0001553788 false 2022 FY 0001553788
2022-01-01 2022-12-31 0001553788
sbev:CommonStock.001ParValuePerShareMember 2022-01-01 2022-12-31
0001553788
sbev:WarrantsToPurchaseSharesOfCommonStock0.001ParValuePerShareMember
2022-01-01 2022-12-31 0001553788 2022-06-30 0001553788 2023-03-31
0001553788 2022-12-31 0001553788 2021-12-31 0001553788 2021-01-01
2021-12-31 0001553788 us-gaap:CommonStockMember 2020-12-31
0001553788 us-gaap:AdditionalPaidInCapitalMember 2020-12-31
0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-12-31 0001553788 us-gaap:RetainedEarningsMember 2020-12-31
0001553788 2020-12-31 0001553788 us-gaap:CommonStockMember
2021-12-31 0001553788 us-gaap:AdditionalPaidInCapitalMember
2021-12-31 0001553788
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31
0001553788 us-gaap:RetainedEarningsMember 2021-12-31 0001553788
us-gaap:CommonStockMember 2021-01-01 2021-12-31 0001553788
us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-12-31
0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-01-01 2021-12-31 0001553788 us-gaap:RetainedEarningsMember
2021-01-01 2021-12-31 0001553788 us-gaap:CommonStockMember
2022-01-01 2022-12-31 0001553788
us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-12-31
0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2022-01-01 2022-12-31 0001553788 us-gaap:RetainedEarningsMember
2022-01-01 2022-12-31 0001553788 us-gaap:CommonStockMember
2022-12-31 0001553788 us-gaap:AdditionalPaidInCapitalMember
2022-12-31 0001553788
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31
0001553788 us-gaap:RetainedEarningsMember 2022-12-31 0001553788
sbev:CopaDiVinoCorporationMember sbev:AssetPurchaseAgreementMember
2020-12-01 2020-12-24 0001553788 sbev:CopaDiVinoCorporationMember
2020-12-24 0001553788 srt:MinimumMember 2022-01-01 2022-12-31
0001553788 srt:MaximumMember 2022-01-01 2022-12-31 0001553788
2020-01-01 2020-12-31 0001553788 sbev:AutoMember 2022-12-31
0001553788 sbev:AutoMember 2021-12-31 0001553788
us-gaap:MachineryAndEquipmentMember 2022-12-31 0001553788
us-gaap:MachineryAndEquipmentMember 2021-12-31 0001553788
us-gaap:BuildingMember 2022-12-31 0001553788 us-gaap:BuildingMember
2021-12-31 0001553788 us-gaap:LeaseholdImprovementsMember
2022-12-31 0001553788 us-gaap:LeaseholdImprovementsMember
2021-12-31 0001553788 us-gaap:FurnitureAndFixturesMember 2022-12-31
0001553788 us-gaap:FurnitureAndFixturesMember 2021-12-31 0001553788
sbev:RelatedPartyNotesPayableMember 2022-01-01 2022-12-31
0001553788 sbev:NotesPayables1Member 2022-12-31 0001553788
sbev:NotesPayables1Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables1Member 2021-12-31 0001553788
sbev:NotesPayables2Member 2022-12-31 0001553788
sbev:NotesPayables2Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables2Member 2021-12-31 0001553788
sbev:NotesPayables3Member 2022-12-31 0001553788
sbev:NotesPayables3Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables3Member 2021-12-31 0001553788
sbev:NotesPayables4Member 2022-12-31 0001553788
sbev:NotesPayables4Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables4Member 2021-12-31 0001553788
sbev:NotesPayables5Member 2022-12-31 0001553788
sbev:NotesPayables5Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables5Member 2021-12-31 0001553788
sbev:NotesPayables6Member 2022-12-31 0001553788
sbev:NotesPayables6Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables6Member 2021-12-31 0001553788
sbev:NotesPayables7Member 2022-12-31 0001553788
sbev:NotesPayables7Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables7Member 2021-12-31 0001553788
sbev:NotesPayables8Member 2022-12-31 0001553788
sbev:NotesPayables8Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables8Member 2021-12-31 0001553788
sbev:NotesPayables9Member 2022-12-31 0001553788
sbev:NotesPayables9Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables9Member 2021-12-31 0001553788
sbev:NotesPayables10Member 2022-12-31 0001553788
sbev:NotesPayables10Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables10Member 2021-12-31 0001553788
sbev:NotesPayables11Member 2022-12-31 0001553788
sbev:NotesPayables11Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables11Member 2021-12-31 0001553788
sbev:NotesPayables12Member 2022-12-31 0001553788
sbev:NotesPayables12Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables12Member 2021-12-31 0001553788
sbev:NotesPayables13Member 2022-12-31 0001553788
sbev:NotesPayables13Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables13Member 2021-12-31 0001553788
sbev:NotesPayables14Member 2022-12-31 0001553788
sbev:NotesPayables14Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables14Member 2021-12-31 0001553788
sbev:NotesPayables15Member 2022-12-31 0001553788
sbev:NotesPayables15Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables15Member 2021-12-31 0001553788
sbev:NotesPayables16Member 2022-12-31 0001553788
sbev:NotesPayables16Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables16Member 2021-12-31 0001553788
sbev:NotesPayables17Member 2022-12-31 0001553788
sbev:NotesPayables17Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables17Member 2021-12-31 0001553788
sbev:NotesPayables18Member 2022-12-31 0001553788
sbev:NotesPayables18Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables18Member 2021-12-31 0001553788
sbev:NotesPayables19Member 2022-12-31 0001553788
sbev:NotesPayables19Member 2022-01-01 2022-12-31 0001553788
sbev:NotesPayables19Member 2021-12-31 0001553788
sbev:RelatedPartiesNotesPayable1Member 2022-12-31 0001553788
sbev:RelatedPartiesNotesPayable1Member 2022-01-01 2022-12-31
0001553788 sbev:RelatedPartiesNotesPayable1Member 2021-12-31
0001553788 sbev:NotesPayablesMember 2022-01-01 2022-12-31
0001553788 sbev:NotesPayablesMember 2021-01-01 2021-12-31
0001553788 sbev:NotesPayablesMember 2022-12-31 0001553788
sbev:NotesPayablesMember 2021-12-31 0001553788
sbev:RelatedPartiesNotesPayableMember 2022-01-01 2022-12-31
0001553788 sbev:RelatedPartiesNotesPayableMember 2021-01-01
2021-12-31 0001553788 us-gaap:IPOMember 2022-01-01 2022-12-31
0001553788 sbev:SettlementLitigationMember 2022-01-01 2022-12-31
0001553788 sbev:ConvertibleInstrumentsMember 2022-01-01 2022-12-31
0001553788 us-gaap:PrivatePlacementMember 2021-01-01 2021-01-31
0001553788 us-gaap:PrivatePlacementMember 2021-01-31 0001553788
us-gaap:PrivatePlacementMember 2021-02-01 2021-02-28 0001553788
2021-02-28 0001553788 us-gaap:PrivatePlacementMember 2022-07-01
2022-07-31 0001553788 us-gaap:PrivatePlacementMember 2022-07-31
0001553788 us-gaap:PrivatePlacementMember 2022-01-01 2022-12-31
0001553788 us-gaap:PrivatePlacementMember 2022-12-31 0001553788
sbev:ConvertibleInstrumentsMember 2022-12-31 0001553788
us-gaap:CommonStockMember sbev:EmployeesMember 2021-09-01
2021-09-30 0001553788 us-gaap:CommonStockMember
sbev:EmployeesMember 2021-05-01 2021-05-31 0001553788
us-gaap:CommonStockMember 2021-01-01 2021-01-31 0001553788
us-gaap:CommonStockMember srt:DirectorMember 2021-01-01 2021-01-31
0001553788 us-gaap:CommonStockMember 2021-06-01 2021-06-30
0001553788 us-gaap:PrivatePlacementMember 2021-06-01 2021-06-30
0001553788 2021-06-01 2021-06-30 0001553788
us-gaap:StockOptionMember 2022-01-01 2022-12-31 0001553788
sbev:EquityCompensationPlanMember 2022-01-01 2022-12-31 0001553788
us-gaap:StockOptionMember 2021-12-31 0001553788
us-gaap:StockOptionMember 2022-01-01 2022-12-31 0001553788
us-gaap:StockOptionMember 2021-01-01 2021-12-31 0001553788
us-gaap:StockOptionMember 2022-12-31 0001553788
us-gaap:WarrantMember 2021-12-31 0001553788 us-gaap:WarrantMember
2020-12-31 0001553788 us-gaap:WarrantMember 2022-01-01 2022-12-31
0001553788 us-gaap:WarrantMember 2021-01-01 2021-12-31 0001553788
us-gaap:WarrantMember 2022-12-31 0001553788
sbev:RelatedPartiesNotesPayableMember 2021-12-31 0001553788
sbev:SALTTequilaUSALLCMember 2022-12-31 0001553788
srt:MinimumMember 2022-12-31 0001553788 srt:MaximumMember
2022-12-31 0001553788 sbev:SplashBeverageGroupMember 2022-01-01
2022-12-31 0001553788 sbev:SplashBeverageGroupMember 2021-01-01
2021-12-31 0001553788 sbev:ECommerceMember 2022-01-01 2022-12-31
0001553788 sbev:ECommerceMember 2021-01-01 2021-12-31 0001553788
sbev:SplashBeverageGroupMember 2022-12-31 0001553788
sbev:SplashBeverageGroupMember 2021-12-31 0001553788
sbev:ECommerceMember 2022-12-31 0001553788 sbev:ECommerceMember
2021-12-31 0001553788 sbev:MedicalDevicesDiscontinuedMember
2022-12-31 0001553788 sbev:MedicalDevicesDiscontinuedMember
2021-12-31 0001553788 2022-09-01 2022-09-22 0001553788 2021-06-01
2021-06-15 0001553788 2021-06-15 0001553788
us-gaap:SubsequentEventMember 2023-02-28 0001553788
us-gaap:SubsequentEventMember 2023-02-02 2023-02-28 0001553788
us-gaap:SubsequentEventMember 2023-03-29 iso4217:USD xbrli:shares
iso4217:USD xbrli:shares xbrli:pure
U.S.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31,
2022
☐ TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from _________to _________
Commission File Number
001-40471
SPLASH BEVERAGE GROUP, INC.
(Exact name of registrant as specified in its charter)
Nevada |
|
34-1720075 |
(State
or other jurisdiction of incorporation or organization) |
|
(I.R.S.
Employer Identification No.) |
1314 E Las Olas Blvd. Suite 221
Fort Lauderdale,
FL
33301
(Address of principal executive offices) (Zip code)
(954)
745-5815
(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:
Title
of each class |
|
Trading
Symbol |
|
Name
of each exchange on which registered |
Common Stock, $0.001 par value per share |
|
SBEV |
|
NYSE American LLC |
Warrants to purchase shares of Common Stock, $0.001 par value per
share |
|
SBEV-WT |
|
NYSE American LLC |
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
No
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.
☐ Yes
☒
No
Indicate by check mark whether the registrant (i) 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 checkmark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required
to submit such files). ☒
Yes ☐ No
Indicate by checkmark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth 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 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 has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an
error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are
restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b).
☐
Indicate by check mark whether the registrant is a shell company
(as defined in rule 12b-2 of the Act). ☐ Yes ☒
No
The aggregate market value of the Registrant’s common equity held
by non-affiliates computed by reference to the price at which the
common equity was last sold as of the last business day of the
Registrant’s most recently completed second quarter was $91,048,293.
On March 31, 2023, there were 41,085,520
shares of Common Stock issued and outstanding.
SPLASH BEVERAGE GROUP, INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2021
TABLE OF CONTENTS
PART I
Except as otherwise
indicated, references to “we”, “us”, “our”, “Splash”, “SBG” and the
“Company” refer to Splash Beverage Group, Inc. and
its whollyowned subsidiaries.
This Annual Report on Form 10-K (this “Annual Report”) contains
“forward-looking statements” Forward-looking statements reflect our
current view about future events. When used in this Report, the
words “anticipate,” “believe,” “estimate,” “expect,” “future,”
“intend,” “plan,” or the negative of these terms and similar
expressions, as they relate to us or our management, identify
forward-looking statements. Such statements include, but are not
limited to, statements contained in this Report relating to our
business strategy, our future operating results and liquidity and
capital resources outlook. Forward-looking statements are based on
our current expectations and assumptions regarding our business,
the economy and other future conditions. Because forward–looking
statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. Our actual results may differ materially from
those contemplated by the forward-looking statements. They are
neither statements of historical fact nor guarantees of assurance
of future performance. We caution you therefore against relying on
any of these forward-looking statements. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements include, without limitation, our ability
to raise capital to fund continuing operations; our ability to
protect our intellectual property rights; the impact of any
infringement actions or other litigation brought against us;
competition from other providers and products; our ability to
develop and commercialize products and services; changes in
government regulation; our ability to complete capital raising
transactions; and other factors (including the risks contained in
the section of this Annual Report entitled “Risk Factors”) relating
to our industry, our operations and results of operations. Actual
results may differ significantly from those anticipated, believed,
estimated, expected, intended or planned.
Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict
all of them. We cannot guarantee future results, levels of
activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States,
we do not intend to update any of the forward-looking statements to
conform these statements to actual results.
MARKET AND INDUSTRY DATA
This Annual Report on Form 10-K contains statistical data,
estimates and forecasts that are based on independent industry
publications or other publicly available information, as well as
other information based on our internal sources. While we believe
the industry and market data included in this Annual Report on Form
10-K are reliable and based on reasonable assumptions, the data
involves many assumptions and limitations, and you are cautioned
not to give undue weight to these estimates. We have not
independently verified the accuracy or completeness of the data
contained in these industry publications and other publicly
available information. The industry in which we operate is subject
to a high degree of uncertainty and risk due to a variety of
factors, including those described in the sections titled
“Cautionary Note Regarding Forward-Looking Statements”
and “Risk Factors” included in this Annual Report on Form
10-K.
TRADEMARKS AND TRADE NAMES
We own or have rights to various trademarks, service marks and
trade names that we use in connection with the operation of our
business. This Annual Report on Form 10-K may also contain
trademarks, service marks and trade names of third parties, which
are the property of their respective owners. Our use or display of
third parties’ trademarks, service marks, trade names or products
in this Annual Report on Form 10-K is not intended to, and does not
imply a relationship with, or endorsement or sponsorship by us.
Solely for convenience, the trademarks, service marks and trade
names referred to in this Annual Report on Form 10-K may appear
without the ®, TM or SM symbols, but such
references are not intended to indicate, in any way, that we will
not assert, to the fullest extent under applicable law, our rights
or the right of the applicable licensor to these trademarks,
service marks and trade names.
Except as otherwise
indicated, references to “we”, “us”, “our”, “Splash”, “SBG” and the
“Company” refer to Splash Beverage Group, Inc. and
its wholly owned subsidiaries.
Item 1. Business.
Company Overview
Splash is a portfolio company managing multiple brands across
several growth segments within the consumer beverage industry.
Splash has built organizational capabilities and an infrastructure
enabling it to incubate and/or acquire brands with the intention of
efficiently accelerating them to higher volumes. The management
team has proven capabilities in building consumer franchises and
marketing and distributing multiple brands of beverages within the
non-alcoholic and alcoholic segments. Manufacturing is typically
outsourced to third party co-packers and distillers, or in select
cases for a brand such as Copa Di Vino wines, performed within our
own facility in Oregon.
We believe the distribution landscape in the beverage industry is
changing rapidly as tech-enabled e-commerce business models are
thriving. Direct to consumer, office or home solutions are
projected to continue to gain traction in the future. To address
this opportunity Splash continues to shape its operating model to
be vertically integrated building an e-commerce platform, Qplash,
which purchases local and regional brands for developing a direct
line of sales to small retail stores.
Splash’s wholly owned subsidiary, Splash Beverage Group II, Inc.
was originally incorporated in the State of Nevada under the name
TapouT Beverages, Inc. for the purpose of acquiring the rights
under a license agreement with TapouT, LLC (Authentic Brands
Group). Splash has license rights to the TapouT Performance brand
in North America (Including US Territories and Military Bases),
United Kingdom, Brazil, South Africa, Scandinavia, Peru, Colombia,
Chile and Guatemala.
In addition, Splash has a joint venture with SALT Naturally
Flavored Tequila, Copa Di Vino wines and Pulpoloco, sangrias that
comes in a biodegradable can.
The Company leadership understand the importance of infusing
beverage brands with strong pop culture and lifestyle elements
which drives trial, belief and, most importantly, repeat
purchases.
The management team led by Robert Nistico has over 28 years of
experience in all levels of the three-tier distribution system used
in the beverage industry working on brands such as Red Bull and
companies such as Gallo Winery and RNCC Texas. The President &
CMO, Bill Meissner, has led major beverage brands as Sparkling Ice,
Fuze, Sweet Leaf Tea and Jones Soda. The CFO, Ron Wall, has over 25
years of experience in the alcohol beverage industry with Diageo
and William Grant & Sons. The Senior Vice President of Sales,
James Allred, has 25+ years’ experience in the beverage industry
predominately with Anheuser-Busch.
Our Strategy
Our strategy is to combine the traditional approach of
manufacturing, distributing, and marketing of beverages, with
early-stage brands that have a reasonable level of pre-existing
brand awareness and market presence, or have attributes that we
believe to be purely innovative. We believe this allows us to break
through the clutter of numerous brand introductions and dilute
risk. This philosophy is applied regardless of whether the brand is
100% owned or a joint venture.
For acquisition or joint venture consideration, we prefer to work
with brands that already have one or more of the following in
place:
|
● |
Some
level of preexisting brand awareness |
|
● |
Regional
presence that can be expanded |
|
● |
Licensing
an existing brand name (TapouT for example) |
|
● |
Add
to an underdeveloped and/or growing category capitalizing on
consumer trends |
|
|
|
|
● |
Innovation
to an existing attractive category (such as flavored
tequila) |
|
|
|
|
● |
A
near term clear path to profitability |
We believe this model provides us with two paths to success: one,
developing our wholly owned core brands and two, the ability to tap
into high growth, early-stage brands ready to scale. This platform
allows us to significantly reduce development expense while
simultaneously increasing efficiencies for all brands in our
portfolio.
Our management team has over 120 years of combined experience in
the beverage industry, including decades of successful brand
introductions by our management team (Gallo, Red Bull, Bacardi,
Diageo, Sparkling Ice, Jones Soda, FUZE Beverage, NOS Energy, SoBe
Beverages, Muscle Milk, Marley Beverages), we believe our ability
to break through the distribution and retail bottlenecks makes us
an attractive joint venture partner to many new brand owners.
Splash has the ability to fully own a brand or be flexible to
engage in business ventures structured with a revenue split, or an
equity position.
The benefit to Splash in these shared brand ownerships is the
ability to avoid the development costs for new products. This model
spreads our risk over several brands, contributes to our economies
of scale, and improves our relationship with distributors and
reduces the overall cost of infrastructure.
The Company also believe the distribution landscape in the beverage
category is changing rapidly. Tech-enabled business models are
thriving and direct to consumer, office or home solutions are
projected to continue to gain traction as beverage alcohol
regulations evolve. A core strategy for us is to build onto the
early success we’re seeing with the Qplash online platform, our
consumer-packaged goods retail division and our first entry point
into the growing e-commerce channel.
Products
We currently produce, distribute and market SALT
Naturally Flavored Tequila (“SALT”), a 100% agave 80 proof line of
flavored tequilas, “TapouT Performance,” a line of performance
beverages that complete in the hydration and energy categories,
Copa Di Vino single serve wine by the glass and import Pulpoloco
Sangria in 3 flavors.
The following is a description of these products.
SALT Flavored Tequila

We oversee production, distribute, and market the following flavors
under the brand name SALT Naturally Flavored Tequila:
Vodka, rum, and brown spirits have experienced significant growth
when flavors are introduced, and we expect this growth of flavors
to continue, as the tequila category continues to rapidly
expand.
SALT is currently being distributed by Republic National
Distribution Co., various Anheuser-Busch & Miller-Coors
distributorships, and other distributors in multiple U.S. states.
Additionally, SALT is for sale in Mexico. Several South American
countries are expected to launch SALT during 2023.
SALT is a business venture between the Company and SALT USA, LLC.
All aspects of manufacturing, logistics, distribution and marketing
are our responsibility.
TapouT Performance Isotonic Sports Drinks

We will produce, market, sell and distribute the following sports
beverages under the brand name TapouT:
|
● |
TapouT
Energy: Launching in 2023 |
TapouT Performance Beverages are a line of unique advanced
performance beverages containing ingredients known for various
functional benefits including, focus, cognition, energy,
recuperative and cell regeneration which promotes better absorption
of nutrients, increase hydration and cellular recovery. They are
exclusively formulated with GRAS (FDA Designation “Generally
Regarded As Safe”) ingredients versus controversial ingredients
often used in many competitive products. TapouT Performance
Beverages are all natural with a highly innovative proprietary
blends designed to enhance physical and or mental performance.
TapouT, formally associated with the UFC and mixed martial arts has
been producing branded clothing and light equipment for over 23
years and has a high level of aided and unaided brand
awareness.
TapouT License Agreement
We have the rights under a License Agreement with ABG TapouT (the
“License Agreement”) to produce, market, sell and distribute
TapouT sports beverages in North America (including US Territories
and Military Bases), United Kingdom, Brazil, South Africa,
Australia, Scandinavia, Peru, Colombia, Chile and Guatemala. The
beverages covered by the License Agreement include sports drinks,
energy drinks, energy shots, electrolyte chews, energy bars, water,
protein, and teas.
We pay a 6% royalty of net sales or a guaranteed minimum annual
royalty of $660,000, whichever is greater. The License Agreement
will expire on December 31, 2025 with a renewal option through
December 31, 2028 at which time will be reviewed and renegotiated
if necessary.
We have the right to use the TapouT brand to market, advertise and
promote for sale our TapouT beverages and branded products. As part
of the alliance, Splash commits to investing 2% of sales in
marketing to the TapouT Performance Brand. TapouT provides
marketing collateral for advertising and promotion and has
influential relationships with select celebrity and athletic
talent. TapouT agrees to use reasonable efforts to request its
retained celebrities and/or athletes be present at autograph
signings, tradeshows and other similar events.
