UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ______

000-55735

(Commission file number)

VERONI BRANDS CORP.

(Exact name of registrant as specified in its charter)

Delaware		81-4664596
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2275 Half Day Rd. Suite 346, Bannockburn, IL 60015

(Address of principal executive offices) (Zip Code)

(888) 794-2999

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class		Trading Symbol(s)		Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~December 1716, 2022, there were 28,~~416~~550,028 shares outstanding of the registrant’s common stock.

VERONI BRANDS CORP.

FORM 10-Q

FOR THE QUARTER ENDED

~~June~~September 30, 2022

INDEX

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:	F-1

	Balance Sheets (Unaudited)	F-1

	Statements of Operations (Unaudited)	F-2

	Statement of Changes in Stockholders’ Equity (Unaudited)	F-3

	Statements of Cash Flows (Unaudited)	F-4

	Notes to Unaudited Financial Statements	F-5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	7

Item 4.	Controls and Procedures	7

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	9

Item 1A.	Risk Factors	9

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9

Item 3.	Defaults Upon Senior Securities	9

Item 4.	Mine Safety Disclosures	9

Item 5.	Other Information	9

Item 6.	Exhibits	9

SIGNATURES		10

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Veroni Brands, Corp.

BALANCE SHEETS

~~June~~September 30, 2022 and December 31, 2021

	2022			2021
ASSETS		Unaudited
	Unaudited
ASSETS
Current Assets
Cash & equivalents	$	~~18,732~~317		$	4,091
Accounts Receivable, net allowance for doubtful accounts of $9,816 and $0, respectively		10,419			9,941
Accounts Receivable, net allowance for doubtful accounts of $0 and $0, respectively		-			9,941
Contract Receivables with recourse		-			48,125
Inventory		-			7,724
Prepaid expenses and other current assets		8929,~~194~~120			103,369
Total Current Assets		~~118~~29,~~345~~437			173,250
Other Assets
Deposits		9,310			9,310
Right-of-use asset-operating, net		-			19,163
Total Other Assets		9,310			28,473
Total Assets	$	~~127~~38,~~655~~747		$	201,723
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable	$	5564,~~769~~411		$	98,776
Accounts payable related party		~~580~~570,701			606,580
Contract receivables liability with recourse		~~454~~-			39,897
Accrued liabilities		~~209~~206,~~081~~581			148,174
Paycheck protection loans (PPP)		963			14,977
Contract liabilities		~~2,300~~-			8,800
Due to related party		~~112~~25,~~200~~170			-
Short-Term lease liability-operating		-			15,134
Total Current Liabilities		~~961~~867,~~468~~826			932,338
Long-term Liabilities
Economic injury disaster loan (EIDL)		150,000			150,000
Total Long-Term Liabilities		150,000			150,000
Total Liabilities		1,~~111~~017,~~468~~826			1,082,338
STOCKHOLDERS’ DEFICIT
Preferred Stock, $0.0001 par value; 20,000,000 shares authorized; none outstanding as of June 30, 2022 and December 31, 2021		-			-
Preferred Stock, $0.0001 par value; 20,000,000 shares authorized; none outstanding as of September 30, 2022 and December 31, 2021		-			-
Common Stock, $0.0001 par value; 100,000,000 shares authorized; 28,416,029 and 27,382,029 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		2,842			2,739
Common Stock, $0.0001 par value; 100,000,000 shares authorized; 28,416,028 and 27,382,029 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		2,842			2,739
Additional paid-in capital		2,~~099~~492,~~219~~969			1,209,320
ACCUMULATED DEFICIT		(3,~~085~~474,~~874~~890	)		(2,092,674	)
Total Stockholders’ Deficit		(~~983~~979,~~813~~079	)		(880,615	)
Total Liabilities and Stockholders’ Deficit	$	~~127~~38,~~655~~747		$	201,723

The accompanying notes are an integral part of these financial statements

F-1

Veroni Brands, Corp.

STATEMENTS OF OPERATIONS

For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021

Unaudited

	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
	For the three months ended						For the nine months ended
	For the three months ended						For the six months ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Revenue, net	$	112,924		$	783,343		$	272,576		$	3,266,702
Revenue, net	$	10,988		$	1,585,183		$	159,652		$	2,483,359
Cost of sales, related party		71,242			398,132			191,913			2,253,656
Cost of sales, related party		25,529			1,226,013			120,671			1,855,524
Cost of sales		-			7,773			-			23,065
Cost of sales		-			14,752			-			15,292
Total cost of sales		71,242			405,905			191,913			2,276,721
Total cost of sales		25,529			1,240,765			120,671			1,870,816
Gross profit		41,682			377,438			80,663			989,981
Gross profit		(14,541	)		344,418			38,981			612,543
Warehouse and selling expenses		5,956			104,723			27,876			274,522
Warehouse and selling expenses		1,408			110,011			21,920			169,799
General and administrative expenses		423,163			501,586			1,436,384			1,050,786
General and administrative expenses		450,186			255,983			1,013,221			549,200
Total operating expenses		429,119			606,309			1,464,260			1,325,308
Total operating expenses		451,594			365,994			1,035,141			718,999
Net income (loss) from operations		(387,437	)		(228,871	)		(1,383,597	)		(335,327	)
Net income (loss) from operations		(466,135	)		(21,576	)		(996,160	)		(106,456	)
Other income (expense)
Interest expense		(~~294~~1,579	)		(~~3,504~~731	)		(35,~~484~~063	)		(34,~~504~~235	)
Interest expense - related party		~~(2,002~~-	)		-			(2,002	)		-
Other income (expense)		~~8,446~~-			-1,004			8,446			~~500~~1,504
Total other income		6(1,~~150~~579	)		~~(3,504~~273	)		21,~~960~~381			(32,~~004~~731	)
Income (loss) before income taxes		(~~459~~389,~~985~~016	)		(25228,~~080~~598	)		(~~993~~1,~~200~~382,216	)		(~~109~~338,~~460~~058	)
Income taxes		-			-			-			-
Net income (loss)	$	(~~459~~389,~~985~~016	)	$	(25228,~~080~~598	)	$	(~~993~~1,~~200~~382,216	)	$	(~~109~~338,~~460~~058	)
Net income (loss) per share:
Basic and diluted		-*			-*		$	(0.0405	)		-*
Weighted average shares outstanding:
Basic and diluted		2728,~~062~~416,~~042~~028			27,112,029			2728,~~962~~237,~~028~~867			27,~~103~~106,~~475~~130

