Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 22, 2023 | |
Document Information Line Items | ||
Entity Registrant Name | Fresh Vine Wine, Inc. | |
Trading Symbol | VINE | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 15,876,227 | |
Amendment Flag | false | |
Entity Central Index Key | 0001880343 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-41147 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 87-3905007 | |
Entity Address, Address Line One | 11500 Wayzata Blvd. | |
Entity Address, Address Line Two | #1147 | |
Entity Address, City or Town | Minnetonka | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55305 | |
City Area Code | (855) | |
Local Phone Number | 766-9463 | |
Title of 12(b) Security | Common stock, $0.001 par value | |
Security Exchange Name | NYSEAMER | |
Entity Interactive Data Current | Yes |
Balance Sheets
Balance Sheets - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 2,603,540 | $ 2,080,335 |
Accounts receivable | 230,244 | 259,317 |
Due from employees, net | 22,733 | 37,733 |
Insurance recovery receivable | 804,907 | |
Inventories | 3,467,838 | 3,696,198 |
Deferred offering costs | 68,286 | |
Prepaid expenses and other | 1,037,550 | 961,211 |
Total current assets | 7,361,905 | 7,907,987 |
Prepaid expenses(long term) | 599,917 | 678,167 |
Total Assets | 7,961,822 | 8,586,154 |
Current liabilities | ||
Accounts payable | 777,345 | 589,204 |
Accrued compensation | 420,413 | |
Settlement payable | 1,250,000 | |
Accrued expenses | 526,370 | 422,931 |
Accrued expenses - related parties | 250,000 | 280,000 |
Deferred revenue | 925 | 10,000 |
Total current liabilities | 1,554,640 | 2,972,548 |
Total Liabilities | 1,554,640 | 2,972,548 |
Stockholders’ Equity | ||
Preferred stock, $0.001 par value - 25,000,000 shares authorized at March 31, 2023 and December 31, 2022; 0 shares issued and outstanding at March 31, 2023 and December 31, 2022 | ||
Common stock, $0.001 par value - 100,000,000 shares authorized at March 31, 2023 and December 31, 2022; 15,876.226 and 12,732,257 shares issued and outstanding at March 31, 2023 and December 31, 2022 respectively | 15,876 | 12,732 |
Additional paid-in capital | 24,221,988 | 21,420,732 |
Accumulated deficit | (17,830,682) | (15,819,858) |
Total Stockholder’s Equity | 6,407,182 | 5,613,606 |
Total Liabilities and Stockholders’ Equity | $ 7,961,822 | $ 8,586,154 |
Balance Sheets (Parentheticals)
Balance Sheets (Parentheticals) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 15,876,226 | 12,732,257 |
Common stock, shares outstanding | 15,876,226 | 12,732,257 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Wholesale revenue | $ 288,374 | $ 529,840 |
Direct to consumer revenue | 120,256 | 248,401 |
Related party service revenue | 150,884 | |
Total Net Revenue | 408,630 | 929,125 |
Cost of revenues | 411,992 | 612,052 |
Gross (Loss) Profit | (3,362) | 317,073 |
Selling, general and administrative expenses | 1,672,766 | 2,705,200 |
Equity-based compensation | 335,922 | 1,902,584 |
Operating Loss | (2,012,050) | (4,290,711) |
Other income | 1,226 | 4,468 |
Net Loss | $ (2,010,824) | $ (4,286,243) |
Weighted Average Shares Outstanding | ||
Basic (in Shares) | 13,332,790 | 12,299,147 |
Diluted (in Shares) | 13,332,790 | 12,299,147 |
Net Loss per Share - Basic (in Dollars per share) | $ (0.15) | $ (0.35) |
Net Loss per Share - Diluted (in Dollars per share) | $ (0.15) | $ (0.35) |
Statements of Changes in Stockh
Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 12,200 | $ 17,681,141 | $ (617,351) | $ 17,075,990 | |
Balance (in Shares) at Dec. 31, 2021 | 12,200,013 | ||||
Equity-based compensation | $ 285 | 1,824,049 | 1,824,334 | ||
Equity-based compensation (in Shares) | 285,184 | ||||
Net income (loss) | (4,286,243) | (4,286,243) | |||
Balances at Mar. 31, 2022 | $ 12,485 | 19,505,190 | (4,903,594) | 14,614,081 | |
Balances (in Shares) at Mar. 31, 2022 | 12,485,197 | ||||
Balance at Dec. 31, 2022 | $ 12,732 | 21,420,732 | (15,819,858) | 5,613,606 | |
Balance (in Shares) at Dec. 31, 2022 | 12,732,257 | ||||
Rights Offering - common stock and warrants issued | $ 3,144 | 2,543,584 | 2,546,728 | ||
Rights Offering - common stock and warrants issued (in Shares) | 3,149,969 | ||||
Equity-based compensation | $ 500 | 257,172 | 257,672 | ||
Equity-based compensation (in Shares) | 500,000 | ||||
Stock Forfeiture | $ (500) | 500 | |||
Stock Forfeiture (in Shares) | (500,000) | ||||
Net income (loss) | (2,010,824) | (2,010,824) | |||
Balances at Mar. 31, 2023 | $ 15,876 | $ 24,221,988 | $ (17,830,682) | $ 6,407,182 | |
Balances (in Shares) at Mar. 31, 2023 | 15,876,226 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash Flows from Operating Activities | ||
Net loss | $ (2,010,824) | $ (4,286,243) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization | 120 | |
Equity-based compensation | 335,922 | 1,902,584 |
Allowance for doubtful accounts | 15,000 | |
Changes in operating assets and liabilities | ||
Accounts receivable | 29,073 | (43,745) |
Insurance recovery receivable | 804,907 | |
Accounts receivable - related party | (150,884) | |
Accounts receivable - other | (58,884) | |
Receivables with recourse | (96,226) | |
Related party receivables | (3,413) | |
Inventories | 228,360 | (626,588) |
Prepaid expenses and other | (76,339) | (1,490,352) |
Accounts payable | 188,141 | 179,078 |
Payroll tax payable | 410,760 | |
Accrued compensation | (420,413) | (316,414) |
Settlement Payable | (1,250,000) | |
Accrued expenses | 103,439 | 100,042 |
Accrued expenses - related parties | (30,000) | (79,617) |
Deferred revenue | (9,075) | 43,565 |
Related party payables | (26,728) | |
Net cash used in operating activities | (2,091,809) | (4,542,945) |
Cash Flows from Financing Activities | ||
Payments of related party notes payable | (216,000) | |
Proceeds from secured borrowings | (154,838) | |
Proceeds from Rights Offering, net of issuance costs | 2,615,014 | |
Net cash provided by (used in) financing activities | 2,615,014 | (370,838) |
Net Increase (Decrease) in Cash | 523,205 | (4,913,783) |
Cash - Beginning of Period | 2,080,335 | 16,063,941 |
Cash - End of Period | 2,603,540 | 11,150,158 |
Supplemental disclosure of non-cash activities: | ||