Copa di Vino Wine Group, Inc. and Related Financing
On December 24, 2020, the Company entered into an Asset
Purchase Agreement with CdV, pursuant to which the Company
purchased certain assets and assumed certain liabilities that
comprise the CdV business for a total purchase price of $5,980,000,
payable in the combination of $2,000,000 in cash, a $2,000,000
convertible promissory note to CdV and a variable number of shares
of the Company’s common stock based on an attainment of revenue
hurdles.
In conjunction with the acquisition, the Company also entered into
a Revenue Loan and Security Agreement (the “Loan and Security
Agreement”) by and among the Company, Robert Nistico, additional
Guarantor and each of the subsidiary guarantors from time-to-time
party thereto (each a “Guarantor”, and, collectively, the
“Guarantors”), and Decathlon Alpha IV, L.P. (the “Lender”). The
Loan and Security Agreement provided for a revenue-based credit
facility of $1,578,237 (the “Gross Amount”) with the Lender (the
“Credit Facility”).
Copa di Vino Wine Group, Inc.

Copa Di Vino is the leading producer of premium wine by the glass
in the United States. The Copa-di-Vino product line is highly
innovative as a ready to drink wine glass capable to go anywhere
without the need for a bottle, corkscrew or glass.
Through our acquisition of Copa di Vino Corporation, we are now
able to offer nine varietals of wine: Pinot Grigio, Riesling,
Merlot, Chardonnay, White Zinfandel, Moscato, Red Blend, Sauvignon
Blanc and Cabernet Sauvignon. In addition to its wine varietals,
Copa di Vino also procures Pulpoloco, a sangria which is encased in
an eco-friendly fiber based can from Spain. The rights to utilize
this packaging for multiple categories were conveyed to SBG in
conjunction with the distribution rights.

E-commerce
“Qplash” is a wholly owned division of Splash. It is our first
entry point into the growing e-commerce channel. The division sells
beverages online through www.qplash.com, and
third-party storefronts such as Amazon.com. Inside of the division,
there are two primary customer groups: business to business
retailers, which in turn offer the products to their customers, and
business to consumer, selling direct to end users. This program
allows businesses to control inventory, order with payment terms,
and offer the convenience of delivery directly to each store.
Currently Qplash offers over 1,500 listings and have
warehouses that ship from both California and Pennsylvania.
Discontinued Business - Canfield Medical Supply, Inc.
Canfield Medical Supply, Inc. (“CMS”) is a provider of home medical
equipment, supplies and services (which relate to the equipment
sales) in Ohio’s Mahoning Valley, Western Pennsylvania and Northern
West Virginia, with an emphasis on providing for patients with
mobility-related limitations who have had strokes, hip or knee
replacements, and other surgeries after they are discharged from a
hospital or rehab center. CMS is a legacy segment of the business
and in December 2020, management discontinued operations and the
business was sold in the second Quarter of 2022.
Our Competitive Strengths
We believe the following competitive strengths contribute to
Company’s success and differentiate us from our competitors:
|
● |
An
established distribution network through global sales
channels; |
|
● |
A
hybrid distribution model that leverages multiple routes to market,
including national chains, independent local markets and regional
chains, and specialty food and C-Stores |
|
● |
Long-term
relationships with retailers and the establishment of
chains; |
|
● |
Premium
customer service; |
|
● |
Dynamic
and sustainable product offerings of natural quality and
freshness with health benefits; |
|
● |
A
highly experienced management team; |
|
● |
Strategically
selected, dedicated sales professionals; |
|
● |
Qplash,
our e-commerce platform, which provides us an
integrated distribution platform for our non-alcoholic
brands; |
|
● |
Ability
to execute and distribute across many geographies, on behalf of our
licensed brand portfolio; |
|
|
|
|
● |
Strong
brand awareness through partnerships and acquisitions of brands
with pre-existing brand awareness or viewed as truly innovative;
and |
|
|
|
|
● |
Celebrity
and professional athlete endorsement of our brands. |
Manufacturing and Co-packing
We are responsible for the manufacturing of Copa di Vino, TapouT
Performance and SALT. The Copa di Vino product line is bottled at
our manufacturing facility in The Dalles, Oregon. Pulpoloco is
imported from Spain as a finished product.
Although we are responsible for manufacturing TapouT Performance
and SALT, we do not directly manufacture these products, but
instead outsource such manufacturing to third party bottlers and
contract packers.
Our TapouT Performance and Salt products are manufactured in the
United States and Mexico under separate arrangements with each
party. Our co-packaging arrangements are terminable upon request
and do not obligate us to produce any minimum quantities of
products within specified periods.
We purchase concentrates, flavors, dietary ingredients, cans,
bottles, caps, labels, and other components and ingredients for our
beverage products from our suppliers, which are delivered to our
manufacturing operations and various third-party bottlers and
co-packers. In some cases, certain common supplies may be purchased
by our various third-party bottlers and co-packers. Depending on
the product, the third-party bottlers or packers add filtered water
and/or other ingredients (including dietary ingredients) for the
manufacture and packaging of the finished products into our
approved containers in accordance with our formulas.
Distribution
We operate within what is referred to as a “Three Tier Distribution
System” where manufacturers do not typically sell directly to
retailers, but instead contract for local and regional distribution
with independent distributors. These distributors typically have
geographic rights to distribute major beverage brands and call on
every store in a given area such as major cities or regions. Our
management team has extensive experience working within this
channel and believes that we will be successful in building a
strong network of these distributors.
In addition to working with these independent distributors, we also
have distribution arrangements with national retail accounts to
distribute some of our products directly through their warehouse
operations. Most notably, SBG executed a distribution agreement
with AB-InBev, for distribution with their owned operations, AB
ONE. This provides SBG very effective distribution
capabilities.
Employees
We have 40 full-time employees, including non-officer
employees and our executive officers. None of our employees are represented by
a labor union. We have not experienced any work stoppages and
consider our relations with our employees to be good.
Listing on the NYSE American
Our common stock and warrants are listed on the NYSE American
exchange under the ticker symbols “SBEV” and “SBEV WT,”
respectively.
Corporate Information
Splash was originally incorporated in the State of Nevada under the
name TapouT Beverages, Inc. for the purpose of acquiring the rights
under a license agreement with TapouT, LLC (Authentic Brands Group)
for the right to use the TapouT brand in connection with
manufacturing and selling certain beverages.
Splash executed a reverse merger with a fully reporting, public
entity called Canfield Medical Supply, Inc. and became a
wholly-owned subsidiary of Canfield Medical Supply Inc. on March
31, 2020. At the time of the merger Canfield state of incorporation
was Colorado. At the time of the merger Canfield’s common stock was
quoted on the OTCQB.
On July 31, 2021, we changed our name from Canfield Medical Supply,
Inc. to Splash Beverage Group, Inc.
On June 11, 2021, our common stock and warrants to purchase common
stock began trading on the NYSE American under the symbols “SBEV”
and SBEV WT,” respectively
On November 8, 2021, we changed our state of incorporation from
Colorado to Nevada.
Our principal offices are located at 1314 E. Las Olas Blvd, Suite
221, Fort Lauderdale, Florida 33301. Our main telephone number is
(954) 745-5815. Our website address
is www.splashbeveragegroup.com. We have not
incorporated by reference into this Annual Report on Form 10-K the
information that can be assessed through our website and you should
not consider it to be part of this Annual Report on Form 10-K.
Item 1A. Risk
Factors.
You should carefully
consider the risks described below as well as other information
provided to you in this document, including information in the
section of this document entitled “Cautionary Note Concerning
Forward Looking Statements.” If any of the following risks actually
occur, the Company’s business, financial condition or results of
operations could be materially adversely affected, the value of the
Company’s Common Stock could decline, and you may lose all or part
of your investment.
RISKS RELATED TO OUR BUSINESS
Risks Related to our Business
Our business could be materially and adversely affected by
the lingering impact of the global COVID-19 pandemic or
other epidemics and outbreaks.
The COVID-19 pandemic had disrupted and affected our
business operations, which has led to business and supply chain
disruptions. The lingering effects of the pandemic are likely to
continue to disrupt our business and supply chain in the future.
For example, our ability to gain new retail authorizations could be
impacted by restrictions in retail outlets and our ability to
generate sales and brand awareness in bars and restaurants could be
impacted if restrictions are place on these establishments.
However, given the unpredictable nature of COVID-19 and
its variants, it is difficult, if not impossible, to predict,
whether any government-imposed restrictions will be reimposed at
previous levels or enhanced in one or more ways impacting our
business operations or those of third parties upon which we rely.
The COVID-19 pandemic, including associated business
interruptions and recovery, as well as other possible epidemics or
outbreaks of other contagions could result in a material adverse
impact on our or our current or anticipated customers’ or
suppliers’ business operations, including reduction or suspension
of operations in the U.S. or other parts of the world. Our design
and engineering operations, among others, cannot all be conducted
remotely and often require on-site access to materials and
equipment. We have customers, suppliers, and partners with
international operations, and our customers, suppliers, and
partners also depend on suppliers and manufacturers worldwide,
which means that our business and prospects could be affected by
the lingering effects of the COVID-19 pandemic anywhere
in the world. Depending upon the duration of the lingering effects
of the COVID-19 pandemic and the associated business
interruptions, our customers, suppliers, manufacturers, and
partners may suspend or delay their engagements with us. We and our
customers’ and suppliers’ response to the lingering effects of
the COVID-19 pandemic may prove to be inadequate and they
may be unable to continue their respective operations in the manner
they had prior to the outbreak or the worsening of the outbreak,
and we may consequently endure interruptions, reputational harm,
delays in our product development, and shipments, all of which
could have an adverse effect on our business, operating results,
and financial condition. In addition, we cannot assure you as to
the timing of the economic recovery given the lingering effects of
the pandemic, which could have a material adverse effect on our
target markets and our business.
If we are unable to continue as a going concern, our
securities will have little or no value.
We have sustained recurring losses and we have had a working
capital and stockholders’ equity deficits. These prior losses and
expected future losses have had, and will continue to have, an
adverse effect on our financial condition. In addition, continued
operations and our ability to continue as a going concern may be
dependent on our ability to obtain additional financing in the near
future and thereafter, and there are no assurances that such
financing will be available to us at all or will be available in
sufficient amounts or on reasonable terms. Our financial statements
do not include any adjustments that may result from the outcome of
this uncertainty. If we are unable to generate additional funds in
the future through sales of our products, financings or from other
sources or transactions, we will exhaust our resources and will be
unable to continue operations. If we cannot continue as a going
concern, our shareholders would likely lose most or all of their
investment in us.
We have experienced recurring losses from operations and
negative cash flows from operating activities
and anticipate that we will continue to incur significant
operating losses in the future.
We have experienced recurring losses from operations and negative
cash flows from operating activities. We expect to continue to
incur significant expenses related to our ongoing operations and
generate operating losses for the foreseeable future. The size of
our losses will depend, in part, on the rate of future expenditures
and our ability to generate revenues. We incurred a net loss
of $21.7 million for
the year ended December 31, 2022. Our accumulated deficit increased
to $112.3 million as
of December 31, 2022, compared to the prior year’s
deficit of $90.6
million.
We may encounter unforeseen expenses, difficulties, complications,
delays, and other unknown factors that may adversely affect our
financial condition. Our prior losses and expected future losses
have had, and will continue to have, an adverse effect on our
financial condition. If our products do not achieve sufficient
market acceptance and our revenues do not increase significantly,
we may never become profitable. Even if we achieve profitability in
the future, we may not be able to sustain profitability in
subsequent periods. Our failure to become and remain profitable
would decrease the value of our company and could impair our
ability to raise capital, expand our business, diversify our
product offerings or continue our operations. A decline in the
value of our company could cause you to lose all or part of your
investment.
If we are not able to successfully execute on our future
operating plans and objectives, our financial condition and results
of operation may be materially adversely affected, and we may not
be able to continue as a going concern.
It is important that we meet our sales goals and increase sales
going forward as our operating plan already reflects prior
significant cost containment measures and may make it difficult to
achieve top-line growth if further significant reductions become
necessary. If we do not meet our sales goals, our available cash
and working capital will decrease and our financial condition will
be negatively impacted.
In order to be successful, we believe that we must, among other
things:
|
● |
increase
the sales volume and gross margins for our products; |
|
|
|
|
● |
maintain
efficiencies in operations; |
|
|
|
|
● |
manage
our operating expenses to sufficiently support operating
activities; |
|
|
|
|
● |
maintain
fixed costs at or near current levels; and |
|
|
|
|
● |
avoid
significant increases in variable costs relating to production,
marketing and distribution. |
We may not be able to meet these objectives, which could have a
material adverse effect on our results of operations. We have
incurred significant operating expenses in the past and may do so
again in the future and, as a result, will need to increase
revenues in order to improve our results of operations. Our ability
to increase sales will depend primarily on success in expanding our
current markets, improving our distribution base, entering into
Direct-To-Retail (DTR) arrangements with national accounts, and
introducing new brands, products or product extensions to the
market. Our ability to successfully enter new distribution areas
and obtain national accounts will, in turn, depend on various
factors, many of which are beyond our control, including, but not
limited to, the continued demand for our brands and products in
target markets, the ability to price our products at competitive
levels, the ability to establish and maintain relationships with
distributors in each geographic area of distribution and the
ability in the future to create, develop and successfully introduce
one or more new brands, products, and product extensions.
Demand for our products may be adversely affected by changes
in consumer preferences or any inability on our part to innovate,
market or distribute our products effectively, and any significant
reduction in demand could adversely affect our business, financial
condition or results of operations.
Our beverage portfolio is comprised of a number of unique brands
with reputations and consumer imagery that have been built over
time. Our investments in marketing as well as our strong commitment
to product quality are intended to have a favorable impact on brand
image and consumer preferences. If we do not adequately anticipate
and react to changing demographics, consumer and economic trends,
health concerns and product preferences, our financial results
could be adversely affected.
Additionally, failure to introduce new brands, products or product
extensions into the marketplace as current ones mature and to meet
the changing preferences of consumers could prevent us from gaining
market share and achieving long-term profitability. Product
lifecycles can vary and consumer preferences and loyalties change
over time. Although we try to anticipate these shifts and innovate
new products to introduce to our consumers, we may not succeed.
Consumer preferences also are affected by factors other than taste,
such as health and nutrition considerations and obesity concerns,
shifting consumer needs, changes in consumer lifestyles, increased
consumer information and competitive product and pricing pressures.
Sales of our products may be adversely affected by the negative
publicity associated with these issues... If we do not adequately
anticipate or adjust to respond to these and other changes in
consumer preferences, we may not be able to maintain and grow our
brand image and our sales may be adversely affected.
Volatility in the price or availability of the inputs
we depend on, including raw materials, packaging, energy and labor,
could adversely impact our financial results.
The principal raw materials we use include glass bottles, aluminum
cans, labels and cardboard cartons, flavorings and sweeteners.
These ingredient costs are subject to fluctuation. Substantial
increases in the prices of our ingredients, raw materials and
packaging materials, to the extent that they cannot be recouped
through increases in the prices of finished beverage products,
would increase our operating costs and could reduce our
profitability. If our supply of these raw materials is impaired or
if prices increase significantly, it could affect the affordability
of our products and reduce sales.
If we are unable to secure sufficient ingredients or raw materials
including glass, sugar, and other key supplies, we might not be
able to satisfy demand on a short-term basis.
Changes in government regulation or failure to comply with
existing regulations could adversely affect our business, financial
condition and results of operations.
Our business and properties are subject to various federal, state
and local laws and regulations, including those governing the
production, packaging, quality, labeling and distribution of
beverage products. In addition, various governmental agencies have
enacted or are considering additional taxes on soft drinks and
other sweetened beverages. Changes in existing laws or regulations
could require material expenses and negatively affect our financial
results through lower sales or higher costs.
We compete in an industry that is brand-conscious, so brand
name recognition and acceptance of our products are critical to our
success.
Our business is dependent upon awareness and market acceptance of
our products and brands by our target market, trendy, young
consumers looking for a distinctive tonality in their beverage
choices. In addition, our business depends on acceptance by our
independent distributors and retailers of our brands as beverage
brands that have the potential to provide incremental sales growth.
If we are not successful in the revitalization and growth of our
brand and product offerings, we may not achieve and maintain
satisfactory levels of acceptance by independent distributors and
retail consumers. Any failure of our brand to maintain or increase
acceptance or market penetration would likely have a material
adverse effect on our revenues and financial results.
Our brands and brand images are keys to our business and any
inability to maintain a positive brand image could have a material
adverse effect on our results of operations.
Our success depends on our ability to maintain brand image for our
existing products and effectively build up brand image for new
products and brand extensions. We cannot predict whether our
advertising, marketing and promotional programs will have the
desired impact on our products’ branding and on consumer
preferences. In addition, negative public relations and product
quality issues, whether real or imagined, could tarnish our
reputation and image of the affected brands and could cause
consumers to choose other products. Our brand image can also be
adversely affected by unfavorable reports, studies and articles,
litigation, or regulatory or other governmental action, whether
involving our products or those of our competitors.
Competition from traditional and large, well-financed
non-alcoholic and alcoholic beverage manufacturers may adversely
affect our distribution relationships and may hinder development of
our existing markets, as well as prevent us from expanding our
markets.
The beverage industry is highly competitive. We compete with other
beverage companies not only for consumer acceptance but also for
shelf space in retail outlets and for marketing focus by our
distributors, all of whom also distribute other beverage brands.
Our products compete with all non-alcoholic and alcoholic
beverages, most of which are marketed by companies with
substantially greater financial resources than ours. Some of these
competitors are placing severe pressure on independent distributors
not to carry competitive brands such as ours. We also compete with
regional beverage producers and “private label” hydration
suppliers.
Increased competitor consolidations, market-place competition,
particularly among branded beverage products, and competitive
product and pricing pressures could impact our earnings, market
share and volume growth. If, due to such pressure or other
competitive threats, we are unable to sufficiently maintain or
develop our distribution channels, we may be unable to achieve our
current revenue and financial targets. Competition, particularly
from companies with greater financial and marketing resources than
ours, could have a material adverse effect on our existing markets,
as well as on our ability to expand the market for our
products.
We may experience a reduced demand for some of our products
due to health concerns (including obesity) and legislative
initiatives against sweetened beverages.
Consumers are concerned about health and wellness; public health
officials and government officials are increasingly vocal about
obesity and its consequences. There has been a trend among some
public health advocates and dietary guidelines to recommend a
reduction in sweetened beverages, as well as increased public
scrutiny, new taxes on sugar-sweetened beverages (as described
below), and additional governmental regulations concerning the
marketing and labeling/packing of the beverage industry. Additional
or revised regulatory requirements, whether labeling, tax or
otherwise, could have a material adverse effect on our financial
condition and results of operations. Further, increasing public
concern with respect to sweetened beverages could reduce demand for
our beverages and increase desire for more low-calorie soft drinks,
water, enhanced water, coffee-flavored beverages, tea, and
beverages with natural sweeteners. We are continuously working to
reduce calories and sugar in our TapouT products while launching
new products, to pair with existing brand extensions that round out
our diversified portfolio.
Legislative or regulatory changes that affect our
products, including new taxes, could reduce demand for
products or increase our costs.
Taxes imposed on the sale of certain of our products by federal,
state and local governments in the United States, or other
countries in which we operate could cause consumers to shift away
from purchasing our beverages. Several municipalities in the United
States have implemented or are considering implementing taxes on
the sale of certain “sugared” beverages, including non-diet soft
drinks, fruit drinks, teas and flavored waters to help fund various
initiatives. These taxes could materially affect our business and
financial results.
Our reliance on distributors, retailers and brokers could
affect our ability to efficiently and profitably distribute and
market our products, maintain our existing markets and expand our
business into other geographic markets.
Our ability to maintain and expand our existing markets for our
products, and to establish markets in new geographic distribution
areas, is dependent on our ability to establish and maintain
successful relationships with reliable distributors, retailers and
brokers strategically positioned to serve those areas. Most of our
distributors, retailers and brokers sell and distribute competing
products, including non-alcoholic and alcoholic beverages, and our
products may represent a small portion of their businesses. The
success of this network will depend on the performance of the
distributors, retailers and brokers of this network. There is a
risk that the mentioned entities may not adequately perform their
functions within the network by, without limitation, failing to
distribute to sufficient retailers or positioning our products in
localities that may not be receptive to our product. Our ability to
incentivize and motivate distributors to manage and sell our
products is affected by competition from other beverage companies
who have greater resources than we do. To the extent that our
distributors, retailers and brokers are distracted from selling our
products or do not employ sufficient efforts in managing and
selling our products, including re-stocking the retail shelves with
our products, our sales and results of operations could be
adversely affected. Furthermore, such third-parties’ financial
position or market share may deteriorate, which could adversely
affect our distribution, marketing and sales activities.
Our ability to maintain and expand our distribution network and
attract additional distributors, retailers and brokers will depend
on a number of factors, some of which are outside our control. Some
of these factors include:
|
● |
the
level of demand for our brands and products in a particular
distribution area; |
|
● |
our
ability to price our products at levels competitive with those of
competing products; and |
|
● |
our
ability to deliver products in the quantity and at the time ordered
by distributors, retailers and brokers. |
We may not be able to successfully manage all or any of these
factors in any of our current or prospective geographic areas of
distribution. Our inability to achieve success with regards to any
of these factors in a geographic distribution area will have a
material adverse effect on our relationships in that particular
geographic area, thus limiting our ability to maintain or expand
our market, which will likely adversely affect our revenues and
financial results.
It is difficult to predict the timing and amount of our sales
because our distributors are not required to place minimum orders
with us.
Our independent distributors and national accounts are not required
to place minimum monthly or annual orders for our products. In
order to reduce their inventory costs, independent distributors
typically order products from us on a “just in time” basis in
quantities and at such times based on the demand for the products
in a particular distribution area. Accordingly, we cannot predict
the timing or quantity of purchases by any of our independent
distributors or whether any of our distributors will continue to
purchase products from us in the same frequencies and volumes as
they may have done in the past. Additionally, our larger
distributors and national partners may make orders that are larger
than we have historically been required to fill. Shortages in
inventory levels, supply of raw materials or other key supplies
could negatively affect us.
If we do not adequately manage our inventory levels, our
operating results could be adversely affected.
