10q10k10q10k.net

What changed in SPLASH BEVERAGE GROUP, INC.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of SPLASH BEVERAGE GROUP, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+160 added−138 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-31)

Top changes in SPLASH BEVERAGE GROUP, INC.'s 2023 10-K

160 paragraphs added · 138 removed · 111 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

36 edited+13 added−4 removed11 unchanged
Biggest changeIt is our first entry point into the growing e-commerce channel. The division sells beverages online through www.qplash.com , and third-party storefronts such as Amazon.com. Inside of the division, there are two primary customer groups: business to business retailers, which in turn offer the products to their customers, and business to consumer, selling direct to end users.
Biggest changeThe rights to utilize this packaging for multiple categories were conveyed to SBG in conjunction with the distribution rights. 4 E-commerce “Qplash” is a wholly owned division of Splash. It is our first entry point into the growing e-commerce channel. The division sells beverages online through www.qplash.com , and third-party storefronts such as Amazon.com.
Splash executed a reverse merger with a fully reporting, public entity called Canfield Medical Supply, Inc. and became a wholly-owned subsidiary of Canfield Medical Supply Inc. on March 31, 2020. At the time of the merger Canfield state of incorporation was Colorado. At the time of the merger Canfield’s common stock was quoted on the OTCQB.
Splash executed a reverse merger with a fully reporting, public entity called Canfield Medical Supply, Inc. and became a wholly-owned subsidiary of Canfield Medical Supply Inc. on March 31, 2020. At the time of the merger Canfield’s state of incorporation was Colorado. At the time of the merger Canfield’s common stock was quoted on the OTCQB.
As part of the alliance, Splash commits to investing 2% of sales in marketing to the TapouT Performance Brand. TapouT provides marketing collateral for advertising and promotion and has influential relationships with select celebrity and athletic talent. TapouT agrees to use reasonable efforts to request its retained celebrities and/or athletes be present at autograph signings, tradeshows and other similar events.
As part of the alliance, Splash commits to investing 2% of sales in marketing to the TapouT Performance Brand. TapouT provides marketing collateral for advertising and promotion and has influential relationships with select celebrities and athletic talent. TapouT agrees to use reasonable efforts to request its retained celebrities and/or athletes be present at autograph signings, tradeshows and other similar events.
The License Agreement will expire on December 31, 2025 with a renewal option through December 31, 2028 at which time will be reviewed and renegotiated if necessary. We have the right to use the TapouT brand to market, advertise and promote for sale our TapouT beverages and branded products.
The License Agreement will expire on December 31, 2025, with a renewal option through December 31, 2028 at which time it will be reviewed and renegotiated if necessary. We have the right to use the TapouT brand to market, advertise and promote for sale our TapouT beverages and branded products.
They are exclusively formulated with GRAS (FDA Designation “Generally Regarded As Safe”) ingredients versus controversial ingredients often used in many competitive products. TapouT Performance Beverages are all natural with a highly innovative proprietary blends designed to enhance physical and or mental performance.
They are exclusively formulated with GRAS (FDA Designation “Generally Regarded as Safe”) ingredients versus controversial ingredients often used in many competitive products. TapouT Performance Beverages are all natural with highly innovative proprietary blends designed to enhance physical and or mental performance.
The Loan and Security Agreement provided for a revenue-based credit facility of $1,578,237 (the “Gross Amount”) with the Lender (the “Credit Facility”). 5 Copa di Vino Wine Group, Inc. Copa Di Vino is the leading producer of premium wine by the glass in the United States.
The Loan and Security Agreement provided for a revenue-based credit facility of $1,578,237 (the “Gross Amount”) with the Lender (the “Credit Facility”). Copa DI Vino ® Wine Group, Inc. Copa DI Vino ® is the leading producer of premium wine by the glass in the United States.
TapouT, formally associated with the UFC and mixed martial arts has been producing branded clothing and light equipment for over 23 years and has a high level of aided and unaided brand awareness.
TapouT, formally associated with the UFC and mixed martial arts has been producing branded clothing and light exercise equipment for over 23 years and has a high level of aided and unaided brand awareness.
Tech-enabled business models are thriving and direct to consumer, office or home solutions are projected to continue to gain traction as beverage alcohol regulations evolve. A core strategy for us is to build onto the early success we’re seeing with the Qplash online platform, our consumer-packaged goods retail division and our first entry point into the growing e-commerce channel.
Tech-enabled business models are thriving and direct to consumer, office and home solutions are projected to continue to gain traction as beverage alcohol regulations evolve. A core strategy for us is to optimize the early success we’re seeing with the Qplash online platform, our consumer-packaged goods retail division and our first entry point into the growing e-commerce channel.
This model spreads our risk over several brands, contributes to our economies of scale, and improves our relationship with distributors and reduces the overall cost of infrastructure. The Company also believe the distribution landscape in the beverage category is changing rapidly.
This model spreads our risk over several brands, contributes to our economies of scale, improves our relationship with distributors and reduces the overall cost of infrastructure. 2 The Company also believes the distribution landscape in the beverage category is changing rapidly.
Item 1. Business. Company Overview Splash is a portfolio company managing multiple brands across several growth segments within the consumer beverage industry. Splash has built organizational capabilities and an infrastructure enabling it to incubate and/or acquire brands with the intention of efficiently accelerating them to higher volumes.
Item 1. Business. Company Overview Splash is a portfolio company managing multiple brands across several growth segments within the consumer beverage industry. Splash has built organizational capabilities and an infrastructure enabling it to incubate and/or acquire brands with the intention of efficiently accelerating them to higher volume and sales revenue.
The Senior Vice President of Sales, James Allred, has 25+ years’ experience in the beverage industry predominately with Anheuser-Busch.
Our Senior Vice President of Sales, James Allred, has over 25 years’ experience in the beverage industry, predominately with Anheuser-Busch.
Copa di Vino Wine Group, Inc. and Related Financing On December 24, 2020, the Company entered into an Asset Purchase Agreement with CdV, pursuant to which the Company purchased certain assets and assumed certain liabilities that comprise the CdV business for a total purchase price of $5,980,000, payable in the combination of $2,000,000 in cash, a $2,000,000 convertible promissory note to CdV and a variable number of shares of the Company’s common stock based on an attainment of revenue hurdles.
(CdV) and Related Financing On December 24, 2020, the Company entered into an Asset Purchase Agreement with CdV, pursuant to which the Company purchased certain assets and assumed certain liabilities that comprise the CdV business for a total purchase price of $5,980,000, payable in the combination of $2,000,000 in cash, a $2,000,000 convertible promissory note to CdV and a variable number of shares of the Company’s common stock based on an attainment of revenue hurdles.
Our Competitive Strengths We believe the following competitive strengths contribute to Company’s success and differentiate us from our competitors: ● An established distribution network through global sales channels; ● A hybrid distribution model that leverages multiple routes to market, including national chains, independent local markets and regional chains, and specialty food and C-Stores ● Long-term relationships with retailers and the establishment of chains; ● Premium customer service; ● Dynamic and sustainable product offerings of natural quality and freshness with health benefits; ● A highly experienced management team; ● Strategically selected, dedicated sales professionals; ● Qplash, our e-commerce platform, which provides us an integrated distribution platform for our non-alcoholic brands; ● Ability to execute and distribute across many geographies, on behalf of our licensed brand portfolio; ● Strong brand awareness through partnerships and acquisitions of brands with pre-existing brand awareness or viewed as truly innovative; and ● Celebrity and professional athlete endorsement of our brands. 7 Manufacturing and Co-packing We are responsible for the manufacturing of Copa di Vino, TapouT Performance and SALT.
Our Competitive Strengths We believe the following competitive strengths contribute to the Company’s success and differentiate us from our competitors: ● An established distribution network through global sales channels; ● A hybrid distribution model that leverages multiple routes to market, including national chains, independent local markets, regional chains, and specialty food and C-Stores ● Long-term relationships with retailers and the establishment of chains; ● Premium customer service; ● Dynamic and sustainable product offerings of natural quality and freshness with health benefits; ● A highly experienced management team; ● Strategically selected, dedicated sales professionals; ● Qplash, our e-commerce platform, which provides us an integrated distribution platform for our non-alcoholic brands; ● Ability to execute and distribute across many geographies on behalf of our licensed brand portfolio; ● Strong brand awareness through partnerships and acquisitions of brands with pre-existing brand awareness, or viewed as truly innovative; and ● Celebrity and professional athlete endorsement of our brands.
