U.S. SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
For the quarterly period ended SeptemberJune 30, 2017
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
For the transition period from _______ to _________
Commission File No.000-55114
SPLASH BEVERAGE GROUP, INC.
| Colorado | 34-1720075 | |
| (State or other jurisdiction of incorporation or formation) | (I.R.S. employer identification number) |
| 1314 E Las Olas Blvd.Suite 221 |
| Fort Lauderdale, FL33301 |
| (Address of principal executive offices) (Zip code) |
(Address of principal executive offices)
Not Applicable
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| American LLC | ||||
| American LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
xYes☒o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
xYeso No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | |
Non-accelerated | Smaller reporting company x ☐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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Check whether the number of shares outstanding of eachregistrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the issuer's classesExchange Act after the distribution of common stock, as of the latest practicable date. securities under a plan confirmed by a court. o Yes o No
As of November 6, 2017,August 16, 2021, there were 11,277,100 shares of Common Stock issued and outstanding.
| SPLASH BEVERAGE GROUP, INC. |
| FORM 10-Q |
| March 31, 2020 |
TABLE OF CONTENTS
i
ITEM 1. FINANCIAL STATEMENTS
Splash Beverage Group, Inc.
Condensed Consolidated Financial Statements.Statements
June 30, 2021
1
| Splash Beverage Group, Inc. |
| Condensed Consolidated Balance Sheets |
| June 30, 2021 and December 31, 2020 |
| (Unaudited) |
| June 30, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 11,943,753 | $ | 380,000 | ||||
| Accounts Receivable, net | 775,274 | 484,858 | ||||||
| Prepaid Expenses | 37,147 | 173,414 | ||||||
| Inventory, net | 1,194,085 | 798,273 | ||||||
| Other receivables | 32,102 | 90,919 | ||||||
| Assets from discontinued operations | 551,809 | 316,572 | ||||||
| Total current assets | 14,534,170 | 2,244,036 | ||||||
| Non-current assets: | ||||||||
| Deposits | $ | 385,874 | $ | 77,686 | ||||
| Goodwill | 5,672,823 | 5,672,823 | ||||||
| Investment in Salt Tequila USA, LLC | 250,000 | 250,000 | ||||||
| Right of use asset, net | 1,190,296 | 80,479 | ||||||
| Quart Vin License, net | 204,012 | 219,512 | ||||||
| Property and equipment, net | 601,304 | 681,352 | ||||||
| Total non-current assets | 8,304,309 | 6,981,852 | ||||||
| Total assets | $ | 22,838,479 | $ | 9,225,888 | ||||
| Liabilities and Stockholders’ Equity (Deficiency) | ||||||||
| Liabilities: | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 1,238,938 | $ | 1,521,818 | ||||
| Right of use liability – current portion | 320,662 | 57,478 | ||||||
| Due to related parties | 3,000 | 368,904 | ||||||
| Sales tax payable | 8,119 | — | ||||||
| Related party notes payable – current portion | 1,329,175 | 1,333,333 | ||||||
| Convertible Loan Payable | 100,000 | 100,000 | ||||||
| Notes payable, current portion | 1,438,000 | 999,736 | ||||||
| Shareholder advances | 469,500 | — | ||||||
| Accrued interest payable | 312,419 | 442,748 | ||||||
| Liabilities from discontinued operations | 551,809 | 591,642 | ||||||
| Total current liabilities | 5,771,622 | 5,415,659 | ||||||
| September 30, | December 31, | |||||||
| ASSETS | 2017 | 2016 | ||||||
| Current Assets | ||||||||
| Cash | $ | 37,281 | $ | 61,659 | ||||
| Accounts receivable | 231,010 | 206,254 | ||||||
| Inventory | 29,037 | 25,231 | ||||||
| Total Current Assets | 297,328 | 293,144 | ||||||
Property and equipment, net of accumulated depreciation of $87,184 and $76,197 | 56,155 | 62,190 | ||||||
| Total Assets | $ | 353,483 | $ | 355,334 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 231,768 | $ | 209,069 | ||||
| Line of credit | 64,619 | 70,373 | ||||||
| Current portion of long-term debt | 10,973 | 10,918 | ||||||
| Total Current Liabilities | 307,360 | 290,360 | ||||||
| Long-term debt | 17,096 | 25,305 | ||||||
| Total Liabilities | 324,456 | 315,665 | ||||||
| Stockholders' Equity | ||||||||
| Preferred stock, no par value; 5,000,000 shares authorized; no shares | - | - | ||||||
| issued and outstanding | ||||||||
| Common stock, no par value; 100,000,000 shares authorized; | ||||||||
| 11,277,200 (September 30, 2017) and 10,927,200 (Dec. 31, 2016) shares | ||||||||
| issued and outstanding | 243,515 | 208,515 | ||||||
| Accumulated deficit | (214,488 | ) | (168,846 | ) | ||||
| Total Stockholders' Equity | 29,027 | 39,669 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 353,483 | $ | 355,334 | ||||
| Long-term Liabilities: | ||||||||
| Related party notes payable - noncurrent | — | 666,667 | ||||||
| Notes payable - noncurrent | 1,215,807 | 1,240,044 | ||||||
| Liability to issue shares in APA | 1,980,000 | 1,980,000 | ||||||
| Right of use liability - noncurrent | 871,161 | 25,521 | ||||||
| Total long-term liabilities | 4,066,968 | 3,912,232 | ||||||
| Total liabilities | 9,838,590 | 9,327,891 | ||||||
| Common stock, (mezzanine shares) shares, contingently convertible to notes payable at December 31, 2020 | — | 9,248,720 | ||||||
| Stockholders’ equity (deficiency): | ||||||||
| Common Stock, $ par, shares authorized, and shares issued and outstanding, at June 30, 2021 and December 31, 2020, respectively | 30,482 | 21,157 | ||||||
| Additional paid in capital | 85,561,961 | 52,217,855 | ||||||
| Accumulated deficit | (72,592,554 | ) | (61,589,735 | ) | ||||
| Total stockholders’ equity (deficiency) | 12,999,887 | (9,350,724 | ) | |||||
| Total liabilities, mezzanine shares and stockholders’ equity (deficiency) | $ | 22,838,479 | $ | 9,225,888 |
The accompanying footnotesnotes are an integral part of these unaudited condensed consolidated financial statements.