We need to maintain adequate inventory levels to be able to deliver
products to distributors on a timely basis. Our inventory supply
depends on our ability to correctly estimate demand for our
products. Our ability to estimate demand for our products is
imprecise, particularly for new products, seasonal promotions and
new markets. If we materially underestimate demand for our products
or are unable to maintain sufficient inventory of raw materials, we
might not be able to satisfy demand on a short-term basis. If we
overestimate distributor or retailer demand for our products, we
may end up with too much inventory, resulting in higher storage
costs, increased trade spend and the risk of inventory spoilage. If
we fail to manage our inventory to meet demand, we could damage our
relationships with our distributors and retailers and could delay
or lose sales opportunities, which would unfavorably impact our
future sales and adversely affect our operating results. In
addition, if the inventory of our products held by our distributors
and retailers is too high, they will not place orders for
additional products, which would also unfavorably impact our sales
and adversely affect our operating results.
If we fail to maintain relationships with our independent
contract manufacturers, our business could be harmed.
We do not manufacture our products but instead outsource the
manufacturing process to third-party bottlers and independent
contract manufacturers (co-packers). We do not own the plants or
the majority of the equipment required to manufacture and package
our beverage products, and we do not anticipate bringing the
manufacturing process in-house in the future. Our ability to
maintain effective relationships with contract manufacturers and
other third parties for the production and delivery of our beverage
products in a particular geographic distribution area is important
to the success of our operations within each distribution area. We
may not be able to maintain our relationships with current contract
manufacturers or establish satisfactory relationships with new or
replacement contract manufacturers, whether in existing or new
geographic distribution areas. The failure to establish and
maintain effective relationships with contract manufacturers for a
distribution area could increase our manufacturing costs and
thereby materially reduce gross profits from the sale of our
products in that area. Poor relations with any of our contract
manufacturers could adversely affect the amount and timing of
product delivered to our distributors for resale, which would in
turn adversely affect our revenues and financial condition. In
addition, our agreements with our contract manufacturers are
terminable at any time, and any such termination could disrupt our
ability to deliver products to our customers.
The volatility of energy and increased regulations may have
an adverse impact on our gross margin.
Over the past few years, volatility in the global oil markets has
resulted in variable fuel prices, which many shipping companies
have passed on to their customers by way of higher base pricing and
increased fuel surcharges. If fuel prices increase, we expect to
experience higher shipping rates and fuel surcharges, as well as
energy surcharges on our raw materials. It is hard to predict what
will happen in the fuel markets in 2021 and beyond. Due to the
price sensitivity of our products, we may not be able to pass such
increases on to our customers.
Disruption within our supply chain, contract manufacturing or
distribution channels could have an adverse effect on our business,
financial condition and results of operations.
Our ability, through our suppliers, business partners, contract
manufacturers, independent distributors and retailers, to make,
move and sell products is critical to our success. Damage or
disruption to our suppliers or to manufacturing or distribution
capabilities due to weather, natural disaster, fire or explosion,
terrorism, pandemics such as influenza COVID-19, labor strikes or
other reasons, could impair the manufacture, distribution and sale
of our products. Many of these events are outside of our control.
Failure to take adequate steps to protect against or mitigate the
likelihood or potential impact of such events, or to effectively
manage such events if they occur, could adversely affect our
business, financial condition and results of operations.
We rely upon our ongoing relationships with our key flavor
suppliers. If we are unable to source our flavors on acceptable
terms from our key suppliers, we could suffer disruptions in our
business.
We currently purchase our flavor concentrate from various flavor
concentrate suppliers, and continually develop other sources of
flavor concentrate for each of our products. Generally, flavor
suppliers hold the proprietary rights to their flavor specific
ingredients. Although we have the exclusive rights to flavor
concentrates developed with our current flavor concentrate
suppliers, and while we have the rights to the ingredients for our
products, we do not have the list of ingredients for our flavor
extracts and concentrates. Consequently, we may be unable to obtain
these exact flavors or concentrates from alternative suppliers on
short notice. If we have to replace a flavor supplier, we could
experience disruptions in our ability to deliver products to our
customers, which could have a material adverse effect on our
results of operations.
If we are unable to attract and retain key personnel, our
efficiency and operations would be adversely affected; in addition,
management turnover causes uncertainties and could harm our
business.
Our success depends on our ability to attract and retain highly
qualified employees in such areas as finance, sales, marketing and
product development. We compete to hire new employees, and, in some
cases, must train them and develop their skills and competencies.
We may not be able to provide our employees with competitive
salaries, and our operating results could be adversely affected by
increased costs due to increased competition for employees, higher
employee turnover or increased employee benefit costs.
Changes to operations, policies and procedures, which can often
occur with the appointment of new personnel, can create
uncertainty, may negatively impact our ability to execute quickly
and effectively, and may ultimately be unsuccessful. In addition,
management transition periods are often difficult as the new
employees gain detailed knowledge of our operations, and friction
can result from changes in strategy and management style.
Management turnover inherently causes some loss of institutional
knowledge, which can negatively affect strategy and execution.
Further, to the extent we experience additional management
turnover, our operations, financial condition and employee morale
could be negatively impacted. In addition, competition for top
management is high and it may take months to find a candidate that
meets our requirements. If we are unable to attract and retain
qualified management personnel, our business could suffer.
If we fail to protect our trademarks and trade secrets, we
may be unable to successfully market our products and compete
effectively.
We rely on a combination of trademark and trade secrecy laws,
confidentiality procedures and contractual provisions to protect
our intellectual property rights. Failure to protect our
intellectual property could harm our brand and our reputation, and
adversely affect our ability to compete effectively. Further,
enforcing or defending our intellectual property rights, including
our trademarks, copyrights, licenses and trade secrets, could
result in the expenditure of significant financial and managerial
resources. We regard our intellectual property, particularly our
trademarks and trade secrets to be of considerable value and
importance to our business and our success, and we actively pursue
the registration of our trademarks in the United States and
internationally. However, the steps taken by us to protect these
proprietary rights may not be adequate and may not prevent third
parties from infringing or misappropriating our trademarks, trade
secrets or similar proprietary rights. In addition, other parties
may seek to assert infringement claims against us, and we may have
to pursue litigation against other parties to assert our rights.
Any such claim or litigation could be costly. In addition, any
event that would jeopardize our proprietary rights or any claims of
infringement by third parties could have a material adverse effect
on our ability to market or sell our brands, profitably exploit our
products or recoup our associated research and development
costs.
As part of the licensing strategy of our brands, we enter into
licensing agreements under which we grant our licensing partners
certain rights to use our trademarks and other designs. Although
our agreements require that the use of our trademarks and designs
is subject to our control and approval, any breach of these
provisions, or any other action by any of our licensing partners
that is harmful to our brands, goodwill and overall image, could
have a material adverse impact on our business.
We may be required in the future to record a significant
charge to earnings if our goodwill or intangible assets become
impaired.
Under United States Generally Accepted Accounting Principles (“U.S.
GAAP”), we are required to review our intangible assets for
impairment when events or changes in circumstances indicate the
carrying value may not be recoverable. Factors that may be
considered a change in circumstances indicating that the carrying
value of our intangible assets may not be recoverable include,
declining or slower than anticipated growth rates for certain of
our existing products, a decline in stock price and market
capitalization, and slower growth rates in our industry.
We may be required in the future to record a significant charge to
earnings during the period in which we determine that our
intangible assets have been impaired. Any such charge would
adversely impact our results of operations. As of December 31,
2022, our intangible assets totaled approximately $5.81million.
If we encounter product recalls or other product quality
issues, our business may suffer.
Product quality issues, real or imagined, or allegations of product
contamination, even when false or unfounded, could tarnish our
image and could cause consumers to choose other products. In
addition, because of changing government regulations or
implementation thereof, or allegations of product contamination, we
may be required from time to time to recall products entirely or
from specific markets. Product recalls could affect our
profitability and could negatively affect brand image.
Our business is subject to many regulations and noncompliance
is costly.
The production, marketing and sale of our beverages, including
contents, labels, caps and containers, are subject to the rules and
regulations of various federal, provincial, state and local health
agencies. If a regulatory authority finds that a current or future
product or production batch or “run” is not in compliance with any
of these regulations, we may be fined, or production may be
stopped, which would adversely affect our financial condition and
results of operations. Similarly, any adverse publicity associated
with any noncompliance may damage our reputation and our ability to
successfully market our products. Furthermore, the rules and
regulations are subject to change from time to time and while we
closely monitor developments in this area, we cannot anticipate
whether changes in these rules and regulations will impact our
business adversely. Additional or revised regulatory requirements,
whether labeling, environmental, tax or otherwise, could have a
material adverse effect on our financial condition and results of
operations.
Significant additional labeling or warning requirements may
inhibit sales of affected products.
Various jurisdictions may seek to adopt significant additional
product labeling or warning requirements relating to the chemical
content or perceived adverse health consequences of certain of our
products. These types of requirements, if they become applicable to
one or more of our products under current or future environmental
or health laws or regulations, may inhibit sales of such products.
In California, a law requires that a specific warning appear on any
product that contains a component listed by the state as having
been found to cause cancer or birth defects. This law recognizes no
generally applicable quantitative thresholds below which a warning
is not required. If a component found in one of our products is
added to the list, or if the increasing sensitivity of detection
methodology that may become available under this law and related
regulations as they currently exist, or as they may be amended,
results in the detection of an infinitesimal quantity of a listed
substance in one of our beverages produced for sale in California,
the resulting warning requirements or adverse publicity could
affect our sales.
Litigation or legal could expose us to significant
liabilities and damage our reputation.
We may become party to litigation claims and legal proceedings.
Litigation involves significant risks, uncertainties and costs,
including distraction of management attention away from our
business operations. We evaluate litigation claims and legal
proceedings to assess the likelihood of unfavorable outcomes and to
estimate, if possible, the amount of potential losses. Based on
these assessments and estimates, we establish reserves and disclose
the relevant litigation claims or legal proceedings, as
appropriate. These assessments and estimates are based on the
information available to management at the time and involve a
significant amount of management judgment. Actual outcomes or
losses may differ materially from those envisioned by our current
assessments and estimates. Our policies and procedures require
strict compliance by our employees and agents with all U.S. and
local laws and regulations applicable to our business operations,
including those prohibiting improper payments to government
officials. Nonetheless, our policies and procedures may not ensure
full compliance by our employees and agents with all applicable
legal requirements. Improper conduct by our employees or agents
could damage our reputation or lead to litigation or legal
proceedings that could result in civil or criminal penalties,
including substantial monetary fines, as well as disgorgement of
profits.
Additionally, there has been public attention directed at the
beverage alcohol industry, which we believe is due to concern over
problems related to harmful use of alcohol, including drinking and
driving, underage drinking and health consequences from the misuse
of alcohol. We could be exposed to lawsuits relating to product
liability or marketing or sales practices with respect to our
alcoholic products. Adverse developments in lawsuits concerning
these types of matters or a significant decline in the social
acceptability of beverage alcohol products that may result from
lawsuits could have a material adverse effect on our business,
liquidity, financial condition and results of operations.
We are subject to risks inherent in sales of products in
international markets.
Our operations outside of the United States, contribute to our
revenue and profitability, and we believe that developing and
emerging markets could present future growth opportunities for us.
However, there can be no assurance that existing or new products
that we manufacture, distribute or sell will be accepted or be
successful in any particular foreign market, due to local or global
competition, product price, cultural differences, and consumer
preferences or otherwise. There are many factors that could
adversely affect demand for our products in foreign markets,
including our inability to attract and maintain key distributors in
these markets; volatility in the economic growth of certain of
these markets; changes in economic, political or social conditions,
the status and renegotiations of the North American Free Trade
Agreement, imposition of new or increased labeling, product or
production requirements, or other legal restrictions; restrictions
on the import or export of our products or ingredients or
substances used in our products; inflationary currency, devaluation
or fluctuation; increased costs of doing business due to compliance
with complex foreign and U.S. laws and regulations. If we
are unable to effectively operate or manage the risks associated
with operating in international markets, our business, financial
condition or results of operations could be adversely affected.
Water scarcity and poor quality could negatively impact
our costs and capacity.
Water is a main ingredient in substantially all of our products, is
vital to the production of the agricultural ingredients on which
our business relies and is needed in our manufacturing process. It
also is critical to the prosperity of the communities we serve.
Water is a limited resource in many parts of the world, facing
unprecedented challenges from overexploitation, increasing demand
for food and other consumer and industrial products whose
manufacturing processes require water, increasing pollution and
emerging awareness of potential contaminants, poor management, lack
of physical or financial access to water, sociopolitical tensions
due to lack of public infrastructure in certain areas of the world
and the effects of climate change. As the demand for water
continues to increase around the world, and as water becomes
scarcer and the quality of available water deteriorates, we may
incur higher costs or face capacity constraints and the possibility
of reputational damage, which could adversely affect our
profitability or net operating revenues in the long run.
Fluctuations in quantity and quality of grape supply could
adversely affect our business.
A shortage in the supply of quality grapes may result from a
variety of factors that determine the quality and quantity of our
grape supply, including weather conditions, pruning methods,
diseases and pests, the ability to buy grapes on long and
short-term contracts and the number of vines producing grapes. Any
shortage in grape production could cause a reduction in the amount
of wine we are able to produce, which could reduce sales and
adversely impact our results from operations. Factors that reduce
the quantity of our grapes may also reduce their quality, which in
turn could reduce the quality or amount of wine we produce.
Deterioration in the quality of our wines could harm our brand
name, reduce sales and adversely impact our business and results of
operations.
Contamination of our wines could harm our
business.
We are subject to certain hazards and product liability risks, such
as potential contamination, through tampering or otherwise, of
ingredients or products. Contamination of any of our wines could
force us to destroy wine held in inventory and could cause the need
for a product recall, which could significantly damage our
reputation for product quality. We maintain insurance against
certain of these kinds of risks, and others, under various
insurance policies. However, the insurance may not be adequate or
may not continue to be available at a price or on terms that are
satisfactory to us and this insurance may not be adequate to cover
any resulting liability.
Our business and operations would be adversely impacted in
the event of a failure or interruption of our information
technology infrastructure or as a result of a cybersecurity
attack.
The proper functioning of our own information technology (IT)
infrastructure is critical to the efficient operation and
management of our business. We may not have the necessary
financial resources to update and maintain our IT infrastructure,
and any failure or interruption of our IT system could
adversely impact our operations. In addition, our IT is vulnerable
to cyberattacks, computer viruses, worms and other malicious
software programs, physical and electronic break-ins, sabotage and
similar disruptions from unauthorized tampering with our computer
systems. We believe that we have adopted appropriate measures to
mitigate potential risks to our technology infrastructure and our
operations from these IT-related and other potential disruptions.
However, given the unpredictability of the timing, nature and scope
of any such IT failures or disruptions, we could
potentially be subject to downtimes, transactional errors,
processing inefficiencies, operational delays, other detrimental
impacts on our operations or ability to provide products to our
customers, the compromising of confidential or personal
information, destruction or corruption of data, security breaches,
other manipulation or improper use of our systems and networks,
financial losses from remedial actions, loss of business or
potential liability, and/or damage to our reputation, any of which
could have a material adverse effect on our cash flows, competitive
position, financial condition or results of operations.
If we fail to comply with personal data protection and
privacy laws, we could be subject to adverse publicity, government
enforcement actions and/or private litigation, which could
negatively affect our business and operating results.
In the ordinary course of our business, we receive, process,
transmit and store information relating to identifiable individuals
(“personal data”), primarily employees, former employees and
consumers with whom we interact. As a result, we are subject to
various U.S. federal and state and foreign laws and regulations
relating to personal data. These laws have been subject to frequent
changes, and new legislation in this area may be enacted in other
jurisdictions at any time. These laws impose operational
requirements for companies receiving or processing personal data,
and many provide for significant penalties for noncompliance. These
requirements with respect to personal data have subjected and may
continue in the future to subject the Company to, among other
things, additional costs and expenses and have required and may in
the future require costly changes to our business practices and
information security systems, policies, procedures and practices.
Our security controls over personal data, the training of employees
and vendors on data privacy and data security, and the policies,
procedures and practices we implemented or may implement in the
future may not prevent the improper disclosure of personal data by
us or the third-party service providers and vendors whose
technology, systems and services we use in connection with the
receipt, storage and transmission of personal data. Unauthorized
access or improper disclosure of personal data in violation of
personal data protection or privacy laws could harm our reputation,
cause loss of consumer confidence, subject us to regulatory
enforcement actions (including fines), and result in private
litigation against us, which could result in loss of revenue,
increased costs, liability for monetary damages, fines and/or
criminal prosecution, all of which could negatively affect our
business and operating results.
If our third-party service providers and business partners do
not satisfactorily fulfill their commitments and responsibilities,
our financial results could suffer.
In the conduct of our business, we rely on relationships with third
parties, including cloud data storage and other information
technology service providers, suppliers, distributors, contractors,
joint venture partners and other external business partners, for
certain functions or for services in support of key portions of our
operations. These third-party service providers and business
partners are subject to similar risks as we are relating to
cybersecurity, privacy violations, business interruption, and
systems and employee failures, and are subject to legal, regulatory
and market risks of their own. Our third-party service providers
and business partners may not fulfill their respective commitments
and responsibilities in a timely manner and in accordance with the
agreed-upon terms. In addition, while we have procedures in place
for selecting and managing our relationships with third-party
service providers and other business partners, we do not have
control over their business operations or governance and compliance
systems, practices and procedures, which increases our financial,
legal, reputational and operational risk. If we are unable to
effectively manage our third-party relationships, or for any reason
our third-party service providers or business partners fail to
satisfactorily fulfill their commitments and responsibilities, our
financial results could suffer.
Our results of operations may fluctuate from quarter to
quarter for many reasons, including seasonality.
Our sales are seasonal, and we experience fluctuations in quarterly
results as a result of many factors. Companies similar to ours have
historically generated a greater percentage of our revenues during
the warm weather months of April through September. Timing of
customer purchases will vary each year and sales can be expected to
shift from one quarter to another. As a result, management believes
that period-to-period comparisons of results of operations are not
necessarily meaningful and should not be relied upon as any
indication of future performance or results expected for the fiscal
year.
Changes in accounting standards and subjective assumptions,
estimates and judgments by management related to complex accounting
matters could significantly affect our financial
results.
The U.S. GAAP and related pronouncements, implementation guidelines
and interpretations with regard to a wide variety of matters that
are relevant to our business, such as, but not limited to,
stock-based compensation, trade spend and promotions, and income
taxes are highly complex and involve many subjective assumptions,
estimates and judgments by our management. Changes to these rules
or their interpretation or changes in underlying assumptions,
estimates or judgments by our management could significantly change
our reported results.
If we are unable to maintain effective disclosure controls
and procedures and internal control over financial reporting, our
stock price and investor confidence could be materially and
adversely affected.
We are required to maintain both disclosure controls and procedures
and internal control over financial reporting that are effective.
Because of their inherent limitations, internal control over
financial reporting, however well designed and operated, can only
provide reasonable, and not absolute, assurance that the controls
will prevent or detect misstatements. Because of these and other
inherent limitations of control systems, there is only the
reasonable assurance that our controls will succeed in achieving
their goals under all potential future conditions. The failure of
controls by design deficiencies or absence of adequate controls
could result in a material adverse effect on our business and
financial results, which could also negatively impact our stock
price and investor confidence.
We are dependent on a distiller in Mexico, to provide us with
our finished SALT tequila product. Failure to obtain satisfactory
performance from them or a loss of their services could cause us to
lose sales, incur additional costs, and lose credibility in the
marketplace.
We depend on a distiller in Mexico, a company in Jalisco, for the
production, bottling, labeling, capping and packaging of our
finished tequila product. We do not have a written agreement with
our distiller in Mexico obligating it to produce our product. The
termination of our relationship with our distiller in Mexico
distiller or an adverse change in the terms of its services could
have a negative impact on our business. If our distiller in Mexico
increases its prices, we may not have alternative sources of supply
at comparable prices and may not be able to raise the prices of our
products to cover all, or even a portion, of the increased costs.
In addition, if our distiller in Mexico fails to perform
satisfactorily, fails to handle increased orders, or the loss of
the services of our distiller in Mexico, along with delays in
shipments of products, could cause us to fail to meet orders, lose
sales, incur additional costs, and/or expose us to product quality
issues. In turn, this could cause us to lose credibility in the
marketplace and damage our relationships with our customers and
consumers, ultimately leading to a decline in our business and
results of operations.
Regulatory decisions and changes in the legal, regulatory and
tax environment where our tequila is produced and where we operate
could limit our business activities or increase our operating costs
and reduce our margins.
Our business is subject to extensive regulation regarding
production, distribution, marketing, advertising and labeling of
beverage alcohol products in the U.S. and in Mexico, where our
tequila is produced. We are required to comply with these
regulations and maintain various permits and licenses. We are also
required to conduct business only with holders of licenses to
import, warehouse, transport, distribute, and sell spirits. We
cannot assure you that these and other governmental regulations,
applicable to our industry, will not change or become more
stringent. Moreover, because these laws and regulations are subject
to interpretation, we may not be able to predict when, and to what
extent, liability may arise. Additionally, due to increasing public
concern over alcohol-related societal problems, including driving
while intoxicated, underage drinking, alcoholism and health
consequences from the abuse of alcohol, various levels of
government may seek to impose additional restrictions or limits on
advertising or other marketing activities promoting beverage
alcohol products. Failure to comply with any of the current or
future regulations and requirements relating to our industry and
products, could result in monetary penalties, suspension or even
revocation of our licenses and permits. Costs of compliance with
changes in regulations could be significant and could harm our
business, as we may find it necessary to raise our prices in order
to maintain profit margins, which could lower the demand for our
products and reduce our sales and profit potential.
In addition, the distribution of beverage alcohol products is
subject to extensive taxation both in the United States and
internationally (and, in the United States, at both the federal and
state government levels), and beverage alcohol products themselves
are the subject of national import and excise duties in most
countries around the world. An increase in taxation or in import or
excise duties could also significantly harm our sales revenue and
margins, both through the reduction of overall consumption and by
encouraging consumers to switch to lower-taxed categories of
beverage alcohol.
We face substantial competition in the alcoholic beverage
industry, and we may not be able to effectively
compete.
Consolidation among spirits producers, distributors, wholesalers,
or retailers could create a more challenging competitive landscape
for our products. Consolidation at any level could hinder the
distribution and sale of our products as a result of reduced
attention and resources allocated to our brands, both during and
after transition periods, because our brands might represent a
smaller portion of the new business portfolio. Expansion into new
product categories by other suppliers, or innovation by new
entrants into the market, could increase competition in our product
categories. Changes to our route-to-consumer models or partners in
important markets could result in temporary or longer-term sales
disruption, higher implementation-related or fixed costs, and could
negatively affect other business relationships we might have with
that partner. Distribution network disruption or fluctuations in
our product inventory levels with distributors, wholesalers, or
retailers could negatively affect our results for a particular
period.
