BERGIO INTERNATIONAL, INC. Forward Looking Statements
This report and other reports filed by our Company from time to time with the
When used in the filings, the words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or the negative of these terms and similar expressions as they relate to us or our management identify forward-looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including those set forth in the Risk Factors on page 5. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. Except, as required by applicable law,
including the securities laws of
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Our financial statements are prepared in accordance with accounting principles
generally accepted in
General
Management's discussion and analysis of results of operations and financial condition is intended to assist the reader in the understanding and assessment of significant changes and trends related to the results of operations and financial position of the Company together with its subsidiary. This discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying financial notes, and with the Critical Accounting Policies noted below.
Plan of Operation
The Bergio brand is our most important asset. The Bergio brand is associated
with high-quality, handcrafted and individually designed pieces with European
sensibility, Italian craftsmanship and a bold flair for the unexpected.
When designer and PEO,
It is our intention to establish
It is our intention to open elegant stores in "high-end" areas and provide excellent service in our stores which will be staffed with knowledgeable professionals.
We also intend to sell our products on a wholesale basis to limited customers.
We have spent over
In 2019 we introduced The Silver Fashion Collection ranging in price from
Our products consist of a wide range of unique styles and designs made from
precious metals such as, gold, platinum, and Karat gold, as well as diamonds and
other precious stones. We currently design and produce approximately 100 to 150
product styles. Current retail prices for our products range from
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On
During the fall of 2018, we opened our second retail store at the new
On
On
The funding for these acquisitions were a combination of proceeds from the issuance of common stock from our S-1 Registration Statement and debt.
Aphrodite's Marketing and GearBubble Tech have increased our online presence and
provide for expansion of the Bergio Brand. Aphrodite is a one-stop shop for
jewelry, gifts, and surprises for any occasion. The online stores provide for a
unique gifting experience in the ecommerce space. With their technological
experience in ecommerce, we expect to grow the Bergio Brand, and in conjunction
with
The Company has instituted various cost saving measures to conserve cash and has worked with its debtors in an attempt to negotiate the debt terms. The Company has been also investigating various strategies to increase sales and expand its business. The Company is in negotiations with some potential partners, but, at this time, there is nothing concrete, but the Company remains positive about its prospects. However, there is no assurance that the Company will be successful in its endeavors or that it will be able to increase its business.
Our future operations are contingent upon increasing revenues and raising capital for on-going operations and expansion of our product lines. Because we have a limited operating history, you may have difficulty evaluating our business and future prospects.
The Company's retail operations have been and continue to be affected by the
recent and ongoing outbreak of the coronavirus disease (COVID-19) which in
Results of Operations - For the Year Ended
Overview
Net revenues decreased during the year ended
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our online presence and the Company continues to position itself for the future
with the acquisition of Aphrodite's Marketing and GearBubble Tech and take
advantage of the Bergio brand in the E-Commerce space as well as establishing a
chain of retail stores worldwide. Our branded product lines are products and/or
collections designed by our designer and CEO
The Company continues to pursue additional financing opportunities and we have initiated measures to strengthen our financial position. As a result, we have accomplished the following:
·We have converted approximately
·Raised additional funding from convertible notes, sales of our Series D Preferred Stock and Common Stock.
These events have allowed us to reduce our debt and provided funding for
operations. We continue to pursue other opportunities. Moreover, there is no
assurance that sufficient funding will be available, or if available, that its
terms will be favorable to the Company. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Years ended December 31,
Increase Percent Increase
2022 2021 (Decrease) (Decrease)
Net revenues $ 9,677,710 $ 10,997,988 $ (1,320,278) (12.00)%
Net revenues - related
parties 139,716 - 139,716 100%
Total net revenues 9,817,426 10,997,988 (1,180,562) (10.73)%
Cost of revenues 4,622,490 4,553,047 69,443 1.53%
Gross profit $ 5,194,936 $ 6,444,941 $ (1,250,005) (19.40%)
Gross profit as a % of
sales 52.91% 58.60%
Net Revenues
Net revenues for the year ended
Cost of Revenues
Cost of revenues consists primarily of the cost of the merchandise, shipping
fees, credit card processing services, fulfillment cost, ecommerce sellers'
pay-out, costs associated with operation and maintenance of the Company's
platform. Cost of revenues for the year ended
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Gross Profit
Gross profit decreased by
Operating Expenses
Operating expenses decreased by
Loss from Operations
As a result of the above, we had a loss from operation of
Other Expenses, net
For the year ended
Net Loss Attributable to
As a result of the above, we had net loss attributable to
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities and working
capital at
December 31, Increase/
2022 2021 (Decrease)
Current Assets $ 3,440,464 $ 4,384,185 $ (943,721)
Current Liabilities $ 4,254,005 $ 6,748,062 $ (2,494,057)
Working Capital $ (813,541) $ (2,363,877) $ 1,550,336 Our working capital deficit was
During the year ended
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Cash used in operating activities.
For the year ended
For the year ended
Cash used in investing activities.
For the year ended
Cash provided financing activities.
Cash provided by financing activities for the year ended
Net cash provided by financing activities for the year ended
Our indebtedness is comprised of various convertible debt, notes payable, loans payable, and advances from a stockholder/officer intended to provide capital for the ongoing manufacturing of our jewelry line, in advance of receipt of the payment from our retail distributors.