Products We currently produce, distribute and market SALT Naturally Flavored Tequila (“SALT”), a 100% agave 80 proof line of flavored tequilas, “TapouT Performance,” a line of performance beverages that complete in the hydration and energy categories, Copa Di Vino single serve wine by the glass and import Pulpoloco Sangria in 3 flavors. 3 The following is a description of these products.
Products We currently produce, distribute and market SALT Naturally Flavored Tequila (“SALT”), a 100% agave 80 proof line of flavored tequilas, “TapouT Performance,” a line of performance beverages that complete in the hydration and energy categories, Copa DI Vino ® single serve wine by the glass, and also import Pulpoloco Sangria in 3 flavors.
Our management team has over 120 years of combined experience in the beverage industry, including decades of successful brand introductions by our management team (Gallo, Red Bull, Bacardi, Diageo, Sparkling Ice, Jones Soda, FUZE Beverage, NOS Energy, SoBe Beverages, Muscle Milk, Marley Beverages), we believe our ability to break through the distribution and retail bottlenecks makes us an attractive joint venture partner to many new brand owners.
Our management team has over 120 years of combined experience in the beverage industry, including decades of successful brand introductions by our management team (Gallo, Red Bull, Bacardi, Diageo, Sparkling Ice, Coca-Cola, FUZE Beverage, NOS Energy, PepsiCo, SoBe Beverages, AB InBev, Muscle Milk, Marley Beverages), we believe our ability to break through the distribution and retail bottlenecks makes us an attractive joint venture partner to many new brand owners.
TapouT Performance Isotonic Sports Drinks We will produce, market, sell and distribute the following sports beverages under the brand name TapouT: ● TapouT Performance: ● TapouT Energy: Launching in 2023 4 TapouT Performance Beverages are a line of unique advanced performance beverages containing ingredients known for various functional benefits including, focus, cognition, energy, recuperative and cell regeneration which promotes better absorption of nutrients, increase hydration and cellular recovery.
TapouT Performance Isotonic Sports Drinks We produce, market, sell and distribute the following sports beverages under the brand name TapouT: ● TapouT Performance ● TapouT Energy 3 TapouT Performance Beverages are a line of unique advanced performance beverages containing ingredients known for various functional benefits including, focus, cognition, energy, recuperative and cell regeneration which promotes better absorption of nutrients, increase hydration and cellular recovery.
This philosophy is applied regardless of whether the brand is 100% owned or a joint venture.
We apply this philosophy regardless of whether the brand is 100% owned or a joint venture.
Our principal offices are located at 1314 E. Las Olas Blvd, Suite 221, Fort Lauderdale, Florida 33301. Our main telephone number is (954) 745-5815. Our website address is www.splashbeveragegroup.com .
Our principal offices are located at 1314 E. Las Olas Blvd, Suite 221, Fort Lauderdale, Florida 33301. Our website address is www.splashbeveragegroup.com .
To address this opportunity Splash continues to shape its operating model to be vertically integrated building an e-commerce platform, Qplash, which purchases local and regional brands for developing a direct line of sales to small retail stores.
Recognizing this opportunity Splash continues to shape its operating model to be vertically integrated with our e-commerce platform, Qplash, which purchases local and regional brands for developing a direct line of sales to boutique retail stores and consumers.
Depending on the product, the third-party bottlers or packers add filtered water and/or other ingredients (including dietary ingredients) for the manufacture and packaging of the finished products into our approved containers in accordance with our formulas.
In some cases, certain common supplies may be purchased by our various third-party bottlers and co-packers. Depending on the product, the third-party bottlers or packers add filtered water and/or other ingredients (including dietary ingredients) for the manufacture and packaging of the finished products into our approved containers in accordance with our formulas.
For acquisition or joint venture consideration, we prefer to work with brands that already have one or more of the following in place: ● Some level of preexisting brand awareness ● Regional presence that can be expanded ● Licensing an existing brand name (TapouT for example) ● Add to an underdeveloped and/or growing category capitalizing on consumer trends ● Innovation to an existing attractive category (such as flavored tequila) ● A near term clear path to profitability We believe this model provides us with two paths to success: one, developing our wholly owned core brands and two, the ability to tap into high growth, early-stage brands ready to scale.
For acquisition or joint venture consideration, we prefer to work with brands that already have one or more of the following in place: ● Some level of preexisting brand awareness. ● Regional presence that can be expanded. ● Licensing an existing brand name (TapouT for example). ● Add to an underdeveloped and/or growing category capitalizing on consumer trends. ● Innovation to an existing attractive category (such as flavored tequila). ● A near term clear path to profitability.
We have not incorporated by reference into this Annual Report on Form 10-K the information that can be assessed through our website and you should not consider it to be part of this Annual Report on Form 10-K.
We have not incorporated by reference into this Annual Report on Form 10-K the information that can be assessed through our website and you should not consider it to be part of this Annual Report on Form 10-K. Available Information We file annual, quarterly, and current reports, proxy statements and other information with the U.S. Securities Exchange Commission (the “SEC”).
The Copa di Vino product line is bottled at our manufacturing facility in The Dalles, Oregon. Pulpoloco is imported from Spain as a finished product. Although we are responsible for manufacturing TapouT Performance and SALT, we do not directly manufacture these products, but instead outsource such manufacturing to third party bottlers and contract packers.
Manufacturing and Co-packing We are responsible for the manufacturing of Copa DI Vino ® , TapouT Performance and SALT. The Copa DI Vino ® product line is bottled at our manufacturing facility in The Dalles, Oregon. Pulpoloco is imported from Spain as a finished product.
Listing on the NYSE American Our common stock and warrants are listed on the NYSE American exchange under the ticker symbols “SBEV” and “SBEV WT,” respectively. 8 Corporate Information Splash was originally incorporated in the State of Nevada under the name TapouT Beverages, Inc. for the purpose of acquiring the rights under a license agreement with TapouT, LLC (Authentic Brands Group) for the right to use the TapouT brand in connection with manufacturing and selling certain beverages.
This note bears 0% interest. 6 Corporate Information Splash was originally incorporated in the State of Nevada under the name TapouT Beverages, Inc. for the purpose of acquiring the rights under a license agreement with TapouT, LLC (Authentic Brands Group) for the right to use the TapouT brand in connection with manufacturing and selling certain beverages.
The Company leadership understand the importance of infusing beverage brands with strong pop culture and lifestyle elements which drives trial, belief and, most importantly, repeat purchases. 2 The management team led by Robert Nistico has over 28 years of experience in all levels of the three-tier distribution system used in the beverage industry working on brands such as Red Bull and companies such as Gallo Winery and RNCC Texas.
Our management team led by Robert Nistico has over 28 years of experience in all levels of the three-tier distribution system used in the beverage industry working with brands such as Red Bull and companies such as Gallo Winery and Republic National Distributing Company (RNDC Texas).
SALT is currently being distributed by Republic National Distribution Co., various Anheuser-Busch & Miller-Coors distributorships, and other distributors in multiple U.S. states. Additionally, SALT is for sale in Mexico. Several South American countries are expected to launch SALT during 2023. SALT is a business venture between the Company and SALT USA, LLC.
SALT is currently being distributed by various Anheuser-Busch & Miller-Coors distributorships, and other distributors in multiple U.S. states. Additionally, SALT is for sale in Mexico. SALT has also launched in Guatemala and Japan and efforts continue to grow the brand’s international presence. SALT is a business venture between the Company and SALT USA, LLC.
Distribution We operate within what is referred to as a “Three Tier Distribution System” where manufacturers do not typically sell directly to retailers, but instead contract for local and regional distribution with independent distributors. These distributors typically have geographic rights to distribute major beverage brands and call on every store in a given area such as major cities or regions.
