation, technical support and research and development; ● terms of our contracts with channel partners or suppliers that cause us to incur additional expenses or assume additional liabilities; ● an increase in price protection claims, redemptions of marketing rebates, product warranty and stock rotation returns or allowance for doubtful accounts; ● litigation involving alleged patent infringement; ● epidemic or widespread product failure, or unanticipated safety issues, in one or more of our products; ● failure to effectively manage our third-party customer support partners, which may result in customer complaints and/or harm to the SRM brand; ● our inability to monitor and ensure compliance with our code of ethics, our anti-corruption compliance program and domestic and international anti-corruption laws and regulations, whether in relation to our employees or with our suppliers or retailers, distributors or other channel partners; ● labor unrest at facilities managed by our third-party manufacturers; ● workplace or human rights violations in certain countries in which our third-party manufacturers or suppliers operate, which may affect the SRM brand and negatively affect our products’ acceptance by consumers; ● unanticipated shifts or declines in profit by geographical region that would adversely impact our tax rate; ● failure to implement and maintain the appropriate internal controls over financial reporting, which may result in restatements of our financial statements; and ● any changes in accounting rules.
Our results can be impacted by a number of macroeconomic factors, including but not limited to consumer confidence and spending levels, tax rates, unemployment, consumer credit availability, raw materials costs, pandemics (such as the ongoing COVID-19 pandemic) and natural disasters, fuel and energy costs (including oil prices), and credit market conditions.
Our results can be impacted by a number of macroeconomic factors, including but not limited to consumer confidence and spending levels, tax rates, unemployment, consumer credit availability, raw materials costs, pandemics (such as the COVID-19 pandemic) and natural disasters, fuel and energy costs (including oil prices), and credit market conditions.
Further legislative changes or competitive wage rates could continue to increase these expenses in the future. 10 Table of Contents Disruptions in SRM’s manufacturing operations or supply chain due to political instability, civil unrest, or disease could adversely affect SRM’s business, financial position, sales, and results of operations. SRM primarily utilizes third-party manufacturers and suppliers throughout Asia.
Further legislative changes or competitive wage rates could continue to increase these expenses in the future. Disruptions in SRM’s manufacturing operations or supply chain due to political instability, civil unrest, or disease could adversely affect SRM’s business, financial position, sales, and results of operations. SRM primarily utilizes third-party manufacturers and suppliers throughout Asia.
The development and maintenance of these technologies may require significant investment by us and we may not achieve the anticipated benefits from such new developments or upgrades. Increases in labor costs and employee health and welfare benefits could have a negative impact on our cash flows, financial condition, and results of operations.
The development and maintenance of these technologies may require significant investment by us and we may not achieve the anticipated benefits from such new developments or upgrades. 8 Table of Contents Increases in labor costs and employee health and welfare benefits could have a negative impact on our cash flows, financial condition, and results of operations.
As a result of continued regulations and interpretations of the Tax Act, we are still quantifying the effects of the tax law change. The amounts reported as of December 31, 2023 are provisional based on the uncertainty discussed above.
As a result of continued regulations and interpretations of the Tax Act, we are still quantifying the effects of the tax law change. The amounts reported as of December 31, 2024 are provisional based on the uncertainty discussed above.
Customers may request extended payment terms which may require us to take on increased credit risk or to reduce or forgo sales entirely in an attempt to mitigate financial risk associated with customer bankruptcy risk. Customer complaints regarding our products and services could hurt our business .
Customers may request extended payment terms which may require us to take on increased credit risk or to reduce or forgo sales entirely in an attempt to mitigate financial risk associated with customer bankruptcy risk. 12 Table of Contents Customer complaints regarding our products and services could hurt our business .
Complying with these reporting and other regulatory requirements is time-consuming and results in increased costs to us and could have a negative effect on our results of operations, financial condition or business. ● Certain of our stockholders hold a significant percentage of our outstanding voting securities, which could reduce the ability of minority stockholders to effect certain corporate actions. 17 Table of Contents ITEM 1B.
Complying with these reporting and other regulatory requirements is time-consuming and results in increased costs to us and could have a negative effect on our results of operations, financial condition or business. ● Certain of our stockholders hold a significant percentage of our outstanding voting securities, which could reduce the ability of minority stockholders to effect certain corporate actions.
These current and any future laws and regulations could harm our business, results of operations and financial condition. 15 Table of Contents We may be subject to anti-corruption, anti-bribery, anti-money laundering, economic sanctions and other similar laws and regulations, and non-compliance with such laws and regulations could subject SRM to civil, criminal and administrative penalties, remedial measures and legal expenses, all of which could adversely affect SRM’s business, prospects, results of operations, financial condition and reputation.