*	less then $.01 per share

The accompanying notes are an integral part of these financial statements

F-2

Veroni Brands, Corp.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the ~~six~~nine months ended ~~June~~September 30, 2022

Unaudited

										Additional					Total
									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance, December 31, 2021		-	$	-		27,382,029	$	2,739	$	1,209,320	$	(2,092,674	)	$	(880,615	)
Issuance of common stock for services - related party		-		-		900,000		90		393,660		-			393,750
Net loss for the three months ending March 31, 2022		-		-		-		-		-		(533,215	)		(533,215	)
Balance, March 31, 2022		-	$	-		28,282,029	$	2,829	$	1,602,980	$	(2,625,889	)	$	(1,020,080	)
Issuance of common stock for cash		-		-		134,000		13		100,487		-			100,500
Issuance of common stock for services - related party		-		-						393,750		-			393,750
Accrued interest - related party										2,002					2,002
Net loss for the six months ending June 30, 2022												(459,985	)		(459,985	)
Net loss for the three months ending June 30, 2022												(459,985	)		(459,985	)
Balance , June 30, 2022		-	$	-		28,416,029	$	2,842	$	2,099,219	$	(3,085,874	)	$	(983,813	)
Issuance of common stock for services - related party		-		-						393,750		-			393,750
Net loss for the three months ending September 30, 2022		-		-		-		-		-		(389,016	)		(389,016	)
Balance , September 30, 2022		-	$	-		28,416,029	$	2,842	$	2,492,969	$	(3,474,890	)	$	(979,079	)

Veroni Brands, Corp.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the ~~six~~nine months ended ~~June~~September 30, 2021

Unaudited

									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance, December 31, 2020		-		-		27,085,029	$	2,709	$	959,600	$	(1,386,108	)	$	(423,799	)
Issuance of common stock for services		-		-		27,000		3		47,247		-			47,250
Net loss for the three months ending March 31, 2021		-		-		-		-		-		(84,380	)		(84,380	)
Balance, March 31, 2021		-	$	-		27,112,029	$	2,712	$	1,006,847	$	(1,470,488	)	$	(460,929	)
Beginning balance, value		-	$	-		27,112,029	$	2,712	$	1,006,847	$	(1,470,488	)	$	(460,929	)
Net loss for the three months ending June 30, 2021		-		-		-		-		-		(25,080	)		(25,080	)
Balance , June 30, 2021		-	$	-		27,112,029	$	2,712	$	1,006,847	$	(1,495,568	)	$	(~~460~~486,~~929~~009	)
Ending balance, value		-	$	-		27,112,029	$	2,712	$	1,006,847	$	(1,495,568	)	$	(460,929	)
Balance balance, value		-	$	-		27,112,029	$	2,712	$	1,006,847	$	(1,495,568	)	$	(486,009	)
Net loss for the three months ending September 30, 2021		-		-		-		-		-		(228,598	)		(228,598	)
Balance , September 30, 2021		-	$	-		27,112,029	$	2,712	$	1,006,847	$	(1,724,166	)	$	(714,607	)
Ending balance, value		-	$	-		27,112,029	$	2,712	$	1,006,847	$	(1,724,166	)	$	(714,607	)

The accompanying notes are an integral part of these financial statements

F-3

Veroni Brands, Corp.

STATEMENTS OF CASH FLOW

For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021

Unaudited

	2022			2021
Cash flow from operating activities:
Net Loss	$	(~~993~~1,~~200~~382,216	)	$	(~~109~~338,~~460~~058	)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for service		~~787~~1,~~500~~181,250			47,250
Accrued interest - related party		2,002			-
PPP loan forgiveness		(14,014	)		-
Bad debt expense					250,427
Changes in:
Trade accounts receivable		~~(10~~9,~~294~~941	)		(~~311~~477,~~319~~812	)
Allowance for doubtful accounts		9,816			-
Contract receivables		48,125			677,016
Contract receivables		48,125			(434,162	)
Prepaid expenses and other current assets		74,249			(74,885	)
Prepaid expenses and other current assets		14,175			2,211
Inventory		7,724			256,666
Inventory		7,724			(1,582	)
Accounts payable		(34,365	)		52,334
Accounts payable		(43,007	)		38,787
Accounts payable related party		(35,879	)		48,609
Accounts payable related party		(25,879	)		127,544
Accrued liabilities		58,407			35,996
Accrued liabilities		60,907			59,822
Contract liabilities		(8,800	)		(37,100	)
Contract liabilities		(6,500	)		92,300
ROU asset/liability		4,029			(1,036	)
ROU asset/liability		4,029			(691	)
Net cash used in operating activities		(75,533	)		439,407
Net cash used in operating activities		(158,616	)		(489,300	)
Cash flows from financing activities:
Proceeds of notes payable-related party		~~112~~25,~~200~~170			-
Proceeds from issuance of common stock		100,500
Proceeds from (repayment of) contract receivables with recourse		(39,~~443~~897	)		~~463~~(547,~~354~~170	)
Net cash provided by financing activities		173,257			463,354
Payments on PPP loan		(14,014	)		-
Net change in cash		14,641			(25,946	)
Net cash provided by financing activities		71,759			(547,170	)
Net change in cash		(3,774	)		(107,763	)
Cash at the beginning of the year		4,091			116,730
Cash at the end of the period	$	~~18,732~~317		$	908,~~784~~967
Supplemental disclosure of cash flow information:
Cash paid for:
Interest	$	35,~~484~~063		$	-
Non-cash investing and financing activities
Conversion of promissory note debt discount	$	-		$	-

The accompanying notes are an integral part of these financial statements

F-4

VERONI BRANDS CORP.

