ICONIC BRANDS, INC. Our Management's Discussion and Analysis contains not only statements that are
historical facts, but also statements that are forward-looking (within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934). Forward-looking statements are, by their very
nature, uncertain and risky. These risks and uncertainties include
international, national and local general economic and market conditions;
demographic changes; our ability to sustain, manage, or forecast growth; our
ability to successfully make and integrate acquisitions; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; fluctuations and difficulty in
forecasting operating results; changes in business strategy or development
plans; business disruptions; the ability to attract and retain qualified
personnel; the ability to protect technology; and other risks that might be
detailed from time to time in our filings with the
Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
You should read the following discussion and analysis of our financial condition
and plan of operations together with and our consolidated financial statements
and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q.
In addition to historical information, this discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions.
Our actual results may differ materially from those discussed below. Factors
that could cause or contribute to such differences include, but are not limited
to, those identified below, those discussed in the section titled "Risk Factors"
included elsewhere in this Quarterly Report on Form 10-Q and the risks described
in our Annual Report on Form 10-K for the fiscal year ended
Summary Overview
We are engaged in the development and sale of alcohol and non-alcohol brands
that are "better-for-you" ("BFY") and "better-for-the-planet". TopPop, our
wholly owned subsidiary, produces low calorie, "ready to go" products,
ready-to-freeze ("RTF") products and ready-to-drink ("RTD") products in
sustainable, flexible and stand-up pouch packaging. TopPop also produces
"cocktails-to-go" pouches and alcohol ice-pops. Our brands include "Bellissima"
by
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We have expertise in developing, from product inception to wholesale distribution or direct to consumer through the QVC distribution channel, and in branding alcohol beverages for our company and for third parties. We market and place products into national distribution through long-standing industry relationships approximately 45 national or regional alcoholic beverage distributors. We currently market and sell the following product lines:
· Bellissima Prosecco - these products comprise a line of all-natural and
vegan Prosecco and Sparkling Wines made with organic grapes, including a
Zero Sugar, Zero Carb option, a DOC Brut and a Sparkling Rose. The
Bellissima line of Prosecco and Sparkling Wines includes two new flavor
profiles, a Zero Sugar/Zero Carb Sparkling Rose and a Rose Prosecco;
· Bellissima Zero Sugar Still Wines - this line of five still wines was
launched in March 2022 and are certified vegan and are made with organic
grapes;
· Bella Sprizz Aperitifs - these products comprise a line of aperitifs
consisting of three different expressions, a classic Italian aperitif, an
all-natural elderflower aperitif and a classic Italian bitter;
Sonja Sangria - a celebrity Sangria that we have sold since the second
· quarter of 2021. This product is actively being marketed but does not
represent a significant part of our sales;
· Ready-to-Freeze and Ready-to-Drink Alcoholic Products - these products are
currently produced under contract for third-party national and regional
brands and for our Boozy Pops® product line; and
· BiVi Vodka - a celebrity-branded vodka that we have sold since 2018 under
the brand "BiVi 100 percent Sicilian Vodka" and which currently does not
represent a material portion of our sales.
In addition, we develop and market private label spirits for established domestic and international chains.
As a result of our
For its first product line, TopPop identified the single serve, RTD and RTF as
an opportunity for product and packaging innovation. TopPop introduced an
alcohol-infused ice pop in
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We believe TopPop brings to us additional synergies and opportunities for
cross-promoting new and existing products to a broader customer base and better
positions our company to establish and support our brands and to create
sustainable packaging solutions to the consumable goods market. We believe our
focus on lifestyle branding and the rising "Better-for-You,"
"Better-for-the-Planet" consumer categories has made us a leader in developing
celebrity brands worldwide, such as our Bellissima Prosecco by
Recent Developments COVID-19
As a result of COVID-19, we have seen a shift away from the traditional brick-and-mortar business to a direct-to-consumer business. Although we expect brick-and-mortar to rebound, we also expect the director-to-consumer model to stay post-COVID-19, as consumers embrace the convenience of having their alcoholic beverages delivered to their doorstep. As we expand our relationship with QVC and our own direct-to-consumer platform through our website, we believe we are well positioned to execute on this opportunity.