We may be subject to anti-corruption, anti-bribery, anti-money laundering, economic sanctions and other similar laws and regulations, and non-compliance with such laws and regulations could subject SRM to civil, criminal and administrative penalties, remedial measures and legal expenses, all of which could adversely affect SRM’s business, prospects, results of operations, financial condition and reputation.
In addition, as a result of the seasonal nature of SRM’s business, SRM may be adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events, such as public health crises and pandemics, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by events, such as strikes, disruptions in transportation, or port delays, that interfere with the manufacture or shipment of goods during the critical months leading up to the purchasing season. 9 Table of Contents We could be subject to future product liability suits or product recalls which could have a significant adverse effect on our financial condition and results of operations.
In addition, as a result of the seasonal nature of SRM’s business, SRM may be adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events, such as public health crises and pandemics, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by events, such as strikes, disruptions in transportation, or port delays, that interfere with the manufacture or shipment of goods during the critical months leading up to the purchasing season.
Acquisitions involve numerous risks and challenges, including relating to the successful integration of the acquired business, entering into new territories or markets with which we have limited or no prior experience, establishing or maintaining business relationships with new retailers, distributors or other channel partners, vendors and suppliers and potential post-closing disputes.
Acquisitions involve numerous risks and challenges, including relating to the successful integration of the acquired business, entering into new territories or markets with which we have limited or no prior experience, establishing or maintaining business relationships with new retailers, distributors or other channel partners, vendors and suppliers and potential post-closing disputes. 10 Table of Contents We cannot ensure that we will be successful in selecting, executing and integrating acquisitions.
While we believe we are in compliance with local laws, we cannot assure that tax and customs authorities agree with our reporting positions and upon audit may assess us additional taxes, duties, interest and penalties.
Failure to comply with these systems and regulations can result in the assessment of additional taxes, duties, interest and penalties. While we believe we are in compliance with local laws, we cannot assure that tax and customs authorities agree with our reporting positions and upon audit may assess us additional taxes, duties, interest and penalties.
As we complete our analysis and prepare necessary data, and interpret any additional guidance, we will adjust our calculations and provisional amounts that we have recorded in our tax provision.
As we complete our analysis and prepare necessary data, and interpret any additional guidance, we will adjust our calculations and provisional amounts that we have recorded in our tax provision. Any such adjustments may materially impact our provision for income taxes in our financial statements.
The loss of recurring orders from any of our more significant retailers, distributors and other channel partners could cause our revenue and profitability to suffer. Our ability to attract new retailers, distributors and other channel partners will depend on a variety of factors, including the cost-effectiveness, reliability, scalability, breadth and depth of our products.
Our ability to attract new retailers, distributors and other channel partners will depend on a variety of factors, including the cost-effectiveness, reliability, scalability, breadth and depth of our products.
While China currently enjoys “most favored nation” trading status with the United States, the ability of the United States to revoke that status and to impose higher tariffs on products imported from China, could materially adversely affect our business, results of operations and financial condition. 8 Table of Contents Failure to successfully implement new initiatives or meet product introduction schedules can have an adverse effect on SRM’s business, financial condition, and results of operations.
While China currently enjoys “most favored nation” trading status with the United States, the ability of the United States to revoke that status and to impose higher tariffs on products imported from China, could materially adversely affect our business, results of operations and financial condition.
Trade restrictions, including embargoes, safeguards and customs restrictions against certain components and materials, as well as labor strikes and work stoppages or boycotts, could increase the cost or reduce or delay the supply of components and materials available to us and our vendors, which could delay or adversely affect the scope of our projects under development or construction and adversely affect our business, financial condition or results of operations. 11 Table of Contents We depend on large, recurring purchases from certain significant retailers, distributors and other channel partners, and a loss, cancellation or delay in purchases by these channel partners could negatively affect our revenue.
Trade restrictions, including embargoes, safeguards and customs restrictions against certain components and materials, as well as labor strikes and work stoppages or boycotts, could increase the cost or reduce or delay the supply of components and materials available to us and our vendors, which could delay or adversely affect the scope of our projects under development or construction and adversely affect our business, financial condition or results of operations.
As a company that designs and sells consumer products, we may be subject to product liability suits or involuntary product recalls, or may choose to voluntarily conduct a product recall.