Our competitors may respond to industry and economic conditions
more rapidly or effectively than we do. Our competitors offer
products that compete directly with ours for shelf space,
promotional displays, and consumer purchases. Pricing, (including
price promotions, discounting, couponing, and free goods),
marketing, new product introductions, entry into our distribution
networks, and other competitive behavior by our competitors could
adversely affect our sales margins, and profitability.
Our business operations may be adversely affected by social,
political and economic conditions affecting market risks and the
demand for and pricing of our tequila products. These risks
include:
|
● |
Unfavorable
economic conditions and related low consumer confidence, high
unemployment, weak credit or capital markets, sovereign debt
defaults, sequestrations, austerity measures, higher interest
rates, political instability, higher inflation, deflation, lower
returns on pension assets, or lower discount rates for pension
obligations; |
|
● |
Changes
in laws, regulations, or policies – especially those that affect
the production, importation, marketing, sale, or consumption of our
beverage alcohol products; |
|
● |
Tax
rate changes (including excise, sales, tariffs, duties, corporate,
individual income, dividends, capital gains), or changes in related
reserves, changes in tax rules or accounting standards, and the
unpredictability and suddenness with which they can
occur; |
|
● |
Dependence
upon the continued growth of brand names; |
|
● |
Changes
in consumer preferences, consumption, or purchase patterns –
particularly away from tequila, and our ability to anticipate and
react to them; bar, restaurant, travel, or other on premise
declines; |
|
● |
Unfavorable
consumer reaction to our products, package changes, product
reformulations, or other product innovation; |
|
● |
Decline
in the social acceptability of beverage alcohol products in our
markets; |
|
● |
Production
facility or supply chain disruption; |
|
● |
Imprecision
in supply/demand forecasting; |
|
● |
Higher
costs, lower quality, or unavailability of energy, input materials,
labor, or finished goods; |
|
● |
Route-to-consumer changes that affect the timing of our sales,
temporarily disrupt the marketing or sale of our products, or
result in higher implementation related or fixed costs;
|
|
● |
Inventory
fluctuations in our products by distributors, wholesalers, or
retailers; Competitors’ consolidation or other competitive
activities, such as pricing actions (including price reductions,
promotions, discounting, couponing, or free goods), marketing,
category expansion, product introductions, or entry or expansion in
our geographic markets; |
|
● |
Insufficient
protection of our intellectual property rights; |
|
● |
Product
recalls or other product liability claims; product counterfeiting,
tampering, or product quality issues; |
|
● |
Significant
legal disputes and proceedings; government investigations
(particularly of industry or company business, trade or marketing
practices); |
|
● |
Failure
or breach of key information technology systems; |
|
● |
Negative
publicity related to our company, brands, marketing, personnel,
operations, business performance or prospects; and |
|
● |
Business
disruption, decline, or costs related to organizational changes,
reductions in workforce, or other cost-cutting measures, or our
failure to attract or retain key executive or employee
talent. |
Uncertainty in the financial markets and other adverse
changes in general economic or political conditions in any of the
major countries in which we do business could adversely affect our
industry, business and results of operations.
Global economic uncertainties, including foreign currency exchange
rates, affect businesses such as ours in a number of ways, making
it difficult to accurately forecast and plan our future business
activities. There can be no assurance that economic improvements
will occur, or that they would be sustainable, or that they would
enhance conditions in markets relevant to us.
Our limited operating history makes it difficult to forecast
our future results, making any investment in us highly
speculative.
We have a limited operating history, and our historical financial
and operating information is of limited value in predicting our
future operating results. We may not accurately forecast customer
behavior and recognize or respond to emerging trends, changing
preferences or competitive factors facing us, and, therefore, we
may fail to make accurate financial forecasts. Our current and
future expense levels are based largely on our investment plans and
estimates of future revenue. As a result, we may be unable to
adjust our spending in a timely manner to compensate for any
unexpected revenue shortfall, which could then force us to curtail
or cease our business operations.
Risks Related to our Securities
An investment in our common stock is speculative and there
can be no assurance of any return on any such
investment.
An investment in tour common stock is speculative and there is no
assurance that investors will obtain any return on their
investment. Investors will be subject to substantial risks involved
in an investment in the Company, including the risk of losing their
entire investment.
Future sales of common stock, or the perception of such
future sales, by some of our existing stockholders could cause our
stock price to decline.
The market price of our common stock could decline as a result of
sales of a large number of shares of our common stock in the market
or the perception that these sales may occur. These sales, or the
possibility that these sales may occur, also might make it more
difficult for us to sell shares in the future at a time and at a
price that we deem appropriate.
From time to time, certain of our stockholders may be eligible to
sell all or some of their common shares by means of ordinary
brokerage transactions in the open market pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended (the
“Securities Act”), subject to certain limitations. In general,
pursuant to Rule 144, non-affiliate stockholders may sell freely
after six months subject only to the current public information
requirement. Affiliates may sell after six months subject to the
Rule 144 volume, manner of sale (for equity securities), and
current public information and notice requirements.
Our Board of Directors may issue and fix the terms of
shares of our Preferred Stock without stockholder approval, which
could adversely affect the voting power of holders of our Common
Stock or any change in control of our Company.
Our Articles of Incorporation authorize the issuance of up to
5,000,000 shares of “blank check” preferred stock, with par value
$0.001 per share, with such designation rights and preferences as
may be determined from time to time by the Board of Directors. Our
Board of Directors is empowered, without shareholder approval, to
issue shares of preferred stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of our common stock. In
the event of such issuances, the preferred stock could be used,
under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of our company. Any such issuance
would be subject to terms and conditions of any current offering
that may disallow any such issuance.
Because certain principal stockholders own a large percentage
of our voting stock, other stockholders’ voting power may be
limited.
As of December 31, 2022, our ten (10) largest shareholders own or
controlled approximately 35.5% of our outstanding common stock. If
those stockholders act together, they would have the ability to
have a substantial influence on matters submitted to our
stockholders for approval, including the election and removal of
directors and the approval of any merger, consolidation or sale of
all or substantially all of our assets. As a result, our other
stockholders may have little or no influence over matters submitted
for shareholder approval. In addition, the ownership of such
stockholders could preclude any unsolicited acquisition of us, and
consequently, adversely affect the price of our common stock. These
stockholders may make decisions that are adverse to your
interests.
We do not expect to pay dividends and investors should not
buy our Common Stock expecting to receive dividends.
We do not anticipate that we will declare or pay any dividends in
the foreseeable future. Consequently, you will only realize an
economic gain on your investment in our common stock if the price
appreciates. You should not purchase our common stock expecting to
receive cash dividends. Therefore, our failure to pay dividends may
cause you to not see any return on your investment even if we are
successful in our business operations.
There can be no assurances that our common stock will
not be subject to potential delisting if we do not continue to
maintain the listing requirements of the NYSE
American.
Since June 11, 2021, our common stock has been listed on the NYSE
American, under the symbol “SBEV”. The NYSE American has
rules for continued listing, including, without limitation,
minimum market capitalization and other requirements. Failure to
maintain our listing (i.e., being de-listed from the NYSE
American), would make it more difficult for shareholders to sell
our common stock and more difficult to obtain accurate price
quotations on our common stock. This could have an adverse effect
on the price of our common stock. Our ability to issue additional
securities for financing or other purposes, or otherwise to arrange
for any financing we may need in the future, may also be materially
and adversely affected if our common stock is not traded on a
national securities exchange.
Our common stock could be further diluted as the result of
the issuance of additional common stock, convertible securities,
warrants or options.
Our issuance of additional common stock, convertible securities,
options and warrants could affect the rights of our stockholders,
result in a reduction in the overall percentage holdings of our
stockholders, could put downward pressure on the market price of
our common stock, could result in adjustments to conversion and
exercise prices of outstanding notes and warrants, and could
obligate us to issue additional common stock to certain of our
stockholders.
Item 1B. Unresolved Staff
Comments.
None
Item 2.
Properties.
Splash’s physical office is located at 1500 Cordova Rd; Fort
Lauderdale, FL 33316 and 1491 2nd Street, Sarasota FL
34236 while our business office is located at 1314 East Las Olas
Blvd, Suite 221, Fort Lauderdale, FL 33301. Copa’s
office/manufacturing facility is located at 901 E. 2nd
Street; The Dalles, OR 97058.
Item 3. Legal
Proceedings.
We are not currently a party to any pending legal proceedings that
we believe will have a material adverse effect on our business or
financial conditions. We may, however, be subject to various claims
and legal actions arising in the ordinary course of business from
time to time.
Item 4. Mine Safety
Disclosures.
Not applicable.
PART II
Item 5. Market for
Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
The Company’s Common Stock and tradeable warrants are quoted
on the NYSE American under the symbol “SBEV” and “SBEV WS”.
Aggregate Number of Holders of Common Stock
As of March 31, 2023, there were 41,085,520 shares of Common
Stock issued and outstanding. As of March 31, 2023, at our
transfer agent and non-objecting beneficial owners totaled
approximately 4,800 holders of record of our Common Stock.
Dividends
We have not declared any cash dividends on our common stock since
inception and do not anticipate paying such dividends in the
foreseeable future. We plan to retain any future earnings for use
in our business operations. Any decisions as to future payment of
cash dividends will depend on our earnings and financial position
and such other factors as the Board of Directors deems
relevant.
Securities Authorized for Issuance under Equity Compensation
Plans
None.
Equity Compensation Plan Information
The following table gives information as of December 31, 2022, the
end of the most recently completed fiscal year, about shares of
common stock that have been issued under our Splash Beverage Group,
Inc. 2020 Incentive Plan. Under the 2020 Incentive Plan we have
1,151,000 options outstanding as of December 31, 2022. See Note
6.
Plan
Category |
|
No.
of Shares to be Issued Upon Exercise or Vesting of Outstanding
Stock Options |
|
Weighted
Average Exercise Price of Outstanding Stock Options |
|
Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans |
Equity
compensation plan approved by board of directors |
|
|
1,151,000 |
|
|
|
2.56 |
|
|
|
1,899,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,151,000 |
|
|
|
2.56 |
|
|
|
1,899,509 |
|
Purchases of Equity Securities by the Issuer.
There were no repurchase of our common stock during the year ended
December 31, 2022.
Item 6. Selected Financial
Data.
This item is not required for Smaller Reporting Companies.
Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
The following discussion and analysis should be read in conjunction
with the Audited Consolidated Financial Statements and Notes to
Audited Consolidated Financial Statements filed herewith.
Business Overview
Canfield Medical Supply, Inc. a company’s whose common stock was
quoted on the OTCQB entered into an Agreement and Plan of Merger
with SBG Acquisition Inc. (“Merger Sub”), a Nevada Corporation
wholly-owned by Canfield, and Splash Beverage Group, II Inc. a
Nevada corporation (“Splash”) pursuant to which Merger Sub merged
with and into Splash (the “Merger”) with Splash as the surviving
company and a wholly-owned subsidiary of Canfield. The Merger was
consummated on March 31, 2020.
As the owners and management of Splash had voting and operating
control of CMS following the Merger, the Merger transaction was
accounted for as a reverse acquisition (that is with Splash as the
acquiring entity), followed by a recapitalization.
On July 31, 2020, CMS changed its name to Splash Beverage Group,
Inc. (“SBG”). On June 11, 2021, SBG’s common stock and warrant to
purchase common stock began trading on the NYSE American under the
symbols “SBEV” and SBEV WT,” respectively
On November 8, 2021, SBG reincorporated into the State of Nevada
and became a Nevada corporation.
Our
principal offices are located at 1314 E. Las Olas Blvd, Suite 221,
Fort Lauderdale, Florida 33301. Our main telephone number is (954)
745-5815. Our website address is www.splashbeveragegroup.com. We
have not incorporated by reference into this Annual Report on Form
10-K the information that can be assessed through our website and
you should not consider it to be part of this Annual Report on Form
10-K.
Results of Operations for the Year Ended December 31, 2022,
compared to Year Ended December 31, 2021.
Revenue
Revenues for the year ended December 31, 2022 were $18.1m compared
to revenues of $11.3m for the year ended December 31, 2021. The
$6.8m increase in sales was mainly due to the increase in our
ecommerce division distribution platform, Qplash of $6.4m.
Cost of Goods Sold
Cost of goods sold for year ended December 31, 2022 were $12.1m
compared to cost of goods sold for the year ended December 31, 2021
of $8.3m. The $4.7m increase in cost of goods sold was due to our
increased sales and inflation.
Operating Expenses
Operating expenses for the year ended December 31, 2022 were $27.3m
compared to $33m for the year ended December 31, 2021. Non cash
operating expenses related to share issuance was $7.4m as of
December 31, 2022 compared $18.4m in December 31, 2021. The cash
expense increase of $5.3m is mainly driven by an increase in sales
and marketing cost of $2.0m to drive sales and promote the brands,
delivery fees of $2.0m and an increase in Amazon selling fees of
$0.6m associated with higher sales of Qplash division.
Other Income/(Expense)
Other expense for the year ended December 31, 2022 were $245,429
compared to $262,450 for the year ended December 31, 2021. These
cost are mainly interest expense.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability of a company to generate funds to support
its current and future operations, satisfy its obligations, and
otherwise operate on an ongoing basis. Significant factors in the
management of liquidity are funds generated by operations, levels
of accounts receivable and accounts payable and capital
expenditures. In addition, the Company has an active registration
statement on Form S-3 to facilitate raising additional funds.
As of December 31, 2022, we had total cash of $4,431,745, as
compared with $4,181,383 at December 31, 2021. The increase was
primarily due to issuances of notes payable and stock
subscription agreements offset by expenses relating to the
operating the business.
Net cash used for continuing operating activities during the year
ended December 31, 2022, was $14,061,116 as compared to the net
cash used by continuing operating activities for the year ended
December 31, 2021, of $14,697,179. The primary reason for the
change in net cash used due to an increase of $0.4m in operating
loss operating losses of the business, offset by a decrease of
$1.2m in working capital Net cash used for discontinued operating
activities during the year ended December 31, 2022, was $32,774 as
compared to $515,952 for the year ended December 31, 2021 due to
discontinuing the business on June 30, 2022.
Net cash used for investing activities during the year ended
December 31, 2022, was $102,698 as compared to the net cash used
for investing activities during the year ended December 31, 2021,
of $0. The net cash used in the year 2022 was for a capital
expenditure for out of home used for advertising and building
improvements.
Net cash provided by financing activities during the year ended
December 31, 2022, was $14,446,951 compared to $19,014,524 provided
from financing activities for the year ended December 31, 2021.
During the year ended December 31, 2022, we received $11,428,591
from the issuance of common stock compared to $19,630,565 during
the year ending December 31, 2021. We received $4,045,420 and
$928,000 proceeds from the issuance of debt in years ending
December 31, 2022 and 2021 respectively. In the year ending
December 31, 2022 $390,500 shareholder advance was repaid and in
year ending December 31, 2021 $390,500 cash advance from
shareholder was received. Principal repayment of debt $636,560 and
$1,673,296 were made in years ending December 31, 2022 and 2021
respectively. In year ending December 31, 2021 a cash advance
repayment of $261,245 was made.
In order to have sufficient cash to fund our operations, we will
need to raise additional equity or debt capital. There can be no
assurance that additional funds will be available when needed from
any source or, if available, will be available on terms that are
acceptable to us. We will be required to pursue sources of
additional capital through various means, including debt or equity
financings. Future financings through equity investments are likely
to be dilutive to existing stockholders. Also, the terms of
securities we may issue in future capital transactions may be more
favorable for new investors. Newly issued securities may include
preferences, superior voting rights, the issuance of warrants or
other derivative securities, and the issuances of incentive awards
under equity employee incentive plans, which may have additional
dilutive effects. Further, we may incur substantial costs in
pursuing future capital and/or financing, including investment
banking fees, legal fees, accounting fees, printing and
distribution expenses and other costs. We may also be required to
recognize non-cash expenses in connection with certain securities
we may issue, such as convertible notes and warrants, which will
adversely impact our financial condition. Our ability to obtain
needed financing may be impaired by such factors as the capital
markets and our history of losses, which could impact the
availability or cost of future financings. If the amount of capital
we are able to raise from financing activities together with our
revenues from operations, is not sufficient to satisfy our capital
needs, even to the extent that we reduce our operations
accordingly, we may be required to curtail or cease operations.
Item 7A. Quantitative and
Qualitative Disclosures about Market Risk.
Not applicable for smaller reporting companies.
Item 8. Financial
Statements and Supplementary Data.
Report of Independent Registered
Public Accounting Firm
To the Board of Directors and Stockholders
Splash Beverage Group, Inc.
Fort Lauderdale, Florida
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
Splash Beverage Group, Inc. at December 31, 2022 and 2021, and the
related consolidated statements operations, stockholders’ equity
and cash flows for each of the years in the two-year period ended
December 31, 2022, and the related notes (collectively referred to
as the financial statements). In our opinion, the financial
statements present fairly, in all material respects, the financial
position of the Company at December 31, 2022 and 2021, and the
results of its operations and its cash flows for each of the years
in the two-year period ended December 31, 2022, in conformity with
accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising
from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are material
to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of
a critical audit matter does not alter in any way our opinion on
the financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or
disclosures to which they relate.
Intangible Assets Impairment Assessments
As described in Notes 2 and 4 to the consolidated financial
statements, the Company has intangible assets of approximately $4.9
million at December 31, 2022. In most cases, no directly observable
market inputs are available to measure the fair value to determine
if the asset is impaired. Therefore, an estimate is derived
indirectly and is based on valuation techniques utilizing
undiscounted and discounted after-tax cash flows and discount
rates. The estimates that management used in calculating the net
present values depend on assumptions specific to the nature of the
management service activities with regard to the amount and timing
of projected future cash flows; long-term forecasts; actions of
competitors (competing services), future tax and discount
rates.
The principal considerations for our determination that performing
procedures relating to the intangible assets impairment assessment
is a critical audit matter are the significant judgment by
management when developing the net present value of the intangible
assets. This in turn led to a high degree of auditor judgment,
subjectivity, and effort in performing procedures and evaluating
management’s significant assumptions related to the amount and
timing of projected future cash flows and the discount rate. In
addition, the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating
audit evidence in connection with forming our overall opinion on
the consolidated financial statements These procedures included
testing management’s process for developing the fair value
estimate; evaluating the appropriateness of the net present value
techniques; testing the completeness and accuracy of underlying
data used in the model; and evaluating the significant assumptions
used by management, including the amount and timing of projected
future cash flows and the discount rate. Evaluating management’s
assumptions related to the amount and timing of projected future
cash flows and the discount rate involved evaluating whether the
assumptions used by management reasonable considering the current
and past performance of the intangible assets, the consistency with
external market and industry data, and whether these assumptions
were consistent with evidence obtained in other areas of the
audit.