3
| Three months | Three months | Nine months | Nine months | |||||||||||||
| ended | ended | ended | ended | |||||||||||||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||||||
| Sales (net of returns) | $ | 319,015 | $ | 236,059 | $ | 739,647 | $ | 695,697 | ||||||||
| Cost of goods sold | 148,664 | 113,572 | 343,034 | 348,686 | ||||||||||||
| Gross profit | 170,351 | 122,487 | 396,613 | 347,011 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Salaries and wages | 80,347 | 75,649 | 241,891 | 214,787 | ||||||||||||
| Professional Fees | 4,851 | 6,054 | 36,751 | 24,378 | ||||||||||||
| Depreciation | 14,421 | 17,125 | 51,720 | 40,281 | ||||||||||||
| Other selling, general and administrative | 37,664 | 35,891 | 116,009 | 101,495 | ||||||||||||
| Total operating expenses | 137,283 | 134,719 | 446,371 | 380,941 | ||||||||||||
| Income (loss) from operations | 33,068 | (12,232 | ) | (49,758 | ) | (33,930 | ) | |||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (1,186 | ) | (1,258 | ) | (3,660 | ) | (3,156 | ) | ||||||||
| Gain on disposal of property and equipment | 3,526 | 1,636 | 7,776 | 4,063 | ||||||||||||
| 2,340 | 378 | 4,116 | 907 | |||||||||||||
| Income (loss) before provision for income taxes | 35,408 | (11,854 | ) | (45,642 | ) | (33,023 | ) | |||||||||
| Provision for income tax | - | - | - | - | ||||||||||||
| Net income (loss) | $ | 35,408 | $ | (11,854 | ) | $ | (45,642 | ) | $ | (33,023 | ) | |||||
| Net income (loss) per share (basic and fully diluted) | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
| Weighted average number of common shares outstanding | 11,277,200 | 10,527,200 | 11,264,379 | 10,470,010 | ||||||||||||
Splash Beverage Group, Inc |
| Condensed Consolidated Statements of Operations |
| For the Three and Six Months Ended June 30, 2021 and June 30, 2020 |
| (Unaudited) |
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net revenues | $ | 3,287,760 | $ | 412,729 | $ | 5,426,684 | $ | 524,732 | ||||||||
| Cost of goods sold | (2,382,707 | ) | (218,751 | ) | (4,004,211 | ) | (325,965 | ) | ||||||||
| Gross margin | 905,053 | 193,978 | 1,422,473 | 198,767 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Contracted services | 190,606 | 167,894 | 467,117 | 405,875 | ||||||||||||
| Salary and wages | 2,073,530 | 303,060 | 4,019,756 | 544,736 | ||||||||||||
| Other general and administrative | 5,173,896 | 115,491 | 7,575,943 | 1,167,686 | ||||||||||||
| Sales and marketing | 174,727 | 23,012 | 216,605 | 47,242 | ||||||||||||
| Total operating expenses | 7,612,759 | 609,457 | 12,279,421 | 2,165,539 | ||||||||||||
| Loss from continuing operations | (6,707,706 | ) | (415,479 | ) | (10,856,948 | ) | (1,966,772 | ) | ||||||||
| Other income/(expense): | ||||||||||||||||
| Interest income | 1 | 205 | 115 | 16,356 | ||||||||||||
| Interest expense | (149,376 | ) | (21,854 | ) | (241,587 | ) | (1,935,491 | ) | ||||||||
| Gain from debt extinguishment | 96,077 | 34,962 | 97,396 | 34,962 | ||||||||||||
| Total other income/(expense) | (53,298 | ) | 13,313 | (144,076 | ) | (1,884,173 | ) | |||||||||
| Provision for income taxes | — | — | — | — | ||||||||||||
| Net loss from continuing operations, net of tax | (6,761,004 | ) | (402,166 | ) | (11,001,024 | ) | (3,850,945 | ) | ||||||||
| Net income from discontinued operations, net of tax | 200,404 | 28,816 | 240,486 | 28,816 | ||||||||||||
| Net loss | $ | (6,560,600 | ) | $ | (373,350 | ) | $ | (10,760,538 | ) | $ | (3,822,129 | ) | ||||
| Loss per share - continuing operations | ||||||||||||||||
| Basic | (0.25 | ) | (0.02 | ) | (0.42 | ) | (0.23 | ) | ||||||||
| Dilutive | (0.25 | ) | (0.02 | ) | (0.42 | ) | (0.23 | ) | ||||||||
| Weighted average number of common shares outstanding - continuing operations | ||||||||||||||||
| Basic | 27,356,918 | 18,969,568 | 26,003,605 | 16,809,392 | ||||||||||||
| Dilutive | 27,356,918 | 18,969,568 | 26,003,605 | 16,809,392 | ||||||||||||
| Earnings per share - discontinued operations | ||||||||||||||||
| Basic | 0.01 | 0.00 | 0.01 | 0.00 | ||||||||||||
| Dilutive | 0.01 | 0.00 | 0.01 | 0.00 | ||||||||||||
| Weighted average number of common shares outstanding - discontinued operations | ||||||||||||||||
| Basic | 27,356,918 | 18,969,568 | 26,003,605 | 16,809,392 | ||||||||||||
| Dilutive | 30,482,999 | 19,682,460 | 29,061,257 | 17,472,461 | ||||||||||||
The accompanying footnotesnotes are an integral part of these unaudited condensed consolidated financial statements.
4
Splash Beverage Group, Inc.
Consolidated Statement of Changes in Deficiency in Stockholders’ Equity (Deficit)
For the three and Six months ended June 30, 2021 and 2020
| Common Stock | Treasury Stock | Additional | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Paid-In Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||
| Balances at December 31, 2019 | 14,673,796 | 14,674 | 45,431 | $ | (50,000 | ) | $ | 22,124,750 | $ | (31,845,506 | ) | $ | (9,756,083 | ) | ||||||||||||||
| Issuance of common stock for convertible debt | — | — | — | — | 145,579 | — | 145,579 | |||||||||||||||||||||
| Incremental beneficial conversion for preferred A | — | — | — | — | 240,770 | (240,770 | ) | — | ||||||||||||||||||||
| Issuance of warrants on convertible instruments | — | — | — | — | 2,486,706 | (828,903 | ) | 1,657,803 | ||||||||||||||||||||
| Issuance of common stock for services | 272,584 | 273 | (45,431 | ) | 50,000 | 549,727 | — | 600,000 | ||||||||||||||||||||
| Issuance of common stock for acquisition | 3,971,067 | 3,971 | — | — | 9,169,193 | — | 9,173,164 | |||||||||||||||||||||
| Net loss | — | — | — | — | — | (3,446,630 | ) | (3,446,630 | ) | |||||||||||||||||||
| Balances at March 31, 2020 | 18,917,447 | 18,917 | 0 | — | 34,716,725 | (36,361,809 | ) | (1,626,168 | ) | |||||||||||||||||||
| Issuance of warrants on convertible instruments | — | — | — | — | 77,434 | — | 77,434 | |||||||||||||||||||||
| Issuance of common stock for cash | 83,304 | 83 | — | — | 142,483 | — | 142,566 | |||||||||||||||||||||
| Net loss | — | — | — | — | — | (373,350 | ) | (373,350 | ) | |||||||||||||||||||
| Balances at June 30, 2020 | 19,000,751 | 19,001 | 0 | $ | — | $ | 34,936,642 | $ | (36,735,159 | ) | $ | (1,779,518 | ) | |||||||||||||||
| Nine months ended | Nine months ended | |||||||
| September 30, | September 30, | |||||||
| 2017 | 2016 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net income (loss) | $ | (45,642 | ) | $ | (33,023 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used for) operating activities: | ||||||||
| Gain on disposal of property and equipment | (7,776 | ) | (4,063 | ) | ||||
| Depreciation | 51,720 | 40,281 | ||||||
| (Increase) decrease in accounts receivable | (24,756 | ) | 15,887 | |||||
| (Increase) in inventory | (3,806 | ) | (5,252 | ) | ||||