We could be subject to future product liability suits or product recalls which could have a significant adverse effect on our financial condition and results of operations. As a company that designs and sells consumer products, we may be subject to product liability suits or involuntary product recalls, or may choose to voluntarily conduct a product recall.
State legislatures have not had sufficient time to respond to the Tax Act. Accordingly, there is uncertainty as to how the laws will apply in the various state jurisdictions.
In addition to the impact of the Tax Act on our federal taxes, the Tax Act may impact our taxation in other jurisdictions, including with respect to state income taxes. State legislatures have not had sufficient time to respond to the Tax Act. Accordingly, there is uncertainty as to how the laws will apply in the various state jurisdictions.
Our operations are routinely subject to audit by tax authorities in various countries. Many countries have indirect tax systems where the sale and purchase of goods and services are subject to tax based on the transaction value. These taxes are commonly referred to as value-added tax (“VAT”) or goods and services tax (“GST”).
Many countries have indirect tax systems where the sale and purchase of goods and services are subject to tax based on the transaction value. These taxes are commonly referred to as value-added tax (“VAT”) or goods and services tax (“GST”). In addition, the distribution of our products subjects us to numerous complex customs regulations, which frequently change over time.
If we do not prevail in any such disagreements, our profitability may be affected. We must comply with indirect tax laws in multiple jurisdictions, as well as complex customs duty regimes worldwide. Audits of our compliance with these rules may result in additional liabilities for taxes, duties, interest and penalties related to our international operations which would reduce our profitability.
If we do not prevail in any such disagreements, our profitability may be affected. 11 Table of Contents We must comply with indirect tax laws in multiple jurisdictions, as well as complex customs duty regimes worldwide.
SRM’s failure to protect its proprietary intellectual property and information, including with respect to any successful challenge to SRM’s ownership of its intellectual property or significant infringements of its intellectual property, could have an adverse effect on SRM’s business, financial condition, and results of operations. 12 Table of Contents We rely on a combination of copyright, trademark, patent and trade secret laws, nondisclosure agreements with employees, consultants and suppliers and other contractual provisions to establish, maintain and protect our intellectual property and technology.
SRM’s failure to protect its proprietary intellectual property and information, including with respect to any successful challenge to SRM’s ownership of its intellectual property or significant infringements of its intellectual property, could have an adverse effect on SRM’s business, financial condition, and results of operations.
Failure to successfully implement any of these initiatives or launches, or the failure of any of these initiatives or launches to produce the results anticipated by management, could have an adverse effect on SRM’s business, financial condition, and results of operations.
Failure to successfully implement new initiatives or meet product introduction schedules can have an adverse effect on SRM’s business, financial condition, and results of operations.
In addition, if stock market analysts or our stockholders do not support or believe in the value of the acquisitions that we choose to undertake, our stock price may decline. 13 Table of Contents If we do not effectively manage our sales channel inventory and product mix, we may incur costs associated with excess inventory, or lose sales from having too few products.
If we do not effectively manage our sales channel inventory and product mix, we may incur costs associated with excess inventory, or lose sales from having too few products.
Any negative publicity generated as a result of customer frustration with our products or services, or with our websites, could damage our reputation and diminish the value of our brand name, which could have a material adverse effect on our business, results of operations, and financial condition. 16 Table of Contents Risks Related to Our Securities and Other Risks We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
Any negative publicity generated as a result of customer frustration with our products or services, or with our websites, could damage our reputation and diminish the value of our brand name, which could have a material adverse effect on our business, results of operations, and financial condition.
Bad or extreme weather conditions and forecasts of bad or mixed weather conditions, which may be due to climate change, can adversely impact attendance at parks where our products are sold.
Failure to successfully implement any of these initiatives or launches, or the failure of any of these initiatives or launches to produce the results anticipated by management, could have an adverse effect on SRM’s business, financial condition, and results of operations. 7 Table of Contents Bad or extreme weather conditions and forecasts of bad or mixed weather conditions, which may be due to climate change, can adversely impact attendance at parks where our products are sold.
We cannot ensure that we will be successful in selecting, executing and integrating acquisitions. Failure to manage and successfully integrate acquisitions could materially harm our business, financial condition and results of operations.
Failure to manage and successfully integrate acquisitions could materially harm our business, financial condition and results of operations. In addition, if stock market analysts or our stockholders do not support or believe in the value of the acquisitions that we choose to undertake, our stock price may decline.
As a result, we are subject to various risks resulting from our international operations. 7 Table of Contents High levels of competition and low barriers to entry make it difficult to achieve, maintain, or build upon the success of SRM’s brands, products, and product lines.