Results of Operations for the Three Months Ended
Introduction
We had sales of
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Revenues and Net Operating Loss
Our operations for the three months ended
ICONIC BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, Increase / 2022 2021 (Decrease) REVENUE Sales$ 6,654,221 $ 584,914 $ 6,069,307 Cost of goods sold 4,920,674 325,206 4,595,468 Gross Profit 1,733,547 259,708 1,473,839 OPERATING EXPENSES Officers' compensation 257,285 263,750 (6,465 ) Professional and consulting fees 557,128 922,429 (365,301 ) Royalties 60,915 107,407 (46,492 ) Fulfillment costs 212,051 31,752 180,299 ) Travel and entertainment 150,553 6,185 144,368 Payroll 1,139,272 143,727 995,545 Amortization expense 796,600 - 796,600 Other operating expenses, including occupancy 2,078,937 329,531 1,749,406 General and administrative expenses: 5,252,741 1,804,781 3,447,960 Selling and marketing 336,485 91,419 245,066 Total operating expenses 5,589,226 1,896,200 3,693,026 Loss from operations (3,855,679 ) (1,636,492 ) (2,219,187 ) Other income (expense): Interest expense (244,152 ) (30,754 ) (213,398 ) Other income (expense) 7,848 - 7,848 Total other income (expense) (236,304 ) (30,754 ) (205,550 ) Net loss$ (4,091,983 ) $ (1,667,246 ) $ (2,424,737 ) Net (loss) income attributable to noncontrolling interests in subsidiaries$ (12,004 ) $ 8,772 $ (20,776 ) Net (loss) attributable to Iconic Brands, Inc.$ (4,079,979 ) $ (1,676,018 ) $ (2,403,961 ) Sales
Our sales are comprised of sales of BiVi Sicilian Vodka, Bellissima Prosecco and
Sparkling Wine, the line of Hooters brand products and our ready to freeze
("RTF") TopPop products. Sales were
Cost of Sales
Cost of sales was
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Officers' Compensation
Officers' compensation was
Professional and Consulting Fees
Professional and consulting fees were
Royalties
We expensed royalties of
Travel and Entertainment
Travel and entertainment expenses were
Payroll Expenses
Payroll expenses for the three months ended
Amortization expense
The amortization expense of
Other Operating Expenses
Other operating expenses were
Selling and marketing
Marketing and advertising expenses were
Net operating loss
We had a loss from operations of
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Other Income and Expense
We had interest expense of
Net (income) loss attributable to Noncontrolling Interests in Subsidiaries
Net income (loss) attributable to noncontrolling interests in subsidiaries
represented 49% of the net loss of Bellissima and BiVi (of which we own 51%) and
is accounted for as a reduction in the net loss attributable to our Company. Net
loss for the three months ended
Net Loss Attributable to
The net loss attributable to Iconic was
Results of Operations for the Six Months Ended
Our operations for the six months ended
June 30, June 30, Increase /
2022 2021 (Decrease)
Sales $ 10,701,018 $ 1,219,447 $ 9,481,571
Cost of Sales 7,125,713 643,839 6,481,874
Gross Profit 3,575,305 575,608 2,999,697
Operating expenses:
Officers compensation 482,746 367,500 115,246
Professional and consulting 1,131,152 1,081,332 49,820
Royalties 94,146 206,535 (112,389 )
Fulfillment costs 334,871 171,752 163,119
Travel and entertainment 238,308 19,028 219,280
Amortization expense 1,593,200 - 1,593,200
Payroll expense 2,367,337 287,454 2,079,883
Other operating expenses, including
occupancy 3,469,368 545,150 2,924,218
General and administrative expenses 9,711,128 2,678,751 7,032,377
Selling and marketing 688,462 212,587 475,875
Total operating expenses 10,399,590 2,891,338 7,508,252
Loss from operations (6,824,285 ) (2,315,730 ) (4,508,555 )
Other income (expense):
Gain on forgiveness of PPP loan - 28,458 (28,458 )
Interest expense (427,286 ) (30,754 ) (396,532 )
Other income (expense) 7,848 - 7,848
Total other income (expense) (419,438 ) (2,296 ) (417,142 )
Net loss $ (7,243,723 ) $ (2,318,026 ) $ (4,925,697 )
Net (loss) income attributable to $
noncontrolling interests in subsidiaries
Net (loss) attributable to Iconic $ Brands, Inc.$ (7,137,900 ) $ (2,342,972 ) (4,794,928 ) 27 Table of Contents Sales
Our sales are comprised of sales of BiVi Sicilian Vodka, Bellissima Prosecco and
Sparkling Wine, the line of Hooters brand products and our RTF TopPop products.
Sales were
Cost of Sales
Cost of sales was
Officers Compensation
Officers' compensation was
Professional and Consulting Fees
Professional and consulting fees were
Royalties
Royalties were
Fulfillment costs
Fulfillment costs expenses were
Travel and Entertainment
Travel and entertainment expenses were
Payroll Expenses
Payroll expenses for the six months ended
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Amortization expense
The amortization expense of
Other Operating Expenses
Other operating expenses were
Selling and marketing
Marketing and advertising expenses were
Income (Loss) from Operations
We had a loss from operations of
Liquidity and Capital Resources
Introduction
During the six months ended
Our cash, current assets, total assets, current liabilities, and total liabilities as ofJune 30, 2022 andDecember 31, 2021 , respectively, were as follows: June 30, December 31, 2022 2021 Change Cash$ 4,697,929 $ 2,190,814 $ 2,507,115 Total Current Assets 13,480,560 4,346,003 9,134,557 Total Assets 62,493,619 50,706,656 11,786,963
Total Current Liabilities 13,641,891 16,650,909 (3,009,018 ) Total Liabilities
$ 39,066,615 $ 31,593,601 $ 7,473,014
Our cash increased
In order to repay our obligations in full or in part when due, we may be required to raise significant capital from other sources and to execute on our business plans for TopPop. There is no assurance that we will be successful in these efforts.
Cash Requirements
Our cash on hand as of
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Sources and Uses of Cash
Operations
Our net cash used in operating activities for the six months ended
Investments
For the six months ended
Financing
Our net cash provided from financing activities for the six months ended
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