Significant Accounting Policies

9 Months Ended

Sep. 30, 2025

Note 2 - Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of US Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Jupiter Wellness Investments, Inc, Yerbaé, Safety Shot, Inc. and Bonk Holdings, LLC. All intercompany accounts and transactions have been eliminated.

Segment Reporting

The Company has two reportable segments: (i) the dietary and energy beverage business and (ii) digital assets, consisting of investing for growth in the appreciation of the asset and staking the tokens to produce income.

Gross profit (loss) is the segment performance measure the chief operating decision maker (“CODM”) (our CEO, Jarrett Boon) uses to assess the Company’s reportable segments.

The dietary and energy beverage products generate revenue from the sale of these products through Amazon and other direct channels. Cost of revenue consists primarily of direct manufacturing costs and freight and shipping.

The digital assets have nominal costs associated with revenue generated through staking.

The following table presents segment revenue and segment gross profit for the nine months ended September 30, 2025 and 2024 reviewed by the CODM:

	September 30,			September 30
	2025			2024

Revenue from beverage sales	$	1,601,866		$	519,793
Cost of sales		1,522,942			2,549,099
Gross profit		78,924			(2,029,306	)

Related party income from digital assets	$	509,085		$	-

Operating (expenses)		(26,990,405	)		(32,923,489	)
Interest income		64,863			40,699
Interest expense		(496,840	)		(252,108	)
Net Realized gain (loss) on sale of stock		500,000			231,159
Net realized gain (loss) on marketable securities		180,556			(46,658	)
Net Loss on settlement		(4,640,465	)		-
Net unrealized gain (loss) on digital assets		(7,213,473	)		-
Net unrealized gain on equity investment		12,594,998			(599,155	)
Net loss on exchange		(120,446	)		-
Net income (loss)	$	(25,533,204	)	$	(35,578,859	)

Assets and liabilities are not separately analyzed or reported to the CODM and are not used to assist in decisions surrounding resource allocation and assessment of segment performance. As such, an analysis of segment assets and liabilities has not been included in this financial information.

Business Combinations

The Company accounts for business combinations in accordance with ASC 805, Business Combinations. The purchase price of an acquired business is allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. Identifiable intangible assets are recognized separately from goodwill and are amortized over their estimated useful lives. The determination of fair values requires management to make significant estimates and assumptions. These estimates are inherently uncertain and may be refined for up to one year from the acquisition date as additional information becomes available. Transaction costs incurred in connection with business combinations are expensed as incurred.

Fair Value Measurements

The Company follows ASC 820, Fair Value Measurement, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is determined based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company classifies assets and liabilities measured at fair value into a three-tier hierarchy based on the observability of inputs used in the valuation:

	●	Level 1 – Quoted prices in active markets for identical assets or liabilities.
	●	Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities or model-derived valuations in which all significant inputs are observable.
	●	Level 3 – Unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use.

The Company holds certain marketable securities that are measured at fair value on a recurring basis. Convertible debt instruments are initially recorded at fair value, which may include bifurcation of embedded conversion features, if applicable, under ASC 815.

Debt Extinguishment and Modification

Any changes or modification to debt instruments must be examined to determine if the modification has any significant effect. If the changes or modifications are material, the change or modification must be accounted for as an extinguishment. If determined to be an extinguishment, the change or modification to the original debt is derecognized and a new debt is recognized. Any difference in the fair value is recognized as a gain or loss on extinguishment.

Equity Method for Investments

Investments in unconsolidated affiliates, which the Company exerts significant influence but does not control or otherwise consolidate, are accounted for using the equity method. Equity method investments are initially recorded at cost. These investments are included in investment in joint ventures in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in loss from equity method joint venture in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

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 expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with a maturity of three months or less when purchased to be cash and equivalents for purposes of the statement of cash flows. There were no cash equivalents as of September 30, 2025, or December 31, 2024.

Inventory

Inventories are stated at the lower of cost or market. The Company periodically reviews the value of items in inventory and provides write-downs or write- offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Inventory is based upon the average cost method of accounting. During the three and nine months ended September 30, 2025, the Company had no write-downs or write-offs. During the nine months ended September 30, 2024, the Company took a write down of certain raw materials and finished goods totaling $1,902,279, due to rebranding issues.

Trading Securities

Securities that the Company intends to sell are classified as trading securities. Trading securities are carried at fair value with gains and losses recognized in current period earnings.

Digital Assets

Our Digital Assets consist of BONK tokens (“Bonk”), as part of its treasury strategy, that meet the scope requirements of ASU 2023-08, Accounting for and Disclosure of Crypto Assets. The Company accounts for these assets at fair value in accordance with ASC 350-60 and ASC 820, with changes in fair value recognized in net income.