/s/ Daszkal Bolton LLP
Daszkal Bolton LLP
We have served as the Company’s auditor since 2020
Fort Lauderdale, Florida
March 31, 2023
229
Splash
Beverage Group, Inc. |
Consolidated Balance Sheets |
December
31, 2022 and December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2022 |
|
December 31,
2021 |
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
4,431,745 |
|
|
$ |
4,181,383 |
|
Accounts
Receivable, net |
|
|
1,812,110 |
|
|
|
1,114,452 |
|
Prepaid
Expenses |
|
|
348,036 |
|
|
|
607,178 |
|
Inventory |
|
|
3,721,307 |
|
|
|
1,923,479 |
|
Other
receivables |
|
|
344,376 |
|
|
|
41,939 |
|
Assets
from discontinued operations |
|
|
— |
|
|
|
473,461 |
|
Total
current assets |
|
|
10,657,574 |
|
|
|
8,341,892 |
|
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
Deposit |
|
|
49,290 |
|
|
|
330,886 |
|
Goodwill |
|
|
256,823 |
|
|
|
256,823 |
|
Intangibles
assets, net |
|
|
4,851,377 |
|
|
|
5,604,512 |
|
Investment in Salt
Tequila USA, LLC |
|
|
250,000 |
|
|
|
250,000 |
|
Right of use
asset |
|
|
750,042 |
|
|
|
1,031,472 |
|
Property and equipment, net |
|
|
489,597 |
|
|
|
569,785 |
|
Total
non-current assets |
|
|
6,647,129 |
|
|
|
8,043,478 |
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
17,304,703 |
|
|
$ |
16,385,370 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts payable
and accrued expenses |
|
$ |
3,383,187 |
|
|
$ |
1,913,459 |
|
Right of use
liability |
|
|
268,749 |
|
|
|
294,067 |
|
Related party
notes payable |
|
|
— |
|
|
|
653,081 |
|
Notes payable |
|
|
1,080,257 |
|
|
|
2,667,812 |
|
Liability to issue
shares |
|
|
91,800 |
|
|
|
— |
|
Shareholder
advances |
|
|
— |
|
|
|
390,500 |
|
Accrued interest
payable |
|
|
141,591 |
|
|
|
171,452 |
|
Liabilities from discontinued operations |
|
|
— |
|
|
|
389,086 |
|
Total
current liabilities |
|
|
4,965,584 |
|
|
|
6,479,457 |
|
|
|
|
|
|
|
|
|
|
Long-term
Liabilities: |
|
|
|
|
|
|
|
|
Notes payable |
|
|
2,536,319 |
|
|
|
300,000 |
|
Right
of use liability |
|
|
480,666 |
|
|
|
732,686 |
|
Total
long-term liabilities |
|
|
3,016,985 |
|
|
|
1,032,686 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
$ |
7,982,569 |
|
|
$ |
7,512,143 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value,
5,000,000
shares authorized, no shares
issued |
|
|
— |
|
|
|
— |
|
Common Stock,
$0.001
par, 300,000,000
shares authorized, 41,085,520
and 33,596,232
shares issued and outstanding, at December 31, 2022 and December
31, 2021, respectively |
|
|
41,086 |
|
|
|
33,596 |
|
Additional paid in
capital |
|
|
121,632,547 |
|
|
|
99,480,188 |
|
Accumulated Other
Comprehensive Income |
|
|
(20,472 |
) |
|
|
— |
|
Accumulated deficit |
|
|
(112,331,027 |
) |
|
|
(90,640,557) |
|
Total
stockholders’ equity |
|
|
9,322,134 |
|
|
|
8,873,227 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
17,304,703 |
|
|
$ |
16,385,370 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
Splash
Beverage Group, Inc. |
Consolidated Statements of Operations |
For
the Years Ended December 31, 2022 and December 31
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
Net revenues |
|
$ |
18,087,486 |
|
|
$ |
11,316,002 |
|
Cost of goods sold |
|
|
(12,168,621 |
) |
|
|
(7,398,241 |
) |
Gross
margin |
|
|
5,918,865 |
|
|
|
3,917,761 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Contracted services |
|
|
1,505,788 |
|
|
|
1,584,830 |
|
Salary
and wages |
|
|
4,179,403 |
|
|
|
3,807,492 |
|
Non-cash share-based compensation |
|
|
7,409,884 |
|
|
|
18,395,488 |
|
Other
general and administrative |
|
|
11,411,535 |
|
|
|
8,425,046 |
|
Sales and marketing |
|
|
2,806,888 |
|
|
|
787,827 |
|
Total operating expenses |
|
|
27,313,498 |
|
|
|
33,000,683 |
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations |
|
|
(21,394,633 |
) |
|
|
(29,082,922 |
) |
|
|
|
|
|
|
|
|
|
Other
income/(expense): |
|
|
|
|
|
|
|
|
Other
Income |
|
|
— |
|
|
|
3,632 |
|
Interest
income |
|
|
6,068 |
|
|
|
643 |
|
Interest
expense |
|
|
(251,497 |
) |
|
|
(442,807 |
) |
Gain from debt extinguishment |
|
|
— |
|
|
|
176,082 |
|
Total
other expense |
|
|
(245,429 |
) |
|
|
(262,450 |
) |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Net
(loss) from continuing operations, net of tax |
|
|
(21,640,062 |
) |
|
|
(29,345,372 |
) |
|
|
|
|
|
|
|
|
|
Net
(loss) income from discontinued operations, net of tax |
|
|
(199,154 |
) |
|
|
294,550 |
|
|
|
|
|
|
|
|
|
|
Gain on discontinued operations |
|
|
148,747 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Net
income (loss) from discontinued operations, net of tax |
|
|
(50,407 |
) |
|
|
294,550 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(21,690,469 |
) |
|
$ |
(29,050,822 |
) |
Other
Comprehensive loss |
|
|
|
|
|
|
|
|
Foreign
Currency Translation loss |
|
|
(20,472 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Total
Comprehensive Income |
|
|
(21,710,941 |
) |
|
|
(29,050,822 |
) |
|
|
|
|
|
|
|
|
|
Loss per share -
continuing operations |
|
|
|
|
|
|
|
|
Basic
and Diluted |
|
|
(0.58 |
) |
|
|
(1.01 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding - continuing operations |
|
|
|
|
|
|
|
|
Basic
and Diluted |
|
|
37,389,990 |
|
|
|
28,900,292 |
|
|
|
|
|
|
|
|
|
|
Income
(loss) per share - discontinued operations |
|
|
|
|
|
|
|
|
Basic
and Diluted |
|
|
(0.00 |
) |
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding - discontinued operations |
|
|
|
|
|
|
|
|
Basic
and Diluted |
|
|
37,389,990 |
|
|
|
28,900,292 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
Splash
Beverage Group, Inc. |
Consolidated Statements of Changes in
Stockholders’
Equity |
For
the years ended December 31, 2022 and 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
Additional Paid-in |
|
Accumulated Other Comprehensive |
|
Accumulated |
|
Total
Stockholders Equity |
|
|
Shares |
|
Amount |
|
Capital |
|
Income |
|
Deficit |
|
(Deficit) |
Balances at December 31, 2020 |
|
|
21,157,043 |
|
|
|
21,157 |
|
|
|
52,217,855 |
|
|
|
— |
|
|
|
(61,589,735 |
) |
|
|
(9,350,723 |
) |
Issuance
of warrants for services |
|
|
|
|
|
|
|
|
|
|
7,267,421 |
|
|
|
|
|
|
|
|
|
|
|
7,267,421 |
|
Issuance
of common stock for services |
|
|
3,272,649 |
|
|
|
3,273 |
|
|
|
11,124,793 |
|
|
|
|
|
|
|
|
|
|
|
11,124,793 |
|
Issuance
of common stock and warrants for cash |
|
|
4,954,779 |
|
|
|
4,955 |
|
|
|
19,625,610 |
|
|
|
|
|
|
|
|
|
|
|
19,625,610 |
|
Mezzanine
shares |
|
|
4,201,761 |
|
|
|
4,202 |
|
|
|
9,244,518 |
|
|
|
|
|
|
|
|
|
|
|
9,244,518 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(29,050,822)
|
|
|
|
(29,050,822)
|
|
Balances at December 31, 2021 |
|
|
33,596,232 |
|
|
|
33,596 |
|
|
|
99,480,188 |
|
|
|
— |
|
|
|
(90,640,557 |
) |
|
|
8,873,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock on convertible instruments |
|
|
377,796 |
|
|
|
378 |
|
|
|
1,514,533 |
|
|
|
— |
|
|
|
— |
|
|
|
1,514,911 |
|
Issuance
of warrants for services |
|
|
— |
|
|
|
— |
|
|
|
3,849,144 |
|
|
|
— |
|
|
|
— |
|
|
|
3,849,144 |
|
Issuance
of warrants on convertible instruments |
|
|
— |
|
|
|
— |
|
|
|
1,898,265 |
|
|
|
— |
|
|
|
— |
|
|
|
1,898,265 |
|
Issuance
of common stock for services |
|
|
2,215,363 |
|
|
|
2,215 |
|
|
|
3,466,722 |
|
|
|
— |
|
|
|
— |
|
|
|
3,463,937 |
|
Issuance
of common stock and warrants for cash |
|
|
4,896,129 |
|
|
|
4,896 |
|
|
|
11,423,695 |
|
|
|
— |
|
|
|
— |
|
|
|
11,428,591 |
|
Accumulated Comprehensive Income - Translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(20,472 |
) |
|
|
|
|
|
|
(20,472 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(21,690,469 |
) |
|
|
(21,690,469 |
) |
Balances at December 31, 2022 |
|
|
41,085,520 |
|
|
|
41,086 |
|
|
|
121,632,546 |
|
|
|
(20,472 |
) |
|
|
(112,331,026 |
) |
|
|
9,322,134 |
|
The accompanying notes are an integral part of these consolidated
financial statements
Splash Beverage Group, Inc. |
Consolidated Statements Cash
Flows |
For the Year Ended December 30, 2022 and
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
|
|
|
|
Net
loss |
|
$ |
(21,710,941 |
) |
|
$ |
(29,050,822 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
936,020 |
|
|
|
111,567 |
|
ROU
asset, net |
|
|
4,093 |
|
|
|
(7,239 |
) |
Gain
from debt extinguishment |
|
|
— |
|
|
|
176,082 |
|
Gain
from sale of discontinued operation |
|
|
84,375 |
|
|
|
— |
|
Non-cash
warrant expense |
|
|
7,318,081 |
|
|
|
16,291,167 |
|
Changes
in working capital items: |
|
|
|
|
|
|
|
|
Accounts
receivable, net |
|
|
(697,658 |
) |
|
|
(629,594 |
) |
Inventory,
net |
|
|
(1,797,828 |
) |
|
|
(1,125,206 |
) |
Prepaid
expenses and other current assets |
|
|
(43,294 |
) |
|
|
(384,784 |
) |
Deposits |
|
|
281,596 |
|
|
|
(253,200 |
) |
Accounts
payable and accrued expenses |
|
|
1,594,300 |
|
|
|
446,146 |
|
Accrued
Interest payable |
|
|
(29,861 |
) |
|
|
(271,296 |
) |
Net
cash used in operating activities - continuing
operations |
|
|
(14,061,116 |
) |
|
|
(14,697,179 |
) |
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities - discontinued
operations |
|
|
(32,774 |
) |
|
|
(515,952 |
) |
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Capital
Expenditures |
|
|
(102,698 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities -– continuing
operations |
|
|
(102,698 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities - discontinued
operations |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds
from issuance of Common stock |
|
|
11,428,591 |
|
|
|
19,630,565 |
|
Cash
advance (repayment) from shareholder |
|
|
(390,500 |
) |
|
|
390,500 |
|
Repayment
of cash advance |
|
|
— |
|
|
|
(261,245 |
) |
Proceeds
from issuance of debt |
|
|
4,045,420 |
|
|
|
928,000 |
|
Principal
repayment of debt |
|
|
(636,560 |
) |
|
|
(1,673,296 |
) |
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities - continuing
operations |
|
|
14,446,951 |
|
|
|
19,014,524 |
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities - discontinued
operations |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Net
Change in Cash and Cash Equivalents |
|
|
250,362 |
|
|
|
3,801,383 |
|
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents, beginning of year |
|
|
4,181,383 |
|
|
|
380,000 |
|
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents, end of year |
|
$ |
4,431,745 |
|
|
$ |
4,181,383 |
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information: |
|
|
|
|
|
|
|
|
Cash
paid for Interest |
|
$ |
204,594 |
|
|
$ |
173,363 |
|
Cash
paid for Taxes |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Non-Cash Investing and Financing
Activities |
|
|
|
|
|
|
|
|
Convertible
notes payable and accrued interest converted to common stock
(377,796 shares) |
|
|
1,514,911 |
|
|
|
— |
|
The accompanying notes are an integral part of these consolidated
financial statements.
Splash Beverage Group, Inc.
Notes to the Consolidated
Financial Statements
Note 1 – Business Organization and
Nature of Operations
Splash Beverage Group (“SBG” or “Splash”), formally Canfield
Medical Supply, Inc. (“CMS”) was incorporated in the State of
Ohio on September 3, 1992, and changed domicile to Colorado on
April 18, 2012. CMS was in the business of home health services,
primarily the selling of durable medical equipment and medical
supplies to the public, nursing homes, hospitals and other end
users.
On December 31, 2019, CMS entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with SBG Acquisition Inc. (“Merger
Sub”), a Nevada Corporation wholly owned by CMS, and Splash
Beverage Group, Inc. a Nevada corporation (“Splash”) pursuant to
which Merger Sub merged with and into Splash (the “Merger”) with
Splash as the surviving company and a wholly-owned subsidiary of
CMS. The Merger was consummated on March 31, 2020.
As the owners and management of Splash have voting and operating
control of CMS following the Merger, the Merger transaction was
accounted for as a reverse acquisition (that is with Splash as the
acquiring entity), followed by a recapitalization.
As part of the recapitalization, previously issued shares of SBG
preferred stock have been reflected as shares of common stock that
were received in the Merger. These common shares have been
retrospectively presented as outstanding for all periods.
Splash specializes in the manufacturing process, distribution, and
sales & marketing of various beverages across multiple
channels. Splash operates in both the non-alcoholic and alcoholic
beverage segments. Additionally, Splash operates its own vertically
integrated B-to-B and B-to-C E-commerce distribution platform
called Qplash, further expanding its distribution abilities and
visibility.
In July 2020 the Company filed a Certificate of Amendment of
Articles of Incorporation of CMS with the Secretary of State of the
State of Colorado, pursuant to which the Company changed its name
from CMS. to Splash Beverage Group, Inc. On July 31, 2020, we
received approval from FINRA to change the Company’s name from CMS
to Splash Beverage Group, Inc. Our new ticker symbol is SBEV.
On December 24, 2020, SBG consummated an Asset Purchase Agreement
(the “Copa APA”) with Copa di Vino Corporation (“CdV”), to purchase
certain assets and assume certain liabilities that comprise the
Copa di Vino business for a total purchase price of $5,980,000, payable in the
combination of $2,000,000 in cash (“Cash
Consideration”), $2,000,000 convertible promissory
note (the “Convertible Note”) to Seller and a variable number of
shares of the Company’s common stock based on a attainment of
revenue hurdles. CdV is one of the leading producers of premium
wine by the glass in the United States with its primary offices and
facilities in The Dalles, Oregon.
On
February 2021, Management initiated a plan to divest its CMS
business. As a result, the assets and operations of CMS have been
retrospectively reflected as discontinued operations. On November
12, 2021 the Company changed its state of Domicile from Colorado to
Nevada.
In coordination with up listing to the NYSE on June 11, 2021
the Company consummated a 1.0 for 3.0 reverse stock split. All
common stock shares stated herein have been adjusted to reflect the
split.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant
Accounting Policies
Basis of Presentation and
Consolidation
These consolidated financial statements include the accounts of
Splash and its wholly owned subsidiaries, Holdings and Splash Mex,
CMS (as discontinued operations), and CdV. All intercompany
balances have been eliminated in consolidation.
Our investment in Salt Tequila USA, LLC is accounted for at cost,
as the company does not have the ability to exercise significant
influence.
Our accounting and reporting policies conform to accounting
principles generally accepted in the United States of America
(GAAP).
Certain reclassifications have been made to the prior period
financial statements to conform to the current period
classifications. These reclassifications had no impact on net
loss.
Use of
Estimates
The preparation of consolidated financial statements in conformity
with GAAP requires our management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash Equivalents and
Concentration of Cash Balance
We consider all highly liquid securities with an original maturity
of three months or less to be cash equivalents. We had no cash equivalents at
December 31, 2022 or December 31, 2021.
Our cash in bank deposit accounts, at times, may exceed federally
insured limits of $250,000.
At December 31, 2022 we had approximately $3.8m
over the federally insured limits. Our cash in
uninsured foreign bank accounts was $1,941
at December 31, 2022.
Accounts Receivable and
Allowance for Doubtful Accounts
Accounts receivables are carried at their estimated collectible
amounts and are periodically evaluated for collectability based on
past credit history with clients and other factors. We establish
provisions for losses on accounts receivable on the basis of loss
experience, known and inherent risk in the account balance, and
current economic conditions. At December 31, 2022 and December 31,
2021, our accounts receivable amounts are reflected net of
allowances of $13,683 and $45,203, respectively.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of
Significant Accounting Policies, continued
Inventory
Inventory is stated at the lower of cost or net realizable value,
accounted for using the weighted average cost method. The inventory
balances at December 31, 2022 and December 31, 2021 consisted of
raw materials, work-in-process, and finished goods held for
distribution. The cost elements of inventory consist of purchase of
products, transportation, and warehousing. We establish provisions
for excess or inventory near expiration are based on management’s
estimates of forecast turnover of inventories on hand and under
contract. A significant change in the timing or level of demand for
certain products as compared to forecast amounts may result in
recording additional provisions for excess or expired inventory in
the future. Provisions for excess inventory are included in cost of
goods sold and have historically been adequate to provide for
losses on inventory. We manage inventory levels and purchase
commitments in an effort to maximize utilization of inventory on
hand and under commitments. The amount of our reserve was
$66,146 and $223,223 at December 31, 2022 and
December 31, 2021, respectively.
Property and
Equipment
We record property and equipment at cost when purchased.
Depreciation is recorded for property, equipment, and software
using the straight-line method over the estimated economic useful
lives of assets, which range from 3-20 years. Company
management reviews the recoverability of all long-lived assets,
including the related useful lives, whenever events or changes in
circumstances indicate that the carrying amount of a long-lived
asset might not be recoverable.
Depreciation expense totaled $182,886 and $156,766 for the years ended
December 31, 2022 and 2021 respectively. Property and equipment
consisted of the following:
Schedule of Property and equipment |
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
Auto |
|
|
45,420 |
|
|
|
— |
|
Machinery & equipment |
|
|
1,108,870 |
|
|
|
1,108,870 |
|
Buildings & Tanks |
|
|
282,988 |
|
|
|
279,543 |
|
Leasehold improvements |
|
|
713,068 |
|
|
|
662,537 |
|
Office furniture & equipment |
|
|
13,636 |
|
|
|
70,960 |
|
Total
cost |
|
|
2,163,983 |
|
|
|
2,121,911 |
|
Accumulated depreciation |
|
|
(1,674,385 |
) |
|
|
(1,552,125 |
) |
Property, plant & equipment, net |
|
|
489,597 |
|
|
|
569,785 |
|
Excise
taxes
The Company pays alcohol excise taxes based on product sales to
both the Oregon Liquor Control Commission and to the U.S.
Department of the Treasury, Alcohol and Tobacco Tax and Trade
Bureau (TTB). The company also pays taxes to the State of Florida –
Division of Alcoholic Beverages and Tobacco. The Company is liable
for the taxes upon the removal of product from the Company’s
warehouse on a per gallon basis. The federal tax rate is affected
by a small winery tax credit provision which decreases based upon
the number of gallons of wine production in a year rather than the
quantity sold.
Employee Retention Credit
(“ERC”)
The CARES Act provides an employee retention credit (“CARES
Employee Retention credit”), which is a refundable tax credit
against certain employment taxes of up to $5,000 per employee for eligible
employers. The tax credit is equal to 50% of qualified wages paid to
employees during a quarter, capped at $10,000 of qualified
wages per employee through December 31, 2020. Additional relief
provisions were passed by the United States government, which
extend and slightly expand the qualified wage caps on these credits
through December 31, 2021. Based on these additional provisions,
the tax credit is now equal to 70% of qualified wages paid to
employees during a quarter, and the limit on qualified wages per
employee has been increased to $10,000 of qualified
wages per quarter. The Company qualified for the tax credit under
the CARES Act. Copa Di Vino received $211,300 which
represents refunds for the quarters ended March, June and September
2021 Form 941 Employer Quarterly Federal Tax Returns.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of
Significant Accounting Policies, continued
Fair Value of Financial
Instruments
Financial Accounting Standards (“FASB”) guidance specifies a
hierarchy of valuation techniques based on whether the inputs to
those valuation techniques are observable or unobservable.
Observable inputs reflect market data obtained from independent
sources, while unobservable inputs reflect market assumptions. The
hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1
measurement) and the lowest priority to unobservable inputs (Level
3 measurement). The three levels of the fair value hierarchy are as
follows:
|
Level
1 - |
Unadjusted
quoted prices in active markets for identical assets or liabilities
that the reporting entity has the ability to access at the
measurement date. Level 1 primarily consists of financial
instruments whose value is based on quoted market prices such as
exchange-traded instruments and listed equities. |
|
Level
2 - |
Inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or
indirectly (e.g., quoted prices of similar assets or liabilities in
active markets, or quoted prices for identical or similar assets or
liabilities in markets that are not active). |
|
Level
3 - |
Unobservable
inputs for the asset or liability. Financial instruments are
considered Level 3 when their fair values are determined using
pricing models, discounted cash flows or similar techniques and at
least one significant model assumption or input is
unobservable. |
The liabilities and indebtedness presented on the consolidated
financial statements approximate fair values at December 31, 2022
and December 31, 2021, consistent with recent negotiations of notes
payable and due to the short duration of maturities.
Revenue
Recognition
We recognize revenue under ASC 606, Revenue from Contracts with
Customers (Topic 606). This guidance sets forth a five-step model
which depicts the recognition of revenue in an amount that reflects
what we expect to receive in exchange for the transfer of goods or
services to customers.
We recognize revenue when our performance obligations under the
terms of a contract with the customer are satisfied. Product sales
occur once control of our products is transferred upon delivery to
the customer. Revenue is measured as the amount of consideration
that we expect to receive in exchange for transferring goods and is
presented net of provisions for customer returns and allowances.
The amount of consideration we receive and revenue we recognize
varies with changes in customer incentives we offer to our
customers and their customers. Sales taxes and other similar taxes
are excluded from revenue.
Distribution expenses to transport our products, and warehousing
expense after manufacture are accounted for in Other General and
Administrative cost.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of
Significant Accounting Policies, continued
Cost of Goods
Sold
Cost of goods sold include the costs of products, packaging,
transportation, warehousing, and costs associated with valuation
allowances for expired, damaged or impaired inventory. The cost of
transportation from production site to other 3rd party
warehouses or customer is included in Other General and
Administrative cost.
Other General and
Administrative Expenses
Other General and Administrative expenses includes Amazon selling
fees, royalty cost for selling TapouT, cost of transportation from
production site to other 3rd party warehouses or
customers, Insurance cost, consulting cost, legal and audit fees,
Investor Relations expenses, travel & entertainment expenses,
occupancy cost and other cost.
Stock-Based
Compensation
We account for stock-based compensation in accordance with ASC
718,”Compensation - Stock Compensation”. Under the fair
value recognition provisions, cost is measured at the grant date
based on the fair value of the award and is recognized as expense
ratably over the requisite service period, which is generally the
option vesting period. We use the Black-Scholes option pricing
model to determine the fair value of stock options. We early
adopted ASU 2018-07, “Improvements to Nonemployee Share-Based
Payment Accounting”, which aligns accounting treatment for such
awards to non-employees with the existing guidance on employee
share-based compensation in ASC 718.
We measure stock-based awards at the grant-date fair value for
employees, directors and consultants and recognizes compensation
expense on a straight-line basis over the vesting period of the
award. Determining the appropriate fair value of stock-based awards
requires the input of subjective assumptions, including the fair
value of our common stock, and for stock options and warrants, the
expected life of the option and warrant, and expected stock price
volatility and exercise price. We used the Black-Scholes option
pricing model to value its stock-based awards. The assumptions used
in calculating the fair value of stock-based awards represent
management’s best estimates and involve inherent uncertainties and
the application of management’s judgment. As a result, if factors
change and management uses different assumptions, stock-based
compensation expense could be materially different for future
awards. The expected life of stock options/warrants were estimated
using the “simplified method,” which calculates the expected term
as the midpoint between the weighted average time to vesting and
the contractual maturity, we have limited historical information to
develop reasonable expectations about future exercise patterns. The
simplified method is based on the average of the vesting tranches
and the contractual life of each grant. For stock price volatility,
we use comparable public companies as a basis for its expected
volatility to calculate the fair value of award. The risk-free
interest rate is based on U.S. Treasury notes with a term
approximating the expected life of the award. The estimation of the
number of awards that will ultimately vest requires judgment, and
to the extent actual results or updated estimates differ from the
Company’s current estimates, such amounts are recognized as an
adjustment in the period in which estimates are revised.
Income
Taxes
We use the liability method of accounting for income taxes as set
forth in ASC 740,”Income Taxes”. Under the liability method,
deferred taxes are determined based on the temporary differences
between the financial statement and tax basis of assets and
liabilities using tax rates expected to be in effect during the
years in which the basis differences reverse. We record a valuation
allowance when it is not more likely than not that the deferred tax
assets will be realized.