Issuance of units for prepaid marketing services |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Management’s Statement [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Fresh Vine Wine, Inc. (the Company), a Nevada corporation, is a premium wine brand built to complement consumers’ healthy and active lifestyles. The Company provides a competitively priced premium product that is blended to deliver several important benefits, such as low-cal, low-sugar, low-carb. The Company’s wines are also gluten-free and keto and vegan friendly. The Company’s revenue is comprised primarily of wholesale and direct to consumer (DTC) sales, and representation and distribution services. Wholesale revenue is generated through sales to distributors located in states throughout the United States of America and Puerto Rico. DTC revenue is generated from individuals purchasing wine directly from the Company through club membership and the Company’s website. Representation and distribution service revenue is generated by providing third party wine producers with access to new markets and distribution channels. Basis of Presentation The Company’s financial statements have been prepared and are presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The financial statements include, in the opinion of the management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the financial statements. In certain instances, amounts reported in prior period financial statements have been reclassified to conform to the current financial statement presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company’s financial Statements and notes thereto for the fiscal year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include contingent liabilities, allowance for doubtful accounts, allowance for inventory obsolescence, equity-based compensation for employees and non-employees, and the valuation of deferred tax assets. Application of New or Revised Accounting Standards Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), a company constituting an “emerging growth company” is, among other things, entitled to rely upon certain reduced reporting requirements and is eligible to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. The Company is an emerging growth company and has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocable opts out of the extended transition period provide in the JOBS Act. Going Concern and Liquidity Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $17.8 million as of March 31,2023. Cash flows used in operating activities were $2.1 million and $4.5 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the Company had approximately a $5.8 million of working capital , inclusive of $2.6 in cash and cash equivalents to cover expenses. The Company’s ability to continue as a going concern is dependent on its ability to meet its liquidity needs through a combination of factors including but not limited to, cash and cash equivalents, working capital and strategic capital raises. The ultimate success of these plans is not guaranteed. In considering our forecast for the next twelve months and the current cash and working capital as of the filing of this Form 10-Q, such matters create a substantial doubt regarding the Company’s ability to meet our financial needs and continue as a going concern. The Company currently holds no debt and may need to seek debt or equity financing in the near term to sustain existing operations. If adequate financing is not available, the Company may be forced to curtail near-term growth priorities, take measures to severely reduce our expenses and business operations, or discontinue them completely. Such financing may be dilutive. At the current pace of incurring expenses and without receipt of additional financing, the Company projects that the existing cash balance will be sufficient to fund current operations into the third quarter of 2023, after which additional financing will be needed to satisfy obligations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2023 | |
Revenue Recognition [Abstract] | |
REVENUE RECOGNITION | 2. REVENUE RECOGNITION The Company’s total revenue reflects the sale of wine domestically in the U.S. to wholesale distributors or DTC and related party service revenues. Under ASC Topic 606, Revenue from Contracts with Customers The Company also generates revenue through membership in its wine club. Wine club members pay a monthly fee, which varies depending on level of membership, and are entitled to receive quarterly shipments of wine, free shipping, and discounts on other wine and merchandise purchased. The Company recognizes revenue for the monthly membership dues when the product is delivered. Any membership dues received before the product is delivered is recorded as deferred revenue on the Company’s balance sheet. The Company has determined that related party service revenue should be recognized over the period of time it provides such services. ASC 606 also notes that when another party is involved in providing goods or services to a customer, the entity should determine whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for those goods or services to be provided by the other party (that is, the entity is an agent). The Company does not bear responsibility for inventory losses and does not have pricing determination; therefore, the Company would be considered the agent and revenue should be recognized as net sales. The following table presents the percentages of total revenue disaggregated by sales channels for the three month periods ended March 31, 2023 and 2022: Three months ended March 31, March 31, Wholesale 71 % 57 % Direct to consumer 29 % 27 % Related party - 16 % Total revenue 100 % 100 % |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Loss Per Share [Abstract] | |
LOSS PER SHARE | 3. LOSS PER SHARE Basic net loss per share is determined by dividing net loss attributable to shareholders by the weighted-average shares outstanding during the period. Diluted EPS reflects potential dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period increased by the numbers of additional common shares that would have been outstanding if all potential common shares had been issued and were dilutive. However, potentially dilutive securities are excluded from the computation of diluted EPS to the extent that their effect is anti-dilutive. The following table presents a reconciliation between basic and diluted net loss per share for the three month periods ending: Three Months Ended March 31, March 31, 2022 Numerator: Net loss attributable to Fresh Vine Wine shareholders $ (2,010,824 ) $ (4,286,243 ) Denominator: Basic – weighted shares outstanding 13,332,790 12,299,417 Dilutive effect from shares authorized - - Diluted – weighted shares outstanding 13,332,790 12,299,417 Basic loss per share attributable to Fresh Vine Wine shareholders: $ (0.15 ) $ (0.35 ) Diluted loss per share attributable to Fresh Vine Wine shareholders: $ (0.15 ) $ (0.35 ) At March 31, 2023 and 2022, 3,211,563 and 2,531,794 shares have been excluded from the calculation of diluted weighted average shares outstanding as the inclusion of these shares would have an anti-dilutive effect. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2023 | |
Inventories [Abstract] | |