We cannot assure you that we will be able to successfully implement actions to lessen the impact of tariffs imposed on our products, including any changes to our supply chain, logistics capabilities, sales policies or pricing of our products. 6 Table of Contents High levels of competition and low barriers to entry make it difficult to achieve, maintain, or build upon the success of SRM’s brands, products, and product lines.
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For example: ● our channel partner agreements generally do not require minimum purchases; ● our retailers, distributors and other channel partners can stop purchasing and stop marketing our products at any time; and ● our channel partner agreements generally are not exclusive.
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As a result, we are subject to various risks resulting from our international operations. Our business may be harmed by the imposition or threat of tariffs, including reciprocal or retaliatory tariffs, in markets in which we operate which could increase our product costs and other costs of doing business, impact consumer spending, or lower our revenues and earnings.
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Any such adjustments may materially impact our provision for income taxes in our financial statements. 14 Table of Contents In addition to the impact of the Tax Act on our federal taxes, the Tax Act may impact our taxation in other jurisdictions, including with respect to state income taxes.
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The current global tariff environment is uncertain. For products manufactured outside the U.S., tariffs increase the cost of our products. Most of our products are produced in China, and tariffs may impact our sales and reduce our profitability as a result.
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In addition, the distribution of our products subjects us to numerous complex customs regulations, which frequently change over time. Failure to comply with these systems and regulations can result in the assessment of additional taxes, duties, interest and penalties.
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Tariffs may also impact consumer spending if products become more expensive, or consumers have less discretionary income or consumer spending power.
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The current tariff environment, particularly the imposition or threat of tariffs on products manufactured in China for import into the U.S. as well the potential for retaliatory and reciprocal tariffs in other countries in which we do business, may negatively impact our business, sales and profitability.
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While our contracts currently require our customers to cover tariffs and other fees, further increases in tariffs may increase the costs of our products.
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We depend on large, recurring purchases from certain significant retailers, distributors and other channel partners, and a loss, cancellation or delay in purchases by these channel partners could negatively affect our revenue. The loss of recurring orders from any of our more significant retailers, distributors and other channel partners could cause our revenue and profitability to suffer.
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We rely on a combination of copyright, trademark, patent and trade secret laws, nondisclosure agreements with employees, consultants and suppliers and other contractual provisions to establish, maintain and protect our intellectual property and technology.
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Audits of our compliance with these rules may result in additional liabilities for taxes, duties, interest and penalties related to our international operations which would reduce our profitability. Our operations are routinely subject to audit by tax authorities in various countries.
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These current and any future laws and regulations could harm our business, results of operations and financial condition.
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Risks Related to Our Securities and Other Risks We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management methodology includes: ● risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment; ● individuals, including employees and external third-party service providers, who are responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents; ● the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; ● a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and ● a third-party risk management process for service providers, suppliers, and vendors.
Biggest changeOur cybersecurity risk management methodology includes: ● risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment; ● individuals, including employees and external third-party service providers, who are responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents; ● the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; 13 Table of Contents ● a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and ● a third-party risk management process for service providers, suppliers, and vendors.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment. 18 Table of Contents
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
We have no t identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal executive office is located in leased premises of approximately 6,908 square feet at 1061 E. Indiantown Rd., Ste. 110, Jupiter, FL 33477. The premises are shared with Safety Shot, Inc., our former parent company, with lease terms on a month-to-month basis.
Biggest changeITEM 2. PROPERTIES Our principal executive office is located in a flexible shared office facility located at 941 W Morse Blvd., Suite 100, Winter Park, FL 32789, with lease terms on a month-to-month basis.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES. Not applicable. PART II
Biggest changeITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 14 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES. 19 PART II 19 ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 19 ITEM 6. RESERVED 20 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 20
Biggest changeITEM 4. MINE SAFETY DISCLOSURES. 14 PART II 15 ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 15 ITEM 6. RESERVED 15 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 16

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Since August 15, 2023, the Company’s common stock has traded on the Nasdaq Capital Market under the symbol SRM. As of March 21, 2024, there were 28 shareholders of record.
Biggest changeITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the Nasdaq Capital Market under the symbol “SRM”. The closing price of our common stock on the Nasdaq Capital Market on March 28 , 2025 was $ 0.453 .
No dividends may be declared or paid on our common shares, unless a dividend, payable in the same consideration or manner, is simultaneously declared or paid, as the case may be, on our shares of preferred stock, if any.
