Forward Looking Statements
This quarterly report on Form 10-Q and other reports (collectively, the
"Filings") filed by Bergio International, Inc. ("Bergio" or the "Company") from
time to time with the U.S. Securities and Exchange Commission (the "SEC")
contain or may contain forward-looking statements and information that are based
upon beliefs of, and information currently available to, the Company's
management as well as estimates and assumptions made by Company's management.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which are only predictions and speak only as of the date hereof.
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 the Company or the Company's management identify
forward-looking statements. Such statements reflect the current view of the
Company with respect to future events and are subject to risks, uncertainties,
assumptions, and other factors, including the risks contained in the "Risk
Factors" section of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2021, filed with the SEC on March 29, 2022, relating to the
Company's industry, the Company's operations and results of operations, and any
businesses that the Company may acquire. 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 the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance, or achievements. Except as required
by applicable law, including the securities laws of the United States, the
Company does not intend to update any of the forward-looking statements to
conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles
generally accepted in the United States ("GAAP"). These accounting principles
require us to make certain estimates, judgments and assumptions. We believe that
the estimates, judgments and assumptions upon which we rely are reasonable based
upon information available to us at the time that these estimates, judgments and
assumptions are made. These estimates, judgments and assumptions can affect the
reported amounts of assets and liabilities as of the date of the financial
statements as well as the reported amounts of revenues and expenses during the
periods presented. Our financial statements would be affected to the extent
there are material differences between these estimates and actual results. In
many cases, the accounting treatment of a particular transaction is specifically
dictated by GAAP and does not require management's judgment in its application.
There are also areas in which management's judgment in selecting any available
alternative would not produce a materially different result. The following
discussion should be read in conjunction with our unaudited condensed
consolidated financial statements and notes thereto appearing elsewhere in this
report.
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. Bergio,
is one of the most coveted brands of fine jewelry. Established in 1995, Bergio's
signature innovative design, coupled with extraordinary diamonds and precious
stones, earned the company recognition as a highly sought-after purveyor of rare
and exquisite treasures from around the globe.
It is our intention to establish Bergio as a holding company for the purpose of
establishing retails stores worldwide. Our branded product lines are products
and/or collections designed by our designer and CEO Berge Abajian and will be
the centerpiece of our retail stores. We also intend to complement our own
quality-designed jewelry with other products and our own specially designed
handbags. This is in line with our strategy and belief that a brand name can
create an association with innovation, design and quality which helps add value
to the individual products as well as facilitate the introduction of new
products.
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.
In 2019 we introduced The Silver Fashion Collection ranging in price from $50 to
$1,200. The Company also introduced the Bergio Handbag Collection, manufactured
in Italy with top quality Italian leather ranging in price from $450 to $875,
which are very competitive entry prices.
--------------------------------------------------------------------------------
40
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 $400 to
$200,000. We have manufacturing control over our line as a result of having a
manufacturing facility in New Jersey as well as subcontracts with facilities
located in Italy.
On March 5, 2014, the Company formed a wholly owned subsidiary called Crown
Luxe, Inc. in the State of Delaware ("Crown Luxe"). Crown Lux was established to
operate the Company's first retail store, which was opened in Bergen County, New
Jersey in 2014.
During the fall of 2018, we opened our second retail store at the new Ocean
Resort Casino in Atlantic City, New Jersey. We are also contemplating the
opening of new stores in the future.
On February 10, 2021, Bergio International, Inc. entered into an Acquisition
Agreement with Digital Age Business, Inc., a Florida corporation, ("Digital Age
Business"), pursuant to which the shareholders of Digital Age Business agreed
to sell all of the assets and liabilities of its Aphrodite's business to a
subsidiary of the Company known as Aphrodite's Marketing, Inc., a Wyoming
corporation in exchange for 3,000 Series B Preferred Stock of the Company, which
collectively, shall be convertible at Shareholders' option, at any time, in
whole or in part, into that number of shares of common stock of the Company
which shall equal thirty percent (30%) of the total issued and outstanding
common stock of the Company (as determined at the earlier of (i) the date of
conversion of the Series B Preferred Stock; and (ii) eighteen (18) months
following the Closing). In addition, the Company will provide an additional
$5,000,000 in financing for Aphrodite's Marketing, Inc. We own 51% of
Aphrodite's Marketing, Inc.