INVENTORIES | 4. INVENTORIES Inventories primarily include bottled wine which is carried at the lower cost (calculated using the average cost method) or net realizable value. Inventories consist of the following at: March 31, December 31, Inventory – finished goods $ 3,454,799 $ 3,683,159 Inventory – merchandise 13,039 13,039 Total $ 3,467,838 $ 3,696,198 |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 3 Months Ended |
Mar. 31, 2023 | |
Prepaid Expenses and Other [Abstarct] | |
PREPAID EXPENSES AND OTHER ASSETS | 5. PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets consist of the following at: March 31, December 31, Prepaid marketing expenses – current $ 313,000 $ 313,000 Prepaid marketing expenses – long-term 599,917 678,167 Inventory deposits 570,230 569,377 Other prepaid expenses 154,321 78,834 Total $ 1,637,468 $ 1,639,378 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Expenses [Abstract] | |
ACCRUED EXPENSES | 6. ACCRUED EXPENSES Accrued expenses consist of the following at: March 31, December 31, Sponsorship agreements $ 287,158 $ 234,494 Accrued credit card charges 13,822 21,013 General trade payable accruals 175,000 107,424 Other accrued expenses 50,390 60,000 Total $ 526,370 $ 422,931 The sponsorship agreements relate to marketing contracts with unrelated parties within the sports and entertainment industry. The terms of the agreements range from two to four years with annual payments range from $103,000 to $216,000 per agreement. The total expense relating to these agreements for the three month periods ended March 31, 2023 and 2022 was $52,664 and $181,437, respectively. Accrued credit card charges primarily consist of warehouse, shipping and other operating costs paid via a Company credit card as a tool for managing cashflow. |
Stockholders Equity
Stockholders Equity | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS EQUITY | 7. STOCKHOLDERS EQUITY Rights offering During the first quarter of 2023, the Company distributed, at no charge to holders of the Company’s common stock, non-transferable subscription rights to purchase up to an aggregate of 6,366,129 Units. Each Unit consisted of one share of our common stock and a Warrant to purchase one share of our common stock. The Warrants were exercisable immediately, expire five years from the date of issuance and have an exercise price of $1.25 per share. For each share of common stock held by a stockholder of the Company on February 22, 2023, the record date of the Rights Offering, such stockholder received 0.5 subscription rights. Each whole subscription right allowed the holder thereof to subscribe to purchase one Unit, which we refer to as the basic subscription right, at a subscription price of $1.00 per Unit. In addition, any holder of subscription rights exercising his, her or its basic subscription right in full was eligible to subscribe to purchase additional Units that remained unsubscribed in the Rights Offering at the same subscription price per Unit that applied to the basic subscription right, subject to proration among participants exercising their over-subscription privilege, which we refer to as the over-subscription privilege. The subscription rights period expired on March 9, 2023, and resulted in stockholders subscribing for 3,143,969 Units. Upon the closing of the Rights Offering, which occurred on March 14, 2023, we issued 3,143,969 shares of common stock and 3,143,969 warrants and received aggregate gross cash proceeds of approximately $3.14 million. After deducting dealer-manager fees and other fees and expenses related to the Rights Offering, we received net proceeds of approximately $2.7 million. If exercised, additional gross proceeds of up to approximately $3.93 million may be received through the exercise of warrants issued in the Rights Offering. The Rights Offering was made pursuant to a registration statement on Form S-1 (Registration No. 333-269082), which was declared effective by the U.S. Securities and Exchange Commission on February 14, 2023, and the prospectus dated February 22, 2023. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Equity-Based Compensation [Abstract] | |
EQUITY-BASED COMPENSATION | 8. EQUITY BASED COMPENSATION As of March 31, 2023, there was $912,917 of unrecognized equity-based compensation expense recorded in prepaid expenses and other assets. The estimated expense for various marketing and advertising services in exchange for common stock, for the periods subsequent to March 31, 2023 is as follows: Advertising 2023 234,750 2024 313,000 2025 313,000 2026 52,167 $ 912,917 Shares of Restricted Stock During the first quarter of 2023, 6,666 shares of restricted stock from previous periods were forfeited by employees that terminated their employment. The new grant of 500,000 shares of restricted stock relates to the settlement reached with a previous employee, as further disclosed in Note 12. Stock compensation expense related to restricted stock issuances amounted to $188,500 and $1,602,797 for the three months ended March 31, 2023 and 2022 respectively. Total unrecognized equity-based compensation expense is $377,000 related to restricted stock as of March 31, 2023. Restricted stock activity as of and during the three-month period ended March 31, 2023 was as follows: Number of Weighted Outstanding at December 31, 2022 6,666 0.90 Granted 500,000 0.50 Vested or released - - Forfeited (6,666 ) - Outstanding at March 31, 2023 500,000 0.32 Vendor Stock Awards Vendor stock award activity subject to revenue-related performance conditions during the three-month period ended March 31, 2023 was as follows: Number of Weighted Outstanding at December 31, 2022 1,030,000 2.25 Granted - - Vested - - Expired - - Outstanding at March 31, 2023 1,030,000 2.00 For stock awards that contain revenue-related performance conditions, compensation cost is recognized in the period in which it becomes probable that the performance condition will be satisfied. Stock compensation expense related to vendor stock awards subject to revenue-related performance conditions totaled $15,500 and $0 for the three months ended March 31, 2023 and 2022, respectively. Total unrecognized stock-based compensation expense related to vendor stock awards is $1,256,200 as of March 31, 2023. Stock Options Stock option activity as of and during the three-month period ended March 31, 2023 was as follows: Number of Weighted Weighted Outstanding at December 31, 2022 1,574,892 9.67 8.94 Granted - - - Exercised - - Forfeited (3,333 ) 2.78 - Outstanding at March 31, 2023 1,571,559 9.68 8.69 Exercisable at March 31, 2023 38,703 3.03 9.42 Stock compensation expense related to option issued amounted to $53,672 and $221,536 for the three months ended March 31, 2023 and 2022 respectively. Total unrecognized equity-based compensation expense is $123,163 related to stock options as of March 31, 2023. Warrants During the first quarter of 2023, no warrants from previous periods were exercised