Company management assesses its income tax positions and records
tax benefits for all years subject to examination based upon its
evaluation of the facts, circumstances and information available at
the reporting date. In accordance with ASC 740-10, for those tax
positions where there is a greater than 50% likelihood that a tax
benefit will be sustained, our policy is to record the largest
amount of tax benefit that is more likely than not to be realized
upon ultimate settlement with a taxing authority that has full
knowledge of all relevant information.
For those income tax positions where there is less than 50%
likelihood that a tax benefit will be sustained, no tax benefit
will be recognized in the financial statements. Company management
has determined that there are no material uncertain tax positions
at December 31, 2022 and December 31, 2021. See not 13.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of
Significant Accounting Policies, continued
Net income (loss) per
share
The net income (loss) per share is computed by dividing the net
income (loss) by the weighted average number of shares of common
outstanding. Warrants, stock options, and common stock issuable
upon the conversion of the Company’s convertible debt or preferred
stock (if any), are not included in the computation if the effect
would be anti-dilutive.
Weighted average number of shares outstanding excludes
anti-dilutive common stock equivalents, including warrants to
purchase shares of common stock and warrants granted by our Board
but have not been exercised totaling 14,343,896.
Advertising
We conduct advertising for the promotion of our products. In
accordance with ASC 720-35, advertising costs are charged to
operations when incurred. We recorded advertising expense of
$732,618 and $728,045 for the years ended
December 30, 2022 and 2021, respectively.
Goodwill and
other intangibles
Goodwill represents the excess of acquisition cost over the fair
value of the net assets acquired and is not subject to
amortization. The Company reviews goodwill annually in the fourth
quarter for impairment or when circumstances indicate carrying
value may exceed the fair value. This evaluation is performed at
the reporting unit level. If a qualitative assessment indicates
that it is more likely than not that the fair value is less than
carrying value, a quantitative analysis is completed using either
the income or market approach, or a combination of both. The income
approach estimates fair value based on expected discounted future
cash flows, while the market approach uses comparable public
companies and transactions to develop metrics to be applied to
historical and expected future operating results.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of
Significant Accounting Policies, continued
Long-lived
assets
The Company evaluates long-lived assets for impairment on an annual
basis, when relocating or closing a facility, or when events or
changes in circumstances may indicate the carrying amount of the
asset group, generally an individual warehouse, may not be fully
recoverable. For asset groups held and used, including warehouses
to be relocated, the carrying value of the asset group is
considered recoverable when the estimated future undiscounted cash
flows generated from the use and eventual disposition of the asset
group exceed the respective carrying value. In the event that the
carrying value is not considered recoverable, an impairment loss is
recognized for the asset group to be held and used equal to the
excess of the carrying value above the estimated fair value of the
asset group. For asset groups classified as held-for-sale (disposal
group), the carrying value is compared to the disposal group’s fair
value less costs to sell. The Company estimates fair value by
obtaining market appraisals from third party brokers or using other
valuation techniques.
Foreign Currency
Gain/Losses
Foreign Currency Gain/Losses — foreign subsidiaries’ functional
currency is the local currency of operations and the net assets of
foreign operations are translated into U.S. dollars using current
exchange rates. Gain or losses from these translation adjustments
are included in the consolidated statement of operations and other
comprehensive (loss) income as foreign currency translation gains
or losses. Translation gains and losses that arise from the
translation of net assets from functional currency to the reporting
currency, as well as exchange gains and losses on intercompany
balances, are included in Other Comprehensive Losses. The Company
incurred foreign currency translation net loss during the year
ended December 31, 2022 of $20,472.
Recent Accounting
Pronouncements
Management does not believe that any other recently issued, but not
yet effective, accounting standards could have a material effect on
the accompanying financial statements. As new accounting
pronouncements are issued, we will adopt those that are applicable
under the circumstances.
Note 3 – Liquidity, Capital Resources
and Going Concern Considerations
During 2022, the Company received approximately $12.8 million
and $4.0
million from the proceeds from the issuance common
stock and debt, respectively. These events served to mitigate
the conditions that previously raised substantial doubt about
the Company’s ability to continue as a going concern.
The Company’s consolidated
financial statements have been prepared on the basis of US GAAP for
a going concern, on the premise that Company’s ability to meet its
obligations as they come due in the normal course of business. The
Company sustained a net loss of approximately $21.7 million and negative cash flows from
operating activities of approximately $14.1 million
for the year ended December 31, 2022. To date the Company has
generated cash flows from issuances of equity and
indebtedness.
Management believes that its
current available resources will be sufficient to fund the
Company’s planned expenditures over the next 12 months. However,
management recognizes that it may be required to obtain additional
resources via issuances of indebtedness or equity to successfully
execute its business plans. No assurances can be given that
management will be successful in raising additional capital, if
needed, or on acceptable terms. These financial statements do not
include any adjustments relating to the recoverability and
classification of recorded asset amounts and classification of
liabilities that might be necessary should the Company determine it
shall be unable to continue as a going concern.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 4 – Notes Payable, Related Party
Notes Payable, and Revenue Financing
Arrangements
Notes payable are generally nonrecourse and secured by all Company
owned assets.
Schedule
of Notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate |
|
December
31, 2022 |
|
December
31, 2021 |
Notes
Payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
March 2014, we entered into a short-term loan agreement with an
entity in the amount of $200,000. The note included warrants
for 272,584 shares of common stock at
$0.94 per share. The
warrants expired as unexercised. The loan matured and remains
in default. |
|
|
8 |
% |
|
|
200,000 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
September 2021, we entered into a twelve-month loan with a company
in the amount of $208,000. The loan and interest was
paid off in June 2022. |
|
|
4.8 |
% |
|
|
— |
|
|
|
116,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2020, we entered into a 56 month loan with a company in
the amount of $1,578,237. The loan requires
payments of 3.75% through November 2022 and 4.00% through September
2025 of the previous months revenue |
|
|
17 |
% |
|
|
1,044,445 |
|
|
|
1,423,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
April 2021, we entered into a six-month loan with a individual in
the amount of $84,000. The loan matures in October
2021 with principal and interest due at maturity. The loan was
extended to January 2023 |
|
|
7 |
% |
|
|
84,000 |
|
|
|
84,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
April 2021, we entered into a six-month loan with a individual in
the amount of $84,000. The loan had an
original maturity of October 2021 with principal and interest due
at maturity. The loan was extended to January 2023 |
|
|
7 |
% |
|
|
84,000 |
|
|
|
84,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
May 2021, we entered into a six-month loan with a individual in the
amount of $50,000. The loan had an
original maturity of October 2021 with principal and interest due
at maturity. The loan was extended to January 2023 |
|
|
7 |
% |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
May 2021, we entered into a six-month loan with a individual in the
amount of $500,000. The loan had an
original maturity of October 2021 with principal and interest due
at maturity. The principal and interest was converted into shares
of common stock in February 2022 |
|
|
7 |
% |
|
|
— |
|
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
May 2021, we entered into a six-month loan with an individual in
the amount of $10,000. The loan had an
original maturity of October 2021 with principal and interest due
at maturity. The loan was extended to January 2023. |
|
|
7 |
% |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
May 2021, we entered into a six-month loan with a individual in the
amount of $200,000. The loan had an
original maturity of October 2021 with principal and interest due
at maturity. The principal and interest was converted into shares
of common stock in February 2022. |
|
|
7 |
% |
|
|
— |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
November 2021, we entered into a one-year loan with a individual in
the amount of $300,000. The loan had an original
maturity of November 2021 with principal and interest due at
maturity. The principal and interest was converted to shares
of common stock in April 2022 |
|
|
7 |
% |
|
|
— |
|
|
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
August 2022, we entered into a 56-months auto loan in the amount of
$45,420. |
|
|
2.35 |
% |
|
|
42,396 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2022, we entered into an eighteen-month loan with an
individual in the amount of $100,000. The note included 100%
warrant coverage. The loan matures in June 2024 with principal and
interest due at maturity. |
|
|
12 |
% |
|
|
100,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2022, we entered into an eighteen-month loan with an
individual in the amount of $250,000. The note included 100%
warrant coverage. The loan matures in June 2024 with principal and
interest due at maturity. |
|
|
12 |
% |
|
|
250,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2022, we entered into an eighteen-month loan with an
individual in the amount of $1,000,000. The note included 100%
warrant coverage. The loan matures in June 2024 with principal and
interest due at maturity. |
|
|
12 |
% |
|
|
1,000,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2022, we entered into an eighteen-month loan with an
individual in the amount of $250,000. The note included 100%
warrant coverage. The loan matures in June 2024 with principal and
interest due at maturity. |
|
|
12 |
% |
|
|
250,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2022, we entered into an eighteen-month loan with an
individual in the amount of $250,000. The note included 100%
warrant coverage. The loan matures in June 2024 with principal and
interest due at maturity. |
|
|
12 |
% |
|
|
250,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2022, we entered into an eighteen-month loan with an
individual in the amount of $250,000. The note included 100%
warrant coverage. The loan matures in June 2024 with principal and
interest due at maturity. |
|
|
12 |
% |
|
|
250,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2022, we entered into an eighteen-month loan with an
individual in the amount of $400,000. The note included 100%
warrant coverage. The loan matures in June 2024 with principal and
interest due at maturity. |
|
|
12 |
% |
|
|
400,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
December 2022, we entered into an eighteen-month loan with an
individual in the amount of $1,500,000. The note included 100%
warrant coverage. The loan matures in June 2024 with principal and
interest due at maturity. |
|
|
12 |
% |
|
|
1,500,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
notes payable |
|
|
$ |
5,514,841 |
|
|
$ |
2,967,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
notes discount |
|
|
|
(1,898,265 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
current portion |
|
|
|
(1,080,257 |
) |
|
|
(2,967,812 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
notes payable |
|
|
$ |
2,536,319 |
|
|
$ |
— |
|
Interest expense on notes payable was $217,123 and $376,572 for the years ended
December 31, 2022 and 2021, respectively. Accrued interest was
$141,591 and $171,452 at December 31, 2022 and
December 31, 2021, respectively.
Notes discount of $1,898,265 for the year ending
December 31, 2022 is related to the discounted warrants on the
December notes. The year ending December 31, 2021 did not have
discounted warrants.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 4 – Notes Payable,
Related Party Notes Payable, and Revenue Financing Arrangements,
continued
Schedule
of Notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate |
|
December
31, 2022 |
|
December
31, 2021 |
Related Parties Notes Payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In December 2020, we entered into an 18 month loan with an
individual in the amount of $2,000,000. The loan was paid off in
June 2022 |
|
2.0% |
|
|
— |
|
|
|
653,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less current
portion |
|
|
— |
|
|
|
(653,081 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term notes
payable |
|
$ |
— |
|
|
$ |
— |
|
Interest expense on related party notes payable was $5,407 and $26,409 for the years ended December
31, 2022 and 2021, respectively.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 5 – Licensing Agreement and
Royalty Payable
We have a licensing agreement with ABG TapouT, LLC (“TapouT”),
providing us with licensing rights to the brand “TapouT” on (i)
energy drinks, (ii) energy bars, (iii) coconut water, (iv)
electrolyte gum/chews, (v) energy shakes, (vi) powdered drink mix,
(viii) water (including enhanced water), (vii) energy shots, (viii)
teas, and (ix) sports drinks sold in the North America (including
US Territories and Military Bases), United Kingdom, Brazil, South
Africa, Australia, Scandinavia, Peru, Colombia, Chile and
Guatemala.. Under the terms of the agreement, we are required to
pay a 6% royalty on net sales, as defined. In 2022 and 2021, we are
required to make monthly payments of $54,450 and $49,500, respectively.
There were no unpaid
royalties at December 31, 2022 and 2021. We paid the guaranteed
minimum royalty payments of $653,400 and $594,000 for the years ended
December 31, 2022 and 2021, which is included in general and
administrative expenses.
In connection with the Copa APA, we acquired the license to certain
patents from 1/4 Vin SARL (“1/4 Vin”) On February 16, 2018, the
Copa di Vino entered into three separate license agreements with
1/4 Vin SARL, (1/4 Vin). 1/4 Vin has the right to license certain
patents and patent applications relating to inventions, systems,
and methods used in the Company’s manufacturing process. In
exchange for notes payable, 1/4 Vin granted the Company a
nonexclusive, royalty-bearing, non-assignable, nontransferable,
terminable license which would continue until the subject equipment
is no longer in service or the patents expire. Amortization is
approximately $31,000 annually until the license
agreement is fully amortized. The asset is being amortized over a
10-year useful life.
Note 6 – Stockholders’
Equity
Common
Stock
During the twelve-months ended December 31, 2022, we issued
4,596,129
shares of common stock as part of the public offerings, 1,834,404
shares in exchange for services, 380,959
shares in connection with the purchase of Copa di Vino, 377,796
shares on conversion of convertible instruments, and 300,000
shares for cash.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 6 – Stockholders’
Equity, continued
Private Placement
Memorandum (PPM)
In January 2021, the Board of Directors approved a private
placement offering of 1,212,121
shares of the common stock of the Company, a purchase price of
$3.30 per share for
aggregate gross proceeds of $4,000,000 (“PPM”). As part of the PPM,
each purchaser received a warrant to purchase one share for
every two shares purchased. In February 2021, we completed our PPM
by issuing a total of 1,212,355 of shares and
606,179 warrants receiving gross
proceeds of approximately $4,000,000.
In July 2022, we issued
100,000 shares of common stock of the Company, at a purchase
price of $1.10
per share. In December 2022, we issued
200,000 shares of common stock of the Company, at a purchase
price of $1.00
per share this placement included 100% warrant
coverage.
In December 2022, we issued Convertible Notes for 4,000,000
shares at $1.00 per share with
warrants to purchase 4,000,000 shares of common
stock at $0.25 per
share.
Stock
Plans
A summary of the Company’s stock option plan and changes during the
year ended is as follows:
Schedule of stock option plan |
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category |
|
No. of Shares to be Issued Upon Exercise or Vesting of Outstanding
Stock Options |
|
Weighted Average Exercise Price of Outstanding Stock Options |
|
Number of Securities Remaining Available for Future Issuance Under
Equity Compensation Plans (Excluding Securities |
Equity compensation plan approved by board of directors |
|
|
1,151,000 |
|
|
|
2.56 |
|
|
|
1,899,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,151,000 |
|
|
|
2.56 |
|
|
|
1,899,509 |
|
On August 2020, the Board adopted the 2020 Stock Incentive Plan
(the “2020 Plan”), which provides for the grant of Options,
Restricted Stock Awards, Stock Appreciation Rights, Performance
Units and Performance Bonuses to consultants and eligible
recipients.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
The following is a summary of the Company’s stock option
activity:
Schedule of stock option activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
December 31,
2022 |
|
|
|
December 31,
2021 |
|
|
|
|
|
|
|
|
|
Balance - beginning of the year |
|
|
1,065,000 |
|
|
$ |
2.60 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
146,000 |
|
|
|
2.31 |
|
|
|
1,065,000 |
|
|
$ |
2.60 |
|
Exercises |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cancelled |
|
|
60,000 |
|
|
|
2.60 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - end of the year |
|
|
1,151,000 |
|
|
$ |
2.56 |
|
|
|
1,065,000 |
|
|
$ |
2.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable – end of year |
|
|
732,746 |
|
|
$ |
2.58 |
|
|
|
334,998 |
|
|
$ |
2.60 |
|
In September 2021 we granted 1,065,000 options to purchase common
stock of the Company to employees, consultants, and directors.
These options vest over two years.
In May 2022, we granted 146,000 options to purchase common
stock to employees and consultants, these options vest between one
and four years.
The Company determined the grant date fair value of the options
granted using the Black Scholes Method using the following
assumptions:
Schedule
of stock option assumption |
|
|
|
|
|
|
|
|
|
|
December 31,
2022 |
|
December 31,
2021 |
Risk-free interest rates |
|
|
0.84 |
% |
|
|
2.99 |
% |
Exercise
price |
|
$ |
2.60 |
|
|
$ |
2.31 |
|
Expected
life |
|
|
5 years |
|
|
|
10 years |
|
Expected
volatility |
|
|
160.0 |
% |
|
|
228.3 |
% |
Expected
dividends |
|
|
— |
|
|
|
— |
|
During the year ended December 31, 2022, 397,748 options vested
with a weighted average grant date fair value of $2.55 Stock
compensation expense for the years ended December 31, 2022 and 2021
was $1,146,965 and
$3,971,926,
respectively.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
At December 31, 2022, there was 418,254 options unvested with an
average grant date fair value of $2.54
and $379,144 of
unrecognized compensation costs related to stock options which will
be recognized over the weighted average remaining years of
0.84.
The following is a summary of the Company’s
Warrant activity
Schedule
of warrant activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants |
|
|
|
December 31, 2022 |
|
|
|
December 31, 2021 |
|
|
|
|
|
|
|
|
|
Balance – beginning of the year |
|
|
10,143,896 |
|
|
$ |
2.51 |
|
|
|
6,213,898 |
|
|
$ |
2.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
4,200,000 |
|
|
|
0.25 |
|
|
|
3,929,998 |
|
|
|
3.29 |
|
Exercises |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cancelled |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- end of the year |
|
|
14,343,896 |
|
|
$ |
1.85 |
|
|
|
10,143,896 |
|
|
$ |
2.51 |
|
In January 2021 we issued 606,179 warrants to purchase common
stock of the Company in connection with the January 2021 private
placement offering of 1,212,121
shares of common stock.
In May 2021 we granted 333,333 warrants to purchase common
stock of the Company to a director. These warrants vest over two
years.
We issued 3,750,000 warrants to purchase common
stock of the Company in connection with the June 2021 underwritten
public offering of 3,750,000
shares of common stock, in addition to 150,000 warrants to purchase common
stock of the Company to the representative underwriter.
The fair value of warrants recognized in the period has been
estimated using the Black-Scholes option pricing model with the
following assumptions.
Schedule
of assumptions used in Black-Scholes option pricing
model |
|
|
|
|
|
|
|
|
December 31, 2022 |
|
December 31,
2021 |
Risk-free interest rates |
|
3.99%
|
|
|
0.93 |
% |
Exercise
price |
|
$0.96 |
|
$ |
1.85 |
|
Expected
life |
|
5 years |
|
|
5 years |
|
Expected
volatility |
|
228.3% |
|
|
165.3 |
% |
Expected
dividends |
|
|
|
|
— |
|
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 7 – Related
Parties
During the normal course of business, we incurred expenses related
to services provided by our CEO or Company expenses paid by our
CEO, resulting in related party payables. In conjunction with the
acquisition of Copa di Vino, the Company also entered into a
Revenue Loan and Security Agreement (the “Loan and Security
Agreement”) by and among the Company, Robert Nistico, additional
Guarantor and each of the subsidiary guarantors from time-to-time
party thereto (each a “Guarantor”, and, collectively, the
“Guarantors”), and Decathlon Alpha IV, L.P. (the “Lender”). The
Loan and Security Agreement provided for a revenue-based credit
facility of $1,578,237 (the “Gross Amount”) with
the Lender (the “Credit Facility”).
There were related party notes payable in the amount of $0.7 million outstanding
as of December 31, 2021 and were repaid in 2022.
Note 8 – Investment in Salt Tequila
USA, LLC
The Company has a marketing and distribution agreement with SALT in
Mexico for the manufacturing of our Tequila product line.
The Company has a 22.5% percentage interest
in SALT Tequila USA, LLC (“SALT”), and has the right to increase
its ownership to 37.5%.
This investment is accounted for at cost.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 9 – Lease
We have various operating lease agreements primarily related to
real estate and office. Our real estate leases represent a majority
of our lease liability. Our lease payments are mainly fixed. Any
variable lease payments, including utilities, common area
maintenance are expensed during the period incurred. Variable lease
costs were immaterial for the years ended December 31, 2022 and
2021. A majority of our real estate leases include options to
extend the lease. We review all options to extend at the inception
of the lease and account for these options when they are reasonably
certain of being exercised.
Operating lease expense is recognized on a straight-line basis over
the lease term and is included in operating expense on our
consolidated statement of operations. Operating lease cost was
$315,980 and $277,525 during the years ended
December 31, 2022 and 2021, respectively.
The following table sets for the maturities of our operating lease
liabilities and reconciles the respective undiscounted payments to
the operating lease liabilities in the consolidated balance sheet
at December 31, 2022:
Maturities of lease liabilities |
|
|
|
|
Undiscounted
Future Minimum Lease Payments |
|
Operating
Lease |
|
|
|
2023 |
|
$ |
298,442 |
|
2024 |
|
|
252,000 |
|
2025 |
|
|
252,000 |
|
Total |
|
|
802,442 |
|
Amount
representing imputed interest |
|
|
(53,027 |
) |
Total
operating lease liability |
|
|
749,415 |
|
Current
portion of operating lease liability |
|
|
(268,749) |
|
Operating
lease liability, non-current |
|
$ |
480,666 |
|
The table below presents information for lease costs related to our
operating leases at December 31, 2022:
Schedule of lease costs |
|
|
|
|
Operating
lease cost: |
|
|
|
|
Amortization
of leased assets |
|
$ |
623,232 |
|
Interest
of lease liabilities |
|
|
94,081 |
|
Total
operating lease cost |
|
$ |
717,313 |
|
The operating lease cost at December 31, 2022 was $315,980 and at December 31,
2021 was $277,525.
The table below presents lease- related terms and discount rates at
December 31, 2022:
Summary of lease-related terms and discount
rates |
|
|
|
|
Remaining
term on leases |
|
|
1 to
months 36 |
|
Incremented
borrowing rate |
|
|
5.0 |
% |
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 10 – Segment
Reporting
We have two reportable operating segments: (1) the manufacture and
distribution of non-alcoholic and spirits brand beverages, and (2)
the retail sale of beverages and groceries online. These operating
segments are managed separately and each segment’s major customers
have different characteristics. Segment Reporting is evaluated by
our Chief Executive Officer and Chief Financial Officer. Our
medical device business was discontinued in 2021.