| Decrease in accounts payable and accrued liabilities | 22,699 | 13,426 | ||||||
| Net cash provided by (used for) operating activities | (7,561 | ) | 27,256 | |||||
| Cash Flows From Investing Activities: | ||||||||
| Proceeds from sale of property and equipment | 10,290 | 4,958 | ||||||
| Purchases of property and equipment | (48,199 | ) | (43,194 | ) | ||||
| Net cash (used for) investing activities | (37,909 | ) | (38,236 | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Net payments on line of credit | (5,754 | ) | (5,448 | ) | ||||
| Payments on long-term debt | (8,154 | ) | (6,173 | ) | ||||
| Proceeds from sales of common stock. | 35,000 | 50,000 | ||||||
| Net cash provided by financing activities | 21,092 | 38,379 | ||||||
| Net Increase (Decrease) in Cash | (24,378 | ) | 27,399 | |||||
| Cash At The Beginning Of The Period | 61,659 | 7,343 | ||||||
| Cash At The End Of The Period | $ | 37,281 | $ | 34,742 | ||||
| Schedule Of Non-Cash Investing And Financing Activities | ||||||||
| Purchase of equipment with long-term debt | $ | - | $ | 16,295 | ||||
| Supplemental Disclosure | ||||||||
| Cash paid for interest | $ | (3,660 | ) | $ | (3,156 | ) | ||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Balances at December 31, 2020 | 21,157,043 | 21,157 | 0 | $ | — | $ | 52,217,855 | $ | (61,589,735 | ) | $ | (9,350,724 | ) | |||||||||||||||
| Issuance of warrants for services | — | — | — | — | 1,186,596 | — | 1,186,596 | |||||||||||||||||||||
| Issuance of common stock for services | 168,333 | 168 | — | — | 730,867 | — | 731,035 | |||||||||||||||||||||
| Issuance of common stock and warrants or cash | 1,174,476 | 1,174 | — | — | 4,529,450 | — | 4,530,624 | |||||||||||||||||||||
| Mezzanine shares | 4,201,761 | 4,202 | — | — | 9,244,519 | — | 9,248,720 | |||||||||||||||||||||
| Net loss | — | — | — | — | — | (4,442,219 | ) | (4,442,219 | ) | |||||||||||||||||||
| Balance at March 31, 2021 | 26,701,613 | 26,702 | 0 | $ | — | $ | 67,909,286 | $ | (66,031,954 | ) | $ | 1,904,003 | ||||||||||||||||
| Issuance of warrants for services | — | — | — | — | 1,186,596 | — | 1,186,596 | |||||||||||||||||||||
| Issuance of common stock for services | — | — | — | — | 1,369,918 | — | 1,369,918 | |||||||||||||||||||||
| Issuance of common stock and warrants or cash | 3,780,303 | 3,780 | — | — | 15,096,160 | — | 15,099,940 | |||||||||||||||||||||
| Net loss | — | — | — | — | — | (6,560,600 | ) | (6,560,600 | ) | |||||||||||||||||||
| Balance at June 30, 2021 | 30,481,916 | 30,482 | 0 | $ | — | $ | 85,561,961 | $ | (72,592,554 | ) | $ | 12,999,887 |
The accompanying footnotesnotes are an integral part of these unaudited condensed consolidated financial statements.
6
| Splash Beverage Group, Inc. |
| Condensed Consolidated Statement Cash Flows |
| For the Six Months Ended June 30, 2021 and 2020 |
| (Unaudited) |
| Six months ended | Six months ended | |||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Net loss | $ | (11,001,024 | ) | $ | (3,850,945 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 80,048 | 13,045 | ||||||
| ROU asset, net | — | 39,684 | ||||||
| Gain from debt extinguishment | (97,396 | ) | (34,962 | ) | ||||
| Interest on notes payable converted to common stock | — | 231,692 | ||||||
| Interest expense due to the issuance of warrants | — | 1,657,805 | ||||||
| Share-based compensation - warrants | 2,373,192 | — | ||||||
| Share-based compensation | 2,100,953 | 600,000 | ||||||
| Other noncash changes | (283,139 | ) | (257,502 | ) | ||||
| Changes in working capital items: | ||||||||
| Accounts receivable, net | (732,998 | ) | (36,641 | ) | ||||
| Inventory, net | (437,827 | ) | (153,804 | ) | ||||
| Prepaid expenses and other current assets | 195,084 | (16,077 | ) | |||||
| Deposits | — | (39,451 | ) | |||||
| Accounts payable and accrued expenses | 268,930 | (56,268 | ) | |||||
| Royalty payable | — | 51,000 | ||||||
| Accrued Interest payable | (130,329 | ) | 40,601 | |||||
| Net cash used in operating activities - continuing operations | (7,664,506 | ) | (1,811,823 | ) | ||||
| Net cash from operating activities - discontinued operations | (240,486 | ) | 28,816 | |||||
| Cash Flows from Investing Activities: | ||||||||
| Capital Expenditures | — | (5,439 | ) | |||||
| Proceeds from the sale of fixed assets | — | 1,098 | ||||||
| Investment in Salt Tequila USA, LLC | — | (150,000 | ) | |||||
| Net cash used in investing activities - continuing operations | — | (154,341 | ) | |||||
| Net cash from investing activities - discontinued operations | — | 72,442 | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of Common stock | 19,630,565 | 1,610,000 | ||||||
| Cash advance from shareholder | 469,500 | 288,000 | ||||||
| Repayment of cash advance | (360,870 | ) | (120,106 | ) | ||||
| Proceeds from issuance of debt | 928,000 | 264,249 | ||||||
| Principal repayment of debt | (1,189,832 | ) | (61,248 | ) | ||||
| ROU liability, net | (8,618 | ) | (39,877 | ) | ||||
| Net cash provided by financing activities - continuing operations | 19,468,746 | 1,941,018 | ||||||
| Net cash from financing activities - discontinued operations | — | — | ||||||
| Net Change in Cash and Cash Equivalents | 11,563,753 | 76,112 | ||||||
| Cash and Cash Equivalents, beginning of year | 380,000 | 42,639 | ||||||
| Cash and Cash Equivalents, end of year | $ | 11,943,753 | $ | 118,751 | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for Interest | $ | 173,363 | $ | 3,424 | ||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Notes payable and accrued interest converted to common stock | — | 9,248,720 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 1 – Business Organization and Nature of Operations
Splash Beverage Group (“SBG”), f/k/a Canfield Medical Supply, Inc. (the “Company”“CMS”), was incorporated in the State of Ohio on September 3, 1992, and changed domicile to Colorado on April 18, 2012. The Company isCMS 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, 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 Canfield Medical Supply, Inc. with the Secretary of State of the State of Colorado, pursuant to which the Company changed its name from Canfield Medical Supply, Inc. to Splash Beverage Group, Inc.. On July 31, 2020, we received approval from FINRA to change the Company’s name from Canfield Medical Supply, Inc. 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.
In coordination with uplisting 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.
9
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
These condensed consolidated financial statements include the accounts of Splash Beverage Group and its wholly owned subsidiaries, Holdings and Splash Mex, CMS (as discontinued operations), and Copa. 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).