Convertible Notes
From time to time the Company enters into certain financing agreements for
convertible notes. For the most part, the Company settles these obligations with
the Company's common stock. As of
Notes Payable
The Company has total notes payable of
Loans and Advances Payable
The Company has loans payable and accrued interest of
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Satisfaction of Our Cash Obligations for the Next 12 Months
A critical component of our operating plan impacting our continued existence is to efficiently manage our retail operations and successfully develop new lines through our Company or through possible acquisitions and/or mergers as well as opening new retail stores. Our ability to obtain capital through additional equity and/or debt financing, and joint venture partnerships will also be important to our expansion plans. In the event we experience any significant problems assimilating acquired assets into our operations or cannot obtain the necessary capital to pursue our strategic plan, we may have to reduce the growth of our operations. This may materially impact our ability to increase revenue and continue our growth.
The Company has suffered recurring losses and has an accumulated deficit of
approximately
It is our intention to establish
These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Research and Development
We are not anticipating significant research and development expenditures in the near future.
Expected Purchase or Sale of Plant and Significant Equipment
We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.
Critical Accounting Policies
The Company prepares its financial statements in accordance with GAAP. In preparing the financial statements and accounting for the underlying transactions and balances, the Company applies its accounting policies as disclosed in Note 3 of our Notes to Consolidated Financial Statements. The Company's accounting policies that require a higher degree of judgment and complexity used in the preparation of financial statements include:
Revenue Recognition
The Company applies ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"). ASC 606 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. ASC 606 requires us to identify distinct performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. When distinct performance obligations exist, the Company allocates the contract transaction price to each distinct performance obligation. The standalone selling price, or our
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best estimate of standalone selling price, is used to allocate the transaction price to the separate performance obligations. The Company recognizes revenue when, or as, the performance obligation is satisfied.
Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Also, significant judgment may be required to determine the allocation of transaction price to each distinct performance obligation.
Generally, revenues are recognized at the time of shipment to the customer with the price being fixed and determinable and collectability assured, provided title and risk of loss is transferred to the customer. Provisions, when appropriate, are made where the right to return exists. Shipping and handling costs charged to customers are classified as sales, and the shipping and handling costs incurred are included in cost of sales.
The Company's subsidiary, GearBubble Tech, recognizes revenue from three sources: (1) e-commerce revenue (2) platform subscription fees and (3) partner and services revenue.
·Revenues are recognized when the merchandise is shipped to the customer and title is transferred and are recorded net of any returns, and discounts or allowances. Shipping cost paid by customers are primarily for ecommerce sales and are included in revenue. Merchandise sales are fulfilled with inventory sourced through our suppliers. Therefore, the Company's contracts have a single performance obligation (shipment of product).
The Company evaluates the criteria outlined in ASC 606-10-55, Principal versus Agent Considerations, in determining whether it is appropriate to record the gross amount of merchandise sales and related costs or the net amount earned as commissions. The Company evaluates whether it is appropriate to recognize revenue on a gross or net basis based upon its evaluation of whether the Company obtains control of the specified goods by considering if it is primarily responsible for fulfillment of the promise, has inventory risk, and has the latitude in establishing pricing and selecting suppliers, among other factors. The ecommerce sellers have no further obligation to the customer after the promised goods are transferred to the customer. Based on its evaluation of these factors, we have determined we are the principal in these arrangements. Through our suppliers, we have the ability to control the promised goods and as a result, the Company records ecommerce sales on a gross basis.
The Company refunds the full cost of the merchandise returned and all original shipping charges if the returned item is defective or we or our partners have made an error, such as shipping the wrong product. If the return is not a result of a product defect or a fulfillment error and the customer initiate a return of an unopened item within 30 days of delivery, for most products we refund the full cost of the merchandise minus the original shipping charge and actual return shipping fees. If our customer returns an item that has been opened or shows signs of wear, the Company issues a partial refund minus the original shipping charge and actual return shipping fees.
·The Company generally recognizes platform subscription fees in the month they are earned. Annual subscription payments received that are related to future periods are recorded as deferred revenue to be recognized as revenues over the contract term or period.
·Partner and services revenue is derived from: (1) partner marketing and promotion, and (2) non-recurring professional services. Revenue from partner marketing and promotion and non-recurring professional services is recognized as the service is performed.
Marketing
The Company applies ASC 720 "Other Expenses" to account for marketing costs. Pursuant to ASC 720-35-25-1, the Company expenses marketing costs as incurred. Marketing costs include advertising and related expenses for third party personnel engaged in marketing and selling activities, including sales commissions, and third-party e-commerce platform fees and selling fees. The Company directs its customers to the Company's ecommerce platform through social media, digital marketing, and promotional campaigns. Marketing costs are included in selling and marketing expenses on the consolidated statement of operations.
Fair Value of Financial Instruments
FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
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date. FASB ASC 820 requires disclosures about the fair value of all financial
instruments, whether or not recognized, for financial statement purposes.
Disclosures about the fair value of financial instruments are based on pertinent
information available to the Company on
The three levels of the fair value hierarchy are as follows:
Level 1:Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2:Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3:Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts reported in the consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued liabilities, accrued compensation, and deferred compensation approximate their fair market value based on the short-term maturity of these instruments.
Derivative Liabilities
The Company has certain financial instruments that are embedded derivatives associated with capital raises and acquisition (see Note 13). The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 - Derivative and Hedging - Contract in Entity's Own Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.
In
Off Balance Sheet Arrangements
The Company is not party to any off-balance sheet arrangements that may affect its financial position or its results of operations.
Recently Adopted Authoritative Pronouncements
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
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No other recently issued accounting pronouncements had or are expected to have a material impact on the Company's condensed consolidated financial statements.
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