Schedule
of Segment Reporting Information |
|
|
|
|
|
|
|
|
Revenue |
|
For the
period ended, December 31,
2022 |
|
For the
period ended, December 31,
2021 |
Splash
Beverage Group |
|
$ |
4,759,586 |
|
|
$ |
4,459,409 |
|
E-Commerce |
|
|
13,327,900 |
|
|
|
6,856,593 |
|
|
|
|
|
|
|
|
|
|
Total
Revenues continuing operations |
|
$ |
18,087,486 |
|
|
$ |
11,316,002 |
|
|
|
|
|
|
|
|
|
|
Total
Revenues discontinuing operations |
|
$ |
385,174 |
|
|
$ |
1,112,878 |
|
Contribution
after Marketing expenses |
|
2022 |
|
2021 |
Splash
Beverage Group |
|
$ |
(2,202,790 |
) |
|
$ |
242,045 |
|
E-Commerce |
|
|
5,314,767 |
|
|
|
2,887,889 |
|
|
|
|
|
|
|
|
|
|
Total
Contribution after Marketing expenses continuing
operations |
|
|
3,111,977 |
|
|
|
3,129,934 |
|
|
|
|
|
|
|
|
|
|
Contracted
services |
|
|
1,505,788 |
|
|
|
1,584,830 |
|
Salary
and wages |
|
|
4,179,403 |
|
|
|
3,807,492 |
|
Non-cash
share-based compensation |
|
|
7,409,884 |
|
|
|
18,395,488 |
|
Other
general and administrative |
|
|
11,411,535 |
|
|
|
8,425,046 |
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations |
|
$ |
(21,394,633) |
|
|
$ |
(29,082,922) |
|
Total
Assets |
|
December
31, 2022 |
|
December
31, 2021 |
Splash
Beverage Group |
|
$ |
14,723,553 |
|
|
$ |
14,998,597 |
|
E-Commerce |
|
|
2,581,150 |
|
|
|
913,312 |
|
Medical
Devices – Discontinued |
|
|
— |
|
|
|
473,461 |
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
17,304,703 |
|
|
$ |
16,385,370 |
|
Splash Beverage Group revenue increased for the year ending
December 31, 2022 versus December 31, 2021 by $0.3m or 6.7% with
largest contribution from TapouT and Pulpoloco. Contribution after
Marketing expenses declined by $2.4m for the year ending December
31, 2022 versus December 31, 2021 driven by raw material cost
increases and faster growth of lower margin brands affecting the
overall mix of sales.
E-Commerce revenue increased for the year ending December 31, 2022
versus December 31, 2021 by $6.4m driven by expanded territory
coverage, new products being sold and increased cart size when
customers checking out. Contribution after Marketing expenses
increased by $2.4m due to increased sales partially offset by cost
increases.
Note 11 – Commitment and
Contingencies
We are a party to asserted claims and are subject to regulatory
actions in the ordinary course of business. The results of such
proceedings cannot be predicted with certainty, but we do not
anticipate that the outcome, if any, arising out of any such matter
will have a material adverse effect on its business, financial
condition or results of operations.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 12 – Registration
Statement
Underwriting Agreement
On June 10, 2021, we entered into an underwriting agreement
(“Underwriting Agreement”) relating to an underwritten public
offering (the “Offering”) of common stock, (the “Common Stock”) and
warrants to purchase one share of Common Stock (the “Warrants”).
Pursuant to the Offering, we sold 3,750,000 shares of Common Stock
and 4,312,500 Warrants, which include 562,500 Warrants sold upon
the partial exercise of the Underwriters’ over-allotment, for total
gross proceeds of approximately $15 million. After deducting the
underwriting commissions, discounts, and offering expenses, we
received net proceeds of approximately $13.2 million.
On February 17, 2022, we entered into an underwriting agreement
(“Underwriting Agreement”) relating to an underwritten public
offering (the “Offering”) of common stock, (the “Common Stock”) to
purchase one share of Common Stock. Pursuant to the Offering, we
sold 2,300,000 shares of Common Stock for total gross proceeds of
approximately $9.2 million. After deducting the underwriting
commissions, discounts, and offering expenses payable by we, we
received net proceeds of approximately $7.9 million.
On September 22, 2022, we entered into an underwriting agreement
(“Underwriting Agreement”) relating to an underwritten public
offering (the “Offering”) of common stock, (the “Common Stock”) to
purchase one share of Common Stock. Pursuant to the Offering, we
sold 2,296,129 shares of Common Stock for
total gross proceeds of approximately $3.6 million. After deducting the
underwriting commissions, discounts, and offering expenses, we
received net proceeds of approximately $3.1 million.
Representative’s Warrants
On June 15, 2021, pursuant to the Underwriting Agreement, the
Company issued the Representative’s Warrants to purchase up to an
aggregate of 150,000 shares of
Common Stock. The Representative’s Warrants may be exercised
beginning on December 10, 2021 until June 10, 2026. The initial
exercise price of each Representative Warrant is $4.60
per share, which represents 115% of the Offering Price.
Note 13 – Tax
Provision
The Company has evaluated the positive and negative evidence in
assessing the realizability of its deferred tax assets. This
assessment included the evaluation of scheduled reversals of
deferred tax liabilities, estimates of projected future taxable
income and tax planning strategies to determine which deferred tax
assets are more likely than not to be realized in the future. Due
to uncertainty to the Company’s ability to utilize its deferred tax
assets, the Company has recorded a full valuation allowance against
its deferred tax assets.
At December 31, 2022, the Company’s net operating loss carryforward
for Federal income tax purposes was $89,794,180, which
will be available to offset future taxable income. If not used,
these carry forwards will begin to expire in 2032, except for the
net operating losses generated January 1, 2018 and after, which can
be carried forward indefinitely.
There was no income tax
expense or benefit for the years ended December 31, 2022 and 2021
due to the full valuation allowance recorded.
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
The reconciliation of the income tax benefit is computed at the
U.S. federal statutory rate as follows:
Schedule of Effective Income Tax Rate
Reconciliation |
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
|
|
|
|
Federal Statutory Tax Rate |
|
|
21.00 |
% |
|
|
21.00 |
% |
Permanent Differences |
|
|
(3.80 |
)% |
|
|
(4.00 |
)% |
Change in Valuation Allowance |
|
|
(17.20 |
)% |
|
|
(17.00 |
)% |
Net deferred tax asset |
|
|
— |
|
|
|
— |
|
The tax effects of temporary differences which give rise to the
significant portions of deferred tax assets or liabilities at
December 31 are as follows:
Schedule of Deferred Tax Assets and
Liabilities |
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
Deferred Tax Assets: |
|
|
|
|
|
|
|
|
Net Operating Losses |
|
$ |
22,758,336 |
|
|
$ |
18,430,306 |
|
Deferred
Rent |
|
|
380 |
|
|
|
380 |
|
Accrued Interest/Interest Expense Limitation |
|
|
1,263,639 |
|
|
|
1,145,380 |
|
Total deferred tax assets |
|
|
24,022,355 |
|
|
|
19,576,065 |
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
(93,476 |
) |
|
|
(139,828 |
) |
Total deferred tax liabilities |
|
|
(93,476 |
) |
|
|
(139,828 |
) |
|
|
|
|
|
|
|
|
|
Less: Valuation allowance |
|
|
(23,928,879 |
) |
|
|
(19,436,237 |
) |
Total Net Deferred Tax Assets |
|
$ |
— |
|
|
$ |
— |
|
The
Company continually evaluates expiring statutes of limitations,
audits, proposed settlements, changes in tax law and new
authoritative rulings. The open tax years subject to examination
with respect to the Company’s operations are 2015 through 2022.
Note 14 – Subsequent
Events
In February 2023 the $200,000
note payable that was in default was settled via payment of
$302,667
In February 2023 the Company received $2.0 million from a
Private Placement issuance of convertible notes. The notes convert
into 3.5M shares of our
common stock.
In February 2023 the Company transferred cash in bank deposits
accounts to the maximum federally insured limits of $250,000 to minimize unissued
funds. At March 29, 2023 we had $563,498 over the federally
insured limits.
We have notes that expire in 2023 that we will extend or
payoff.
Item 9. Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure.
On March 9, 2023, the Company was advised by Daszkal Bolton, LLP
(“Daszkal”), the Company’s independent registered public accounting
firm, that Daszkal completed a business combination agreement with
CohnReznick LLP (“CohnReznick”). As a result of this transaction,
Daszkal will resign as the Company’s independent registered public
accounting firm upon the Company filing its annual report on Form
10-K for the year ended December 31, 2022. The Company’s current
Daszkal audit team is now part of CohnReznick and the Company
expects it will likely engage CohnReznick to serve as the Company’s
independent registered public accounting firm for the Company’s
fiscal year ending December 31, 2023, but has not engaged
CohnReznick at this time.
Daszkal’s reports on the Company’s financial statements for the
past two years did not contain an adverse opinion or a disclaimer
of opinion, and were not qualified or modified as to uncertainty,
audit scope, or accounting principles.
During the years ended December 31, 2021 and
2020, and the subsequent interim periods through November 14, 2022,
there were (i) no disagreements (as described in Item 304(a)(1)(iv)
of Regulation S-K and the related instructions) between the Company
and Daszkal on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which, if not resolved to Daszkal’s satisfaction, would have caused
Daszkal to make reference thereto in its reports on the financial
statements for such years; and (ii) no “reportable events” within
the meaning of Item 304(a)(1)(v) of Regulation S-K, except that Daszkal
advised the Company of material weaknesses in its internal control
over financial reporting as of December 31, 2021 and
2020.
Item 9A. Controls and
Procedures.
(1) Evaluation of Disclosure Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as
such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e)
under the Exchange Act), that are designed to ensure that
information required to be disclosed in our reports under the
Exchange Act, is recorded, processed, summarized and reported
within the time periods required under the SEC’s rules and forms
and that the information is gathered and communicated to our
management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial
Officer), to allow for timely decisions regarding required
disclosure.
As required by Exchange Act Rule 13a-15, our Chief Executive
Officer and Chief Financial Officer carried out an evaluation of
the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rule 13a-15 as of
the end of the period covered by this report. Based on the
foregoing evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that due to our limited resources our
disclosure controls and procedures are not effective in providing
material information required to be included in our periodic SEC
filings on a timely basis and to ensure that information required
to be disclosed in our periodic SEC filings is accumulated and
communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure about our internal control over
financial reporting discussed below Following the 2021 evaluation
by management of the effectiveness of the design and operation of
our disclosure controls and procedures we implemented new controls
and process in 2022.
(2) Management’s Report on Internal Control over Financial
Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting for our company.
Our internal control system was designed to, in general, provide
reasonable assurance to our management and board regarding the
preparation and fair presentation of published financial
statements, but because of its inherent limitations, internal
control over financial reporting may not prevent or detect
misstatements. 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.
Our management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2022. Based on that
assessment, our management has determined that as of December 31,
2022, our internal control over financial reporting was not
effective due to material weaknesses related to a limited
segregation of duties due to our limited resources and the small
number of employees. Management has determined that this control
deficiency constitutes a material weakness which could result in
material misstatements of significant accounts and disclosures that
could result in a material misstatement to our interim or annual
financial statements that would not be prevented or detected. In
addition, due to limited staffing, we are not always able to detect
minor errors or omissions in reporting.
This Annual Report does not include an attestation report of our
independent registered public accounting firm regarding
management’s assessment of our internal control over financial
reporting pursuant to temporary rules of the SEC.
(3) Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial
reporting other than items highlighted above, identified in
connection with the evaluation required by paragraph (d) of Rules
13a-15 or 15d-15 under the Securities Exchange Act of 1934 that
occurred during our most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
Item 9B. Other
Information.
None.
ITEM 9C. DISCLOSURE
REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not
applicable.
PART III
Item 10. Directors,
Executive Officers and Corporate Governance.
The following table sets forth our executive officers and
directors, their ages and position(s) with the Company.
Name |
|
Age |
|
Position |
|
|
|
|
|
Robert
Nistico |
|
59 |
|
Chief
Executive Officer and Director |
|
|
|
|
|
Ronald
Wall |
|
55 |
|
Chief
Financial Officer |
|
|
|
|
|
William
Meissner |
|
56 |
|
President,
Chief Marketing Officer |
|
|
|
|
|
Justin
Yorke |
|
56 |
|
Director |
|
|
|
|
|
Peter
McDonough |
|
64 |
|
Director |
|
|
|
|
|
Candace
Crawford |
|
67 |
|
Director |
Directors are elected annually and hold office until the next
annual meeting of the stockholders of the Company and until their
successors are elected. Officers are elected annually by the Board
of Directors (the “Board”) and serve at the discretion of the
Board.
Robert Nistico, age 59, on March 31, 2020 became the Chief
Executive Officer and a member of the Board of the Company. Since
2012, Mr. Nistico has served as the Chief Executive Officer and a
member of the Board of Splash Beverage Group, Inc., prior to the
Company’s acquisition by CMS. Mr. Nistico also served as the
president of Viva Beverages, LLC from 2009 to 2011. Mr. Nistico was
the fifth employee at Red Bull North America, Inc. where he worked
from 1996 to 2007 and served as Vice President of Field Marketing
and Sr. Vice President/General Manager. Mr. Nistico was
instrumental in building the Red Bull brand in North and Central
America and the Caribbean from no revenues to $1.45 billion in
annual revenues. Earlier, he held the brand position of Regional
Portfolio V.P and Division Manager for Diageo (formerly I.D.V. /
Heublein), General Sales Manager for Republic National (formerly
The Julius Schepps Company) and North Texas State Manager for The E
& J Gallo Winery (and a variety of other management positions
for those companies). Mr. Nistico serves as a director of Apollo
Brands. Mr. Nistico has more than 27 years of experience in the
beverage industry, including direct and indirect sales management,
strategic brand management & marketing, finance, operations,
production and logistics. Mr. Nistico holds a B.A. from the
University of Colorado.
Ronald Wall, age 56, became
Chief Financial Officer in May 2022. Mr. Wall is a collaborative
finance executive with expertise leveraging analysis, insights and
team approaches, driving organizational improvements, and
implementing practices and controls. From 2016 to 2022, Mr. Wall
served as the Chief Financial Officer for Americas of William Grant
& Sons Inc., a premium spirits company. Previously, Mr. Wall
served in various capacities at William Grant & Sons Inc.,
including Chief Financial Officer for North America, and Chief
Financial Officer for the United States of America.
William Meissner, age 56, became the President and Chief Marketing
Officer of the Company in May of 2020. Mr. Meissner is a proven
leader with more than twenty years of success in growing consumer
brand companies with both large multinational and medium sized
entrepreneurial organizations. Meissner has held several other
leadership and board director roles. Prior to Splash Meissner was a
board director and CEO in a beverage vertical organized by a
mid-cap PE firm designed to acquire and build emerging brands,
where he acquired two legacy tea brands from Nestle, Sweet Leaf Tea
and Tradewinds Tea. Meissner served as CEO and Board Director or
Genesis Today, Inc. a plant based superfood and supplement company,
CEO and Board Director of a joint venture between Distant Lands
Coffee Inc. and Caffitaly Systems s.p.a called Tazza Pronto Inc.,
CEO and Board Director of Jones Soda Inc., President of Talking
Rain Beverages, Inc., Chief Marketing Officer of Coca-Cola’s Fuze
Beverages, Brand Director of PepsiCo’s SoBe Beverages and Category
Manager of Nutritional Beverages for Tetra Pak Inc. Meissner has an
MBA from the University of Pittsburgh’s Katz Graduate School of
Business and a Bachelor’s degree from Michigan State
University.
Justin Yorke, age 56, became a member of the Board of the Company
on March 31, 2020. Since March 31, 2020, Mr. Yorke has also served
as the Company’s Secretary. Mr. Yorke has over 25 years of
experience in finance. Based in Hong Kong for over 10 years, he
managed funds for a private Swiss Bank, Darier Henstch from 1997 to
2000. Prior to that, from 1995 to 1997, Mr. Yorke managed funds for
Peregrine Investments and from 1990 to 1995 Unifund, Asia, Ltd,
Hong Kong, a high net-worth family office headquartered Geneva,
Switzerland. From 2000 to 2004, he was a partner at Asiatic
Investment Management, based in San Francisco. Since 2004, Mr.
Yorke has been a partner in San Gabriel Advisors, LLC and Arroyo
Capital Management, LLC and is the manager of the San Gabriel Fund,
JMW Fund and Richland Fund. The funds are highly diversified in
focus with investment holdings, public, private equity and debt
investments and real estate investments. He has a B.A. degree from
UCLA. Mr. Yorke is the principal of WesBev LLC, which prior to the
merger between CMS and our Company was the majority shareholder of
the Company. He also is an acting director and audit committee
chair of Processa Pharmaceuticals, (Nasdaq: PCSA). Mr. Yorke served as non-executive
Chairman of Jed Oil and a Director/CEO at JMG
Exploration.
Peter J. McDonough, age 64, has served as an independent director
of the Company since October 5, 2020 and previously served as a
member of the Board of Splash Beverage Group, Inc. prior to the
Company’s acquisition by CMS. Mr. McDonough brings more than 30
years of executive leadership experience from an array of global
industry leading consumer goods companies. Most recently, Mr.
McDonough was Chief Executive Officer of Trait Biosciences, Inc.
(2019-2022) after serving as an independent management consultant
(2016-2018). Earlier, Mr. McDonough served as President, Chief
Marketing and Innovation Officer for Diageo North America
(2006-2015). Prior to joining Diageo, Mr. McDonough was Vice
President, European Marketing at The Procter & Gamble Company
(2004-2006), where he led the Duracell Battery and Braun Appliance
marketing organizations. From 2002 to 2004, Mr. McDonough was a
member of the graduate business school faculty and lecturer at the
University of Canterbury in Christchurch, New Zealand. Prior to
this academic post he served as Vice President of Marketing for
Gillette North America’s Blade Razor & Grooming Products
Business where he directed the market launch of industry leading
brands like Mach3 Turbo and Venus Razors. Earlier in his career,
Mr. McDonough served as Director of North American Marketing at
Black & Decker where he was involved in launching the DeWalt
Power Tool Company. Mr. McDonough received a B.A. from Cornell
University and a Master of Business Administration from the Wharton
School of Business. He is also an independent director on the Board
of Franklin BSP Realty Trust (NYSE: FBRT).
Candace Crawford, age 67, has served as an independent director
since May 24, 2021. Ms. Crawford is a highly accomplished senior
executive and entrepreneur with more than 30 years of success
across the food and beverage, consumer products, manufacturing,
retail, and commercial real estate industries. Her broad areas of
expertise include strategic planning, growth and growing
businesses, financial acumen, P&L, operations, and governance.
Since 2017, Ms. Crawford has served as an adviser and board member
to various companies. Ms. Crawford has sat on the board of Vive
Organic since February 2019-2022, when the Company was sold and the
board of Skin Te since June 2018. She served as the CEO of Coco
Libre from 2015 to 2017, when the Company was sold. Under her
management, she was able to expand distribution, grow product
innovation and build awareness of the flagship coconut water brand
Coco Libre. Prior to this, she was the Chief Operating Officer and
Chief Financial Officer at Zico Beverages LLC from 2009 to 2013,
when the Company was sold. Before making her debut in the beverage
world, Ms. Crawford was the Chief Financial Officer for five
different companies including Metropolitan Theaters; Virgin
Entertainment Group; Resort Theaters of America; OMP; and Ancora
Capital. Ms. Crawford holds a Bachelor of Science in Business from
the University of Southern California and is a Certified Public
Accountant.
Family Relationships
There are no family relationships among and between the issuer’s
directors, officers, persons nominated or chosen by the issuer to
become directors or officers, or beneficial owners of more than ten
percent of any class of the issuer’s equity securities.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires that our
directors and executive officers and persons who beneficially own
more than 10% of our common stock (referred to herein as the
“reporting persons”) file with the SEC various reports as to their
ownership of and activities relating to our common stock. Such
reporting persons are required by the SEC regulations to furnish us
with copies of all Section 16(a) reports they file. Based solely on
our review of copies of the reports filed with the SEC and the
written representations of our directors and executive officers, we
believe that all reporting requirements for fiscal year 2022 were
complied with by each person who at any time during the 2022 fiscal
year was a director or an executive officer or held more than 10%
of our common stock, except for the following: Justin Yorke,
Candace Crawford, Peter McDonough and Robert Nistico each filed a
late Form 4 report on March 31, 2022, related to the granting of
options to purchase our common stock on September 30, 2021; Ms.
Crawford filed a late Form 4 report on April 5, 2022, related to
the granting of options to purchase our common stock on May 16,
2021; Mr. Nistico filed a late Form 4 report on May 31, 2022,
related to the purchase of our common stock on May 26, 2022; and
Mr. Nistico filed a late Form 4 report on June 7, 2022, related to
the purchase of our common stock on June 3, 2022.
Committees of the Board of Directors
Audit Committee
We have separately designated an Audit Committee. The Audit
Committee is responsible for, among other things, the appointment,
compensation, removal and oversight of the work of the Company’s
independent registered public accounting firm, overseeing the
accounting and financial reporting process of the Company, and
reviewing related person transactions. Our Audit Committee is
comprised of Peter McDonough and Candace Crawford. Under NYSE
listing standards and applicable SEC rules, all the directors on
the audit committee must be independent. Also, as a smaller
reporting company, we are only required to maintain an audit
committee of two independent directors. Our Board has determined
that Peter McDonough and Candace Crawford are independent under
NYSE listing standards and applicable SEC rules. Candace Crawford
is the Chairperson of the audit committee. Each member of the audit
committee is financially literate and our Board has determined that
Candace Crawford qualifies as an “audit committee financial expert”
as defined in applicable SEC rules. The Audit Committee operates
under a written charter adopted by the Board of Directors, which
can be found in on our website at www.splashbeveragegroup.com.
During 2022, the Audit Committee held four meetings in person
or through conference calls.
Compensation and
Management Resources Committee
We have established a Compensation and Management Resources
Committee of our Board of Directors. The purpose of the
Compensation and Management Resources Committee is to assist the
Board in discharging its responsibilities relating to executive
compensation, succession planning for the Company’s executive team,
and to review and make recommendations to the Board regarding
employee benefit policies and programs, incentive compensation
plans and equity-based plans.
The members of our Compensation and Management Resources Committee
are Peter McDonough and Candace Crawford. Candace Crawford is
the chairperson of the
Compensation and Management Resources Committee.