Distribution For our beverage-alcohol products, we operate within what is referred to as a “Three Tier Distribution System” where manufacturers are not permitted to sell directly to retailers, but instead contract for local and regional distribution with independent distributors.
We purchase concentrates, flavors, dietary ingredients, cans, bottles, caps, labels, and other components and ingredients for our beverage products from our suppliers, which are delivered to our manufacturing operations and various third-party bottlers and co-packers. In some cases, certain common supplies may be purchased by our various third-party bottlers and co-packers.
Our co-packaging arrangements are terminable upon request and do not obligate us to produce any minimum quantities of products within specified periods. 5 We purchase concentrates, flavors, dietary ingredients, cans, bottles, caps, labels, and other components and ingredients for our beverage products from our suppliers, which are delivered to our manufacturing operations and various third-party bottlers and co-packers.
Splash has license rights to the TapouT Performance brand in North America (Including US Territories and Military Bases), United Kingdom, Brazil, South Africa, Scandinavia, Peru, Colombia, Chile and Guatemala. In addition, Splash has a joint venture with SALT Naturally Flavored Tequila, Copa Di Vino wines and Pulpoloco, sangrias that comes in a biodegradable can.
Splash has license rights to the TapouT Performance brand in North America (Including US Territories and Military Bases), United Kingdom, Brazil, South Africa, Scandinavia, Peru, Colombia, Chile and Guatemala. 1 In December 2020, Splash Beverage Group Inc. purchased the key assets of the Copa DI Vino ® single serve wine company.
We have not experienced any work stoppages and consider our relations with our employees to be good.
Employees We have 32 full-time employees, including non-officer employees and our executive officers. None of our employees are represented by a labor union. We have not experienced any work stoppages and consider our relations with our employees to be good.
The Copa-di-Vino product line is highly innovative as a ready to drink wine glass capable to go anywhere without the need for a bottle, corkscrew or glass. Through our acquisition of Copa di Vino Corporation, we are now able to offer nine varietals of wine: Pinot Grigio, Riesling, Merlot, Chardonnay, White Zinfandel, Moscato, Red Blend, Sauvignon Blanc and Cabernet Sauvignon.
Through our acquisition of Copa DI Vino ® Corporation, we are now able to offer nine varietals of wine: Pinot Grigio, Riesling, Merlot, Chardonnay, White Zinfandel, Moscato, Red Blend, Sauvignon Blanc and Cabernet Sauvignon. In addition to its wine varietals, Copa DI Vino ® also procures Pulpoloco, a sangria which is encased in an eco-friendly fiber based can from Spain.
Our management team has extensive experience working within this channel and believes that we will be successful in building a strong network of these distributors. In addition to working with these independent distributors, we also have distribution arrangements with national retail accounts to distribute some of our products directly through their warehouse operations.
In addition to working with these independent distributors, we also have distribution arrangements with national retail accounts to distribute some of our products directly through their warehouse operations. Most notably, SBG executed a distribution agreement with AB-InBev, for distribution with their own operations, AB ONE. This provides SBG very effective distribution capabilities.
The President & CMO, Bill Meissner, has led major beverage brands as Sparkling Ice, Fuze, Sweet Leaf Tea and Jones Soda. The CFO, Ron Wall, has over 25 years of experience in the alcohol beverage industry with Diageo and William Grant & Sons.
Our President & CMO, Bill Meissner, has led major beverage brands including Sparkling Ice, Fuze, Sweet Leaf Tea and Jones Soda. Our CFO, Stacy McLaughlin, has over 15 years of experience in public company accounting and finance, with an emphasis on reporting, fundraising and mergers and acquisitions.
Our TapouT Performance and Salt products are manufactured in the United States and Mexico under separate arrangements with each party. Our co-packaging arrangements are terminable upon request and do not obligate us to produce any minimum quantities of products within specified periods.
Although we are responsible for manufacturing TapouT Performance and SALT, we do not directly manufacture these products, but instead outsource such manufacturing to third party bottlers and contract packers and distillers. Our TapouT Performance and SALT products are manufactured in the United States and Mexico, respectively under separate arrangements with each party.
This platform allows us to significantly reduce development expense while simultaneously increasing efficiencies for all brands in our portfolio.
We believe this platform model provides us with two paths to success: one, developing our wholly owned core brands and two, the ability to tap into high growth, early-stage brands ready to scale. This platform allows us to limit risk, and significantly reduce development expenses while simultaneously increasing efficiencies for all brands in our portfolio.
This program allows businesses to control inventory, order with payment terms, and offer the convenience of delivery directly to each store. Currently Qplash offers over 1,500 listings and have warehouses that ship from both California and Pennsylvania. Discontinued Business - Canfield Medical Supply, Inc. Canfield Medical Supply, Inc.
Currently Qplash offers over 1,500 listings and has warehouses that ship from both California and Pennsylvania.
Removed
In addition to its wine varietals, Copa di Vino also procures Pulpoloco, a sangria which is encased in an eco-friendly fiber based can from Spain. The rights to utilize this packaging for multiple categories were conveyed to SBG in conjunction with the distribution rights. 6 E-commerce “Qplash” is a wholly owned division of Splash.
Added
The operations and IP for Copa DI Vino ® are wholly owned by Splash and incorporated in the state of Nevada under the name Copa DI Vino ® Wine Group Inc. In addition, Splash has a joint venture with SALT Naturally Flavored Tequila and Pulpoloco sangria that comes in a biodegradable can.
Removed
(“CMS”) is a provider of home medical equipment, supplies and services (which relate to the equipment sales) in Ohio’s Mahoning Valley, Western Pennsylvania and Northern West Virginia, with an emphasis on providing for patients with mobility-related limitations who have had strokes, hip or knee replacements, and other surgeries after they are discharged from a hospital or rehab center.
Added
The Company’s leadership understands the importance of infusing beverage brands with strong popular culture and lifestyle elements that drive trial, belief and, most importantly, repeat purchases.
Removed
CMS is a legacy segment of the business and in December 2020, management discontinued operations and the business was sold in the second Quarter of 2022.
Added
The following is a description of these products.
Removed
Most notably, SBG executed a distribution agreement with AB-InBev, for distribution with their owned operations, AB ONE. This provides SBG very effective distribution capabilities. Employees We have 40 full-time employees, including non-officer employees and our executive officers. None of our employees are represented by a labor union.
Added
The Copa DI Vino ® product line is highly innovative as a ready to drink wine glass capable of going anywhere without the need for a bottle, corkscrew or glass. The company also has a growing keg wine business for on-premises restaurants and bars.
Added
Inside of the division, there are two primary customer groups: business to business retailers, which in turn offer the products to their customers, and business to consumer, selling direct to end users. The business-to-business program allows businesses to control inventory, order with payment terms, and offer the convenience of delivery directly to each store.
Added
These distributors typically have geographic rights to distribute major beverage brands and call on every store in a given area such as major cities or regions. Our management team has extensive experience working within this channel and believes that we will be successful in building a strong network of these distributors.
Added
Intellectual Property During the fiscal year ended December 31, 2023, we were granted a trademark for Copa DI Vino ® . The United States Patent and Trademark Office issued the trademark on March 12, 2024, providing our company exclusive rights to use the trademark in connection with the product categories specified in this Form 10-K.
Added
Listing on the NYSE American Our common stock and warrants are listed on the NYSE American exchange under the ticker symbols “SBEV” and “SBEV WT,” respectively. Recent Developments In January 2024, the Company entered into a convertible note with an individual in the amount of $250,000.
Added
The note has an eighteen-month term, accrues interest at 12% and is convertible into shares of common stock of the Company at $0.50 per share, which also includes 200% warrants at $0.25 In January 2024, the Company entered into a commercial loan in the amount of $500,000.
Added
The total cost of the loan is $250,000 and is paid in weekly increments of 6.97% of the current receivable balance. In February 2024, the Company entered into a convertible note with an individual in the amount of $150,000.
Added
The note has an eighteen-month term, accrues interest at 12% and is convertible into shares of common stock of the Company at $0.40 per share, which also includes 250% warrants at $0.25. In March 2024, the Company received a $109,000 cash advance from our chief executive officer, resulting in a related party payable.