The accompanying condensed consolidated financial statements have been prepared by the Companyus without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 have been made.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of AmericaGAAP have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2016 audited financial statements. The results of operations for the periodsperiod ended SeptemberJune 30, 2017 and 20162021 are not necessarily indicative of the operating results for the full year.
Use of estimates
The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principlesGAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosuredisclosures 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 cash equivalents
We consider all highly liquid investmentssecurities with an original maturity of twelvethree months or less asto be cash equivalents.
Our cash in bank deposit accounts, at times, may exceed federally insured limits of $250,000. At June 30, 2021 we had $11,115,182 over the federally insured limits.
Note 2 – Summary of Significant Accounting Policies, continued
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable
Splash Beverage Group, Inc.
Notes to the Company has determined that no allowanceCondensed Consolidated Financial Statements
Inventory
Inventory is stated at the lower of cost or net realizable value, accounted for doubtful accounts is necessary.
Property and Equipment
We record property and equipment
Depreciation expense totaled $44,465 and $10,750 for the three months ended June 30, 2021 and June 30, 2020, respectively. Depreciation expense totaled $80,048 and $13,045 for the six months ended June 30, 2021 and June 30, 2020, respectively. Property and equipment are recorded at costas of June 30, 2021 and depreciated under straight line methods over each item's estimated useful life.
| Schedule of Property and equipment | ||||||||
| June 30, 2021 | December 31, 2020 | |||||||
| Property and equipment, at cost | 2,170,899 | 843,097 | ||||||
| Accumulated depreciation | (1,569,585 | ) | (161,745 | ) | ||||
| Property and equipment, net | 601,304 | 681,352 | ||||||
Excise taxes
The Company carries inventorypays alcohol excise taxes based on product sales to both the Oregon Liquor Control Commission and to the U.S. Department of durable medical equipmentthe Treasury, Alcohol and medical suppliesTobacco Tax and Trade Bureau (TTB). The Company is liable for resale. Inventorythe 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.
Paycheck Protection Program
The Company records Paycheck Protection Program (“PPP”) loan proceeds in accordance with Accounting Standards Codification (“ASC”) 470, Debt. Debt is extinguished when either the debtor pays the creditor or the debtor is legally released from being the primary obligor, either judicially or by the creditor. See note 11.
11
Splash Beverage Group, Inc.
Notes to the Condensed 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 June 30, 2021 and December 31, 2020, consistent with recent negotiations of notes payable and due to the short duration of maturities.
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
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, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.
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.
We measure stock-based awards at the grant-date fair value for employees, directors and consultants and recognizes compensation expense on a first–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 first-out basis.
Stock-Based Compensation
We account for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation”. Under the fair value recognition
Income Taxes
We use the Company for services, such as safety and set up consulting or claims processing, is recorded after the service is performed. Rentalliability method of durable home medical equipment is evidenced by written contract, with revenue recognized when rent is earned.
Company management assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of management, itthe 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 some portion orhas 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 0 material uncertain tax positions at June 30, 2021 and December 31, 2020.
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
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'sCompany’s convertible debt or preferred stock (if any), are not included in the computation if the effect would be anti-dilutive.
| Schedule of Earnings Per Share, Basic and Diluted | ||||||||
| Numerator | 2021 | 2020 | ||||||
| Net loss from continuing applicable to common shareholders | $ | (11,001,024 | ) | $ | (402,166 | ) | ||
| Net loss from discontinued applicable to common shareholders | $ | 240,486 | $ | 28,816 | ||||
| Denominator | ||||||||
| Weighted average number of common shares outstanding | ||||||||
| Basic | 26,003,605 | 16,809,392 | ||||||
| Dilutive | 26,003,605 | 16,809,392 | ||||||
| Net loss per share from continuing operations | ||||||||
| Basic | (0.42 | ) | (0.23 | ) | ||||
| Dilutive | (0.42 | ) | (0.23 | ) | ||||
| Net income per share from discontinued operations | ||||||||
| Basic | 0.01 | 0.00 | ||||||
| Dilutive | 0.01 | 0.00 | ||||||
Weighted average number of shares outstanding excludes anti-dilutive common stock equivalents, including warrants to purchase million shares of common stock for nominal consideration. The weighted average number of common shares calculation excludes 10,068,836 warrants which have been granted by our Board but have not been exercised.
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 $150,753and would increase$23,962.11 for the earningsthree-months ended June 30, 2021 and 2020, respectively. We recorded advertising expense of $198,538 and $46,768.45 for the six-months ended June 30, 2021 and 2020, respectively.
Goodwill
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 decrease loss per share.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. At December 31, 2020, our management determined that an impairment charge of approximately $9.5 million, was necessary to reduce the goodwill relating to our Medical Device Segment. The impairment charge was primarily related to the net cash flow projection of that business unit.
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Long-lived assets
The Company evaluates long-lived assets for impairment on an annual basis, when relocating or equity instruments issuedclosing a facility, or outstanding duringwhen events or changes in circumstances may indicate the nine months ended September 30, 2017 or 2016.
Recent Accounting Pronouncements
In June 2016, that FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” (Topic 326). This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.
Management is currently assessing the new standard but does not believe that it would have a material effect.
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
At December 31, 2020, the Company had liabilities in excess of assets in the amount of approximately $9.4 million. During the six month period of 2021, the Company received approximately $19.6 million from the proceeds from the issuance common stock. These events served to mitigate the conditions that historically raised substantial doubt about the Company’s ability to continue as a going concern.
Based on this analysis the Company concluded it has the ability to continue as a going concern for at least the next 12 months.
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable
Notes payable are generally nonrecourse and secured by all Company owned assets.
| Schedule of debt | ||||||||||||
| Interest Rate | June 30, 2021 | December 31, 2020 | ||||||||||
| Notes Payable | ||||||||||||
| In February 2014, we entered into a 12-month term loan agreement with an individual in the amount of $200,000. The note included warrants for 22,049 shares of common stock at $ per share. The warrants expired on February 28, 2017 and none were exercised at that date. The note was paid all in Q2 2021. | 15 | % | — | 150,000 | ||||||||
| 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 90,161 shares of common stock at $ per share. The warrants expired on February 28, 2017 and none were exercised at that date. The loan matured and remains in default. | 8 | % | 200,000 | 200,000 | ||||||||
| In May 2020, we entered into a two year loan with the SBA under the Paycheck Protection Program established by the CARES Act in the amount of $94,833. The note requires monthly payments of principal and interest starting in December 2020 and maturing in May 2021. We received 100% forgiveness in Q2 2021. See note 13. | 1 | % | — | 89,612 | ||||||||
| In June 2020, we entered into a six-month loan with an individual in the amount of $100,000. The loan matures in December 2020 with principal and interest due at maturity. | 12 | % | — | 100,000 | ||||||||
| In August 2020, we entered into a nine-month loan with a company in the amount of $112,000. The loan requires 9 amortized payments of principal and interest in the amount of $12,246 with the final payment due September 2020. | 4.8 | % | — | 62,719 | ||||||||
| Notes payable for license agreements due in 36 monthly payments of $10,000, interest imputed at 10%, maturing in July 2021. | 10.0 | % | 10,000 | 59,212 | ||||||||
| 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% of the previous months revenue. | Various | 1,515,807 | 1,578,237 | |||||||||
| In April 2021, we entered into a six-month loan with an individual in the amount of $84,000. The loan matures in October 2021 with principal and interest due at maturity. | 7 | % | 84,000 | — | ||||||||
| 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. | 7 | % | 84,000 | — | ||||||||
| In May 2021, we entered into a six-month loan with a individual in the amount of $50,000. The loan matures in October 2021 with principal and interest due at maturity. | 7 | % | 50,000 | — | ||||||||
| In May 2021, we entered into a six-month loan with a individual in the amount of $500,000. The loan matures in October 2021 with principal and interest due at maturity. | 7 | % | 500,000 | — | ||||||||
| In May 2021, we entered into a six-month loan with a individual in the amount of $10,000. The loan matures in October 2021 with principal and interest due at maturity. | 7 | % | 10,000 | — | ||||||||
| In May 2021, we entered into a six-month loan with a individual in the amount of $200,000. The loan matures in October 2021 with principal and interest due at maturity. | 7 | % | 200,000 | — | ||||||||
| Total notes payable | $ | 2,653,807 | $ | 2,239,780 | ||||||||
| Less current portion | (1,438,000 | ) | (999,736 | ) | ||||||||
| Long-term notes payable | $ | 1,215,807 | $ | 1,240,044 |
Interest expense on notes payable was $133,702 and $10,429 for the three months ended June 30, 2021 and 2020, respectively.