Notes to Financial Statements

~~June~~September 30, 2022 and 2021

Note 1 - Nature of Operations and Financial Condition

Veroni Brands Corp. (the “Company”) was incorporated on December 7, 2016 under the laws of the state of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisition.

The Company has been formed to acquire, operate, develop, grow and import premium European products into the U.S. market. Veroni Brands was created to search out desirable premium products across Europe and make them accessible to discerning consumers in the U.S. Veroni Brands strives to import the extraordinary and delight its consumers with experiences that had previously only been attainable in Europe. In January 2018, the Company became an exclusive importer and distributor of “Iron Energy” by Mike Tyson. The beverage became available to consumers in select Chicago area markets in May 2018 in three different flavors such as “Mojito,” “Zero Sugar” and “Original.” During 2019, the Company built the distribution of the Iron Energy product nationwide. Beginning in February 2019, the Company expanded its import and distribution network with the distribution of chocolate products and significantly grew its sales and distribution volumes. The Company entered into long term supply agreements with major U.S national retailers to import chocolate products under “Private Label Brands” that are currently being sold in over 20,000 retail locations across the U.S. The Company takes pride in the variety of consumer products it imports and is proud to share them with its consumers nationwide. The Company’s recent expansion of the import and distribution of snacks, chocolate and chocolate related products that are currently being sold to U.S. national retailers presents the Company with a substantial growth opportunity to introduce to its retail partners to many other consumer products and to increase its network of retailers.

Going Concern

The Company has generated revenue this year of approximately $~~159~~272,~~652~~576 and incurred a net loss of $~~993~~1,~~200 for~~382,216 for the ~~six~~nine months ending ~~June~~September 30, 2022 and has an accumulated deficit of $3,~~085~~474,~~874~~890 since its inception. As of ~~June~~September 30, 2022, the Company had a cash balance available of approximately $~~18,732~~-0- and working capital of ($~~843~~838,~~123~~389) which is not sufficient to meet its operating requirements for the next twelve months. Therefore, the Company’s ability to continue as a going concern is dependent on its ability to grow its revenue and generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its shareholders or other sources, as may be required.

In addition to importing products from ZWC Millano, the Company has recently established relationships with other European manufacturers that can manufacture wide range of “panned” products, meaning those that are coated with a sugar syrup and/or chocolate, such as nuts, raisin, pretzels, fruits and many other “panned” and healthy snacks items as well as chocolate bars, multi-flavor truffles, sticks, chocolate cups, 5-bites, chocolate covered gummies, chocolate Easter eggs, custom Christmas chocolate figures as well as Advent calendars and many other products to support demand of the Company’s national retailers.

The Company is continuing to evaluate various financing options in order to continue the funding of the expansion of its operations, the products being offered and its customer base.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

F-5

VERONI BRANDS CORP.

Notes to Financial Statements

~~June~~September 30, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies

Reclassifications

Certain reclassifications have been made in the 2021 financial statements to conform to the 2022 presentation. These reclassifications have no effect on net loss for 2022.

Advertising

The Company’s policy is to expense advertising costs as incurred. Advertising expense for the ~~six~~nine months ending ~~June~~September 30, 2022 and 2021 is $0 and $550, respectively.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the carrying amount of inventory and associated reserves, and allowances and reserves in regards to receivables and revenue. Actual results could differ from those estimates.

Revenue Recognition

The Company’s significant accounting policy for revenue was updated as a result of the adoption of ASU Topic 606. The Company has adopted the new standard on January 1, 2019 and has used the modified retrospective method. The majority of the Company’s business is ship and bill. Based on our analysis, the Company did not identify a cumulative effect adjustment to retained earnings at December 31, 2018. The Company recognizes revenue in accordance with the five-step model as prescribed by ASU 606 in which the Company evaluates the transfer of promised goods or services and recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASU 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. See Note 12 for revenue disaggregated by product line.

The Company recognizes revenue from the sale of products when title and risk of loss passes and the customer accepts the goods, which generally occurs at the time of delivery to a customer warehouse. Customer sales incentives such as volume-based rebates or discounts are treated as a reduction of sales at the time the sale is recognized. Shipping and handling costs are treated as fulfillment costs and presented in warehouse and selling expenses.

Payments that are received before performance obligations are recorded are shown as current liabilities.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less.

Shipping Costs

Costs associated with shipping product to customers aggregating approximately $2124,~~546~~204 and $95197,~~290~~367 for the ~~six~~nine months ending ~~June~~September 30, 2022 and 2021, respectively, is included in warehouse and selling expenses.

F-6

VERONI BRANDS CORP.

Notes to Financial Statements

~~June~~September 30, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies (Continued)

Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation limit as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

Accounts Receivable and Concentration of Credit Risk

Accounts receivable are recorded at the invoiced amounts less an allowance for doubtful accounts. The allowance for doubtful accounts is based on the Company’s estimate of the amount of probable credit losses in its accounts receivable. The Company determines the allowance for doubtful accounts based upon an aging of accounts receivable, historical experience and management judgment. Accounts receivable balances are periodically reviewed for collectability, and balances are charged off against the allowance when the Company determines that the potential for recovery is remote. An allowance for doubtful accounts of approximately $~~9,816~~-0- and $-0- is reserved as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

We are exposed to credit risk in the normal course of business, primarily related to accounts receivable. To limit credit risk, management periodically reviews and evaluates the financial condition of its customers and maintains an allowance for doubtful accounts. For the ~~six~~nine months ended ~~June~~September 30, ~~2022, we had two customers who comprised approximately 100% or $10,419 of our accounts receivable. For the six months ended June 30,~~ 2021, we had one customer who comprised approximately 9596% or $1112,~~165,360~~729 of our contract receivables with ~~recourse~~ recourse and two customers who comprised approximately 5762% or $~~187~~449,~~435~~587 of our accounts receivable.