Added
These filings are available to the public through the SEC’s website at http://www.sec.gov.
Added
All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included unless otherwise specified, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

54 edited+19 added−21 removed121 unchanged
Biggest changeIf we are not successful in the revitalization and growth of our brand and product offerings, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers. Any failure of our brand to maintain or increase acceptance or market penetration would likely have a material adverse effect on our revenues and financial results.
Biggest changeIn addition, our business depends on acceptance by our independent distributors and retailers of our brands as beverage brands that have the potential to provide incremental sales growth. If we are not successful in the revitalization and growth of our brand and product offerings, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers.
These risks include: ● Unfavorable economic conditions and related low consumer confidence, high unemployment, weak credit or capital markets, sovereign debt defaults, sequestrations, austerity measures, higher interest rates, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations; ● Changes in laws, regulations, or policies – especially those that affect the production, importation, marketing, sale, or consumption of our beverage alcohol products; 20 ● Tax rate changes (including excise, sales, tariffs, duties, corporate, individual income, dividends, capital gains), or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur; ● Dependence upon the continued growth of brand names; ● Changes in consumer preferences, consumption, or purchase patterns – particularly away from tequila, and our ability to anticipate and react to them; bar, restaurant, travel, or other on premise declines; ● Unfavorable consumer reaction to our products, package changes, product reformulations, or other product innovation; ● Decline in the social acceptability of beverage alcohol products in our markets; ● Production facility or supply chain disruption; ● Imprecision in supply/demand forecasting; ● Higher costs, lower quality, or unavailability of energy, input materials, labor, or finished goods; ● Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher implementation related or fixed costs; ● Inventory fluctuations in our products by distributors, wholesalers, or retailers; Competitors’ consolidation or other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets; ● Insufficient protection of our intellectual property rights; ● Product recalls or other product liability claims; product counterfeiting, tampering, or product quality issues; ● Significant legal disputes and proceedings; government investigations (particularly of industry or company business, trade or marketing practices); ● Failure or breach of key information technology systems; ● Negative publicity related to our company, brands, marketing, personnel, operations, business performance or prospects; and ● Business disruption, decline, or costs related to organizational changes, reductions in workforce, or other cost-cutting measures, or our failure to attract or retain key executive or employee talent.
These risks include: ● Unfavorable economic conditions and related low consumer confidence, high unemployment, weak credit or capital markets, sovereign debt defaults, sequestrations, austerity measures, higher interest rates, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations; ● Changes in laws, regulations, or policies – especially those that affect the production, importation, marketing, sale, or consumption of our beverage alcohol products; 17 ● Tax rate changes (including excise, sales, tariffs, duties, corporate, individual income, dividends, capital gains), or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur; ● Dependence upon the continued growth of brand names; ● Changes in consumer preferences, consumption, or purchase patterns – particularly away from tequila, and our ability to anticipate and react to them; bar, restaurant, travel, or other on-premise declines; ● Unfavorable consumer reaction to our products, package changes, product reformulations, or other product innovation; ● Decline in the social acceptability of beverage alcohol products in our markets; ● Production facility or supply chain disruption; ● Imprecision in supply/demand forecasting; ● Higher costs, lower quality, or unavailability of energy, input materials, labor, or finished goods; ● Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher implementation related or fixed costs; ● Inventory fluctuations in our products by distributors, wholesalers, or retailers; Competitors’ consolidation or other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets; ● Insufficient protection of our intellectual property rights; ● Product recalls or other product liability claims; product counterfeiting, tampering, or product quality issues; ● Significant legal disputes and proceedings; government investigations (particularly of industry or company business, trade or marketing practices); ● Failure or breach of key information technology systems; ● Negative publicity related to our company, brands, marketing, personnel, operations, business performance or prospects; and ● Business disruption, decline, or costs related to organizational changes, reductions in workforce, or other cost-cutting measures, or our failure to attract or retain key executive or employee talent.
An increase in taxation or in import or excise duties could also significantly harm our sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol. We face substantial competition in the alcoholic beverage industry, and we may not be able to effectively compete.
An increase in taxation or in import or excise duties could also significantly harm our sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol. We face substantial competition in the alcoholic and non-alcoholic beverage industry, and we may not be able to effectively compete.
Pricing, (including price promotions, discounting, couponing, and free goods), marketing, new product introductions, entry into our distribution networks, and other competitive behavior by our competitors could adversely affect our sales margins, and profitability. Our business operations may be adversely affected by social, political and economic conditions affecting market risks and the demand for and pricing of our tequila products.
Pricing, (including price promotions, discounting, couponing, and free goods), marketing, new product introductions, entry into our distribution networks, and other competitive behavior by our competitors could adversely affect our sales margins, and profitability. Our business operations may be adversely affected by social, political and economic conditions affecting market risks and the demand for and pricing of our products.
The failure of controls by design deficiencies or absence of adequate controls could result in a material adverse effect on our business and financial results, which could also negatively impact our stock price and investor confidence. 19 We are dependent on a distiller in Mexico, to provide us with our finished SALT tequila product.
The failure of controls by design deficiencies or absence of adequate controls could result in a material adverse effect on our business and financial results, which could also negatively impact our stock price and investor confidence. We are dependent on a distiller in Mexico to provide us with our finished SALT tequila product.
Furthermore, such third-parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities. Our ability to maintain and expand our distribution network and attract additional distributors, retailers and brokers will depend on a number of factors, some of which are outside our control.
Furthermore, such third-parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities. 10 Our ability to maintain and expand our distribution network and attract additional distributors, retailers and brokers will depend on a number of factors, some of which are outside our control.
If we are unable to effectively operate or manage the risks associated with operating in international markets, our business, financial condition or results of operations could be adversely affected. 17 Water scarcity and poor quality could negatively impact our costs and capacity.
If we are unable to effectively operate or manage the risks associated with operating in international markets, our business, financial condition or results of operations could be adversely affected. Water scarcity and poor quality could negatively impact our costs and capacity.
Our ability to increase sales will depend primarily on success in expanding our current markets, improving our distribution base, entering into Direct-To-Retail (DTR) arrangements with national accounts, and introducing new brands, products or product extensions to the market.
Our ability to increase sales will depend primarily on success in expanding our current markets, improving our distribution base, entering into Direct-To-Retail (DTR) arrangements with national accounts, 8 and introducing new brands, products or product extensions to the market.
Sales of our products may be adversely affected by the negative publicity associated with these issues... If we do not adequately anticipate or adjust to respond to these and other changes in consumer preferences, we may not be able to maintain and grow our brand image and our sales may be adversely affected.
Sales of our products may be adversely affected by negative publicity associated with these issues. If we do not adequately anticipate or adjust to respond to these and other changes in consumer preferences, we may not be able to maintain and grow our brand image and our sales may be adversely affected.
In addition, our agreements with our contract manufacturers are terminable at any time, and any such termination could disrupt our ability to deliver products to our customers. The volatility of energy and increased regulations may have an adverse impact on our gross margin.
In addition, our agreements with our contract manufacturers are terminable at any time, and any such termination could disrupt our ability to deliver products to our customers. 11 The volatility of energy and increased regulations may have an adverse impact on our gross margin.
Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks, copyrights, licenses and trade secrets, could result in the expenditure of significant financial and managerial resources.
Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks, 12 copyrights, licenses and trade secrets, could result in the expenditure of significant financial and managerial resources.
Unauthorized access or improper disclosure of personal data in violation of personal data protection or privacy laws could harm our reputation, cause loss of consumer confidence, subject us to regulatory enforcement actions (including fines), and result in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines and/or criminal prosecution, all of which could negatively affect our business and operating results. 18 If our third-party service providers and business partners do not satisfactorily fulfill their commitments and responsibilities, our financial results could suffer.
Unauthorized access or improper disclosure of personal data in violation of personal data protection or privacy laws could harm our reputation, cause loss of consumer confidence, subject us to regulatory enforcement actions (including fines), and result in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines and/or criminal prosecution, all of which could negatively affect our business and operating results. 15 If our third-party service providers and business partners do not satisfactorily fulfill their commitments and responsibilities, our financial results could suffer.