No dividends may be declared or paid on our shares of common stock, unless a dividend, payable in the same consideration or manner, is simultaneously declared or paid, as the case may be, on our shares of preferred stock, if any.
Since certain shares of our common stock are held by brokers and other institutions on behalf of stockholders, the foregoing number of holders of our common stock is not representative of the number of beneficial holders of our common stock.
Holders As of March 25, 2025, there were 31 shareholders of record. Since certain shares of our common stock are held by brokers and other institutions on behalf of stockholders, the foregoing number of holders of our common stock is not representative of the number of beneficial holders of our common stock.
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The last reported sales price for our common stock as reported on the Nasdaq Capital Market on March 29, 2024 was $1.59.
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Issuance of Unregistered Securities During the year ended December 31, 2024, the Company issued: (i) 200,000 shares of its restricted common stock from stock payable valued at $354,000; (ii) 1,500,000 shares of its restricted common stock in connection with the purchase of intangible assets valued at $1,143,000; (iii) 250,000 shares of its restricted common stock in connection with a consulting agreement valued at $202,500; and (iv) 950,000 shares of its restricted common stock for services to investor relations firms valued at $ 1,058,500.
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Issuance of Unregistered Securities During the period from the date of the Company’s IPO (August 14, 2023) to December 31, 2023, the Company issued 315,500 shares of its restricted common stock, valued at a total of $612,800 (based on the date of the respective agreements), to three companies.
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These issuances were made in reliance on an exemption from registration set forth in Section 4(a)(2) of the Securities Act, as transactions by an issuer not involving a public offering. Purchases of Equity Securities by the Issuer and Affiliated Purchasers There were no issuer purchases of equity securities during the years ended December 31, 2024.
Removed
Additionally, at December 31, 2023, the Company has stock payable for services due one company for $676,000 representing 400,000 shares of the Company’s restricted common stock. Purchases of Equity Securities by the Issuer and Affiliated Purchasers There were no issuer purchases of equity securities during the year ended December 31, 2023.
Removed
Securities Authorized for Issuance under Equity Compensation Plans 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.
Removed
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.
Removed
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 2022 Plan.
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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. 19 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

26 edited+12 added−11 removed42 unchanged
Biggest changeOperating expenses for the year ended December 31, 2022 totaled $902,198 were in connection with our daily operations as follows: (i) rent of $4,065; (ii) depreciation and amortization of $2,333; and (iii) general and administrative expenses of $866,516, consisting of payroll and related taxes, travel, meals and entertainment, office supplies and expense and other normal office and administration expenses.
Biggest changeOperating expenses for the year ended December 31, 2024 totaled $5,194,576 were in connection with our daily operations as follows: (i) marketing expenses of $55,803; (ii) legal and professional expenses of $1,432,537 including board of director fees, auditing and accounting fees, investor relations and public awareness campaigns, legal services, corporate advisory services, registration statement preparation fees, general corporate governance fees; (iii) rent of $55,417; (iv) depreciation and amortization of $16,880; (v) general and administrative expenses of $1,667,548, consisting of payroll and related taxes, travel, meals and entertainment, office supplies and expense and other normal office and administration expenses; (vi) stock based compensation of $1,861,743 consisting primarily of investor relations and public awareness campaign and the fair value of stock options granted to officers, directors and employees.
There were no cash equivalents as of December 31, 2023 and 2022. 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.
There were no cash equivalents as of December 31, 2024 and 2023. 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.
The Company provides an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. During the years ended December 31, 2023 and 2022, the Company recognized no allowance for doubtful collections.
The Company provides an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. During the years ended December 31, 2024 and 2023, the Company recognized no allowance for doubtful collections.
Gains and losses from foreign currency transactions and translation for the years ended December 31, 2023 and 2022 and the cumulative translation gains and losses as of December 31, 2023 and 2022 were not material. Accounts Receivable Accounts receivable are generated from sales of the Company’s products.
Gains and losses from foreign currency transactions and translation for the years ended December 31, 2024 and 2023 and the cumulative translation gains and losses as of December 31, 2024 and 2023 were not material. Accounts Receivable Accounts receivable are generated from sales of the Company’s products.
Results of Operations For the years ended December 31, 2023 and 2022 The following table provides selected financial data about us for the year ended December 31, 2023 and 2022, respectively.
Results of Operations For the years ended December 31, 2024 and 2023 The following table provides selected financial data about us for the year ended December 31, 2024 and 2023, respectively.