For the ~~six~~nine months ended ~~June~~September 30, 2022, we had ~~one~~two ~~customer~~customers with sales in excess of 10% of our revenue and they represented 9499% of our revenue. For the ~~six~~nine months ended ~~June~~September 30, 2021, we had ~~two~~three customers with sales in excess of 10% of our revenue and they represented 8079% of our revenue.

Distribution Agreements and Supplier Concentration

At the beginning of 2019, the Company established relationships with other European manufacturers that can manufacture a wide range of “panned” products such as nuts, raisin, pretzels, fruits and many other “panned” and healthy snacks items, as well as chocolate bars, multi-flavor truffles, sticks, chocolate cups, 5-bites, chocolate covered gummies, chocolate Easter eggs, custom Christmas chocolate figures as well as Advent calendars and many other products to support demand from the Company’s national retailers.

Vendor Concentration

Currently, the Company is sourcing all its chocolate products and snacks from the Millano Group, a related party. The Company has not entered into a distributor agreement but is currently negotiating an agreement with Millano Group. The Company, due to relationships with other European manufacturers could find other sources to replace its chocolate and snack products if the Company were to terminate Millano Group as it’s suppler for chocolate products. Total purchases for the ~~six~~nine months ending ~~June~~September 30, 2022 and 2021 were approximately $62191,~~573~~ 913 and $12,~~614~~253,~~805~~656, respectively which represents 100% and ~~100~~98% of product purchases, respectively.

Income Taxes

Under ASC 740, Income Taxes, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of ~~June~~September 30, 2022 and 2021, there were no net deferred tax assets, as the ~~Company~~ Company established a 100% valuation allowance, due to the uncertainty of the realization of net operating loss carryforwards prior to ~~their~~ their expiration.

F-7

VERONI BRANDS CORP.

Notes to Financial Statements

~~June~~September 30, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies (Continued)

Loss Per Common Share

Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. As of ~~June~~September 30, 2022 and 2021, there are no outstanding dilutive securities.

Fair Value of Financial Instruments

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents and accounts payable approximate their fair values at ~~June~~September 30, 2022 and 2021 due to their short-term nature and management’s belief that their carrying amounts approximate the amount for which the assets could be sold or the liabilities could be settled.

Share-Based Compensation

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity–Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date. In June 2018, the Financial Accounting Standards Board adopted Accounting Standards Update 2018-07 Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. In that update, ASC 505 has been rescinded in its entirety and share based compensation issued to nonemployees will now fall under ASC 718 and its associated fair value measurements. Due to the Emerging Growth Company (see below) status of the Company, the Company has adopted the update on January 1, 2020.

Emerging Growth Company

The Company has elected to be an emerging growth company as defined under the Jumpstart Our Business Startups Act of 2012 (“Jobs Act”). Included with this election, the Company has also elected to use the provisions within the Jobs Act that allow companies that go public to continue to use the private company adoption date rules for new accounting policies. Should the Company obtain revenues in excess of $1 billion on an annual basis, have its non-affiliated market capitalization increase to over $700 million as of the last day of its second quarter, or raise in excess of $1 billion in public offerings of its equity or instruments directly convertible into its equity, it will forfeit its status under the Jobs Act as an emerging growth company.

F-8

VERONI BRANDS CORP.

Notes to Financial Statements

~~June~~September 30, 2022 and 2021

Note 2 – Summary of Significant Accounting Policies (Continued)

Emerging Growth Company

Note 3 – Inventory

Finished Goods inventory consist of “Iron Energy” energy drinks, chocolates, and related products imported from Poland and is stated at the lower of actual cost (first-in, first-out method) or net realizable value. Inventory cost includes all freight (ocean, air and truck) costs to the warehouse, import duties, regulatory and miscellaneous fees. Inventory is as follows:

Schedule of Inventory

	June 30, 2022		December 31, 2021
	September 30, 2022		December 31, 2021
Finished goods – in warehouse	$	-	$	7,724

Note 4 – Prepaid Expenses

Prepaid inventory

The Company’s foreign suppliers will generally require that the Company pay in advance of an inventory shipment to it from Europe. The Company’s current agreement with FoodCare includes provisions in which title for the inventory passes upon FoodCare loading the product onto truck transport for delivery to the seaport in Poland. Amounts transferred to the Company’s suppliers to secure future delivery, but prior to transfer of title of those shipments, are recorded as prepaid inventory and are included in prepaid expenses and other current assets.

Schedule of Prepaid Expenses

	June 30, 2022		December 31, 2021
	September 30, 2022		December 31, 2021
Prepaid packaging	$	2629,~~621~~120	$	28,318
Prepaid inventory		~~62,573~~-		75,051
Total prepaid expenses	$	8929,~~194~~120	$	103,369

Note 5 – Notes Payable Other

Under the Small Business Administration (“SBA”), the Company applied for the Paycheck Protection Program (“PPP”) loan. These loans are forgiven if used for payroll, payroll benefits, including health insurance and retirement plans, as well as certain rent payments, leases, and utility payments, which are limited to 40% of the loan proceeds, all of which if paid within either 8 weeks or 24 weeks of the receipt of the loan proceeds. The SBA forgave $38,550 of principal and $558 of interest on May 1, 2021. The unforgiven portion will be repaid over 6 months with a maturity date of May 4, 2022 at an interest rate of 1% per annum. The PPP loan has a loan balance of $963 and $14,977 as ~~June~~September 30, 2022 and December 31, 2021, respectively.

F-9

VERONI BRANDS CORP.