Interest expense on notes payable was $203,236 and $59,859 for the six months ended June 30, 2021 and 2020, respectively. Accrued interest was $125,205 at June 30, 2021
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued
| Schedule of debt | ||||||||||||
| Interest Rate | June 30, 2021 | December 31, 2020 | ||||||||||
| Related Parties Notes Payable | ||||||||||||
| In December 2020, we entered into a 18 month loan with an individual in the amount of $2,000,000. The loan requires 18 monthly amortized payments of principal and interest in the amount of $114,444 with the final payment due June 2022. | 2.0 | % | 1,329,175 | 2,000,000 | ||||||||
| Less current portion | (1,329,175 | ) | (1,333,333 | ) | ||||||||
| Long-term notes payable | $ | (0 | ) | $ | 666,667 | ||||||
Interest expense on related party notes payable was $7,804 and $0 for the three months ended June 30, 2021 and 2020, respectively. Interest expense on related party notes payable was $15,839 and $0 for the six months ended June 30, 2021 and 2020, respectively. Accrued interest was $0 as of June 30, 2021.
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued
| Schedule of debt | ||||||||||
| Interest Rate | June 30, 2021 | December 31, 2020 | ||||||||
| Convertible Bridge Loans Payable | ||||||||||
| In May 2015, we entered into a 3-month term loan agreement with an individual in the amount of $100,000. The annual interest rate for this bridge loan was 32% for the first 90 days, and 4% thereafter, compounded monthly. | See left | $ | 100,000 | $ | 100,000 | |||||
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued
Interest expense on the convertible bridge loans payable was $8,000 and $8,000 for the three months ended June 30, 2021 and 2020, respectively. Interest expense on the convertible bridge loans payable was $16,000 and $101,785 for the three months ended June 30, 2021 and 2020, respectively. Accrued interest was $187,215 at June 30, 2021.
On April 24, 2017, a note holder filed a complaint against the Company for a promissory note in default. The note holder is requesting summary judgment in the amount of $287,215.
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Splash Beverage Group, Inc.
Notes to the Condensed 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 energy drinks, energy shots, water, teas and sports drinks for beverages sold in the United States of America, its territories, possessions, U.S. military bases and Mexico. Under the terms of the agreement, we are required to pay a 6% royalty on net sales, as defined. In 2021 and 2020, we are required to make monthly payments of $49,500 and $45,000, respectively.
There were no unpaid royalties at June 30, 2021. We paid the guaranteed minimum royalty payments of $297,000 and $270,000 for the six-months ended June 30, 2021 and 2020, 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 (Deficiency)
Common Stock
At March 31, 2020, we issued shares of common stock in exchange for services provided to us. The shares were valued at $ per share. We recognized share-based compensation expense of $, which is classified within the other general and administrative line on the Statement of Operations. At March 31, 2021, we issued shares of common stock in exchange for services provided to us. The shares were valued at a fair market value stock price based on the agreement date. We recognized share-based compensation expense of $2,100,953, which is classified within the other general and administrative line on the Statement of Operations.
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 6 – Deficiency in Stockholders’ Equity, continued
Private Placement Memorandum (PPM)
In July 2020, the Board of Directors has determined that it is in the best interests of the Corporation and its stockholders to obtain working capital by conducting a private placement offering of shares of the common stock and 650,000 warrants to purchase common stock of the Company, $0.001 par value per share at a purchase price of $3.30 per share for aggregate gross proceeds of $3,070,000.
In January 2021, the Board of Directors approveda private placement offering of shares of the common stock of the Company, $value per share at a purchase price of $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 $4,000,771.
Stock Plans
2012 Plan
On May 2012, the Board adopted the 2012 Stock Incentive Plan (the “2012 Plan”), which provided for the grant of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Restricted Stock Units and Stock Appreciation Rights to eligible recipients. The total number of shares that may be issued under the 2012 plan was .
The Board previously granted options to purchase 885,897 shares of common stock, which were exercised prior to 2019. In December, 2019, the Board granted options to purchase 374,804 shares to certain employees and consultants at an exercise price of $2.20.
Concurrently with the consummation of the Merger, the outstanding options to purchase shares were cancelled and replaced with warrants to purchase 374,804 shares at an exercise price of $2.20, and the 2012 Plan was retired.
2020 Plan
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. The total number of shares that may be issued under the 2020 plan was.
No awards have been granted under the 2020 Plan.
Warrants
The total amount of outstanding warrants are summarized below:
| Schedule of Warrants Activity | |
| [A] | 454,064 |
| [B] | 124,162 |
| [C] | 908,129 |
| [D] | 650,000 |
| [E] | 606,179 |
| [F] | 374,803 |
| [G] | 1,884,833 |
| [H] | 833,333 |
| [I] | 333,333 |
| [J] | 3,900,000 |
| Total | 10,068,836 |
[A] Warrant Issuance-Series A Convertible Preferred Stock
As an incentive to convert their Series A preferred stock, in March 2020, we issued 333,333 new warrants to the holders of our Series A preferred stock to purchase shares of SBG common stock. Concurrently with the consummation of the Merger, these warrants were exchanged for warrants to purchase 454,064 of Splash Beverage Group, Inc. shares all of which were outstanding as of June 30, 2021. These warrants have a 3-year term and expire March 2023.
[B] Warrant Issuance-Series B Convertible Preferred Stock
As part of the sale and issuance of 1,777,892 shares of our Series B Convertible Preferred Stock, we issued 888,946 warrants to purchase shares our common stock. The warrants have a 5-year term and at June 30, 2021, there are 124,162 warrants outstanding.
22
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
[C] Warrant Issuance-GMA Bridge Holdings, LLC Consulting Services
We issued 454,307 warrants to purchase shares of our common stock as part of our consulting agreement with GMA Bridge Holdings, LLC (“GMA), at December 31, 2019. These warrants subsequently were exchanged for 908,615 warrants in March 2020 as an incentive for GMA to convert indebtedness and accrued interest into shares of our common stock. At June 30, 2021 all 908,615 warrants remain outstanding.