On July 1, 2021, we entered into an Agreement and Plan of Merger with
GearBubble, Inc., a Nevada corporation, pursuant to which the shareholders of
GearBubble agreed to sell 100% of the issued and outstanding shares of
GearBubble to a subsidiary of the Company known as GearBubble Tech, Inc., a
Wyoming corporation in exchange for $3,162,000 (the "Cash Purchase Price"),
which shall be paid as follows: a) $2,000,000 (which was paid in cash at
Closing), b) $1,162,000 to be paid in 15 equal installments, and c) 49,000 of
the 100,000 authorized shares of the Merger Sub, such that upon the Closing, 51%
of the Merger Sub shall be owned by the Company, and 49% of the Merger Sub shall
be owned by the GearBubble Shareholders. We own 51% of GearBubble Tech, Inc.
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 are expected to increase 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 Bergio's design expertise and years of experience in the
jewelry industry, we believe we can successfully grow the business.
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 March
2020, was declared a pandemic by the World Health Organization. The ultimate
disruption which may be caused by the outbreak is uncertain; however, it may
result in a material adverse impact on the Company's financial position,
operations and cash flows. Possible areas that may be affected include, but are
not limited to, disruption to the Company's customers and revenue, labor
workforce, unavailability of products and supplies used in operations, and the
decline in value of assets held by the Company, including property and
equipment.
--------------------------------------------------------------------------------
41
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Results of Operations
Overview
Net revenues increased during the nine months ended September 30, 2022 due to
Aphrodite's Marketing and GearBubble Tech acquisition as compared to the nine
months ended September 30, 2021 despite the impact of the current pandemic. Our
retail operations have been impacted by the pandemic. We continue to evaluate
our initiatives. We are expanding our online presence and have been experiencing
positive results, but it is too early to assess the real impact. The Company
continues to position itself for the future with the acquisition of Aphrodite's
Marketing in February 2021 and GearBubble Tech in July 2021 and take advantage
of the Bergio brand in the E-Commerce space as well as establishing a chain of
retail stores worldwide.
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 during the nine months ended September 30, 2022:
·We have converted approximately $1,379,000 including accrued interest of
$77,000 of our convertible notes and loan into equity.
·Raised additional funding from convertible notes and sales of our Series D
Preferred 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 unaudited condensed consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Three Months Ended
September 30, September 30, Increase Percent Increase
2022 2021 (Decrease) (Decrease)
Net revenues $ 1,318,851 $ 2,175,042 $ (856,191) (39.36%)
Total net revenues 1,318,851 2,175,042 856,191 (39.36%)
Cost of revenues 595,063 1,410,873 (815,810) (57.82%)
Gross profit $ 723,788 $ 764,169 $ (40,381) (5.28%)
Gross profit as a % of
sales 54.88% 35.13%
Nine months ended
September 30, September 30, Increase Percent Increase
2022 2021 (Decrease) (Decrease)
Net revenues $ 5,733,883 $ 5,461,676 $ 272,207 4.98%
Net revenues - related
parties 139,716 - 139,716 100%
Total net revenues 5,873,599 5,461,676 411,923 7.54%
Cost of revenues 2,832,043 2,099,129 732,914 34.92%
Gross profit $ 3,041,556 $ 3,362,547 $ (320,991) (9.55%)
Gross profit as a % of
sales 51.78% 61.57%
--------------------------------------------------------------------------------
42
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Revenues
Total net revenues for the three months ended September 30, 2022 including net
revenues - related parties which amounted to $1,318,851 decreased by $856,191 as
compared to $2,137,042. Total net revenues for the nine months ended September
30, 2022 including net revenues - related parties which amounted to $5,873,599
increased by $411,923 as compared to $5,461,676. The decrease in total net
revenues during the three months ended September 30, 2022, was primarily due to
the decrease in revenues of our majority owned subsidiary, Aphrodite's
Marketing, as a result of the decrease in marketing and advertising expenses
through social media, digital marketing, and promotional campaigns. The increase
in total net revenues during the nine months ended September 30, 2022 was
primarily due to the acquisition of GearBubble Tech in July 2021 whereby the
year 2022 current period included nine month revenues of GearBubble Tech as
compared to only three months from the year 2021 prior period.
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 three months ended September 30, 2022
decreased by $815,810 to $595,063 as compared to $1,410,873 as a result of the
decrease in net revenues during the three month period. Cost of revenues for the
nine months ended September 30, 2022 increased by $732,914 to $2,832,043 as
compared to $2,099,129 and was primarily due to the acquisition of GearBubble
Tech in July 2021 whereby the year 2022 current period included nine month of
GearBubble Tech's cost of revenues as compared to only three months from the
year 2021 prior period.
Gross Profit
Gross profit decreased by $40,381 to $723,788 for the three months ended
September 30, 2022 as compared to $764,169 for the nine months ended September
30, 2021. Gross profit decreased by $320,991 to $3,041,556 for the nine months
ended September 30, 2022 as compared to $3,362,547 for the nine months ended
September 30, 2021. The decrease during the three months period was primarily
attributable to the decrease in net revenues as discussed above. The decrease
during the nine months period was primarily attributable to the increase in cost
of revenues as discussed above.
