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, 2020, filed with the SEC on March 18, 2021, 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 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.
When designer and CEO, Berge Abajian, creates a collection, he looks well beyond
the drawing board. Berge focuses on the woman who will ultimately wear his
pieces, bringing to creation a magnificent piece of jewelry that reflects the
beauty and vitality a woman possesses. Bergio creations are a seamless blend of
classic elegance and subtle flair, adding to a woman's charm while never
overpowering her.
It is our intention to establish Bergio as a holding company for the purpose of
establishing retails stores worldwide & acquisitions. 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.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Plan of Operation (continued)
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 $3 million in branding the Bergio name through tradeshows,
trade advertising, national advertising and billboard advertising since
launching the line in 1995. 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 February 10,2021 we acquired 51% of Aphrodite's an e-commerce company that
sold $9,700,000.00 in 2020, this acquisition was essential to move the company
into the e-commerce space also it will assist to launch Bergio fine online
website to compete with all other jewelry e-commerce companies
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.
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 the fourth quarter of 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 future.
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. On May 6,2021 we signed a binding letter of intent to acquire 51% of
Gear Bubble, in four and half years Gear bubble processed over $ 130 Million in
sales and generated $27 Million in revenue in 2020. Other negotiations are in
progress they will be announced once they materialize. Once Gear Bubble is
completed and with the acquisition of Aphrodite's Bergio is moving into a
different level of revenues in which it will secure and fund our future
expansion. We are on our way to be self-funded and become profitable.
The Company's operations have been affected by the recent and ongoing outbreak
of the coronavirus disease 2019 (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, including a significant disruption in
consumer demand and accessories, labor workforce, inability of customers to pay
outstanding accounts receivable due and owing to the Company as they limit or
shut down their businesses, customers seeking relief or extended payment plans
relating to accounts receivable due and owing to the Company, unavailability of
products and supplies used in operations, and the decline in value of assets
held by the Company, including property and equipment. As such, the
comparability of the Company's operating results has been affected by
significant adverse impacts related to the COVID-19 pandemic.
The Company has increased its online presence with the 2 acquisitions to
minimize the impact of having to close its retail stores as well as directing
efforts towards its wholesale operations.
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.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Plan of Operation (continued)
We also intend to sell our products on a wholesale basis to limited customers.
We have spent over $3 million in branding the Bergio name through tradeshows,
trade advertising, national advertising and billboard advertising since
launching the line in 1995. 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.
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.
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 the fourth quarter of 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 future.
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 operations have been affected by the recent and ongoing outbreak
of the coronavirus disease 2019 (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, including a significant disruption in
consumer demand and accessories, labor workforce, inability of customers to pay
outstanding accounts receivable due and owing to the Company as they limit or
shut down their businesses, customers seeking relief or extended payment plans
relating to accounts receivable due and owing to the Company, unavailability of
products and supplies used in operations, and the decline in value of assets
held by the Company, including property and equipment. As such, the
comparability of the Company's operating results has been affected by
significant adverse impacts related to the COVID-19 pandemic.
The Company has increased its online presence to minimize the impact of having
to close its retail stores as well as directing efforts towards its wholesale
operations.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations
Overview
Sales were robust for the quarter ended March 31, 2021 due to Aphrodite's
acquisition as compared to the same quarter last year 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 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 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 continue to be excited about our
store in Atlantic City, NJ. Our initial store in northern New Jersey has not
done as well as we had hoped and the wholesale market has also not been
favorable but with the addition of our online presence it has helped the company
to reach a favorable balance. The Company has leveraged itself such that as
sales increase a larger portion of dollars will flow to the bottom line.
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 negotiated some of our convertible debt.
·Pursuant to a Settlement Agreement, Livingston Asset Management acquired
$362,285 (the "Claim Amount") of Company liabilities from certain creditors. In
satisfaction of the Claim Amount, the Company agreed to issue shares of the
Company's common stock in one or more tranches to Livingston in the manner
contemplated in the Settlement Agreement and Stipulation Agreement. The effect
of this will be to convert debt to equity.
·Filed a S-1 registration statement with the SEC. The Company has received
limited proceeds from this offering.
·Raised additional funding from loans.
These events have allowed us to reduce our debt, provided limited funding for
operations, and funding for the Aphrodite's . 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.