Operating Activities: Net cash used in our operating activities of $769,764 during the year ended December 31, 2023, was primarily due to our operating loss of $2,053,843 offset by $1,288,800 of stock based compensation.
Net cash used in our operating activities of $766,877 during the year ended December 31, 2023, was primarily due to our operating loss of $2,053,843 offset by $1,288,800 of stock-based compensation.
Our 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 consists of net operating loss carry forwards calculated using effective tax rates equating to approximately $497,655 and $51,149, respectively.
Our 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, 2024 and 2023 consists of net operating loss carry forwards calculated using effective tax rates equating to approximately $1,377,232 and $497,655, respectively.
Due to the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance of $497,655 and $51,149 for the years ended December 31, 2023 and 2022. Stock Based Compensation We recognize compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation - Stock Compensation” (“ASC 718”).
Due to the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance of $1,377,232 and $497,655 for the years ended December 31, 2024 and 2023. Stock Based Compensation We recognize compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation - Stock Compensation” (“ASC 718”).
In addition, we launched new product lines as well as increased marketing, promotional and social media efforts. Income/Losses Net loss for the year ended December 31, 2023 was $2,053,859 and income for the year ended December 31, 2022 was $328,701. 23 Table of Contents Impact of Inflation We believe that inflation has had a negligible effect on operations since inception.
In addition, we launched new product lines as well as increased marketing, promotional and social media efforts. Income/Losses Net loss for the year ended December 31, 2024 and 2023, was $4,339,345 and $2,053,859, respectively. 19 Table of Contents Impact of Inflation We believe that inflation has had a negligible effect on operations since inception.
Consumers, who value us for our distinct, stylized products, remain at the center of everything we do. Content Providers : We have licensing relationships with many established content providers, and our products appear in venues such as Walt Disney Parks and Resorts, Universal Studios, SeaWorld, Six Flags, Great Wolf Lodge, Dollywood and Merlin Entertainment.
Consumers, who value us for our distinct, stylized products, remain at the center of everything we do. Content Providers : We have licensing relationships with many established content providers, and our products appear in venues such as Walt Disney, United Parks and Resorts (f/k/a SeaWorld), Universal Studios, Six Flags, Herschend Family Entertainment and Merlin Entertainment.
Financing Activities: During the year ended December 31, 2023, net cash provided by financing activities of $3,679,359 was by the proceeds from the sale of our common stock in our Initial Public Offering ($5,168,325) less the payment of a promissory note to Jupiter Wellness, Inc. ($1,488,966).
During the year ended December 31, 2023, net cash provided by financing activities of $3,687,058 was from the $5,168,325 proceeds from the sale of our common stock in our initial public offering less the payment of $1,488,966 on a promissory note to Safety Shot.
Warrants are not considered in the calculations for the years ended December 31, 2023 and 2022, as the impact of the potential common shares would be to decrease the loss per share. 21 Table of Contents For the Years Ended December 31, 2023 2022 Numerator: Net income (loss) $ (2,053,859 ) $ 328,701 Denominator: Denominator for basic earnings per share - Weighted-average common shares 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 Cash We consider 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.
Warrants are not considered in the calculations for the years ended December 31, 2024 and 2023, as the impact of the potential shares of common stock would be to decrease the loss per share. 17 Table of Contents For the Years Ended December 31, 2024 2023 Numerator: Net (loss) $ (4,339,345 ) $ (2,053,859 ) Denominator: Denominator for basic earnings per share - Weighted-average shares of common stock issued and outstanding during the period 11,623,191 7,688,523 Denominator for diluted earnings per share 11,623,191 7,688,523 Basic (loss) per share $ (0.37 ) $ (0.27 ) Diluted (loss) per share $ (0.37 ) $ (0.27 ) Cash We consider 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.
During the year ended December 31, 2022, net cash used in investing activities of $11,984 was primarily from purchase of fixed assets and loan to an affiliate. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable to a smaller reporting company.
During the year ended December 31, 2023, net cash used in investing activities of $392,956 was $350,176 used in the acquisition of SRM Entertainment Ltd and $42,780 purchase of fixed assets. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable to a smaller reporting company.
December 31, 2023 December 31, 2022 Sales $ 5,760,533 $ 6,076,116 Cost of Sales 4,443,083 4,845,217 Gross Profit (Loss) 1,317,450 1,230,899 Total expenses 3,371,309 902,198 Net Income (Loss) $ (2,053,859 ) $ 328,701 Revenues We generated $5,760,533 in revenues for the year ended December 31, 2023 compared to $6,076,116 revenues for the year ended December 31, 2022.