Notes to Financial Statements

June 30, 2022 and 2021

Note 6 – Contract Receivables Liability with Recourse

On February 21, 2019, the Company entered into a factoring agreement with Advance Business Capital d/b/a Interstate Capital for a term of one year. On September 11, 2019, the lender (now doing business as Triumph Business Capital), entered into an amended agreement with the Company which lowered the interest rate charged by the lender from 0.49% for every 10 days to Prime Rate (floor of 5.5%) plus 3%. As of ~~June~~September 30, 2022 and 2021 the Company owes $~~454~~0 and $139,~~112~~897,~~856,~~ respectively for advances on their receivables. The Company bears all credit risk related to the receivables factored. The Company has given a security interest in substantially all of its assets and the president of the Company, a major shareholder, have guaranteed the debt.

Note 7 – Long Term Debt

On August 27, 2020 the Company received an Economic Injury Disaster Loan (EIDL) from the U.S. Small Business Administration SBA) in the amount of $150,000. The interest rate is 3.75% with payments of $731 beginning twelve month from the date of the loan. Interest is accrued monthly and payments are first applied to interest accrued to the date of receipt of payment and the balance, if any, will be applied to the principal. The balance of principal and interest is due 8/27/2050. As of ~~June~~September 30, 2022 the Company owes $150,000.

The maturity of the EIDL loan as of ~~December~~September 3130, ~~2021~~2022 is as follows:

			1
2022	$	512
2022		$	-
2023		2,888
2023			2,181
2024		2,998
2024			3,285
2025		3,112
2025			3,410
2026		3,231
2026			3,540
Thereafter		137,259
Thereafter			137,584
Long term debt	$	150,000
Long term debt		$	150,000

F-9

VERONI BRANDS CORP.

Notes to Financial Statements

September 30, 2022 and 2021

Note 8 – Stockholders’ Equity

The Board of Directors is authorized to issue preferred stock by series that will establish the number of shares to be included and fix the designation, powers, preferences and rights of the shares each such series and the qualifications, limitations or restrictions thereof. At December 31, 2021, the Company has not established any series of preferred stock.

The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock.

From January 1 to ~~June~~September 30, 2022 the Company issued 900,000 shares of common stock to its chief executive officer Igor Gabal for FY 2022, in lieu of a reduction of Igor’s salary for FY 2022, 900,000 shares were issued as of February 1, 2022. Per employment agreement a total of $1,575,000 in stock compensation will be expense through the year. As of ~~June~~September 30, 2022, $~~787~~1,~~500~~181,250 has been ~~expensed~~ expensed as stock compensation.

From January 1 to ~~June~~September 30, 2022 the Company ~~issued~~sold 134,000 shares of common stock at $0.75 per share for athe total cash consideration of $100,500.

From January 1 to ~~June~~September 30, 2021 the Company issued 27,000 shares of common stock in consideration of services of $47,250.

At ~~December~~September 3130, ~~2021~~2022, the Company has no outstanding options or warrants.

F-10

VERONI BRANDS CORP.

Notes to Financial Statements

June 30, 2022 and 2021

Note 9 –Related Party Transactions

During the first ~~six~~nine months of 2022, a shareholder lent the company $~~127~~142,200 of which $15117,~~000~~030 was paid back. At ~~June~~September 30, 2022 and December 31, 2021 the related party balances were as follows:

Schedule of Related Party Transaction

	June 30, 2022		December 31, 2021
	September 30, 2022		December 31, 2021
Due to officer	$	~~112~~25,~~200~~170	$	-
Total related party	$	~~112~~25,~~200~~170	$	-

The Company ishas been purchasing all of its chocolate products from Millano Group, a related party (controlled by the father of a major shareholder), and owed $~~580~~570,701 and $~~910~~606,~~961~~580 at ~~June~~September 30, 2022 and 2021, respectively. The balance is reflected in accounts payable related party.

Note 10– Revenue

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company had ~~one~~two ~~customer~~customers whose sales accounted for approximately ~~100~~99% of revenue.

The following table presents revenues by product line for the ~~six~~nine months ended ~~June~~September 30:

Schedule of Revenue by Product Line

	2022	~~2022~~		2021	~~2021~~
Chocolate	$	$272,576	~~159,652~~	$	$3,266,702	~~2,483,358~~
Totals	$	$272,576	~~159,652~~	$	$3,266,702	~~2,483,359~~

F-10

VERONI BRANDS CORP.

Notes to Financial Statements

September 30, 2022 and 2021

Note 11– Commitments and Contingencies

The Company’s operations are subject to the Federal Food, Drug and Cosmetic Act; the Bioterrorism Act; and regulations created by the U.S. Food and Drug Administration (“FDA”). The FDA regulates manufacturing and holding requirements for foods, specifies the standards of identity for certain foods and prescribes the format and content of certain information that must appear on food product labels. In addition, the published applicable rules under the Food Safety Modernization Act (“FSMA”) regulates food products imported into the United States and provides the FDA with mandatory recall authority.

For the purchase of products harvested or manufactured outside the United States, and for the shipment of products to customers located outside of the United States, the Company is subject to customs laws regarding the import and export of shipments. The Company’s activities, including working with customs brokers and freight forwarders, are subject to regulation by U.S. Customs and Border Protection, part of the Homeland Security.

On June 17, 2020, The Scale Effect Company d/b/a Mant Logistics filed an amended complaint in the United States District Court for the Northern District of Illinois naming as defendants the Company, Baron Chocolatier, Inc. and two significant shareholders of the Company. The action was originally against Baron Chocolatier only, alleging that Baron did not pay for shipping and logistics services in the amount of $277,233, plus accrued interest. The complaint was amended to allege that the Company is a successor corporation and continuation of Baron Chocolatier, thereby making the Company liable for the debts and liabilities of Baron, and that Baron is an alter ego for the Company and the Company’s two significant shareholders. No trial date has been scheduled. The parties are still in the discovery stage. The Company intends to vigorously defend in this lawsuit.