[D] We issued 650,000 warrants to purchase common stock of the Company in connection with the July 2020 private placement offering of 930,303 shares of common stock
[E] 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.
[F] We issued 374,803 warrants to purchase common stock, as a replacement of cancelled outstanding options concurrent with the March 2020 Merger
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
[G] In December 2020 we granted 1,884,833 warrants to purchase common stock of the Company to employees, consultants and directors. These warrants vest over three years
[H] In December 2020 we granted 833,333 warrants to purchase common stock of the Company to our board of directors. These warrants vest over two - three years
[I] In May 2021 we granted 333,333 warrants to purchase common stock of the Company to a director. These warrants vest, equally, over three years
[J] 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.
Shareholder Advances and Liability to Issue Stock and Warrants
During the first quarter of 2021, we entered into a marketing agreement with a consultant, to be paid by issuance of shares of common stock of the company. The liability was measured at $214,500, the value of the Company’s common stock at the date of the agreement.
During the first quarter of 2021, the Company received $245,000 pursuant to subscription agreements for the issuance of shares of common stock and warrants to purchase 40,833 shares of common stock.
We have an agreement with a consultant, to be paid by the Company if the carrying amountissuance of a long-lived asset exceeds its fair value.
Note 7 – Related Parties
During the normal course of business, we incurred expenses related to services provided by our CEO or hospital bed. At the endCompany expenses paid by our CEO, resulting in related party payables, net of the use period, the wheelchair or hospital bed is either returned$0 at June 30, 2021. The related party payable to the poolCEO bears no interest payable and is due on demand. We also assumed a $50,000 note for the President of WesBev, who is the majority shareholder of SBG.
There are related party notes payable of $1.3 million outstanding as of June 30, 2021 as discussed in Note 4.
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 be rentedincrease its ownership to another customer, or title of the chair or bed is transferred37.5%.
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Splash Beverage Group, Inc.
Notes to the customer. DepreciationCondensed Consolidated Financial Statements
Note 9 – Operating Lease Obligations
Effective July 2018, we entered into a lease agreement for the right to use and occupy office space. The lease term commenced July 1, 2018 and is computed overscheduled to expire after 36 months, on June 30, 2021. We renewed the estimated useful lifelease under the same terms.
Effective November 2019, we entered into a lease with Interport Logistics, LLC. The lease term commenced on November 11, 2019 and is scheduled to expire on November 11, 2022.
Effective May 2019, we entered into a lease in Mexico. The lease commenced May 1, 2019 and is scheduled to expire after 24 months, on April 1, 2021. We have negotiated a one year lease term for our Mexican warehouse.
Effective January 2021, we entered into a lease agreement for the right to use and occupy office space in Sarasota Florida. The lease term commenced January 18, 2021 and is scheduled to expire after 18 months, on July 31, 2022.
Effective January 2021, we entered into a lease agreement for the right to use and occupy office and manufacturing space located in Miami Florida. The lease term commenced January 1, 2021 and is scheduled to expire after 60 months, on December 31, 2025.
The following table presents the discounted present value of minimum lease payments for our office and warehouses to the assets, ranging from 13 months to 7 years,amounts reported as operating lease liabilities on the straight-line basis. Depreciation expenseconsolidated balance sheet at June 30, 2021:
| Maturities of lease liabilities | |||||
| Undiscounted Future Minimum Lease Payments | Operating Lease | ||||
| 2021 (six months) | $ | 178,592 | |||
| 2022 | 342,273 | ||||
| 2023 | 276,318 | ||||
| 2024 | 265,493 | ||||
| 2025 | 252,000 | ||||
| Total | 1,314,676 | ||||
| Amount representing imputed interest | (122,853 | ) | |||
| Total operating lease liability | 1,191,823 | ||||
| Current portion of operating lease liability | 320,662 | ||||
| Operating lease liability, non-current | $ | 871,161 | |||
The table below presents information for lease costs related to our operating leases at June 30, 2021:
| Lease costs | ||||
| Operating lease cost: | ||||
| Amortization of leased assets | $ | 157,923 | ||
| Interest of lease liabilities | 32,568 | |||
| Total operating lease cost | $ | 190,492 |
The table below presents lease-related terms and discount rates at June 30, 2021:
| Summary of lease-related terms and discount rates | ||
| Remaining term on leases | 13 to months 54 | |
| Incremented borrowing rate | 5.0% |
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Splash Beverage Group, Inc.
Notes to the nine months ended September 30, 2017 and 2016 was $51,720 and $40,281, respectively. Accumulated depreciation totaled $87,184 and $76,197 at September 30, 2017 andCondensed Consolidated Financial Statements
Note 10 – Line of Credit
At December 31, 2016, respectively.
Note 11 – PPP Loan
On January 30, 20172020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and 2016, respectively. During the nine months ended September 30, 2017risks to the international community as the virus spreads globally beyond the point of origin. On March 20, 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.
In response to the COVID-19 outbreak in the United States, the CARES Act (the “Act”) was passed by Congress and 2016,signed into law on March 27, 2020. In connection with the CARES Act, the Company madeand its subsidiary applied for and received loans with an original aggregate principal paymentsbalance of $5,754approximately $158,000. These loans and $5,448, respectively.interest will be forgiven as long as the funds are used for qualifying expenditures as outlined in the Act. The loans bear interest at 1%, with an 18 month term, and has a 6-month initial payment deferral. See Note 4.
In April 2021, we received notification of forgiveness for the entire outstanding balance.
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 12 – Segment Reporting
The Company evaluates segment reporting in accordance with the FASB Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Executive Officer and Chief Financial Officer.
Note: The Copa di Vino business is included in our Splash Beverage Group segment.
| Three-Months Ended | Six-Months Ended | |||||||||||||||
| Revenue | Q2 2021 | Q2 2020 | Q2 2021 | Q2 2020 | ||||||||||||
| Splash Beverage Group | 1,565,865 | 121,392 | 2,391,608 | 121,392 | ||||||||||||
| E-Commerce | 1,721,895 | 291,337 | 3,035,077 | 403,340 | ||||||||||||
| Total Revenues continuing operations | 3,287,760 | 412,729 | 5,426,684 | 524,732 | ||||||||||||
| Total Revenues discontinued operations | 369,442 | 199,579 | 648,219 | 199,579 | ||||||||||||
| Total assets | 2021 | 2020 | ||||||
| Splash Beverage Group | 21,547,558 | 8,403,670 | ||||||
| E-Commerce | 739,112 | 505,646 | ||||||
| Medical Devices - Discontinued | 551,809 | 316,572 | ||||||
| Total Assets | 22,838,479 | 9,225,888 | ||||||
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 13 – 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.
Capital Raise
In connection with the CMS merger we were committed to our previous preferred stock and debt holders to raise $9 million in a secondary IPO or debt, as defined in the agreements.
In February 2021, we successfully raised the $9 million required.
Stock Price Guarantee
We have a commitment to issue additional shares associated with specific stock price guarantee granted to an investor. The stock price guarantee expired March 2021.