December 31, 2024 December 31, 2023 Sales $ 4,311,382 $ 5,760,533 Cost of Sales 3,456,151 4,443,083 Gross Profit (Loss) 855,231 1,317,450 Total expenses 5,194,576 3,371,309 Net Income (Loss) $ (4,339,345 ) $ (2,053,859 ) Revenues We generated $4,311,382 in revenues for the year ended December 31, 2024 compared to $5,760,533 revenues for the year ended December 31, 2023.
Critical Accounting Policies Our management’s discussion and analysis of our financial condition and results of operations is based on our audited financial statements for the year ended December 31, 2023 and 2022, which have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, and the rules and regulations of the Securities and Exchange Commission.
This has allowed us to deliver significant growth while lessening our dependence on individual content releases. 16 Table of Contents Critical Accounting Policies Our management’s discussion and analysis of our financial condition and results of operations is based on our audited financial statements for the year ended December 31, 2024 and 2023, which have been prepared in accordance with United States generally accepted accounting principles, or U.S.
The strength of our management team and relationships with content providers, retailers and third-party manufacturers allows us to move from product concept to a new product tactfully. As a result, we can dynamically manage our business to balance current content releases and pop culture trends with timeless content based on classic movies, such as Harry Potter or Star Wars.
As a result, we can dynamically manage our business to balance current content releases and pop culture trends with timeless content based on classic movies, such as Harry Potter or Star Wars.
As of December 31, 2023, we had approximately $2,980,741 in cash and cash equivalents, an increase of $2,527,225 from the $453,516 as of December 31, 2022. During the year ended December 31, 2023, we raised net proceeds of $5,168,325 from the sale of securities.
As of December 31, 2024, we had approximately $1,352,373 in cash and cash equivalents, a decrease of $1,628,368 from the $2,980,741 as of December 31, 2023. During the year ended December 31, 2024 and 2023, we raised net proceeds of $2,501,255 and $5,168,325, respectively from the sale of securities.
In this annually report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock. As used in this annual report and unless otherwise indicated, the terms “we”, “us”, “our”, “JUPW” and the “Company” mean SRM Entertainment, Inc.
In this annually report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common stock in our capital stock.
Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. Recently Issued Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for nonemployee share-based payment transactions.
Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, enhancing segment reporting requirements under ASC 280.
The adoption of this standard did not have a significant impact on our results of operations, financial condition, cash flows, and financial statement disclosures. Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
The Company adopted the ASU for the year ended December 31, 2024. 18 Table of Contents Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Other expenses consisted of $754 of other income and net interest expense of $30,038. Expenses during 2023 were higher than the same period in 2022 due primarily to cost associated with our initial public offering and other costs associated with our company being listed and traded on Nasdaq.
Expenses during 2024 were higher than the same period in 2023 due primarily to increased stock based compensation related to investor relations and public awareness campaign and the fair value of stock options granted to officers, directors and employees and other costs associated with our company being listed and traded on Nasdaq.
Over time, many of our consumers evolve from occasional buyers to more frequent purchasers, whom we categorize as enthusiasts or collectors. We create products to appeal to a broad array of fans across consumer demographic groups—men, women, boys and girls—not a single, narrow demographic. We currently offer an array of products that sell across several categories.
We create products to appeal to a broad array of fans across consumer demographic groups—men, women, boys and girls—not a single, narrow demographic. We currently offer an array of products that sell across several categories. Our products are generally priced between $2.50 and $50.00, which allows our diverse consumer base to express their fandom frequently and impulsively.
Operating Expenses and other income/expense We had total operating expenses and other income/expense of $3,371,309 for the year ended December 31, 2023 compared to $902,198 for the year ended December 31, 2022.
We believe with the new theme park opening in Orlando in 2025, our business should benefit from the publicity and enthusiasm that typically surrounds new theme park openings. Operating Expenses and other income/expenses We had total operating expenses and other income/expense of $5,194,576 for the year ended December 31, 2024 compared to $3,371,309 for the year ended December 31, 2023.
Our products are generally priced between $2.50 and $50.00, which allows our diverse consumer base to express their fandom frequently and impulsively. We continue to introduce innovative products designed to facilitate fan engagement at different price points and styles. 20 Table of Contents We have developed a nimble and low-fixed cost production model.
We continue to introduce innovative products designed to facilitate fan engagement at different price points and styles. We have developed a nimble and low-fixed cost production model. The strength of our management team and relationships with content providers, retailers and third-party manufacturers allows us to move from product concept to a new product tactfully.