In March 2021, Crossmark Inc. initial a lawsuit in the Circuit Court of Cook County, Illinois, against the Company, seeking to collect payment for services rendered. The Company had entered into an agreement with Crossmark to promote the sale of the Iron Energy products which the Company had distributed. Crossmark alleges that $100,000 plus costs and attorneys’ fees are owed by the Company. The Company believes that a default judgment has been entered, but the Company intends to overturn the entry of the judgment and defend in this lawsuit. The Company has accrued $100,000 in 2020 as a reserve for this liability.

Note 12 – Subsequent Events

On November 16^th, 2022 the Company issued 134,000 shares of common stock at $0.75 per share for the total cash consideration of $100,500.

F-11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Business

The Company operates in the consumer packaged goods industry and it is focused on the import, sale and distribution of premium chocolate and snack products produced in Europe. The Company also serves as a supplier of confectionery products for major U.S. retailers under private label brands. The Company has established itself as a vendor of record with national retail chains across the United States and other well-known international retailers allowing its products to be sold in thousands of stores in the United States.

Our goal is to develop multiple brands of consumer packaged goods and become one of the leading suppliers and distributors in the United States of premium chocolate, snacks and beverage products from Europe. Our wide range of premium chocolate, snacks and beverage items allowed us to establish strong relationships with national retail chains across the United States and international retailers.

The Company is also seeking opportunities to merge with emerging brand companies that established themselves and their respective brand portfolio of items and are in need to access our national distribution network. We believe that a potential merger would give Veroni much bigger presence within national retailers in the United States and add variety of other products that Veroni can sell to its retailers and wholesalers in the consumer package goods space.

Products

The Company’s product mix is comprised of the following:

CHOCOLATE
Bars
5Bites
Truffles
Sticks
Candies
Cups
Gummies

Chocolate Products

Veroni currently distributes its chocolate products under the Sweet Desire and Baron Chocolatier brands, as well as private label chocolate bars, cups and bites.

The Company is also in the process of developing its own brand and line of products:

	●	The Company hired CA Fortune to analyze and develop the brand and create a portfolio of new products. The Company’s chocolate products are GMO free and Kosher and Halal certified, and contain all natural ingredients with zero trans-fat, no artificial flavors or colors.

	●	The Company is approved and licensed by Rainforest Alliance to sell its chocolate products nationwide to its customers The Company believes that its key competitive advantage is that it can provide premium chocolate products at mainstream prices. The product is manufactured in Europe and imported via port in Germany into a warehouse near port of New Jersey and from there its being shipped across the country to its costumers’ distribution centers.

	●	The Company handles the product design and development phases in-house, in collaboration with leading product design and development teams who traditionally serve major retailers in the United States.

Veroni plans to gradually increase chocolate sales by offering products made with all natural ingredients priced at a slight discount to premium brand chocolates offered by competitors such as Godiva, Russell Stover, Lindt, and Ghirardelli. It also plans to incrementally grow chocolate sales by cross-merchandising chocolate products with its retail partners’ wine and coffee products.

Results of Operations

Three Months Ended ~~June~~September 30, 2022 Compared to ~~June~~September 30, 2021.

Revenues

Revenues for the three months ended ~~June~~September 30, 2022 were $10112,~~988~~924 as compared with $1783,~~585,183~~343 for the comparable prior year period, a change of of ($1670,~~574~~419),~~195,~~ or 99(85%). In 2022, the Company’s revenues were impacted by loss of retail customers due to significant product cost increase. Therefore, the Company ~~experience~~experienced significant reduction in revenue in the three months ended ~~June~~September 30, 2022.

Cost of Sales

Cost of sales for the three months ended ~~June~~September 30, 2022 was $2571,~~529~~242 as compared with $1405,~~240,765~~905 for the comparable prior year period, a change of ($1334,~~215,236~~663) or 98(82%). The decrease was primarily due to reduced sales.

Gross Profit

Gross profit for the three months ended ~~June~~September 30, 2022 was $~~(15~~41,~~541)~~682 as compared with $~~344~~405,~~418~~905 for the comparable prior year period, a change of ($~~359~~334,~~959~~663) or ~~104~~(82%). The decrease was primarily due to reduced sales.

Operating Expenses

Operating expenses for the three months ended ~~June~~September 30, 2022 were $~~451~~429,~~594~~119 as compared with $~~365~~606,~~994~~309 for the comparable prior year period, a a change of ($85177,~~600~~190) or 23(29%). The ~~increase~~decrease was primarily due to ~~stock~~reduced ~~issued to officer for services~~sales.

Net Loss

Our net loss for the three months ended ~~June~~September 30, 2022 was $~~459~~389,~~985~~106 as compared with a net loss of $25228,~~080~~598 for the comparable prior ~~year~~ year period, a change of $~~434~~160,~~905~~508 or 9570%. The ~~decrease~~increase was primarily due to reduced sales.

General and Administrative Expenses

General and administrative expenses for the three months ended ~~June~~September 30, 2022 was $~~450~~423,~~186~~163 as compared with a $~~255~~501,~~983~~586 for the comparable prior year period, a change of ($~~194~~78,~~203~~423) or 76(19%). The ~~increase~~decrease was primarily due to ~~stock~~reduced ~~issued to officer for services~~sales.

~~Six~~Nine Months Ended ~~June~~September 30, 2022 Compared to ~~June~~September 30, 2021.

Revenues

Revenues for the ~~six~~nine months ended ~~June~~September 30, 2022 were $~~159~~272,~~652~~576 as compared with $23,~~483~~266,~~359~~702 for the comparable prior year period, a change of of ($2,~~323~~994,~~707~~126), or 94(92%). In 2022, the Company’s revenues were impacted by ~~loss~~impacted by loss of retail customers due to significant product cost increase. Therefore, the Company ~~experience~~experienced significant reduction in revenue in the ~~six~~nine months ended ~~June~~September 30, 2022.