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Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 14 – Registration Statement
Underwriting Agreement
On June 10, 2021, the Company entered into an underwriting agreement ( “Underwriting Agreement”) relating to an underwritten public offering (the “Offering”) of common stock, no par value per share (the “Common Stock”) and warrants to purchase one share of Common Stock (the “Warrants”). Pursuant to the Offering, the Company 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 following:
September 30, 2017 | December 31, 2016 | |||||||
| 3.53% installment note payable $352 monthly, including interest, through July 2019, collateralized by vehicle with carrying value of $4,078 | $ | 7,496 | $ | 10,426 | ||||
| 3.79% installment note payable $299 monthly, including | ||||||||
| interest, through July 2021, collateralized by vehicle with carrying value of $12,466 | 12,764 | 15,052 | ||||||
| 2.99% installment note payable $350 monthly, including interest, through August 2019, collateralized by vehicle with carrying value of $6,806 | 7,809 | 10,745 | ||||||
| 28,069 | 36,223 | |||||||
| Less principal due within one year | (10,973 | ) | (10,918 | ) | ||||
| TOTAL LONG-TERM DEBT | $ | 17,096 | $ | 25,305 | ||||
Representative’s Warrants
On January 10, 2017June 15, 2021, pursuant to the Underwriting Agreement, the Company issued 350,000 the Representative’s Warrants to purchase up to an aggregate of 150,000 shares of its common stock at $.10 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, for total proceeds of $35,000 to unaffiliated individuals.
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ITEM 2. Management's DiscussionMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
The information in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and AnalysisSection 21E of Financial Conditionthe Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and Resultsuncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements that are not of Operations.
Unless the context otherwise requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer to Splash Beverage Group and its subsidiaries.
The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements (unaudited) and Related Notes herewith.
Business Overview
Splash Beverage Group (“SBG”), f/k/a Canfield Medical Supply, Inc. (the “CMS”), was incorporated in the State of Ohio on September 3, 1992, and changed domicile to Condensed Financial Statements (unaudited) filed herein.
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.
Prior to the rehabilitation market, which consistsMerger, CMS was in the business of home health services, primarily the selling of homedurable medical equipment and supplies. More than 50%medical supplies to the public, nursing homes, hospitals and other end users and the Company continues to operate the home health supply business as a separate division.
As the owners and management of our revenues are derived fromSplash have voting and operating control of CMS following the saleMerger, the Merger transaction was accounted for as a reverse acquisition (that is with Splash as the acquiring entity), followed by a recapitalization.
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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, distribution, and rental of durable home medical equipment including such items as wheeled walkers, manual and power wheelchairs, hospital beds, ramps, bedside commodes, and miscellaneous bathroom equipment. The balance of our revenue is from the salesales & marketing of various home medical supplies including diabetic testing, incontinence, ostomy, wound care,beverages across multiple channels. Splash operates in both the non-alcoholic and catheter care.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 changes its name from Canfield Medical Supply, Inc. to Splash Beverage Group, Inc. Our emphasisnew ticker symbol is on helping patientsSBEV.
On December 24, 2020, SBG consummated an Asset Purchase Agreement(the “APA”) with mobility related limitations, but our overallCopa di Vino Corporation (“CdV”), to purchase certain assets and assume certain liabilities that comprise the Copa di Vino business is aimed at helping patients remainfor a total purchase price of $5,980,000, payable in their homes insteadthe combination of having$2,000,000 in cash (“Cash Consideration”), $2,000,000 convertible promissory note (the “Convertible Note”) to go to hospitals, rehab centersSeller and other similar facilities. Mosta variable number of shares of the equipmentCompany’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 supplies that we sell are prescribed by a physician as partfacilities in The Dalles, Oregon.
Results of an overall care plan.
Revenue
Revenues for the three months ended SeptemberJune 30, 20172021 were $319,015 as$3,287,760 compared to the revenues of $236,059$412,729 for the three months ended SeptemberJune 30, 2016.2020. The 35%$2,875,031 increase in sales is due to an increasing trend in powerchair sales.
Operating Expenses
Operating expenses for the three months ended SeptemberJune 30, 20172021 were $137,283 as$7,612,759 compared to $134,719$609,457 for the three months ended SeptemberJune 30, 2016.2020. The 2%$7,003,302 increase in our operating expenses was primarily duea result of recording the warrants issued pursuant to certain private placements conducted by the 6% increase in salariesCompany, increased headcount from the Copa acquisition and wages which was offset in part by small decreases inthe addition of new sales reps, professional fees ($1,446,946) and depreciation.
Interest Expense
Interest expenses for the $47,262 improvement includethree months ended June 30, 2021 were $149,376 compared to $21,854 for the fact thatthree months ended June 30, 2020. The $127,522 increase in our interest expenses was primarily a result of additional debt taken on in Q2 2021.
Results of Operations for the sales increased by $82,956 while the cost of good sold only increased by $35,092.
Revenue
Revenues for the ninesix months ended SeptemberJune 30, 20172021 were $739,647 as$5,426,684 compared to the revenues of $695,697$524,732 for the ninesix months ended SeptemberJune 30, 2016.2020. The 6%$4,901,952 increase in sales is primarily due to an increasing trend in power chair sales.
Operating Expenses
Operating expenses for the ninesix months ended SeptemberJune 30, 20172021 were $446,371 as$12,279,421 compared to $380,941$2,165,539 for the ninesix months ended SeptemberJune 30, 2016.2020. The 17% increase is due to the $27,104$10,113,882 increase in salaries and wages attributableour operating expenses was primarily a result of recording the warrants issued pursuant to pay raisescertain private placements conducted by the Company, increased headcount from the Copa acquisition and the hiringaddition of anew sales representative during the third quarter of 2016, the $12,373 increase inreps, professional fees incurred during the latest nine months for the audit of our December 31, 2016 financial statements($6,666,141) and Form 10-K filing (we did not commence our December 31, 2015 audit until the second quarter of 2016), and the $14,514 increase in other general and administrative expenses comprised primarily of our new website development and outsourcing of our billing collections.
Interest Expense
Interest expenses for the six months ended June 30, 2021 were $241,587 compared to $1,935,491 for the six months ended June 30, 2020. The $1,693,904 decrease in our interest expenses was primarily a result of recording a finance charge of $1,821,426 associated with warrants issued to one of our note holders in Q1 2020 offset by interest expense recorded in the period.
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.
As of SeptemberJune 30, 2017,2021, we had negative working capitaltotal cash and cash equivalents of ($10,032)$11,943,753, as compared to working capital of $2,784 as ofwith $380,000 at December 31, 2016.
Net cash used for operating activities during the six months ended June 30, 2021 was the increase in$7,664,506 as compared to the net loss from $33,023 incash used by operating activities for the ninesix months ended SeptemberJune 30, 20162020 of $1,783,007. The primary reasons for the change in net cash used is due to a net loss of $45,642losses sustained and increases in the latest nine-month period as explained previously.
Net cash used for investing activities during the ninesix months ended SeptemberJune 30, 20172021 was $37,909 which included $48,199$0 as compared to the net cash used by operating activities for the purchase of equipment. In comparison, during the ninesix months ended SeptemberJune 30, 2016,2020 of $154,341. The net cash used in the Company used $43,194 forfirst quarter of 2020 was primarily due to the purchase of equipment.