If a component found in one of our products is added to the list, or if the increasing sensitivity of detection methodology that may become available under this law and related regulations as they currently exist, or as they may be amended, results in the detection of an infinitesimal quantity of a listed substance in one of our beverages produced for sale in California, the resulting warning requirements or adverse publicity could affect our sales. 16 Litigation or legal could expose us to significant liabilities and damage our reputation.
If a component found in one of our products is added to the list, or if the increasing sensitivity of detection methodology that may become available under this law and related regulations as they currently exist, or as they may be amended, results in the detection of an infinitesimal quantity of a listed substance in one of our beverages produced for sale in California, the resulting warning requirements or adverse publicity could affect our sales. 13 Litigation or legal could expose us to significant liabilities and damage our reputation.
Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through sales of our products, financings or from other sources or transactions, we will exhaust our resources and will be unable to continue operations.
Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through sales of our products, financing or from other sources or transactions, we will exhaust our resources and will be unable to continue operations.
Some of these competitors are placing severe pressure on independent distributors not to carry competitive brands such as ours. We also compete with regional beverage producers and “private label” hydration suppliers. 12 Increased competitor consolidations, market-place competition, particularly among branded beverage products, and competitive product and pricing pressures could impact our earnings, market share and volume growth.
Some of these competitors are placing severe pressure on independent distributors not to carry competitive brands such as ours. We also compete with regional beverage producers and “private label” brands. Increased competitor consolidations, market-place competition, particularly among branded beverage products, and competitive product and pricing pressures could impact our earnings, market share and volume growth.
In order to be successful, we believe that we must, among other things: ● increase the sales volume and gross margins for our products; ● maintain efficiencies in operations; ● manage our operating expenses to sufficiently support operating activities; ● maintain fixed costs at or near current levels; and ● avoid significant increases in variable costs relating to production, marketing and distribution.
In order to be successful, we believe that we must, among other things: ● increase the sales volume and gross margins for our products and those that we will acquire; ● maintain efficiencies in operations; ● manage our operating expenses to sufficiently support operating activities; ● maintain fixed costs at or near current levels; and ● avoid significant increases in variable costs relating to production, marketing and distribution.
We may be required in the future to record a significant charge to earnings if our goodwill or intangible assets become impaired. Under United States Generally Accepted Accounting Principles (“U.S. GAAP”), we are required to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
We may be required in the future to record a significant charge to earnings if our goodwill or intangible assets become impaired. Under United States Generally Accepted Accounting Principles (“U.S. GAAP”), we are required to review our intangible assets for impairment at least annually or when events or changes in circumstances indicate the carrying value may not be recoverable.
Our issuance of additional common stock, convertible securities, options and warrants could affect the rights of our stockholders, result in a reduction in the overall percentage holdings of our stockholders, could put downward pressure on the market price of our common stock, could result in adjustments to conversion and exercise prices of outstanding notes and warrants, and could obligate us to issue additional common stock to certain of our stockholders. 23 Item 1B.
Our issuance of additional common stock, convertible securities, options and warrants could affect the rights of our stockholders, result in a reduction in the overall percentage holdings of our stockholders, could put downward pressure on the market price of our common stock, could result in adjustments to conversion and exercise prices of outstanding notes and warrants, and could obligate us to issue additional common stock to certain of our stockholders.
Volatility in the price or availability of the inputs we depend on, including raw materials, packaging, energy and labor, could adversely impact our financial results. The principal raw materials we use include glass bottles, aluminum cans, labels and cardboard cartons, flavorings and sweeteners. These ingredient costs are subject to fluctuation.
Volatility in the price or availability of the inputs we depend on, including raw materials, packaging, energy and labor, could adversely impact our financial results. The principal raw materials we use include glass bottles, aluminum cans, PET, fiber-board, labels and cardboard cartons, flavorings and sweeteners. These component and ingredient costs are subject to fluctuation.
Substantial increases in the prices of our ingredients, raw materials and packaging materials, to the extent that they cannot be recouped through increases in the prices of finished beverage products, would increase our operating costs and could reduce our profitability.
If there were to be substantial increases in the prices of our ingredients, raw materials and packaging materials, to the extent that they cannot be recouped through increases in the prices of finished beverage products, would increase our operating costs and could reduce our profitability.
As the demand for water continues to increase around the world, and as water becomes scarcer and the quality of available water deteriorates, we may incur higher costs or face capacity constraints and the possibility of reputational damage, which could adversely affect our profitability or net operating revenues in the long run.
As the demand for water continues to increase around the world, and as water becomes scarcer and the quality of available water deteriorates, we may incur higher costs or face capacity constraints and the possibility of reputational damage, which could adversely affect our profitability or net operating revenues in the long run. 14 Fluctuations in quantity and quality of grape supply could adversely affect our business.
We incurred a net loss of $21.7 million for the year ended December 31, 2 022 . Our accumulated deficit increased to $112.3 million as of December 31, 2 022 , compared to the prior year’s deficit of $90.6 million. We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our financial condition.
We incurred a net loss of $21.0 million for the year ended December 31, 2 023 . Our accumulated deficit increased to $133.3 million as of December 31, 2 023 , compared to the prior year’s deficit of $112.3 million. We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our financial condition.
We may be required in the future to record a significant charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. As of December 31, 2022, our intangible assets totaled approximately $5.81million.
We may be required in the future to record a significant charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. As of December 31, 2023, our intangible assets totaled approximately $4.71 million.
Because certain principal stockholders own a large percentage of our voting stock, other stockholders’ voting power may be limited. As of December 31, 2022, our ten (10) largest shareholders own or controlled approximately 35.5% of our outstanding common stock.
Because certain principal stockholders own a large percentage of our voting stock, other stockholders’ voting power may be limited. As of December 31, 2023, our ten (10) largest shareholders own or controlled approximately 21.2% of our outstanding common stock.
Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition from other beverage companies who have greater resources than we do.
Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition from other beverage companies, some of which may have greater resources than we do.
Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our common stock is not traded on a national securities exchange.
This could have an adverse effect on the price of our common stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our common stock is not traded on a national securities exchange.
As a result, our other stockholders may have little or no influence over matters submitted for shareholder approval. In addition, the ownership of such stockholders could preclude any unsolicited acquisition of us, and consequently, adversely affect the price of our common stock. These stockholders may make decisions that are adverse to your interests.
As a result, our other stockholders may have little or no influence over matters submitted for shareholder approval. In addition, the ownership of such stockholders could preclude any unsolicited acquisition of us, and consequently, adversely affect the price of our common stock.
Future sales of common stock, or the perception of such future sales, by some of our existing stockholders could cause our stock price to decline. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market or the perception that these sales may occur.
The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market or the perception that these sales may occur.
We have experienced recurring losses from operations and negative cash flows from operating activities. We expect to continue to incur significant expenses related to our ongoing operations and generate operating losses for the foreseeable future. The size of our losses will depend, in part, on the rate of future expenditures and our ability to generate revenues.
We expect to continue to incur significant expenses related to our ongoing operations and generate operating losses for the foreseeable future. The size of our losses will depend, in part, on the rate of future expenditures, our ability to execute on our acquisition strategy and our ability to generate revenues.
Our independent distributors and national accounts are not required to place minimum monthly or annual orders for our products. In order to reduce their inventory costs, independent distributors typically order products from us on a “just in time” basis in quantities and at such times based on the demand for the products in a particular distribution area.
In order to reduce their inventory costs, independent distributors typically order products from us on a “just in time” basis in quantities and at such times based on the demand for the products in a particular distribution area.
Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results. 13 It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.
Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results.
Our ability to successfully enter new distribution areas and obtain national accounts will, in turn, depend on various factors, many of which are beyond our control, including, but not limited to, the continued demand for our brands and products in target markets, the ability to price our products at competitive levels, the ability to establish and maintain relationships with distributors in each geographic area of distribution and the ability in the future to create, develop and successfully introduce one or more new brands, products, and product extensions. 10 Demand for our products may be adversely affected by changes in consumer preferences or any inability on our part to innovate, market or distribute our products effectively, and any significant reduction in demand could adversely affect our business, financial condition or results of operations.