Sales
Three Months Ended
Increase Percent Increase
March 31, 2021 March 31, 2020 (Decrease) (Decrease)
Sales, net $ 1,149,314 $ 75,393 $ 1,073,921 153%
Gross profit $839,148 $ 49,087 $ 790,061 171%
Gross profit as a % of
sales 73% 65%
Net sales for the three months ended March 31, 2021 increased $1,073,921 (153%)
to $1,149,314 as compared to $75,393. This robust increase is the result of the
acquisition of Aphrodite's which expanded the selling opportunities
internationally and nationwide thru out the US. We were able to minimize the
impact of the effect on our retail stores by our efforts on our wholesale and
expanding our online presence, but it is too early to assess the real impact.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations (continued)
Gross Profit
Gross profit increased $790,061 (171%) to $839,148 for the three months ended
March 31, 2021 as compared to $49,087 for the three months ended March 31, 2020.
This increase primarily is a result of turning the company vertical.
Selling, General & Administrative Expenses
Total selling, general and administrative expenses increased $976,127 (528%) to
$1,204,230 for the three months ended March 31, 2021 as compared to $228,103 for
the three months ended March 31, 2020. This increase is due to the acquisition
cost and advertising and other costs associated with Aphrodite's Marketing.
Income (Loss) from Operations
As a result of the above, we had a loss from operation of $365,082 for the three
months ended March 31, 2021 as compared to a loss from operations of $179,016
from the same period last year.
Other Expense
For the three months ended March 31, 2021, the Company had other expense of
$112,510 as compared to other expense of $1,291,885 for the three months ended
March 31, 2020. This increase is primarily attributed to change in fair value of
derivatives.
Net Income (Loss)
As a result of the above, we had net loss $477,592 for the three months ended
March 31, 2021 as compared to net loss of $1,470,901 for the three months ended
March 31, 2020.
Liquidity and Capital Resources
The following table summarizes working capital at March 31, 2021, compared to
December 31, 2020:
Increase/
March 31, 2021 December 31, 2020 (Decrease)
Current Assets $ 3,610,224 $ 1,321,632 $ 2,288,592
Current Liabilities $ 5,579,698 $ 1,106,318 $ (4,473,380)
Working Capital $ (1,969,474) $ 215,314 $ (2,184,788)
At March 3, 2021 the Company had negative working capital of $1,969,474 as
compared to positive working capital of $215,314 at December 31, 2020. This
decrease in working capital is primarily attributed to the increase in
liabilities s a result of the Aphrodite's transaction. The Company believes it
will work down this debt as a result of improved operations.
During the three months ended March 31, 2021, the Company's principal sources
and uses of funds were as follows:
Cash used in operating activities: For the three months ended March 31, 2021,
the Company used $251,308 in cash for operations as compared to using $11,201 in
cash for operations for the three months ended March 31, 2020. This increase in
cash used in operations is primarily attributed to increase in loss from
operations, increase in accounts receivable and inventories partially offset by
the decrease in prepaid expenses and other current assets.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources (continued)
Cash (used in) provided by investing activities: For the three months ended
March 31, 2021, the Company used $40,169 in cash for investing activities as
compared to using $-0- of cash in investing activities for the three months
ended March 31, 2020 as a as a result of purchases of capital assets.
Cash provided by(used in) financing activities: Net provided by financing
activities for the three months ended March 31, 2021 was $1,122,516 as compared
to using $11,580 for the three months ended March 31, 2020. This increase is
primarily the result of increases in funds raised proceeds from the proceeds
from loans payable, sale of common stock offset partially by an increase in
repayments of loans payable, debt and convertible debt.
Our indebtedness is comprised of loans payable, convertible debt, 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 Debt
From time to time the Company enters into certain financing agreements for
convertible debt. For the most part, the Company settles these obligations with
the Company's common stock. As of March 31, 2021, total convertible debt was
$1,015,568, net of debt discount of $718,181 at March 31, 2021
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
$12,286,127 as of March 31, 2021. As of March 31, 2021, the Company had
$1,015,568 in convertible debentures and $1,801,084 in loans payable. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. The recoverability of a major portion of the recorded asset
amounts shown in the accompanying 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.
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. The Company has also increased its online presence to minimize
the impact of having to close its retail stores as well as directing efforts
towards its wholesale operations. The newly formed company, of which Bergio owns
51%, will greatly enhance our online presence and provide the opportunity for
future growth.
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.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources (continued)
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.
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 2020
consolidated financial statements included in our Annual Report.
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BERGIO INTERNATIONAL, INC. 