Under NYSE listing standards, we are required to have at least two
members of the compensation committee, all of whom must be
independent directors. Our board of directors has determined that
each of Peter J. McDonough and Candace Crawford is independent under
NYSE listing standards. The Compensation and Management
Resources Committee is responsible for, among other things, (a)
reviewing all compensation arrangements for the executive officers
of the Company and (b) administering the Company’s stock option
plans. The Compensation and Management Resource Committee operates
under a written charter adopted by the Board of Directors, which
can be found on our website at www.splashbeveragegroup.com
within the “Investor Information” section.
The duties and responsibilities of the Compensation and Management
Resources Committee in accordance with its charter are to review
and discuss with management and the Board the objectives,
philosophy, structure, cost and administration of the Company’s
executive compensation and employee benefit policies and programs;
no less than annually, review and approve, with respect to the
Chief Executive Officer and the other executive officers (a) all
elements of compensation, (b) incentive targets, (c) any employment
agreements, severance agreements and change in control agreements
or provisions, in each case as, when and if appropriate, and (d)
any special or supplemental benefits; make recommendations to the
Board with respect to the Company’s major long-term incentive plans
applicable to directors, executives and/or non-executive employees
of the Company and approve (a) individual annual or periodic
equity-based awards for the Chief Executive Officer and other
executive officers and (b) an annual pool of awards for other
employees with guidelines for the administration and allocation of
such awards; recommend to the Board for its approval a succession
plan for the Chief Executive Officer, addressing the policies and
principles for selecting a successor to the Chief Executive
Officer, both in an emergency situation and in the ordinary course
of business; review programs created and maintained by management
for the development and succession of other executive officers and
any other individuals identified by management or the Compensation
and Management Resources Committee; review the establishment,
amendment and termination of employee benefits plans, review
employee benefit plan operations and administration; and any other
duties or responsibilities expressly delegated to the Compensation
and Management Resources Committee by the Board from time to time
relating to the Committee’s purpose.
The Compensation and Management Resources Committee may request any
officer or employee of the Company or the Company’s outside counsel
to attend a meeting of the Compensation and Management Resources
Committee or to meet with any members of, or consultants to, the
Compensation and Management Resources Committee. The Company’s
Chief Executive Officer does not attend any portion of a meeting
where the Chief Executive Officer’s performance or compensation is
discussed, unless specifically invited by the Compensation and
Management Resources Committee.
The Compensation and Management Resources Committee has the sole
authority to retain and terminate any compensation consultant to be
used to assist in the evaluation of director, Chief Executive
Officer or other executive officer compensation or employee benefit
plans and has sole authority to approve the consultant’s fees and
other retention terms. The Compensation and Management Resources
Committee also has the authority to obtain advice and assistance
from internal or external legal, accounting or other experts,
advisors and consultants to assist in carrying out its duties and
responsibilities and has the authority to retain and approve the
fees and other retention terms for any external experts, advisors
or consultants.
During 2022, the Compensation Management Resources Committee held
two meetings in person or through conference calls.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible
for overseeing the appropriate and effective governance of the
Company, including, among other things, (a) nominations to the
Board of Directors and making recommendations regarding the size
and composition of the Board of Directors and (b) the development
and recommendation of appropriate corporate governance principles.
The Nominating and Corporate Governance Committee consists of Peter
McDonough and Candace Crawford, each of whom is an independent
director (as defined under Section 803 of the NYSE American LLC
Company Guide). The Chairperson of the committee is Peter
McDonough. The Nominating and Corporate Governance Committee
operates under a written charter adopted by the Board of Directors,
which can be found on our website at www.splashbeveragegroup.com
within the “Investor Information” section.
The Nominating and Corporate Governance Committee adheres to the
Company’s bylaws provisions and Securities and Exchange Commission
rules relating to proposals by stockholders when considering
director candidates that might be recommended by stockholders,
along with the requirements set forth in the committee’s Policy
with Regard to Consideration of Candidates Recommended for Election
to the Board of Directors, also available on our website. The
Nominating and Corporate Governance Committee of the Board of
Directors is responsible for identifying and selecting qualified
candidates for election to the Board of Directors prior to each
annual meeting of the Company’s stockholders. In identifying and
evaluating nominees for director, the Committee considers each
candidate’s qualities, experience, background and skills, as well
as other factors, such as the individual’s ethics, integrity and
values which the candidate may bring to the Board of Directors.
During 2021, the Nominating and Corporate Governance Committee held
two meetings in person or through conference calls.
Meetings of the Board of Directors same as above
During 2022, the Board of Directors held five
meetings. During 2022, each member of our Board
of Directors attended at least 75% of the aggregate of all
meetings of our Board of Directors and of all
meetings of committees of our Board of Directors on which
such member served that were held during the period in which such
director served.
The Board of Directors also approved certain actions by unanimous
written consent.
Director Independence
The NYSE listing standards require that a majority of our Board be
independent. Our Board has determined that Peter J. McDonough and
Candace Crawford are “independent directors” as defined in the NYSE
listing standards. Our independent directors will have regularly
scheduled meetings at which only independent directors are
present.
Involvement in Certain Legal Proceedings
Our Directors and Executive Officers have not been involved in any
of the following events during the past ten years:
1. |
any
bankruptcy petition filed by or against such person or any business
of which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior to
that time; |
|
|
2. |
any
conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses); |
|
|
3. |
being
subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or
otherwise limiting his involvement in any type of business,
securities or banking activities or to be associated with any
person practicing in banking or securities activities; |
|
|
4. |
being
found by a court of competent jurisdiction in a civil action, the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended,
or vacated; |
|
|
5. |
being
subject of, or a party to, any federal or state judicial or
administrative order, judgment decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of
any federal or state securities or commodities law or regulation,
any law or regulation respecting financial institutions or
insurance companies, or any law or regulation prohibiting mail or
wire fraud or fraud in connection with any business entity;
or |
|
|
6. |
being
subject of or party to any sanction or order, not subsequently
reversed, suspended, or vacated, of any self-regulatory
organization, any registered entity or any equivalent exchange,
association, entity or organization that has disciplinary authority
over its members or persons associated with a member. |
7. |
Such
person was the subject of, or a party to, any federal or state
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged
violation of: |
i. Any federal or state securities or commodities law or
regulation; or
ii. Any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud
in connection with any business entity; or
8. |
Such
person was the subject of, or a party to, any sanction or order,
not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.
1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or
persons associated with a member. |
Board leadership structure and role in risk oversight
The Board of Directors oversees our business and affairs and
monitors the performance of management. In accordance with
corporate governance principles, the Board of
Directors does not involve itself in day-to-day operations.
The directors keep themselves informed through discussions with the
Chief Executive Officer and other key executives, visits to the
Company’s facilities, by reading the reports and other materials
that we send them and by participating in Board and committee
meetings. Each director’s term will continue until the election and
qualification of his or her successor, or his or her earlier death,
resignation or removal.
Code of Ethics
We have adopted a code of business conduct and ethics that applies
to our directors, officers (including our Chief Executive Officer,
Chief Financial Officer and any person performing similar
functions) and employees. Our Code of Ethics is available at our
website at www.splashbeveragegroup.com.
Item 11. Executive
Compensation
The following table sets forth information for our two most
recently completed fiscal years ending December 31, 2022 and
December 31, 2021 concerning all of the compensation awarded to,
earned by the executive officers named below.
Name |
|
Year |
|
Salary |
|
Bonus |
|
Other |
|
Stock
Awards |
|
Options |
|
Total |
Robert Nistico |
|
|
2022 |
|
|
|
325,000 |
|
|
|
100,000 |
|
|
|
14,400 |
|
|
|
— |
|
|
|
— |
|
|
|
439,000 |
|
Robert
Nistico |
|
|
2021 |
|
|
|
325,000 |
|
|
|
162,500 |
|
|
|
14,400 |
|
|
|
— |
|
|
|
1,378,000 |
|
|
|
1,879,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
Meissner |
|
|
2022 |
|
|
|
325,000 |
|
|
|
90,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
415,000 |
|
William
Meissner |
|
|
2021 |
|
|
|
325,000 |
|
|
|
162,500 |
|
|
|
— |
|
|
|
— |
|
|
|
260,000 |
|
|
|
747,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
Wall |
|
|
2022 |
|
|
|
217,708 |
|
|
|
60,000 |
|
|
|
28,429 |
|
|
|
— |
|
|
|
254,100 |
|
|
|
560,237 |
|
Dean
Huge |
|
|
2021 |
|
|
|
150,000 |
|
|
|
30,000 |
|
|
|
— |
|
|
|
225,334 |
|
|
|
— |
|
|
|
405,334 |
|
Directors Compensation
During the fiscal year ended December 31, 2022, our directors were
paid compensation in cash for serving as Directors of the
Company.
Name |
|
Year |
|
Compensation |
|
Options/Warrants |
|
Total |
Candace Crawford |
|
|
2022 |
|
|
|
75,000 |
|
|
|
— |
|
|
|
75,000 |
|
Candace Crawford |
|
|
2021 |
|
|
|
31,250 |
|
|
|
1,075,000 |
|
|
|
1,106,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter McDonough |
|
|
2022 |
|
|
|
69,996 |
|
|
|
— |
|
|
|
69,996 |
|
Peter McDonough |
|
|
2021 |
|
|
|
29,165 |
|
|
|
325,000 |
|
|
|
354,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Justin Yorke |
|
|
2022 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Justin Yorke |
|
|
2021 |
|
|
|
— |
|
|
|
325,000 |
|
|
|
325,000 |
|
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the total outstanding equity awards
as of December 31, 2022, for each Named Executive Officer:
Name |
|
Grant
Date |
|
Number of
Securities Underlying Unexercised Options / Warrants
Exercisable |
|
Option /
Warrant Awards Number of Securities Underlying Unexercised Options
/ Warrants Exercisable |
|
Option
Exercise
Price |
|
Option
Expiration
Date |
Robert Nistico |
|
2/28/2020 |
|
|
159,008 |
|
|
|
— |
|
|
|
2.19 |
|
|
2/27/2025 |
Robert
Nistico |
|
10/16/2020 |
|
|
1,000,000 |
|
|
|
— |
|
|
|
2.25 |
|
|
10/15/2027 |
Robert
Nistico |
|
9/16/2021 |
|
|
530,000 |
|
|
|
— |
|
|
|
2.60 |
|
|
9/15/2026 |
William
Meissner |
|
10/16/2020 |
|
|
416,667 |
|
|
|
— |
|
|
|
2.25 |
|
|
10/15/2027 |
William
Meissner |
|
9/16/2021 |
|
|
66,666 |
|
|
|
33,334 |
|
|
|
2.60 |
|
|
9/15/2026 |
Ronald
Wall |
|
5/2/2022 |
|
|
27,750 |
|
|
|
83,250 |
|
|
|
2.31 |
|
|
5/2/2032 |
|
(1) |
Unless otherwise noted, the
business address of each of the following individuals is 1314 East
Las Olas Blvd, Suite 221 Fort Lauderdale, Florida 33301 |
Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The following table sets forth certain information with respect to
the beneficial ownership of our common stock as of March 31, 2023,
and as adjusted to reflect the sale of common stock in this
offering, for:
● |
each
of our current directors and executive officers; |
|
|
● |
all
of our current directors and executive officers as a group;
and |
|
|
● |
each
person, or group of affiliated persons, who beneficially owned more
than 5% of our common stock. |
Except as indicated by the footnotes below, we believe, based
on information furnished to us, that the persons and entities named
in the table below have sole voting and sole investment power with
respect to all shares of common stock that they beneficially,
subject to applicable community property laws. Unless otherwise
specified, the address for each of the persons named in the table
is 1314 E Las Olas Blvd. Suite 221, Fort Lauderdale, Florida
33301.
Our calculation of the percentage of beneficial ownership
prior to this offering is based on 25,655,515 shares of common
stock outstanding as of March 31, 2023. We have determined
beneficial ownership in accordance with the rules of the SEC, and
the information is not necessarily indicative of beneficial
ownership for any other purpose. Under Rule 13d-3 of the Exchange
Act of 1934, as amended (the “Exchange Act”), a beneficial owner of
a security includes any person who, directly or indirectly, through
any contract, arrangement, understanding, relationship or otherwise
has or shares: (i) voting power, which includes the power to vote
or to direct the voting of shares; and (ii) investment power, which
includes the power to dispose or direct the disposition of shares.
Certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the
power to dispose of the shares). In addition, shares are deemed to
be beneficially owned by a person if the person has the right to
acquire the shares (for example, upon exercise of an option) within
60 days of the date as of which the information is provided. In
computing the percentage ownership of any person or persons, the
amount of shares outstanding is deemed to include the amount of
shares beneficially owned by such person or persons (and only such
person or persons) by reason of these acquisition rights.
Name |
|
Shares of Common
Stock |
|
Percentage of
Common Stock |
Executive Officers and Directors |
|
|
|
|
|
|
|
|
Robert Nistico |
|
|
1,350,000 |
|
|
|
3.3 |
% |
|
|
|
|
|
|
|
|
|
Justin
Yorke(1) |
|
|
5,486,109 |
|
|
|
13.4 |
% |
|
|
|
|
|
|
|
|
|
Peter
McDonough |
|
|
22,716 |
|
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
Candace
Crawford |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
William
Meissner |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Ronald Wall |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Officers
and Directors as a Group (6 individuals) |
|
|
6,858,825 |
|
|
|
16.7 |
% |
5% or greater owners: |
|
|
|
|
|
|
|
|
LK
Family Partnership |
|
|
2,898,797 |
|
|
|
7.1 |
% |
|
|
|
|
|
|
|
|
|
Total |
|
|
9,757,622 |
|
|
|
23.7 |
% |
|
(1) |
Of which 3,297,243 shares are held by
Richland Fund LLC, 1,398,012 shares are held by JMW Fund LLC
and 790,854 shares are held by San Gabriel LLC. All funds are
managed by Mr. Yorke. |
Item 13. Certain
Relationships and Related Transactions and Director
Independence.
The following is a description of the transactions and series
of similar transactions, since December 31, 2022, that we were a
participant or will be a participant in, which:
● |
the
amount involved exceeds the lesser of $120,000 or one percent of
the average of the smaller reporting company’s total assets at
year-end for the last two completed fiscal years; and |
● |
any
of our directors, executive officers, holders of more than 5% of
our capital stock (which we refer to as “5% stockholders”) or any
member of their immediate family had or will have a direct or
indirect material interest, other than compensation arrangements
with directors and executive officers. |
Item 14. Principal
Accounting Fees and Services.
December 31, 2022
Audit |
|
$ |
193,000 |
|
Audit
related |
|
|
— |
|
Tax |
|
|
19,725 |
|
Total |
|
$ |
212,725 |
|
December 31, 2021
Audit |
|
$ |
182,430 |
|
Audit related |
|
|
— |
|
Tax |
|
|
3,200 |
|
Total |
|
$ |
185,630 |
|
PART IV
Item 15. Exhibits and
Financial Statement Schedules.
The
following documents are filed as part of this Annual Report on Form
10-K:
1. Financial Statements. See the Financial Statements starting on
page F-1.
2. Exhibits. The exhibits listed in the Exhibit Index, which
appears immediately following the signature page and is
incorporated herein by reference, and filed as part of this Annual
Report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
SPLASH
BEVERAGE GROUP, INC. (Registrant) |
|
|
|
Date: March
31, 2023 |
By: |
/s/
Robert Nistico |
|
Name: |
Robert
Nistico |
|
|
Chairman
of the Board and Chief Executive Officer |
|
|
(Principal
Executive Officer) |
Pursuant to the requirements of the Securities Act of 1934 this
Annual Report on Form 10-K was signed by the following persons on
behalf of the Registrant and in the capacities and on the dates
stated:
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/
Robert Nistico |
|
|
|
|
Robert
Nistico |
|
Chief
Executive Officer and Director |
|
March
31, 2023 |
|
|
(Principle
Executive Officer) |
|
|
|
|
|
|
|
/s/
Ronald Wall |
|
|
|
|
Ronald
Wall |
|
Chief
Financial Officer, Treasurer |
|
March
31, 2023 |
|
|
(Principal
Financial and Accounting Officer) |
|
|
/s/
Justin Yorke |
|
|
|
|
Justin
Yorke |
|
Director,
Secretary |
|
March
31, 2023 |
|
|
|
|
|
/s/Peter
McDonough |
|
Director |
|
March
31, 2023 |
Peter
McDonough |
|
|
|
|
|
|
|
|
|
/s/
Candace Crawford |
|
|
|
|
Candace
Crawford |
|
Director |
|
March
31, 2023 |
EXHIBIT INDEX
Exhibit
No. |
|
Description
of Exhibit |
|
|
|
1.1 |
|
Underwriting
Agreement dated June 10, 2021 between Splash Beverage Group and EF
Hutton, division of Benchmark Investments, LLC, as representative
of the underwriters named therein (incorporated by reference herein
to Exhibit 1.1 to the Current report on Form 8-K filed with the
Securities and Exchange Commission on June 15,
2021) |
|
|
|
1.2 |
|
Underwriting
Agreement dated June 10, 2021 between Splash Beverage Group and EF
Hutton, division of Benchmark Investments, LLC, as representative
of the underwriters named therein (incorporated by reference herein
to Exhibit 1.1 to the Current report on Form 8-K filed with the
Securities and Exchange Commission on February 17,
2022) |
|
|
|
1.3 |
|
Underwriting
Agreement dated September 23, 2022, between Splash Beverage Group
and EF Hutton, division of Benchmark Investments, LLC, as
representative of the underwriters named therein (incorporated by
reference herein to Exhibit 1.1 to the Current report on Form 8-K
filed with the Securities and Exchange Commission on September 27,
2022) |
|
|
|
2.1 |
|
Agreement
and Plan of Merger dated December 31, 2019 by and among Canfield
Medical Supply, Inc., SBG Acquisition, Inc., and Splash Beverage
Group, Inc. (incorporated by reference to Exhibit 2.1 to the
Registrant’s Form 8-K dated January 7, 2020) |
|
|
|
2.2 |
|
Form
of Amendment No. 1 to the Agreement and Plan of Merger
(incorporated by reference herein to Exhibit 10.1 filed with Form
8-K filed with the SEC on October 7, 2020) |
|
|
|
3.1 |
|
Bylaws
(incorporated by reference herein to Exhibit 3.2 filed with Form
8-K1 filed with the SEC on November 15, 2021) |
|
|
|
3.2 |
|
Articles
of Incorporation filed with the Secretary of State of Nevada
(incorporated by reference herein to Exhibit 3.1 filed with Form8-K
filed with the SEC on November 15, 2021) |
|
|
|
3.3 |
|
Articles
of Merger filed with the Secretary of State of the State of Nevada
(incorporated by reference herein to Exhibit 2.2 filed with Form8-K
filed with the SEC on November 15, 2021) |
|
|
|
3.4 |
|
Statement
of Merger filed with the Secretary of State of the State of
Colorado (incorporated by reference herein to Exhibit 2.3 filed
with Form8-K filed with the SEC on November 15,
2021) |
|
|
|
4.1 |
|
Form
of Common Stock Certificate (incorporated by reference to exhibit
4.1 filed with the Annual Report on Form 10-K filed with the SEC on
March 31, 2022) |
|
|
|
4.2 |
|
Form
of Investor Warrant (incorporated by reference to exhibit 4.1 filed
with the Current Report on Form 8-K filed with the SEC on June 15,
2021) |
|
|
|
4.3 |
|
Warrant
Agent Agreement between Splash Beverage Group Inc. and Equinity
Trust Company dated as of June 15, 2001 (incorporated by reference
to exhibit 10.1 filed with the Current Report on Form 8-K filed
with the SEC on June 15, 2021) |
|
|
|
4.4 |
|
Description
of Capital Stock * |
10.1 |
|
Form
of SBG Warrant (incorporated by reference herein to Exhibit 10.4
filed with Form 8-K filed with the SEC on April 6,
2020) |
|
|
|
10.2 |
|
Form
of New Warrant (incorporated by reference herein to Exhibit 10.5
filed with Form 8-K filed with the SEC on April 6,
2020) |
|
|
|
10.3 |
|
Form
of Warrant (incorporated by reference herein to Exhibit 10.2 filed
with Form 8-K filed with the SEC on August 18,
2020) |
|
|
|
10.4 |
|
Revenue
Loan and Security Agreement dated (incorporated by reference herein
to Exhibit 10.1 filed with Form 8-K filed with the SEC on December
31, 2020) |
|
|
|
10.5 |
|
Asset
Purchase Agreement dated (incorporated by reference herein to
Exhibit 10.2 filed with Form 8-K filed with the SEC on December 31,
2020) |
|
|
|
10.6 |
|
Convertible
Promissory Note dated (incorporated by reference herein to Exhibit
10.3 filed with Form 8-K filed with the SEC on December 31,
2020) |
|
|
|
10.7 |
|
An
Agreement Regarding Other Accounts Payable dated (incorporated by
reference herein to Exhibit 10.4 filed with Form 8-K filed with the
SEC on December 31, 2020) |
|
|
|
10.8 |
|
Martin
Employment Agreement dated (incorporated by reference herein to
Exhibit 10.5 filed with Form 8-K filed with the SEC on December 31,
2020) |
|
|
|
10.9 |
|
Non-Competition,
Non-Solicitation and Confidential Information Agreement
(incorporated by reference herein to Exhibit 10.6 filed with Form
8-K filed with the SEC on December 31, 2020) |
|
|
|
10.10 |
|
Form
of Subscription Agreement (incorporated by reference herein to
Exhibit 10.1 filed with Form 8-K filed with the SEC on January 21,
2021) |
|
|
|
10.11 |
|
Form
of Warrant (incorporated by reference herein to Exhibit 10.2 filed
with Form 8-K filed with the SEC on January 21,
2021) |
|
|
|
10.12 |
|
Form
of Subscription Agreement (incorporated by reference herein to
Exhibit 10.1 filed with Form 8-K filed with the SEC on February 2,
2021) |
|
|
|
10.13 |
|
Form
of Warrant (incorporated by reference herein to Exhibit 10.2 filed
with Form 8-K filed with the SEC on February 2,
2021) |
|
|
|
10.14 |
|
Form
of Subscription Agreement (incorporated by reference herein to
Exhibit 10.1 filed with Form 8-K filed with the SEC on February 12,
2021) |
|
* |
Filed
herewith |
|
** |
Furnished
herewith |
41
Splash Beverage (AMEX:SBEV)
Historical Stock Chart
From May 2023 to Jun 2023
Splash Beverage (AMEX:SBEV)
Historical Stock Chart
From Jun 2022 to Jun 2023