Operating Expenses
Operating expenses decreased by $180,435 to $1,535,076 for the three months
ended September 30, 2022 as compared to $1,715,511 for the three months ended
September 30, 2021. The decrease was primarily attributable to i) decrease in
selling and, marketing expenses of $313,260 primarily attributable to decrease
in advertising and marketing activities through social media, digital marketing,
and promotional campaigns ii) increase professional and consulting expenses of
$220,835 primarily related to increase in consulting and contractor fees related
to increase operations as a result of the acquisition of Aphrodite's Marketing
and GearBubble Tech, iii) increase in compensation and related taxes of $7,277
and iv) decrease in general and administrative expenses of $95,287 due to
decrease in office expenses as a result of cost cutting measures. The overall
decrease in operating expenses reflect the decrease in advertising and marketing
expenses through social media and digital marketing activities.
Operating expenses increased by $284,906 to $5,438,118 for the nine months ended
September 30, 2022 as compared to $5,153,212 for the nine months ended September
30, 2021. The increase was primarily attributable to i) decrease in selling and,
marketing expenses of $659,473 primarily attributable to decrease advertising
and marketing activities through social media, digital marketing, and
promotional campaigns ii) increase professional and consulting expenses of
$824,314 primarily related to increase in consulting and contractor fees related
to increase operations as a result of the acquisition of Aphrodite's Marketing
and GearBubble Tech, iii) increase in compensation and related taxes of $382,766
primarily related to the increase in number of employees as a result of the
acquisition of Aphrodite's Marketing and GearBubble Tech. Additionally, the
Company approved a bonus of $100,000 and recognized stock based compensation of
$150,000 to our CEO for the nine months ended September 30, 2022 and iv)
decrease in general and administrative expenses of $262,701 due to decrease in
depreciation and office expenses as a result of cost cutting measures. The
overall increase in operating expenses reflect the increase in business
operations as a result of the acquisition of Aphrodite's Marketing and
GearBubble Tech.
--------------------------------------------------------------------------------
43
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Loss from Operations
As a result of the above, we had a loss from operation of $811,288 for the three
months ended September 30, 2022 as compared to a loss from operations of
$951,342 for the three months ended September 30, 2021. We had a loss from
operation of $2,396,562 for the nine months ended September 30, 2022 as compared
to a loss from operations of $1,790,665 for the nine months ended September 30,
2021.
Other Income (Expense)
For the three months ended September 30, 2022, the Company had other expense of
$43,867 as compared to other expense of $495,926 for the three months ended
September 30, 2021, a change of $64,848. The decrease in other expenses is
primarily attributed to the decrease in amortization of debt discount and
deferred financing cost of $480,616, decrease in interest expense of $50,318 due
to the repayments of debt, and decrease in derivative expense of $89,735 offset
by increase in change in fair value of derivative liabilities of $138,710.
For the nine months ended September 30, 2022, the Company had other expense of
$722,284 as compared to other expense of $2,054,726 for the nine months ended
September 30, 2021, a decrease of $1,332,442 in other expense. The decrease in
other expense is primarily attributed to the decrease in amortization of debt
discount and deferred financing cost of $748,987, increase in change in fair
value of derivative liabilities of $1,187,055, decrease in derivative expense of
$287,038, offset by decrease in gain from extinguishment of debt of $178,644 and
increase in interest expense of $665,576 from note conversions.
Net Income (Loss) Attributable to Bergio International, Inc.
As a result of the above, we had net loss attributable to Bergio International,
Inc. $581,704 for the three months ended September 30, 2022 as compared to
$963,613 for the three months ended September 30, 2021. As a result of the
above, we had net loss attributable to Bergio International, Inc. $2,146,779 for
the nine months ended September 30, 2022 as compared to $2,984,584 for the nine
months ended September 30, 2021.
Net Loss Available to Bergio International, Inc. Common Stockholders
As a result of the above, we had net loss available to Bergio International,
Inc. common stockholders of $581,704 for the three months ended September 30,
2022 as compared to $963,613 for the three months ended September 30, 2021. As a
result of the above, we had net loss available to Bergio International, Inc.
common stockholders of $3,702,657 for the nine months ended September 30, 2022
as compared to $2,984,584 for the nine months ended September 30, 2021 after the
recognition of deemed dividend of $1,555,878 upon the issuance of the Series D
Preferred Stock.