or forfeited. As described above, 3,143,969 warrants were granted as part of the Rights Offering, as disclosed in Note 7. Number of Weighted Weighted Outstanding at December 31, 2022 110,000 12.00 3.71 Granted 3,143,969 1.25 5.00 Exercised - - Forfeited - Outstanding at March 31, 2023 3,253,969 1.61 4.91 The Company uses the Black-Scholes option-pricing model to estimate the fair value of equity-based awards. The inputs for the Black-Scholes valuation model require management’s significant assumptions. Prior to the Company’s IPO, the price per share of common stock was determined by the Company’s board based on recent prices of common stock sold in private offerings. Subsequent to the IPO, the price per share of common stock is determined by using the closing market price on The NYSE American stock exchange on the grant date. The risk-free interest rates, ranging from 0.02% to 4.45%, are based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal to the expected life of the awards at the grant date. The expected term for employee and nonemployee awards ranged from 3 to 10 years based on industry data, vesting period, contractual period, among other factors. The expected volatility was estimated at 175% based on historical volatility information of peer companies that are publicly available in combination with the Company’s calculated volatility since being publicly traded. The Company does not expect to pay dividends. For awards with a performance condition, stock compensation is recognized over the requisite service period if it is probable that the performance condition will be satisfied. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax [Abstract] | |
INCOME TAXES | 9. INCOME TAXES The Company has federal and state net operating loss carryforwards with a full valuation allowance against the deferred tax assets as of March 31, 2023. No income tax expense or benefit was recorded for the three month periods ended March 31, 2023 and 2022 due to the Company’s net loss position. |
Supplier and Customer Concentra
Supplier and Customer Concentration | 3 Months Ended |
Mar. 31, 2023 | |
Supplier and Customer Concentration [Abstract] | |
SUPPLIER AND CUSTOMER CONCENTRATION | 10. SUPPLIER AND CUSTOMER CONCENTRATION The Company has an agreement with an unrelated party for various wine making activities, including production, bottling, labeling, and packaging. The Company purchases finished goods through blanket sales orders that require a minimum 20% deposit. In addition to the purchases of finished goods, the Company pays certain storage, administrative fees and taxes related to the purchased goods. There is no specified term of the agreement but continues as additional blanket sales orders are issued. For the three month periods ended March 31, 2023 and 2022, substantially all of the Company’s inventory purchases were from this supplier. The Company also engages with other suppliers as needed for the purchase of a select varietal of wine to be offered in limited quantities. There are no formal agreements due to the infrequency of activity with these suppliers. A significant portion of the Company’s wholesale revenue comes from two national distributor customers that operate in several markets. For the three month periods ended March 31, 2023 and 2022, approximately 73% and 56% respectively of the Company’s wholesale revenue came from these two customers. As of March 31, 2023 and 2022, these customers accounted for approximately 73% and 56% respectively of accounts receivable. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES During March 2021, the Company entered into two license agreements with the Class F partner investors for marketing and advertising services. The agreements require ongoing payments of $300,000 per agreement each year for an initial term of five years. Additionally, the agreements require the Company to reimburse out of pocket expenses related to promotion of the Company’s products. In November 2021, the agreements were amended to include, among other provisions, partners investor options to terminate the agreements if a $5 million EBITDA threshold is not met in either 2022 or 2023. The net expense was $120,000 and $20,000 for the three month periods ended March 31, 2023 and 2022 respectively. License Agreements The estimated expense related to the license agreements for the periods ending December 31 subsequent to March 31, 2023 is as follows: Advertising 2023 $ 360,000 2024 480,000 2025 480,000 2026 80,000 $ 1,400,000 Sponsorship Agreements The estimated expense for the sponsorship agreements as described in Note 6 for the periods ending December 31 subsequent to March 31, 2023 is as follows: Advertising 2023 $ 319,761 2024 160,147 $ 479,908 |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2023 | |
Legal Proceedings Abstract | |
LEGAL PROCEEDINGS | 12. LEGAL PROCEEDINGS Timothy Michaels On February 24, 2022, Timothy Michaels, the former Chief Operating Officer of the Company, signed a Separation Agreement and Release (the “Separation Agreement”) in connection with the termination of his employment with the Company, which occurred on February 7, 2022. On May 27, 2022, Mr. Michaels filed a complaint against the Company in the Fourth Judicial District Court, Hennepin County, Minnesota, alleging that the Company breached the February 24, 2022 Separation Agreement by including a restricted “lock-up” legend on shares of the Company’s common stock issued to Mr. Michaels pursuant to the Settlement Agreement. The complaint also included counts alleging breach of the implied covenant of good faith and fair dealing, issuer liability under Minn. Stat. § 336.8-401 for delay in removing or directing the Company’s transfer agent to remove the lock-up legend from the shares, conversion and civil theft. The Company has denied the allegations and intends to vigorously defend against the lawsuit. The Company has made a motion seeking dismissal of the conversion and civil theft counts, which was granted by the Fourth Judicial District Court, Hennepin County, Minnesota on October 31, 2022. The action remains pending. Janelle Anderson Litigation Settlement and Related Founder Share Forfeitures The Company was a party to an action pending in Hennepin County District Court, captioned Janelle Anderson v. Fresh Vine Wine, Inc., Damian Novak, and Rick Nechio, Court File No. 27-CV-22-11491 (the “Lawsuit”), in which Ms. Anderson alleged, among other things, that the Company terminated her employment in retaliation for reports of alleged wrongdoing pursuant to the Minnesota Whistleblower Act. Defendants also included Damian Novak, former Executive Chairman and a former director of the Company, and Rick Nechio, former interim Chief Executive Officer and a director of the Company. The suit was dismissed on March 6, 2023, with