Our ability to successfully enter new distribution areas and obtain national accounts will, in turn, depend on various factors, many of which are beyond our control, including, but not limited to, the continued demand for our brands and products in target markets, the ability to price our products at competitive levels, available positions within the retailer’s planograms, the ability to establish and maintain relationships with distributors in each geographic area of distribution and the ability in the future to create, develop and successfully introduce one or more new brands, products, and product extensions.
We have sustained recurring losses and we have had a working capital and stockholders’ equity deficits. These prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition.
If we are unable to improve our liquidity position, we may not be able to continue as a going concern. We have sustained recurring losses and we have had working capital and stockholders’ equity deficits. These prior losses and expected future losses have had, 7 and will continue to have, an adverse effect on our financial condition.
We cannot predict whether our advertising, marketing and promotional programs will have the desired impact on our products’ branding and on consumer preferences. In addition, negative public relations and product quality issues, whether real or imagined, could tarnish our reputation and image of the affected brands and could cause consumers to choose other products.
In addition, negative public relations and product quality issues, whether real or imagined, could tarnish our reputation and image of the affected brands and could cause consumers to choose other products.
Global economic uncertainties, including foreign currency exchange rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us.
Global economic uncertainties, including foreign currency exchange rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities.
Failure to maintain our listing (i.e., being de-listed from the NYSE American), would make it more difficult for shareholders to sell our common stock and more difficult to obtain accurate price quotations on our common stock. This could have an adverse effect on the price of our common stock.
The NYSE American has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing (i.e., being de-listed from the NYSE American), would make it more difficult for shareholders to sell our common stock and more difficult to obtain accurate price quotations on our common stock.
We do not manufacture our products but instead outsource the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers). We do not own the plants or the majority of the equipment required to manufacture and package our beverage products, and we do not anticipate bringing the manufacturing process in-house in the future.
We do not manufacture SALT Tequila, Pulpoloco Sangria or TapouT performance drinks but instead outsource the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers). We do not own the plants or the majority of the equipment required to manufacture and package these brands.
In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs. 15 As part of the licensing strategy of our brands, we enter into licensing agreements under which we grant our licensing partners certain rights to use our trademarks and other designs.
Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs.
An investment in tour common stock is speculative and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.
Risks Related to Our Securities An investment in our common stock is speculative and there can be no assurance of any return on any such investment. An investment in our common stock is speculative and there is no assurance that investors will obtain any return on their investment.
Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our existing markets, as well as on our ability to expand the market for our products. We may experience a reduced demand for some of our products due to health concerns (including obesity) and legislative initiatives against sweetened beverages.
Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our existing markets, as well as on our ability to expand the market for our products. Legislative or regulatory changes that affect our products, including new taxes, could reduce demand for products or increase our costs.
As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall, which could then force us to curtail or cease our business operations. 21 Risks Related to our Securities An investment in our common stock is speculative and there can be no assurance of any return on any such investment.
Our current and future expense levels are based largely on our investment plans and estimates of future revenue. As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall, which could then force us to curtail or cease our business operations.
We do not expect to pay dividends and investors should not buy our Common Stock expecting to receive dividends. We do not anticipate that we will declare or pay any dividends in the foreseeable future. Consequently, you will only realize an economic gain on your investment in our common stock if the price appreciates.
These stockholders may make decisions that are adverse to your interests. 19 We do not expect to pay dividends and investors should not buy our Common Stock expecting to receive dividends. We do not anticipate that we will declare or pay any dividends in the foreseeable future.
If we cannot continue as a going concern, our shareholders would likely lose most or all of their investment in us. We have experienced recurring losses from operations and negative cash flows from operating activities and anticipate that we will continue to incur significant operating losses in the future.
We have experienced recurring losses from operations and negative cash flows from operating activities and anticipate that we will continue to incur significant operating losses in the future. We have experienced recurring losses from operations and negative cash flows from operating activities.
We may not accurately forecast customer behavior and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore, we may fail to make accurate financial forecasts. Our current and future expense levels are based largely on our investment plans and estimates of future revenue.
We have a limited operating history, and our historical financial and operating information is of limited value in predicting our future operating results. We may not accurately forecast customer behavior and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore, we may fail to make accurate financial forecasts.
In turn, this could cause us to lose credibility in the marketplace and damage our relationships with our customers and consumers, ultimately leading to a decline in our business and results of operations.
In turn, this could cause us to lose credibility in the marketplace and damage our relationships with our customers and consumers, ultimately leading to a decline in our business and results of operations. 16 Regulatory decisions and changes in the legal, regulatory and tax environment where our tequila is produced and where we operate could limit our business activities or increase our operating costs and reduce our margins.
If we are unable to secure sufficient ingredients or raw materials including glass, sugar, and other key supplies, we might not be able to satisfy demand on a short-term basis. 11 Changes in government regulation or failure to comply with existing regulations could adversely affect our business, financial condition and results of operations.
If our supply of these raw materials is impaired or if prices increase significantly, it could affect the affordability of our products and reduce sales. If we are unable to secure sufficient ingredients or raw materials including glass, sugar, and other key supplies, we might not be able to satisfy demand on a short-term basis.
Our brands and brand images are keys to our business and any inability to maintain a positive brand image could have a material adverse effect on our results of operations. Our success depends on our ability to maintain brand image for our existing products and effectively build up brand image for new products and brand extensions.
Any failure of our brand to maintain or increase acceptance or market penetration would likely have a material adverse effect on our revenues and financial results. 9 Our brands and brand images are keys to our business and any inability to maintain a positive brand image could have a material adverse effect on our results of operations.
Our ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to make, move and sell products is critical to our success.
Disruption within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition and results of operations. Our ability, through our suppliers, business partners, contract manufacturers, independent distributors and retailers, to make, move and sell products is critical to our success.
Our business and properties are subject to various federal, state and local laws and regulations, including those governing the production, packaging, quality, labeling and distribution of beverage products. In addition, various governmental agencies have enacted or are considering additional taxes on soft drinks and other sweetened beverages.
Changes in government regulation or failure to comply with existing regulations could adversely affect our business, financial condition and results of operations. Our business and properties are subject to various federal, state and local laws and regulations, including those governing the production, packaging, quality, labeling and distribution of beverage products.
Therefore, our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations. 22 There can be no assurances that our common stock will not be subject to potential delisting if we do not continue to maintain the listing requirements of the NYSE American.
There can be no assurances that our common stock will not be subject to potential delisting if we do not continue to maintain the listing requirements of the NYSE American. Since June 11, 2021, our common stock has been listed on the NYSE American, under the symbol “SBEV”.
Changes in existing laws or regulations could require material expenses and negatively affect our financial results through lower sales or higher costs. We compete in an industry that is brand-conscious, so brand name recognition and acceptance of our products are critical to our success.
We compete in an industry that is brand-conscious, so brand name recognition and acceptance of our products are critical to our success. Our business is dependent upon awareness and market acceptance of our products and brands by our target markets.
It is hard to predict what will happen in the fuel markets in 2021 and beyond.
It is hard to predict what will happen in the fuel markets in 2024 and beyond. Due to the price sensitivity of our products, we may not always be able to pass such increases on to our customers.
Our limited operating history makes it difficult to forecast our future results, making any investment in us highly speculative. We have a limited operating history, and our historical financial and operating information is of limited value in predicting our future operating results.
There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us. 18 Our limited operating history makes it difficult to forecast our future results, making any investment in us highly speculative.
In addition, we cannot assure you as to the timing of the economic recovery given the lingering effects of the pandemic, which could have a material adverse effect on our target markets and our business. 9 If we are unable to continue as a going concern, our securities will have little or no value.
RISKS RELATED TO OUR BUSINESS Risks Related to our Business Our auditors have included an explanatory paragraph in their opinion regarding our ability to continue as a going concern. If we are unable to continue as a going concern, our securities will have little or no value.
Removed
RISKS RELATED TO OUR BUSINESS Risks Related to our Business Our business could be materially and adversely affected by the lingering impact of the global COVID-19 pandemic or other epidemics and outbreaks. The COVID-19 pandemic had disrupted and affected our business operations, which has led to business and supply chain disruptions.