Cost of Sales

Cost of sales for the ~~six~~nine months ended ~~June~~September 30, 2022 was $~~120~~191,~~671~~913 as compared with $12,~~870~~276,~~816~~721 for the comparable prior year period, a change of ($12,~~750~~084,~~145~~808) or 94(92%). The decrease was primarily due to reduced sales.

Gross Profit

Gross profit for the ~~six~~nine months ended ~~June~~September 30, 2022 was $3880,~~981~~663 as compared with $~~612~~989,~~543~~981 for the comparable prior year period, a change of ($~~573~~909,~~562~~318) or 94(92%). The decrease was primarily due to reduced sales.

Operating Expenses

Operating expenses for the ~~six~~nine months ended ~~June~~September 30, 2022 were $1,~~035~~464,~~141~~260 as compared with $~~718~~1,~~999~~325,308 for the comparable prior year period, a change of $~~316~~138,~~142~~952 or 4437%. The increase was primarily due to stock issued to officer for services.

Net Loss

Our net loss for the ~~six~~nine months ended ~~June~~September 30, 2022 was $~~993~~1,~~200~~382,216 as compared with a net loss of $~~109~~338,~~460~~058 for the comparable prior ~~year~~ year period, a change of $~~883~~1,~~740~~044,158 or ~~807~~309%. The increase was primarily due to reduced sales.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2022 was $1,013,221 as compared with a $549,200 for the comparable prior year period, a change of $464,021 or 84%. The increase was primarily due to stock issued to officer for services.

Liquidity and Capital Resources

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company’s operating activities used net cash of $~~158~~4,~~616~~432, due primarily to the net ~~loss~~ loss of $~~993~~1,~~200~~382,216, ~~decrease~~increase in accounts payable related party of $2535,879, and decrease in trade accounts receivable of $109,~~294~~941, offset by ~~increase~~ decrease of $48,125 in contract receivables and $7,724 in inventory, and an ~~increase~~decrease in accrued liabilities of $6058,~~907~~407. In comparison, the Company’s operating activities used net cash of $~~489~~107,~~300~~763 during the comparable 2021 period, due primarily to reduction of ~~contract receivables~~accounts receivable of ~~434~~$677,~~162~~016.

Net cash provided by financing activities was $~~173~~85,~~257~~773, from proceeds of notes payable-related party of ~~112~~25,~~200~~170 and proceeds from issuance of common stock of 100,500 less repayment of contract receivables with recourse of 39,~~443~~897. For the comparable 2021 period, net cash ~~provided~~used by financing activities totaled $~~463~~547,~~354~~170, from the ~~proceeds~~repayment of the Company’s contract receivables financing,.

The Company had a cash balance of ($~~18,732~~251) and a working capital deficit of $~~843~~838,~~123~~389 as of ~~June~~September 30, 2022, as compared to a cash balance of $4,091 and a working capital deficit of $759,088, as of December 31, 2021.

Under the Small Business Administration (“SBA”), the Company applied for the Paycheck Protection Program (“PPP”) and received a loan from the SBA in the amount of $56,250 (the “PPP Loan”). These loans are forgiven if used for payroll, payroll benefits, including health insurance and retirement plans, as well as certain rent payments, leases, and utility payments, which are limited to 40% of the loan proceeds, all of which if paid within either 8 weeks or 24 weeks of the receipt of the loan proceeds. On October 14, 2021 we received notice from the SBA that $38,550.50 of the balance of the PPP Loan has been forgiven. The Company has elected to record these advances under the debt treatment for these loans, under GAAP guidance. The remainder of the PPP Loan will accrue interest at 1% per annum and be paid in monthly payments of $3,003.05. As of ~~June~~September 30, 2022, a balance of $963 was outstanding under the ~~PPP~~ PPP Loan.

On August 27, 2020, the Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the SBA under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. Pursuant to that certain Loan Authorization and Agreement (the “SBA Loan Agreement”), the principal amount of the EIDL Loan is up to $150,000, with proceeds to be used for working capital purposes. On September 2, 2020, the Company received $149,900. Interest accrues at the rate of 3.75% per annum. Installment payments, including principal and interest, are due monthly beginning August 27, 2021 (twelve months from the date of the SBA Note (defined below)) in the amount of $731. The balance of principal and interest is payable thirty years from the date of the EIDL Loan.

In connection therewith, the Company executed (i) a note for the benefit of the SBA (the “SBA Note”), which contains customary events of default and (ii) a Security Agreement, granting the SBA a security interest in all tangible and intangible personal property of the Company, which also contains customary events of default (the “SBA Security Agreement”).

The Company’s proposed activities will necessitate significant uses of capital into and beyond 2022, particularly for the financing of inventory. While the Company has a factoring arrangement, sales of equity securities in the Company would result in reduced financing costs. Since the beginning of 2018 and through ~~June~~September 30, 2022, the Company has engaged in sales of its equity securities in private placements. ~~Through June 30, 2022, 134,000 shares have been sold for total gross proceeds of $100,500, 900,000 shares have been issued for services rendered valued at $787,500.~~

Plan of Operations

During 2022 and 2021, sales were concentrated in two customers. One of these customers notified the Company that they decided to terminate the private label program going forward. Sales in 2022 are expected to decrease by 63%. As vendor selection is an annual process with this customer, the Company is planning to reapply as a vendor for 2023 season and broaden its customer base. For the next few years, the Company will continue to focus on obtaining visibility for the products by contacting convenience store locations and small distributors to those types of locations. In addition, the Company will also continue to expand the number of products to be imported from Europe and distributed throughout the United States.

Management believes that while the current COVID-19 crisis has not affected the volume of sales, it has resulted in the Company experiencing supply chain and transportation logistics issues. Manufacturers and those providing shipping and logistics services are increasing prices and/or decreasing the amount of product and/or services to the Company, thereby making it more difficult to meet the terms of contracts with retailers. Management believes that for the current fiscal year, the Company will experience reduced profit margins as a result. It is not known whether the supply chain and transportation logistics issues will continue into the future.