prejudice. On January 27, 2023, the Company entered into a Global Mutual Compromise, Release and Settlement Agreement (the “Settlement Agreement”) among Ms. Anderson and each of Messrs. Novak and Nechio. Pursuant to the Settlement Agreement, Ms. Anderson agreed to dismiss the Lawsuit with prejudice and to file with the court any and all documents necessary to effect such dismissal with prejudice within five business days after all settlement consideration has been actually received by her, and the parties agreed to general mutual releases. The Company also agreed to indemnify Ms. Anderson and hold her harmless against any liability, civil damages, penalties, or fines claimed against her for any of her actions done within the course and scope of her employment with the Company as required by Minn. Stat. §181.970, and under any applicable insurance policies, including but not limited to any directors and officers policies. The Settlement Agreement also contains a non-disparagement provision. As consideration for Ms. Anderson’s dismissal and release, and provided that she does not revoke or rescind the Settlement Agreement within prescribed time periods, the Company agreed to make a cash payment to Ms. Anderson in the amount of $1,250,000, less certain attorney fees and relevant taxes and other withholdings, in a lump sum. The Company recouped approximately $805,000 of this cash payment from insurance coverage. The cash payment is in addition to the $400,000 that the Company previously paid to Ms. Anderson in January 2023 in respect of 2022 bonus compensation earned by Ms. Anderson under her employment agreement while employed by the Company. Also as contemplated by the Settlement Agreement, the Company and Ms. Anderson agreed to enter into a consulting agreement (the “Anderson Consulting Agreement”) pursuant to which Ms. Anderson would provide certain consulting services to the Company for a period of six months. As consideration for such services, the Company agreed to grant and issue to Ms. Anderson 500,000 shares of the Company’s common stock (the “Anderson Consulting Shares”) from the Company’s 2021 Equity Incentive Plan (the “Anderson Consulting Share Grant”). The cash payment and the Anderson Consulting Share Grant were scheduled to be made at the “closing” of the Settlement Agreement (the “Settlement Closing”), subject to Ms. Anderson not revoking or rescinding the Settlement Agreement during the applicable revocation period. The Settlement Closing was completed on February 20, 2023, with prejudice. Also pursuant to the Settlement Agreement, Damian Novak, former Executive Chairman and director, resigned as Executive Chairman and removed himself from his management duties with the Company effective February 20, 2023, and has agreed to resign from our board of directors promptly following completion of the subscription rights offering on March 14, 2023. In addition, Rick Nechio, the Company’s former interim Chief Executive Officer and director, resigned from our board of directors effective February 20, 2023. In conjunction with entering into the Settlement Agreement, Rick Nechio and Damian Novak entered into Agreements to Forfeit Shares of Common Stock (the “Forfeiture Agreements”) pursuant to which each agreed to forfeit and transfer back to the Company without consideration 250,000 shares of common stock of the Company held by them (a total of 500,000 shares), to enable the Company to issue the Anderson Consulting Shares to Ms. Anderson without subjecting the Company’s other stockholders to dilution therefrom (the “Anderson Consulting-related Forfeitures”). The Anderson Consulting-related Forfeitures became effective in connection with the Settlement Closing. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS Effective April 25, 2023, the Board of Directors of the Company (the “Board”) appointed Roger Cockroft to serve as Chief Executive Officer of the Company, succeeding Rick Nechio. In connection with the Chief Executive Officer appointment, the Company entered into an employment agreement with Mr. Cockroft dated April 25, 2023. Under the employment agreement, which is for an indefinite term, Mr. Cockroft is entitled to receive annual base salary of $450,000 and is eligible to receive an annual cash bonus commencing in 2024 (the “Bonus”), the target amount of which will be equal to 50% of his base salary. The Bonus is payable in a combination of cash and shares of common stock issued out of the Company’s 2021 Equity Incentive Plan (the “Equity Incentive Plan”) valued at the closing price of the Company’s common stock on the vesting date. Unless agreed otherwise, the cash portion of the Bonus will be the minimum amount of income withholding taxes resulting from payment of the entire Bonus. To the extent that there are not sufficient available shares reserved for issuance under the Equity Incentive Plan (or successor plans) to support Bonus payments otherwise payable in stock, the Company will pay such Bonus payments in cash. During the first 12 months of his employment term, 50% of Mr. Cockroft’s salary, or $225,000, will be paid in cash. In lieu of cash salary in the amount of the remaining $225,000, the Company granted Mr. Cockroft an inducement award of 463,917 shares of restricted stock (the “Restricted Stock”) upon the commencement of his employment. The Restricted Stock award is subject to transfer and forfeiture restrictions that are scheduled to lapse in four installments as nearly equal in amount as possible on the three, six, nine and twelve month anniversaries of the grant date, subject to continued employment. Also upon commencement of his employment, Mr. Cockroft was granted (i) a 1,000,000 share stock option award (the “Stock Option”), and (ii) a restricted stock unit award (“RSUs”). The Stock Option has an exercise price equal to $1.00 per share and, subject to continued employment, is scheduled to vest with respect to 250,000 shares on the one-year anniversary of the grant date and, thereafter, is scheduled to vest in 36 monthly installments as nearly equal in amount as possible commencing on the 13th month anniversary of the grant date and continuing on each one month anniversary thereafter. The RSUs have a target payout amount equal to $154,726. The amount of the RSU award actually payable will be determined by the Board (or a compensation committee thereof) based on the satisfaction of 2023 performance objectives. The RSUs will be settled in shares of the Company’s common stock valued at the most recent closing price of the Company’s common stock on the payment date, subject to Mr. Cockroft’s right to forfeit shares to satisfy tax withholding obligations. The grants of the Restricted Stock award, the Stock Option and the RSUs were made separately from the Company’s 2021 Equity Incentive Plan (the “Equity Incentive Plan”) as inducements material to Mr. Cockroft entering into employment with the Company. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business Fresh Vine Wine, Inc. (the Company), a Nevada corporation, is a premium wine brand built to complement consumers’ healthy and active lifestyles. The Company provides a competitively priced premium product that is blended to deliver several important benefits, such as low-cal, low-sugar, low-carb. The Company’s wines are also gluten-free and keto and vegan friendly. The Company’s revenue is comprised primarily of wholesale and direct to consumer (DTC) sales, and representation and distribution services. Wholesale revenue is generated through sales to distributors located in states throughout the United States of America and Puerto Rico. DTC revenue is generated from individuals purchasing wine directly from the Company through club membership and the Company’s website. Representation and distribution service revenue is generated by providing third party wine producers with access to new markets and distribution channels. |
Basis of Presentation | Basis of Presentation The Company’s financial statements have been prepared and are presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The financial statements include, in the opinion of the management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the financial statements. In certain instances, amounts reported in prior period financial statements have been reclassified to conform to the current financial statement presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company’s financial Statements and notes thereto for the fiscal year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. |
Accounting Estimates | Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include contingent liabilities, allowance for doubtful accounts, allowance for inventory obsolescence, equity-based compensation for employees and non-employees, and the valuation of deferred tax assets. |
Application of New or Revised Accounting Standards | Application of New or Revised Accounting Standards Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), a company constituting an “emerging growth company” is, among other things, entitled to rely upon certain reduced reporting requirements and is eligible to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. The Company is an emerging growth company and has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocable opts out of the extended transition period provide in the JOBS Act. |
Going Concern and Liquidity | Going Concern and Liquidity Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $17.8 million as of March 31,2023. Cash flows used in operating activities were $2.1 million and $4.5 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the Company had approximately a $5.8 million of working capital , inclusive of $2.6 in cash and cash equivalents to cover expenses. The Company’s ability to continue as a going concern is dependent on its ability to meet its liquidity needs through a combination of factors including but not limited to, cash and cash equivalents, working capital and strategic capital raises. The ultimate success of these plans is not guaranteed. In considering our forecast for the next twelve months and the current cash and working capital as of the filing of this Form 10-Q, such matters create a substantial doubt regarding the Company’s ability to meet our financial needs and continue as a going concern. The Company currently holds no debt and may need to seek debt or equity financing in the near term to sustain existing operations. If adequate financing is not available, the Company may be forced to curtail near-term growth priorities, take measures to severely reduce our expenses and business operations, or discontinue them completely. Such financing may be dilutive. At the current pace of incurring expenses and without receipt of additional financing, the Company projects that the existing cash balance will be sufficient to fund current operations into the third quarter of 2023, after which additional financing will be needed to satisfy obligations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue Recognition [Abstract] | |
Schedule of table presents the percentages of total revenue disaggregated | Three months ended March 31, March 31, Wholesale 71 % 57 % Direct to consumer 29 % 27 % Related party - 16 % Total revenue 100 % 100 % |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Loss Per Share [Abstract] | |
Schedule of basic net loss per share | Three Months Ended March 31, March 31, 2022 Numerator: Net loss attributable to Fresh Vine Wine shareholders $ (2,010,824 ) $ (4,286,243 ) Denominator: Basic – weighted shares outstanding 13,332,790 12,299,417 Dilutive effect from shares authorized - - Diluted – weighted shares outstanding 13,332,790 12,299,417 Basic loss per share attributable to Fresh Vine Wine shareholders: $ (0.15 ) $ (0.35 ) Diluted loss per share attributable to Fresh Vine Wine shareholders: $ (0.15 ) $ (0.35 ) |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventories [Abstract] | |
Schedule of inventories consist | March 31, December 31, Inventory – finished goods $ 3,454,799 $ 3,683,159 Inventory – merchandise 13,039 13,039 Total $ 3,467,838 $ 3,696,198 |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Prepaid Expenses and Other [Abstarct] | |
Schedule of prepaid expenses and other assets | March 31, December 31, Prepaid marketing expenses – current $ 313,000 $ 313,000 Prepaid marketing expenses – long-term 599,917 678,167 Inventory deposits 570,230 569,377 Other prepaid expenses 154,321 78,834 Total $ 1,637,468 $ 1,639,378 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Expenses [Abstract] | |
Schedule of accrued expenses | March 31, December 31, Sponsorship agreements $ 287,158 $ 234,494 Accrued credit card charges 13,822 21,013 General trade payable accruals 175,000 107,424 Other accrued expenses 50,390 60,000 Total $ 526,370 $ 422,931 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity-Based Compensation (Tables) [Line Items] | |
Schedule of estimated expense for various marketing and advertising services | Advertising 2023 234,750 2024 313,000 2025 313,000 2026 52,167 $ 912,917 |
Schedule of restricted stock activity | Number of Weighted Outstanding at December 31, 2022 6,666 0.90 Granted 500,000 0.50 Vested or released - - Forfeited (6,666 ) - Outstanding at March 31, 2023 500,000 0.32 |
Schedule of Vendor stock award activity | Number of Weighted Outstanding at December 31, 2022 1,030,000 2.25 Granted - - Vested - - Expired - - Outstanding at March 31, 2023 1,030,000 2.00 |
Schedule of underwriter warrants to purchase common shares of the company outstanding | Number of Weighted Weighted Outstanding at December 31, 2022 110,000 12.00 3.71 Granted 3,143,969 1.25 5.00 Exercised - - Forfeited - Outstanding at March 31, 2023 3,253,969 1.61 4.91 |