Added
Rose, Snyder & Jacobs LLP, our independent registered public accounting firm for the fiscal year ended December 31, 2023, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2023, indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern.
Removed
The lingering effects of the pandemic are likely to continue to disrupt our business and supply chain in the future. For example, our ability to gain new retail authorizations could be impacted by restrictions in retail outlets and our ability to generate sales and brand awareness in bars and restaurants could be impacted if restrictions are place on these establishments.
Added
If we cannot continue as a going concern, our shareholders would likely lose most or all of their investment in us. Management recognizes that it may be required to obtain additional resources via issuances of indebtedness or equity to successfully execute its business plans.
Removed
However, given the unpredictable nature of COVID-19 and its variants, it is difficult, if not impossible, to predict, whether any government-imposed restrictions will be reimposed at previous levels or enhanced in one or more ways impacting our business operations or those of third parties upon which we rely.
Added
No assurances can be given that management will be successful in raising additional capital, if needed, or on acceptable terms. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next 12 months.
Removed
The COVID-19 pandemic, including associated business interruptions and recovery, as well as other possible epidemics or outbreaks of other contagions could result in a material adverse impact on our or our current or anticipated customers’ or suppliers’ business operations, including reduction or suspension of operations in the U.S. or other parts of the world.
Added
These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Removed
Our design and engineering operations, among others, cannot all be conducted remotely and often require on-site access to materials and equipment.
Added
Demand for our products may be adversely affected by changes in consumer preferences or any inability on our part to innovate, market or distribute our products effectively, and any significant reduction in demand could adversely affect our business, financial condition or results of operations.
Removed
We have customers, suppliers, and partners with international operations, and our customers, suppliers, and partners also depend on suppliers and manufacturers worldwide, which means that our business and prospects could be affected by the lingering effects of the COVID-19 pandemic anywhere in the world.
Added
In addition, various governmental agencies have enacted or are considering additional taxes on soft drinks and other sweetened beverages. Changes in existing laws or regulations could require material expenses and negatively affect our financial results through lower sales or higher costs.
Removed
Depending upon the duration of the lingering effects of the COVID-19 pandemic and the associated business interruptions, our customers, suppliers, manufacturers, and partners may suspend or delay their engagements with us.
Added
Our success depends on our ability to maintain brand image for our existing products and effectively build up brand image for new products and brand extensions. We cannot predict whether our advertising, marketing and promotional programs will have the desired impact on our products’ branding and on consumer preferences.
Removed
We and our customers’ and suppliers’ response to the lingering effects of the COVID-19 pandemic may prove to be inadequate and they may be unable to continue their respective operations in the manner they had prior to the outbreak or the worsening of the outbreak, and we may consequently endure interruptions, reputational harm, delays in our product development, and shipments, all of which could have an adverse effect on our business, operating results, and financial condition.
Added
It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us. Our independent distributors and national accounts are not required to place minimum monthly or annual orders for our products.
Removed
If our supply of these raw materials is impaired or if prices increase significantly, it could affect the affordability of our products and reduce sales.
Added
As part of the licensing strategy of our brands, we enter into licensing agreements under which we grant our licensing partners certain rights to use our trademarks and other designs.
Removed
Our business is dependent upon awareness and market acceptance of our products and brands by our target market, trendy, young consumers looking for a distinctive tonality in their beverage choices. In addition, our business depends on acceptance by our independent distributors and retailers of our brands as beverage brands that have the potential to provide incremental sales growth.
Added
Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment. Future sales of common stock, or the perception of such future sales, by some of our existing stockholders could cause our stock price to decline.
Removed
Consumers are concerned about health and wellness; public health officials and government officials are increasingly vocal about obesity and its consequences.
Added
Consequently, you will only realize an economic gain on your investment in our common stock if the price appreciates. You should not purchase our common stock expecting to receive cash dividends. Therefore, our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations.
Removed
There has been a trend among some public health advocates and dietary guidelines to recommend a reduction in sweetened beverages, as well as increased public scrutiny, new taxes on sugar-sweetened beverages (as described below), and additional governmental regulations concerning the marketing and labeling/packing of the beverage industry.
Added
On October 6, 2023, the NYSE American notified the Company that we were not in compliance with Section 1003(a)(i) of the continued listing standards set forth in the NYSE American Company Guide (the “Company Guide”), requiring a listed company to have stockholders’ equity of (i) at least $2.0 million if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years.
Removed
Additional or revised regulatory requirements, whether labeling, tax or otherwise, could have a material adverse effect on our financial condition and results of operations. Further, increasing public concern with respect to sweetened beverages could reduce demand for our beverages and increase desire for more low-calorie soft drinks, water, enhanced water, coffee-flavored beverages, tea, and beverages with natural sweeteners.
Added
The notice had no immediate impact on the listing of our common stock, subject to our compliance with the other continued listing requirements.

… 14 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+1 added−0 removed0 unchanged
Biggest changeItem 2. Properties. Splash’s physical office is located at 1500 Cordova Rd; Fort Lauderdale, FL 33316 and 1491 2 nd Street, Sarasota FL 34236 while our business office is located at 1314 East Las Olas Blvd, Suite 221, Fort Lauderdale, FL 33301. Copa’s office/manufacturing facility is located at 901 E. 2 nd Street; The Dalles, OR 97058.
Biggest changeItem 2. Properties. Splash’s physical offices are located at 1500 Cordova Rd; Fort Lauderdale, FL 33316 and 1491 2 nd Street, Sarasota FL 34236 while our business office is located at 1314 East Las Olas Blvd, Suite 221, Fort Lauderdale, FL 33301. Copa’s office/manufacturing facility is located at 901 E. 2 nd Street; The Dalles, OR 97058.
Added
Currently, the Company does not own any real property.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+6 added−2 removed0 unchanged
Biggest changeAs of March 31, 2023, at our transfer agent and non-objecting beneficial owners totaled approximately 4,800 holders of record of our Common Stock. Dividends We have not declared any cash dividends on our common stock since inception and do not anticipate paying such dividends in the foreseeable future.
Biggest changeAs of March 29, 2024, at our transfer agent owners totaled approximately 273 holders of record of our Common Stock. Dividends We have not declared any cash dividends on our common stock since inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business operations.
We plan to retain any future earnings for use in our business operations. Any decisions as to future payment of cash dividends will depend on our earnings and financial position and such other factors as the Board of Directors deems relevant. Securities Authorized for Issuance under Equity Compensation Plans None.
Any decisions as to future payment of cash dividends will depend on our earnings and financial position and such other factors as the Board of Directors deems relevant. Securities Authorized for Issuance under Equity Compensation Plans None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company’s Common Stock and tradeable warrants are quoted on the NYSE American under the symbol “SBEV” and “SBEV WS”. Aggregate Number of Holders of Common Stock As of March 31, 2023, there were 41,085,520 shares of Common Stock issued and outstanding.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company’s Common Stock and tradeable warrants are publicly traded on the NYSE American under the symbol “SBEV” and “SBEV WS”. Aggregate Number of Holders of Common Stock As of March 29, 2024, there were 45,129,687 shares of Common Stock issued and outstanding.
There were no repurchase of our common stock during the year ended December 31, 2022. Item 6. Selected Financial Data. This item is not required for Smaller Reporting Companies.
There were no repurchases of our common stock during the year ended December 31, 2023.
Removed
Equity Compensation Plan Information The following table gives information as of December 31, 2022, the end of the most recently completed fiscal year, about shares of common stock that have been issued under our Splash Beverage Group, Inc. 2020 Incentive Plan. Under the 2020 Incentive Plan we have 1,151,000 options outstanding as of December 31, 2022. See Note 6.
Added
Equity Compensation Plan Information The information required by this item with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Annual Report on Form 10-K, and is incorporated herein by reference. 22 Purchases of Equity Securities by the Issuer.
Removed
Plan Category No. of Shares to be Issued Upon Exercise or Vesting of Outstanding Stock Options Weighted Average Exercise Price of Outstanding Stock Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans Equity compensation plan approved by board of directors 1,151,000 2.56 1,899,509 Total 1,151,000 2.56 1,899,509 24 Purchases of Equity Securities by the Issuer.