Liquidity and Capital Resources
The following table summarizes working capital at September 30, 2022, compared
to December 31, 2021:
September 30, December 31, Increase/
2022 2021 (Decrease)
Net revenues $ 3,313,435 $ 4,384,185 $ (1,070,750)
Total net revenues $ 4,230,026 $ 6,748,062 $ (2,518,036)
Gross profit $ (916,591) $ (2,363,877) $ 1,447,286At September 30, 2022 the Company had working capital deficit of $916,591 as
compared to $2,363,877 at December 31, 2021. This decrease in working capital
deficit is primarily attributed to the decrease in liabilities.
During the nine months ended September 30, 2022, the Company's principal sources
and uses of funds were as follows:
Cash used in operating activities: For the nine months ended September 30, 2022,
the Company used $2,175,047 in cash for operations as compared to $2,295,489 in
cash used for operations for the nine months ended September 30, 2021. This
increase in cash used in operations is primarily attributed to net loss of
$2,146,779, amortization expense of $181,467, non-cash interest upon conversion
of debt of $1,025,660, amortization of debt discount and deferred
--------------------------------------------------------------------------------
44
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
financing cost of $475,567, stock based compensation of $213,674, offset by
non-controlling interest of $972,067, change in fair value of derivative
liabilities of $569,108, gain from extinguishment of debt $349,314, and decrease
in changes in operating assets and liabilities of $16,525 primarily attributable
to increase in accounts receivable of $26,998, increase in accrued compensation
- CEO of $319,765, decrease in inventory of $226,252, decrease in accounts
payable and accrued liabilities of $227,296, and decrease in deferred
compensation - CEO $346,163.
For the nine months ended September 30, 2021, the Company used $2,295,489 in
cash for operations. This increase in cash used in operations is primarily
attributed to increase in net loss, increase in depreciation and amortization
expense of $174,434, increase in amortization of debt discount and deferred
financing cost of $1,037,701, increase in derivative expense of $184,056,
increase in change in fair value of derivative liabilities of $896,075, increase
in inventory of 706,869, increase in accounts payable and accrued liabilities of
$363,637 offset by non-controlling interest of $860,807, increase in gain from
extinguishment of debt $304,407 and decrease in prepaid expenses of $363,637.
Cash used in investing activities: For the nine months ended September 30, 2022,
the Company used $0 in cash for investing activities as compared to $886,209 of
cash in investing activities for the nine months ended September 30, 2021 as a
result of cash paid for the acquisition of GearBubble Tech for $2,000,000 and
purchases of property and equipment of $47,685 offset by cash acquired from the
acquisition of GearBubble Tech of $1,161,476.
Cash provided by financing activities: Cash provided by financing activities for
the nine months ended September 30, 2022 was $1,269,094 as compared to
$4,254,782 for the nine months ended September 30, 2021 and was primarily the
result of net proceeds received from convertible notes of $126,250, sale of
preferred stock of $1,555,000, proceeds from loans $1,003,140, proceeds from a
note of $110,000 offset by repayments of loans payable of $776,804, repayment of
secured notes of $400,000, repayment of note of $218,634 and repayment of
advances to CEO of $129,858.
Cash provided by financing activities for the nine months ended September 30,
2021 was $4,254,782 and was primarily the result of increases in funds raised
proceeds from the proceeds from notes payable of $1,788,750, sale of common
stock of $3,768,730, proceeds from loans payable of $373,120, offset by
repayments of loans payable, debt and convertible debt for a total of
$1,675,057.
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 September 30, 2022, principal amounts under
the convertible notes payable was $54,250, net of debt discount of $40,576 at
September 30, 2022.
Notes Payable
The Company has total notes payable of $755,050 classified as current portion
and total notes payable - long term portion of $261,353 at September 30, 2022.
Loans Payable
The Company has loans payable and accrued interest of $1,230,392 at September
30, 2022.
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
$18,182,991 as of September 30, 2022. As of September 30, 2022, the Company has
principal amounts of convertible notes of $54,250, notes payable (current and
long-term portion) of $1,016,403 and loans payable of $1,230,392. These factors
raise substantial doubt about the
--------------------------------------------------------------------------------
45
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Company's ability to continue as a going concern. The recoverability of a major
portion of the recorded asset amounts shown in the accompanying unaudited
condensed consolidated balance sheet is dependent upon continued operations of
the Company, which in turn, is dependent upon the Company's ability to raise
capital and/or generate positive cash flows from operations.
These unaudited condensed 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.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, results or
operations, liquidity, capital expenditures or capital resources that is deemed
material.
Critical Accounting Policies
Our critical accounting policies are described in Management's Discussion and
Analysis of Financial Condition and Results of Operations included in our Annual
Report. There have been no changes in our critical accounting policies. Our
significant accounting policies are described in our notes to the consolidated
financial statements for the year ended December 31, 2021 which is included in
our Annual Report.
© Edgar Online, source Glimpses
BERGIO INTERNATIONAL, INC. 