Net cash provided by financing activities during the ninesix months ended SeptemberJune 30, 20172021 was $21,092 as$19,468,746 compared to $38,379$1,941,018 provided byfrom financing activities infor the ninesix months ended SeptemberJune 30, 2016. The Company sold shares of its common stock during2020. During the ninesix months ended SeptemberJune 30, 20172021, we received $21,028,065 from investors, which was offset by repayments to shareholders and 2016debt holders of $1,159,319.
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CONTRACTUAL OBLIGATIONS
Minimum Royalty Payments:
We have a licensing agreement with ABG TapouT, LLC (“TapouT”). Under the licensing agreement, we have minimum royalty payments to raise $35,000 and $50,000, respectively, to help payTapouT for the costs associated with being a public company. Minimal payments towards the Company’s line of credit and notes payable were also made during each of the nine-month periods ended September 30, 2017 and 2016.
| ● | 2021 $594,000 |
| ● | 2022 $653,400 |
Inventory Purchase Commitments:
None.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
| (a) | Evaluation of Disclosure Controls and Procedures |
We maintain disclosure controls and Procedures.
As further discussed below, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operationsoperation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the endExchange Act. Based on that evaluation, our chief executive officer and chief financial officer concluded that, because of the period covered by this quarterly report, and have concluded thatcertain material weaknesses in our internal control over financial reporting our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of March 31, 2021. The material weaknesses relate to the absence of in-house accounting personnel with the ability to properly account for complex transactions and a lack of separation of duties between accounting and other functions.
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We hired a consulting firm to advise us on technical issues related to U.S. generally accepted accounting principles as related to the maintenance of our accounting books and records and the preparation of our consolidated financial statements. Although we are adequate.
| (b) | Changes in Internal Controls over Financial Reporting |
There has been no change in our internal control over financial reporting (as definedidentified in connection with the evaluation required by paragraph (d) of Rules 13a-15(f) and 15d-15(f)13a-15 or 15d-15 under the Securities Exchange Act)Act of 1934 that occurred during the period covered by this reportour most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 1. Legal Proceedings.
None.
ITEM 1A. Risk Factors.
The COVID-19 pandemic has had, and we expect will continue to have, certain negative impacts on our business and operations, and such impacts may have a material adverse effect on our business and results of operations.
The current COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the global economy and financial markets. The human and economic consequences of the COVID-19 pandemic as well as the measures being taken by governments, businesses (including the Company and our suppliers, bottlers/distributors, co-packers and other service providers) and the public at large to limit the COVID-19 pandemic, have and will, directly and indirectly impact our business and results of operations, including, without limitation, the following:
| ● | Deteriorating economic conditions and financial uncertainties in many of our major markets due to the COVID-19 pandemic, such as increased and prolonged unemployment, decreases in per capita income and the level of disposable income, declines in consumer confidence, or economic slowdowns or recessions, could affect consumer purchasing power and consumers’ ability to purchase our products, thereby reducing demand for our products. In addition, public concern among consumers regarding the risk of contracting COVID-19 may also reduce demand for our products. | |
| ● | The closure of on-premise retailers and other establishments that sell our products as a result of the COVID-19 pandemic may also adversely impact our sales and results of operations. | |
| ● | Our advertising, marketing, promotional, sponsorship and endorsement activities have been, and will continue to be, disrupted by reduced opportunities for such activities due to measures taken to limit the spread of the COVID-19 pandemic and the cancellations of sporting events, concerts and other events may result in decreased demand for our products. Our product sampling programs, which are part of our strategy to develop brand awareness, have been, and will continue to be, disrupted by the COVID-19 pandemic. If we are unable to successfully adapt to the changing landscape of advertising, marketing, promotional, sponsorship and endorsement opportunities created by the COVID-19 pandemic, our sales, volume growth and overall financial results could be negatively affected. | |
| ● | Our innovation activities, including our ability to introduce new products in certain markets, have been delayed and/or adversely impacted by the COVID-19 pandemic. If such innovation activities are disrupted and we continue to delay the launch of new products and/or we are unable to secure sufficient distribution levels for such new products, our business and results of operations could be adversely affected. | |
| ● | Some of our suppliers, bottlers/distributors and co-packers may experience plant closures, production slowdowns and disruptions in operations as a result of the impact of the COVID-19 pandemic. This could result in a disruption to our operations. | |
| ● | We may experience delays in the sourcing of certain raw materials as a result of shipping delays due to, among other things, additional safety requirements imposed by port authorities, closures of or congestion at ports, reduced availability of commercial transportation, border restrictions and capacity constraints. |
| ● | As a result of the COVID-19 pandemic, including related governmental measures, restrictions, directives and guidance, we have required most of our office-based employees to work remotely. We may experience reductions in productivity and disruptions to our business routines while our remote work policy remains in place. If our employees working remotely do not maintain appropriate measures to mitigate potential risks to our technology and operations from information technology-related disruptions, we may face cybersecurity threats. Employees of our third-party service providers who are working remotely, with whom we may share data, are subject to similar cybersecurity risks. | |
| ● | Governmental authorities at the U.S. federal, state and/or municipal level and in certain foreign jurisdictions may increase or impose new income taxes, indirect taxes or other taxes or revise interpretations of existing tax rules and regulations as a means of financing the costs of stimulus or may take other measures to protect populations and economies from the impact of the COVID-19 pandemic. Increases in direct and indirect tax rates could affect our net income, and increases in consumer taxes could affect our products’ affordability and reduce our sales. | |
| ● | We may be required to record significant impairment charges with respect to goodwill or intangible assets whose fair values may be negatively affected by the effects of the COVID-19 pandemic. | |
| ● | The financial impact of the COVID-19 pandemic may cause one or more of the financial institutions we do business with to fail or default in their obligations to us or to become insolvent or file for bankruptcy, which could cause us to incur significant losses and negatively impact our results of operations and financial condition. | |
| ● | Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may result in negative publicity and the Company becoming a party to litigation claims and/or legal proceedings, which could consume significant financial and managerial resources, result in decreased demand for our products and injury to our reputation. | |
| ● | The resumption of normal business operations after the disruptions caused by the COVID-19 pandemic may be delayed or constrained by its lingering effects on our suppliers, bottlers/distributors, co-packers, contractors, business partners and other service providers. |
Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a material adverse effect on our business, reputation, operating results and/or financial condition. The full extent to which the COVID-19 pandemic will negatively affect our business, reputation, operating results and/or financial condition will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities and other third parties in response to the COVID-19 pandemic.
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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosures.
No disclosure required.
ITEM 5. Other Information.OTHER INFORMATION
None.
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ITEM 6. Exhibits.
(a) Exhibits required by Item 601 of Regulation S-K.
| Exhibits | Description |
| 31.1 | Certification of CEO and Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically |
| 31.2 | Certification of CFO and Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically |
| 32.1 | Certification of CEO and Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically |
| 32.2 | Certification of CFO and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically | |
| 101 | XBRL Exhibits |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: August 16, 2021 | By: | /s/ Robert Nistico | |
| Date: August 16, 2021 | By: | /s/ Dean Huge | |
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