Digital Assets are classified as current or noncurrent in the consolidated balance sheet under ASC-210, based on the Company’s intended holding period and liquidity considerations. Assets expected to be sold or used within one year from the reporting date are classified as current assets. Treasury assets not intended to be sold or converted to cash within the operating cycle are classified as noncurrent assets.

Crypto assets are not offset against any related liabilities and are presented on a gross basis in the balance sheet, consistent with ASC 210-20, unless a legal right of setoff exists and settlement is intended to occur on a net basis.

The Company determines the fair value of crypto assets using quoted prices from active markets at the balance sheet date (Level 3 inputs under ASC 820).

Gains and losses resulting from changes in fair value are included in the statement of operations.

The Company discloses the composition of crypto assets, including fair value by major type of token, as well as the location on the balance sheet and significant changes during the reporting period, in accordance with the disclosure requirements of ASU 2023-08.

Future sales or exchanges of coins will be accounted for on a first in first out basis (FIFO).

90% of revenue that is used to purchase BONK tokens is not legally or contractually restricted. Under the Revenue Sharing Agreement, 90% of gross revenues must be converted into BONK and deposited into the Treasuries Wallet. The agreement does not impose any lock-ups, use-restrictions, release conditions, or prohibitions on sale or transfer after the BONK is received. The BONK tokens are fully available for the Company’s use, without restriction. The Company has full control and the ability to sell, transfer, or use the tokens at any time. The Company has chosen, as part of its long-term economic strategy, not to sell these tokens. This is a voluntary internal policy, not an externally imposed restriction. The Company’s strategic objective is to accumulate BONK in treasury in order to support long-term token stability and ecosystem value, which is consistent with the economic purpose of the revenue-sharing arrangement. Because the tokens are fully under the Company’s control and are not subject to contractual release conditions, they are not “restricted assets”. The Company can access the economic benefits at any time if needed.

Net Loss per Common Share

Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments such as options, warrants, convertible securities and preferred stock, unless the effect is to reduce a loss or increase earnings per share. As such, options, warrants, convertible securities, and preferred stock are not considered in the calculations, as the impact of the potential common shares would be to decrease the loss per share.

Revenue Recognition

Beverage Products

The Company generates its revenue from the sale of its drink products directly to the end user or through a distributor (collectively the “customers”).

The Company recognizes revenues by applying the following steps in accordance with FASB Accounting Standards Codification 606 “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

	●	identify the contract with a customer;

	●	identify the performance obligations in the contract;

	●	determine the transaction price;

	●	allocate the transaction price to performance obligations in the contract; and

	●	recognize revenue as the performance obligation is satisfied.

The Company’s performance obligations are satisfied when goods or products are shipped on a FOB shipping point basis as title passes when shipped. Our products are generally paid in advance of shipment or standard net 30 days and we offer no specific right of return, refund or warranty related to our products except for cases of defective products of which there have been none to date.

The Company only provides refunds for products that are damaged during delivery to the customer. However, instances of refunds are rare and have not historically had a material impact on the Company’s results of operations. Finally, the Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer.

In addition to variable consideration, the Company also provides payments to certain customers for slotting fees. In accordance with the guidance in ASC 606-10-32, the Company determined that the payment is not in exchange for a distinct good or service and it is therefore recognized as a reduction to the transaction price. As the slotting fee payment covers the life of the contract with a customer, the initial payment is recognized as an asset and is amortized as a reduction to revenue on a rational and reasonable basis over the estimated life of the contract.

Digital Asset Income

The Digital Assets Segment generates revenue through the Company’s participation in digital content and blockchain-based platforms under the Bonk Digital Agreement.

On August 8, 2025, the Company entered into a revenue sharing agreement with related party, Bonk Digital, Inc. (the “Bonk Agreement”) in which the Company obtained rights to a share of future revenue streams derived from Bonk’s digital platform (the “Bonk Digital Asset”). In accordance with the guidance in ASC 805-50-30-1, ASC 350-30-25-2, ASC 55-10-45-1 and ASC 820-10-35-2, a discounted cashflow with a terminal period of 5 years and a discount rate of 15% was used to calculate the fair value of future revenues in accordance with the agreement.

Revenue in this segment is recognized as the underlying platform revenues are earned by Bonk and the Company’s share becomes realizable under the terms of the Bonk Agreement. The Company’s share of those revenues is based on a fixed percentage of gross receipts or other participation metrics as defined in the agreement.

Amounts earned under the Bonk Agreement are not contingent on product sales and is recognized as “Related party income from digital assets” in the consolidated statements of operations when:

	●	the performance obligations under the Bonk platform are satisfied,
	●	the transaction price (i.e., the Company’s share of platform proceeds) can be reliably measured, and
	●	collection is probable.

Revenue is typically recorded on a net basis, representing the Company’s proportionate share of digital platform proceeds received or receivable during the reporting period.