There is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. In 2019, the Company entered into a factoring agreement covering its accounts receivable (see below). The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans. In the near term, the Company plans to rely on its primary stockholders to continue to fund the Company’s continuing operating requirements. The Company will require a minimum of $600,000 for the next 12 months to fund its operations, which will be used to fund expenses related to operations, office supplies, travel, salaries and other incidental expenses. Management believes that this capital would allow the Company to meet its operating cash requirements, and would facilitate the Company’s business of selling and distributing its products. Management also believes that the acquisition of such assets would generate revenue to cover overhead cost and general liabilities of the Company, and allow the Company to achieve overall sustainable profitability.

Due to the above-described difficulties, management is seeking other opportunities outside of the import/distribution business in order to bring value to the stockholders.

Accounts Receivable Financing

On February 21, 2019, the Company entered into a factoring agreement with an unrelated third party, Advance Business Capital LLC, dba Interstate Capital (“ICC”), pursuant to which the Company sells the majority of its accounts receivable to ICC for 85% of the value of the receivable. The term of the agreement is for 12 months and automatically renews for additional 12-month periods. The accounts receivable are sold with recourse back to the Company, meaning that the Company bears the risk of non-payment by the account debtor. To secure its obligations to ICC, the Company has granted a blanket security interest in its other assets, such as inventory, equipment, machinery, furniture, fixtures, contract rights, and general intangibles. The loan is guaranteed by two major shareholders of the Company. On September 11, 2019, the lender (which now does business as Triumph Business Capital) entered into an amended agreement with the Company which lowered the interest charged by the lender from 0.49% for every 10 days to prime rate (with a floor of 5.5%) plus 3%. On January 27, 2021, the agreement was further amended to include the factoring of purchase orders at the Wall Street Journal Prime Rate. As of ~~June~~September 30, 2022 and December 31, 2021, the Company owes $~~454~~ and $39,897, respectively for advances on their receivables. The Company bears all credit risk related to the receivables factored.

Alternative Financial Planning

The Company has no alternative financial plans at the moment. If the Company is not able to successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to survive as a going concern and implement any part of its business plan or strategy will be severely jeopardized.

Critical Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures and Changes in Internal Controls

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosures. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.

As of ~~June~~September 30, 2022, our management carried out an evaluation of the effectiveness of our disclosure controls and procedures as such ~~term~~ term is defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. Based on this evaluation, the President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of ~~June~~September 30, 2022, because of the identification of the material weakness in internal control over financial reporting described below. Notwithstanding the material weakness that existed as of ~~June~~September 30, 2022, our President and Chief Financial Officer has concluded that the financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the financial position, results of operations and cash flows of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

	●	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;
	●	Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
	●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, we conducted an assessment of the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 1992, as of ~~June~~September 30, 2022.

As a result of our material weakness described below, management has concluded that, as of ~~June~~September 30, 2022, our internal control over ~~financial~~ financial reporting was not effective based on the criteria in “Internal Control-Integrated Framework” issued by COSO.

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility, that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In connection with its assessment, management identified the following material weaknesses at ~~June~~September 30, 2022:

● There is a lack of segregation of duties within the accounting and financial reporting process along with the proper safeguards to prevent the management override of controls, as the Company has only one executive officer. ● Since we use external consultants to prepare our financial statements and provide sufficient documentation of such preparation and review procedures, our officer must rely on such documentation. ● We had only one executive officer at ~~June~~September 30, 2022.

Due to our limited resources, we expect these weaknesses in internal control to continue while we implement our business plan.

Changes in Internal Control over Financial Reporting

During the period covered by this quarterly report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On June 17, 2019, The Scale Effect Company d/b/a Mant Logistics filed an amended complaint in the United States District Court for the Northern District of Illinois naming as defendants the Company, Igor Gabal, Tomasz Kotas, and Baron Chocolatier, Inc. The action was originally against Baron Chocolatier only, alleging that Baron did not pay for shipping and logistics services in the amount of $277,233, plus accrued interest. The complaint was amended to allege that the Company is a successor corporation and continuation of Baron Chocolatier, thereby making the Company liable for the debts and liabilities of Baron, and that Baron is an alter ego for the Company, Igor Gabal and Tomasz Kotas. No trial date has been scheduled. The parties are still in the discovery stage. The Company intends to vigorously defend in this lawsuit.

In March 2021, Crossmark Inc. initial a lawsuit in the Circuit Court of Cook County, Illinois, against the Company, seeking to collect payment for services rendered. The Company had entered into an agreement with Crossmark to promote the sale of the Iron Energy products which the Company had distributed. Crossmark alleges that $100,000 plus costs and attorneys’ fees are owed by the Company. The default judgment entered in this case has been vacated and the Company intends to defend in this lawsuit. As of March 31. 2022, the case was pending, and the parties are waiting to be scheduled for mediation.

Item 1A. Risk Factors

Not applicable to smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~During the~~On ~~second~~November ~~quarter~~16th, 2022 the Company ~~sold~~issued ~~total of~~ 134,000 shares of ~~its~~ common stock at $0.75 per share for the total ~~proceeds~~cash consideration of $100,500.~~00.~~ The use of ~~proceeds~~proceed ~~has~~is ~~been~~to ~~used~~continue ~~for~~company ~~ordinary operational expenses~~operations.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

		Incorporated by
Exhibit		Reference		Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.				X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.				X
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350.				X
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350.				X
101.INS	Inline XBRL Instance Document				X
101.SCH	Inline XBRL Taxonomy Extension Schema Linkbase Document.				X
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document.				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.				X
101.LAB	Inline XBRL Taxonomy Label Linkbase Document.				X
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document.				X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VERONI BRANDS CORP.
Dated: August 17, 2022	By:	/s/ Igor Gabal
Dated: December 16, 2022	By:	/s/ Igor Gabal
		Igor Gabal, President and Chief Financial Officer

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