Net cash used in our operating activities of $29,925 during the year ended December 31, 2022, is primarily due to our net income of $328,701 offset by our increase in operation assets (primarily inventory).
Operating Activities: Net cash used in our operating activities of $2,856,359 during the year ended December 31, 2024, was primarily due to our operating loss of $4,339,345 offset by $1,861,743 of stock-based compensation.
During the year ended December 31, 2022, net cash provided by financing activities of $19,948 was primarily from proceeds from a promissory note. Investing Activities: During the year ended December 31, 2023, net cash used in investing activities of $382,370 was primarily used in the acquisition of SRM Entertainment Ltd.
Financing Activities: During the year ended December 31, 2024, the net cash provided by financing activities of $1,501,255 was from the $2,501,255 proceeds of our sale of common stock in from our registered direct offerings under our Shelf S-3 less the $1,000,000 payment on a promissory note.
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Content Providers : We have licensing relationships with many established content providers, and our products appear in venues such as Walt Disney Parks and Resorts, Universal Studios, SeaWorld, Six Flags, Great Wolf Lodge, Dollywood and Merlin Entertainment. We currently have licenses with Smurfs and Zoonicorn LLC, from which we can create multiple products based on each character within.
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As used in this annual report and unless otherwise indicated, the terms “we”, “us”, “our”, “SRM” and the “Company” mean SRM Entertainment, Inc. and its consolidated subsidiary unless the context dictates otherwise.
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Content providers trust us to create unique, stylized extensions of their intellectual property that extend the relevance of their content with consumers through ongoing engagement, helping to maximize the lifetime value of their content. Consumers : Fans are increasingly looking for ways to express their affinity for and engage with their favorite pop culture content.
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Consumers : Fans are increasingly looking for ways to express their affinity for and engage with their favorite pop culture content. Over time, many of our consumers evolve from occasional buyers to more frequent purchasers, whom we categorize as enthusiasts or collectors.
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This has allowed us to deliver significant growth while lessening our dependence on individual content releases.
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GAAP, and the rules and regulations of the Securities and Exchange Commission.
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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 Company has adopted this standard beginning January 1, 2019.
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This ASU aims to provide investors with more detailed information about a public entity’s reportable segments, including those with a single reportable segment. The Key Provisions include : 1.
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The adoption of this standard did not have a significant impact on our results of operations, financial condition, cash flows, and financial statement disclosures. 22 Table of Contents In February 2016, Topic 842, “Leases” was issued to replace the leases requirements in Topic 840, “Leases”.
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Enhanced Expense Disclosures: Public entities must now disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included in each reported measure of segment profit or loss. 2.
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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.
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Disclosure of Other Segment Items: Entities are required to disclose an amount for “other segment items” by reportable segment, representing the difference between reported segment revenues and the sum of significant segment expenses and the reported measure of segment profit or loss. A qualitative description of the composition of these other segment items is also required. 3.
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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.
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Interim Reporting Requirements: All annual disclosures about a reportable segment’s profit or loss and assets, including the new disclosures introduced by ASU 2023-07, must now be provided in interim periods as well. 4.
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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.
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Single Reportable Segment Entities: Public entities with a single reportable segment are explicitly required to provide all segment disclosures mandated by ASC 280, including those introduced by ASU 2023-07. This clarification ensures that users receive comprehensive information about the entity’s operations and performance. 5.
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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.
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Disclosure of CODM Information: Entities must disclose the title and position of the CODM and explain how the CODM uses the reported measure(s) of segment profit or loss in assessing performance and allocating resources. These amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.
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The decrease can be attributed to industry conditions, even though attendance and revenue were up on the West Coast, the summer season was a bit milder in Orlando, Florida, as there was a year-over-year decline in revenue for Orlando resorts.
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The decrease can be attributed to our largest theme park orders were down due to major expansion resulting in a decrease in attendance at their Ordando facility, timing delays for orders from another theme park operator and an election year in which retailers were very cautious in buying.
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However, while demand has tapered off from the initial post COVID rebound in 2022, attendance in Orlando is still for the most part in line with pre-pandemic levels. We believe with the new theme park opening in Orlando right around the corner, our business should benefit from the publicity and enthusiasm that typically surrounds new theme park openings.
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Other expenses consisted of net interest expense of $4,548.
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Investing Activities: During the year ended December 31, 2024, net cash used in investing activities of $273,264 consisted of a $250,000 cash payment as part of the asset purchase agreement related to our purchase of intangible assets and $23,264 paid for fixed assets.

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