Stock Options [Member] | |
Equity-Based Compensation (Tables) [Line Items] | |
Schedule of restricted stock activity | Number of Weighted Weighted Outstanding at December 31, 2022 1,574,892 9.67 8.94 Granted - - - Exercised - - Forfeited (3,333 ) 2.78 - Outstanding at March 31, 2023 1,571,559 9.68 8.69 Exercisable at March 31, 2023 38,703 3.03 9.42 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies [Abstract] | |
Schedule of estimated expense | Advertising 2023 $ 360,000 2024 480,000 2025 480,000 2026 80,000 $ 1,400,000 Advertising 2023 $ 319,761 2024 160,147 $ 479,908 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounting Policies [Abstract] | ||
Accumulated deficit | $ 17.8 | |
Cash flows used in operating activities | 2.1 | $ 4.5 |
Working capital | 5.8 | |
Cash and cash equivalents | $ 2.6 |
Revenue Recognition (Details) -
Revenue Recognition (Details) - Schedule of table presents the percentages of total revenue disaggregated | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue, Major Customer [Line Items] | ||
Total revenue | 100% | 100% |
Wholesale [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total revenue | 71% | 57% |
Direct to consumer [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total revenue | 29% | 27% |
Related party [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total revenue | 16% |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Loss Per Share [Abstract] | ||
Diluted weighted average shares outstanding | 3,211,563 | 2,531,794 |
Loss Per Share (Details) - Sche
Loss Per Share (Details) - Schedule of basic net loss per share - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net loss attributable to Fresh Vine Wine shareholders (in Dollars) | $ (2,010,824) | $ (4,286,243) |
Denominator: | ||
Basic – weighted shares outstanding | 13,332,790 | 12,299,417 |
Dilutive effect from shares authorized | ||
Diluted – weighted shares outstanding | 13,332,790 | 12,299,417 |
Basic loss per share attributable to Fresh Vine Wine shareholders: (in Dollars per share) | $ (0.15) | $ (0.35) |
Diluted loss per share attributable to Fresh Vine Wine shareholders: (in Dollars per share) | $ (0.15) | $ (0.35) |
Inventories (Details) - Schedul
Inventories (Details) - Schedule of inventories consist - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Schedule of Inventories Consist [Abstract] | ||
Inventory – finished goods | $ 3,454,799 | $ 3,683,159 |
Inventory – merchandise | 13,039 | 13,039 |
Total | $ 3,467,838 | $ 3,696,198 |
Prepaid Expenses and Other As_3
Prepaid Expenses and Other Assets (Details) - Schedule of prepaid expenses and other assets - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Schedule of Prepaid Expenses and Other Assets [Abstract] | ||
Prepaid marketing expenses – current | $ 313,000 | $ 313,000 |
Prepaid marketing expenses – long-term | 599,917 | 678,167 |
Inventory deposits | 570,230 | 569,377 |
Other prepaid expenses | 154,321 | 78,834 |
Total | $ 1,637,468 | $ 1,639,378 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accrued Expenses (Details) [Line Items] | ||
Total expense | $ 181,437 | |
Sponsorship Agreements [Member] | ||
Accrued Expenses (Details) [Line Items] | ||
Total expense | $ 52,664 | |
Minimum [Member] | ||
Accrued Expenses (Details) [Line Items] | ||
Agreements term | 2 years | |
Payments for agreements | $ 103,000 | |
Maximum [Member] | ||
Accrued Expenses (Details) [Line Items] | ||
Agreements term | 4 years | |
Payments for agreements | $ 216,000 |
Accrued Expenses (Details) - Sc
Accrued Expenses (Details) - Schedule of accrued expenses - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Schedule of accrued expenses [Abstract] | ||
Sponsorship agreements | $ 287,158 | $ 234,494 |
Accrued credit card charges | 13,822 | 21,013 |
General trade payable accruals | 175,000 | 107,424 |
Other accrued expenses | 50,390 | 60,000 |
Total | $ 526,370 | $ 422,931 |
Stockholders Equity (Details)
Stockholders Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Feb. 22, 2023 | |
Stockholders Equity (Details) [Line Items] | ||
Subscription rights to purchase units | 6,366,129 | |
Warrants expiration | 5 years | |
Warrants exercise price (in Dollars per share) | $ 1.25 | |
Stockholder received subscription rights (in Dollars per share) | $ 0.5 | |
Purchase of unit | 1 | |
Price per unit (in Dollars per share) | $ 1 | |
Units subscribed | 3,143,969 | |
Gross cash proceeds (in Dollars) | $ 3,140 | |
Net proceeds received (in Dollars) | 2,700 | |
Additional gross proceeds (in Dollars) | $ 3,930 | |
Common Stock [Member] | ||
Stockholders Equity (Details) [Line Items] | ||
Shares issued | 1 | |
Common Stock [Member] | Rights Offering [Member] | ||
Stockholders Equity (Details) [Line Items] | ||
Shares issued | 3,143,969 | |
Warrant [Member] | ||
Stockholders Equity (Details) [Line Items] | ||
Shares issued | 1 | |
Warrant [Member] | Rights Offering [Member] | ||
Stockholders Equity (Details) [Line Items] | ||
Shares issued | 3,143,969 |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Equity-Based Compensation (Details) [Line Items] | ||
Unrecognized equity-based compensation expense | $ 912,917 | |
Shares of restricted stock forfeited (in Shares) | 6,666 | |
Shares of grant (in Shares) | 500,000 | |
Stock compensation expense related | $ 188,500 | $ 1,602,797 |
Stock compensation expense related to option issued amounted | $ 53,672 | 221,536 |
Share of warrants (in Shares) | 3,143,969 | |
Expected volatility | 175% | |
Minimum [Member] | ||
Equity-Based Compensation (Details) [Line Items] | ||
Risk-free interest rate | 0.02% | |
Expected term | 3 years | |
Maximum [Member] | ||
Equity-Based Compensation (Details) [Line Items] | ||
Risk-free interest rate | 4.45% | |
Expected term | 10 years | |
Restricted Stock [Member] | ||
Equity-Based Compensation (Details) [Line Items] | ||
Total unrecognized equity-based compensation expense | $ 377,000 | |
Vendor stock [Member] | ||
Equity-Based Compensation (Details) [Line Items] | ||
Stock compensation expense related | 15,500 | $ 0 |
Total unrecognized equity-based compensation expense | 1,256,200 | |
Stock Options [Member] | ||
Equity-Based Compensation (Details) [Line Items] | ||
Total unrecognized equity-based compensation expense | $ 123,163 |
Equity-Based Compensation (De_2
Equity-Based Compensation (Details) - Schedule of estimated expense for various marketing and advertising services | Mar. 31, 2023 USD ($) |
Advertising and Marketing Expense | |
2023 | $ 234,750 |
2024 | 313,000 |
2025 | 313,000 |
2026 | 52,167 |
Advertising and marketing expense, total | $ 912,917 |
Equity-Based Compensation (De_3
Equity-Based Compensation (Details) - Schedule of restricted stock activity | 3 Months Ended |