Accounts Receivable and Credit Risk

Accounts receivable are generated from sales of the Company’s products. The Company provides an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. As of September 30, 2025 and December 31, 2024, the Company had $0 allowance for doubtful collections.

Certain non-cash transactions, including the issuance of common stock in exchange for digital assets, are recorded as accounts receivable until settlement occurs. On September 30, 2025, the Company issued shares of its common stock in exchange for the Bonk Digital Asset with a fair value of $21 million. As the cash consideration for this transaction was not received until October 1, 2025, the Company recorded the transaction as an increase to Accounts Receivable and Common Stock Payable, with the digital asset recorded at its fair value on the date of issuance.

Impairment of Long-Lived Assets

We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.

Other Asset - Revenue Sharing Agreement

During the three months ended September 30, 2025, the Company entered into a revenue sharing agreement (the “Agreement”) with a related party. In connection with the Agreement, the Company issued 100,000 shares of its Series C preferred stock as consideration for the counterparty’s participation in the arrangement. The Agreement entitles the counterparty to receive a portion of future revenues generated from certain Company products and initiatives, subject to the terms and conditions of the Agreement.

The issuance of the Series C preferred stock was accounted for as a non-cash transaction. The fair value of the Series C preferred stock issued was determined using a discounted cash flow model based on management’s estimates of future revenues expected to be generated under the Agreement. The resulting fair value was recorded as an increase to additional paid-in capital, with a corresponding amount recognized as an “Other asset” within the consolidated balance sheet as of September 30, 2025, representing the Company’s right to future economic benefit from the Agreement. As of September 30, 2025, the asset at a fair value of $2,195,379 and is amortized on a straight-line basis over 4.25 years. The Company recognized $44,804 in related amortization expense for the three and nine months ended September 30, 2025.”). A discounted cashflow with a terminal period of 5 years and a discount rate of 15% was used to calculate the fair value of future revenues in accordance with the agreement

The Company will evaluate the carrying value of this asset for impairment in future reporting periods as actual revenues are realized or if other indicators of impairment arise. 15

Intangible Assets

Intangible assets consist of patents and trademarks, purchased customer contracts, purchased customer and merchant relationships, purchased trade names, purchased technology, and non-compete agreements. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to twenty years. No significant residual value is estimated for intangible assets. We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.

The Company did not have any impairment charges during the three and nine months ended September 30, 2025 and 2024.

Research and Development

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $8,668 and $10,315 for the three months ended September 30, 2025 and 2024, respectively. The Company incurred research and development expenses of $24,190 and $271,719 for the nine months ended September 30, 2025 and 2024, respectively.

Stock Based Compensation

The Company recognizes compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation - Stock Compensation” (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant- date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options and warrants and share-based payments issued to non-employees for goods or services. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.

Income Taxes

The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on October 24, 2018, the evaluation was performed for 2018 tax year which would be the only period subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.

Discontinued Operations

On September 24, 2024, the Company signed a separation agreement with Caring Brands, Inc. Caring Brands, Inc. is no longer a subsidiary of the Company, all operations performed under the Caring Brands product line are considered discontinued operations and no longer reported the Company’s financials. The Company recognized $299,184 in loss from discontinued operations for the three and nine months ended September 30, 2024.

Related parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Pursuant to Section 850-10-20 the related parties include (i) affiliates of the Company; (ii) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (iii) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (iv) principal owners of the Company; (v) management of the Company; (vi) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (vii) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, enhancing segment reporting requirements under ASC 280. This ASU aims to provide investors with more detailed information about a public entity’s reportable segments, including those with a single reportable segment. The key provisions include:

	1.	Enhanced Expense Disclosures: Public entities must now disclose significant segment expenses that are regularly provided to the CODM and included in each reported measure of segment profit or loss.

	2.	Disclosure of Other Segment Items: Entities are required to disclose an amount for “other segment items” by reportable segment, representing the difference between reported segment revenues and the sum of significant segment expenses and the reported measure of segment profit or loss. A qualitative description of the composition of these other segment items is also required.

	3.	Interim Reporting Requirements: All annual disclosures about a reportable segment’s profit or loss and assets, including the new disclosures introduced by ASU 2023-07, must now be provided in interim periods as well.

	4.	Single Reportable Segment Entities: Public entities with a single reportable segment are explicitly required to provide all segment disclosures mandated by ASC 280, including those introduced by ASU 2023-07. This clarification ensures that users receive comprehensive information about the entity’s operations and performance.

	5.	Disclosure of CODM Information: Entities must disclose the title and position of the CODM and explain how the CODM uses the reported measure(s) of segment profit or loss in assessing performance and allocating resources.

These amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted the ASU for the year ended December 31, 2024. The adoption of the ASU did not have a material impact on the Company’s financial statements.

BONK, INC. 10-Q