Mar. 31, 2023 shares | |
Schedule of Restricted Stock Activity [Abstract] | |
Number of Shares of Restricted Stock, Outstanding beginning balance | 6,666 |
Weighted Average Remaining Contractual Term (Years), Outstanding beginning balance | 10 months 24 days |
Number of Shares of Restricted Stock, Granted | 500,000 |
Weighted Average Remaining Contractual Term (Years), Granted | 6 months |
Number of Shares of Restricted Stock, Vested or released | |
Weighted Average Remaining Contractual Term (Years), Vested or released | |
Number of Shares of Restricted Stock, Forfeited | (6,666) |
Weighted Average Remaining Contractual Term (Years), Forfeited | |
Number of Shares of Restricted Stock, Outstanding ending balance | 500,000 |
Weighted Average Remaining Contractual Term (Years), Outstanding ending balance | 3 months 25 days |
Equity-Based Compensation (De_4
Equity-Based Compensation (Details) - Schedule of Vendor stock award activity | 3 Months Ended |
Mar. 31, 2023 shares | |
Schedule Of Vendor Stock Award Activity Abstract | |
Number of Shares of Vendor Stock Awards, Outstanding beginning balance | 1,030,000 |
Weighted Average Remaining Vesting Term (Years), Outstanding beginning balance | 2 years 3 months |
Number of Shares of Vendor Stock Awards, Granted | |
Weighted Average Remaining Vesting Term (Years), Granted | |
Number of Shares of Vendor Stock Awards, Vested | |
Weighted Average Remaining Vesting Term (Years), Vested | |
Number of Shares of Vendor Stock Awards, Expired | |
Weighted Average Remaining Vesting Term (Years), Expired | |
Number of Shares of Vendor Stock Awards, Outstanding ending balance | 1,030,000 |
Weighted Average Remaining Vesting Term (Years), Outstanding ending balance | 2 years |
Equity-Based Compensation (De_5
Equity-Based Compensation (Details) - Schedule of stock option activity - Stock Options [Member] | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Equity-Based Compensation (Details) - Schedule of stock option activity [Line Items] | |
Number of Options, Outstanding beginning balance | shares | 1,574,892 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 9.67 |
Weighted Average Remaining Contractual Term (Years) beginning balance | 8 years 11 months 8 days |
Number of Shares of Restricted Stock, Granted | shares | |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Remaining Contractual Term (Years), Granted | |
Number of Options, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Remaining Contractual Term (Years), Exercised | |
Number of Shares of Restricted Stock, Forfeited | shares | (3,333) |
Weighted Average Exercise Price, Forfeited | $ / shares | $ 2.78 |
Weighted Average Remaining Contractual Term (Years), Forfeited | |
Number of Options, Outstanding ending balance | shares | 1,571,559 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | $ 9.68 |
Weighted Average Remaining Contractual Term (Years) ending balance | 8 years 8 months 8 days |
Number of Options, Exercisable | shares | 38,703 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 3.03 |
Weighted Average Remaining Contractual Term (Years), Exercisable | 9 years 5 months 1 day |
Equity-Based Compensation (De_6
Equity-Based Compensation (Details) - Schedule of underwriter warrants to purchase common shares of the company outstanding - Warrant [Member] | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Class of Warrant or Right [Line Items] | |
Number of Warrants, Outstanding beginning balance | shares | 110,000 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 12 |
Weighted Average Remaining Contractual Term (Years), Outstanding beginning balance | 3 years 8 months 15 days |
Number of Warrants, Granted | shares | 3,143,969 |
Weighted Average Exercise Price, Granted | $ / shares | $ 1.25 |
Weighted Average Remaining Contractual Term (Years), Granted | 5 years |
Number of Warrants, Vested or released | shares | |
Weighted Average Exercise Price, Vested or released | $ / shares | |
Weighted Average Remaining Contractual Term (Years), Vested or released | |
Number of Warrants, Forfeited | shares | |
Weighted Average Exercise Price, Forfeited | $ / shares | |
Weighted Average Remaining Contractual Term (Years), Forfeited | |
Number of Warrants, Outstanding ending balance | shares | 3,253,969 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | $ 1.61 |
Weighted Average Remaining Contractual Term (Years), Outstanding ending balance | 4 years 10 months 28 days |
Supplier and Customer Concent_2
Supplier and Customer Concentration (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Supplier and Customer Concentration (Details) [Line Items] | ||
Purchases finished goods percentage | 20% | |
Number of customers | 2 | |
Percentage of wholesale revenue | 73% | 56% |
No customers accounted percentage | 56% | |
Accounts Receivable [Member] | ||
Supplier and Customer Concentration (Details) [Line Items] | ||
No customers accounted percentage | 73% |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2021 | Mar. 31, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | |
Commitments and Contingencies [Abstract] | ||||
Ongoing payments | $ 300,000 | |||
Initial service term | 5 years | |||
Investor options to terminate agreements | $ 5,000,000 | |||
Interest expense | $ 120,000 | $ 20,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of estimated expense | Mar. 31, 2023 USD ($) |
Commitments and Contingencies (Details) - Schedule of estimated expense [Line Items] | |
2023 | $ 319,761 |
2024 | 480,000 |
2025 | 480,000 |
2026 | 80,000 |
Total | 1,400,000 |
Sponsorship Agreement [Member] | |
Commitments and Contingencies (Details) - Schedule of estimated expense [Line Items] | |
2023 | 360,000 |
2024 | 160,147 |
Total | $ 479,908 |
Legal Proceedings (Details)
Legal Proceedings (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) shares | |
Legal Proceedings (Details) [Line Items] | |
Attorney legal fees | $ | $ 1,250,000 |
Cash payment from insurance coverage | $ | 805,000 |
Cash payment | $ | $ 400,000 |
Common stock shares | shares | 500,000 |
Common stock shares forfeiture | shares | 250,000 |
Ms. Anderson [Member] | |
Legal Proceedings (Details) [Line Items] | |
Common stock shares | shares | 500,000 |
Subsequent Events (Details)
Subsequent Events (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Subsequent Events (Details) [Line Items] | |
Annual base salary | $ 450,000 |
Salary percentage | 50% |
Salary paid in cash | $ 225,000 |
Cash salary | $ 225,000 |
Shares of restricted stock (in Shares) | shares | 463,917 |
Stock option shares (in Shares) | shares | 1,000,000 |
Exercise price (in Dollars per share) | $ / shares | $ 1 |
Shares issued (in Shares) | shares | 250,000 |
Target payout amount | $ 154,726 |
Mr. Cockroft’s [Member] | |
Subsequent Events (Details) [Line Items] | |
Salary percentage | 50% |