Added
Use of Proceeds On June 7, 2021, our Registration Statement, as amended, and originally filed on Form S-1 (File No. 333-255091) was declared effective by the SEC for our initial public offering of 7,500,000 units, including 3,750,000 additional shares of common stock and 3,750,000 warrants to purchase shares of common stock, each at an offering price of $4.00 per share, for aggregate gross proceeds of approximately $15.0 million.
Added
After deducting underwriting discounts and commissions and other estimated offering expenses incurred by us of approximately $1.2 million, the net proceeds from the offering were approximately $13.8 million. Kingswood Capital Markets, a division of Benchmark Investments, LLC acted as sole book-running manager and the representative of the underwriters of the underwritten public offering.
Added
No offering costs were paid or are payable, directly, or indirectly, to our directors or officers, to persons owning 10% or more of any class of our equity securities, or to any of our affiliates. Our common stock and warrants are traded on Nasdaq under the symbols “SBEV” and “SBEV WS”, respectively.
Added
There has been no material change in the expected use of the net proceeds from our underwritten public offering as described in our final prospectus filed with the SEC on June 14, 2021. Upon receipt, the net proceeds from our underwritten public offering were held in cash and cash equivalents.
Added
As of December 31, 2023, we have used approximately all of the net proceeds from the underwritten public offering, primarily on working capital and general corporate purposes. Item 6. {Reserved}

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

16 edited+10 added−0 removed7 unchanged
Biggest changeThe cash expense increase of $5.3m is mainly driven by an increase in sales and marketing cost of $2.0m to drive sales and promote the brands, delivery fees of $2.0m and an increase in Amazon selling fees of $0.6m associated with higher sales of Qplash division. 25 Other Income/(Expense) Other expense for the year ended December 31, 2022 were $245,429 compared to $262,450 for the year ended December 31, 2021.
Biggest changeOther Income/(Expense) Other expense for the year ended December 31, 2023 were $5.7 million compared to $0.2 million for the year ended December 31, 2022. The other expense increase of $5.5 million is mainly driven by an increase in amortization of debt discount of $3.8 million and a $1.9 million increase in interest expense.
Also, the terms of securities we may issue in future capital transactions may be more favorable for new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other derivative securities, and the issuances of incentive awards under equity employee incentive plans, which may have additional dilutive effects.
Also, the terms of securities we may issue in future capital transactions may be more favorable for new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other derivative securities, and the issuance of incentive awards under equity employee incentive plans, which may have additional dilutive effects.
These cost are mainly interest expense. LIQUIDITY AND CAPITAL RESOURCES Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis should be read in conjunction with the Audited Consolidated Financial Statements and Notes to Audited Consolidated Financial Statements filed herewith.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis should be read in conjunction with the Audited Consolidated Financial Statements and Notes to Audited Consolidated Financial Statements filed herewith. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking.
In addition, the Company has an active registration statement on Form S-3 to facilitate raising additional funds. As of December 31, 2022, we had total cash of $4,431,745, as compared with $4,181,383 at December 31, 2021. The increase was primarily due to issuances of notes payable and stock subscription agreements offset by expenses relating to the operating the business.
In addition, the Company has an active registration statement on Form S-3 to facilitate raising additional funds. As of December 31, 2023, we had total cash of $379,978, as compared with $4,431,745 at December 31, 2022. The decrease was primarily due to expenses relating to operating the business.
Net cash used for investing activities during the year ended December 31, 2022, was $102,698 as compared to the net cash used for investing activities during the year ended December 31, 2021, of $0. The net cash used in the year 2022 was for a capital expenditure for out of home used for advertising and building improvements.
Net cash used for investing activities during the year ended December 31, 2023, was $0.01 as compared to the net cash used for investing activities during the year ended December 31, 2022, of $0.1 million. The net cash used in the year 2023 was for a capital expenditure for building improvements.
Net cash used for continuing operating activities during the year ended December 31, 2022, was $14,061,116 as compared to the net cash used by continuing operating activities for the year ended December 31, 2021, of $14,697,179.
Net cash used for continuing operating activities during the year ended December 31, 2023, was $10.2 million as compared to the net cash used by continuing operating activities for the year ended December 31, 2022, of $14.0 million.
Cost of Goods Sold Cost of goods sold for year ended December 31, 2022 were $12.1m compared to cost of goods sold for the year ended December 31, 2021 of $8.3m. The $4.7m increase in cost of goods sold was due to our increased sales and inflation.
Cost of Goods Sold Cost of goods sold for the year ended December 31, 2023 were $13.3 million compared to cost of goods sold for the year ended December 31, 2022 of $12.2 million. The $1.1 million increase in cost of goods sold was due to our increased sales and inflation.
Principal repayment of debt $636,560 and $1,673,296 were made in years ending December 31, 2022 and 2021 respectively. In year ending December 31, 2021 a cash advance repayment of $261,245 was made. In order to have sufficient cash to fund our operations, we will need to raise additional equity or debt capital.
Principal repayment of debt of $1.0 million and $0.6 million were made in years ending December 31, 2023 and 2022 respectively. In the year ending December 31, 2023 a cash advance from related party of $0.4 million was received. 24 In order to have sufficient cash to fund our operations, we will need to raise additional equity or debt capital.
Operating Expenses Operating expenses for the year ended December 31, 2022 were $27.3m compared to $33m for the year ended December 31, 2021. Non cash operating expenses related to share issuance was $7.4m as of December 31, 2022 compared $18.4m in December 31, 2021.
Operating Expenses Operating expenses for the year ended December 31, 2023 were $20.9 million compared to $27.3 million for the year ended December 31, 2022. Non cash-operating expenses related to share issuance was $1.2 million as of December 31, 2023 compared to $7.4 million in December 31, 2022.
Net cash provided by financing activities during the year ended December 31, 2022, was $14,446,951 compared to $19,014,524 provided from financing activities for the year ended December 31, 2021. During the year ended December 31, 2022, we received $11,428,591 from the issuance of common stock compared to $19,630,565 during the year ending December 31, 2021.
Net cash provided by financing activities during the year ended December 31, 2023, was $6.1 million compared to $14.4 million provided from financing activities for the year ended December 31, 2022. During the year ended December 31, 2023, we received $0 from the issuance of common stock compared to $11.4 million during the year ending December 31, 2022.
We received $4,045,420 and $928,000 proceeds from the issuance of debt in years ending December 31, 2022 and 2021 respectively. In the year ending December 31, 2022 $390,500 shareholder advance was repaid and in year ending December 31, 2021 $390,500 cash advance from shareholder was received.
We received $6.6 million and $4.0 million proceeds from the issuance of debt in years ending December 31, 2023 and 2022, respectively. In the year ending December 31, 2023, $0.2 million was received from a shareholder advance and a $0.4 million shareholder advance was repaid in the year ending December 31, 2022.
Our main telephone number is (954) 745-5815. Our website address is www.splashbeveragegroup.com. We have not incorporated by reference into this Annual Report on Form 10-K the information that can be assessed through our website and you should not consider it to be part of this Annual Report on Form 10-K.
We have not incorporated by reference into this Annual Report on Form 10-K the information that can be assessed through our website and you should not consider it to be part of this Annual Report on Form 10-K. 23 Results of Operations for the Year Ended December 31, 2023, compared to Year Ended December 31, 2022.
Business Overview Canfield Medical Supply, Inc. a company’s whose common stock was quoted on the OTCQB entered into an Agreement and Plan of Merger with SBG Acquisition Inc.
Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Annual Report, and other factors that we may not know. Business Overview Canfield Medical Supply, Inc. (“CMS”) a company’s whose common stock was quoted on the OTCQB entered into an Agreement and Plan of Merger with SBG Acquisition Inc.
The primary reason for the change in net cash used due to an increase of $0.4m in operating loss operating losses of the business, offset by a decrease of $1.2m in working capital Net cash used for discontinued operating activities during the year ended December 31, 2022, was $32,774 as compared to $515,952 for the year ended December 31, 2021 due to discontinuing the business on June 30, 2022.
The primary reason for the change in net cash used was due to an increase of $3.8 million in amortization of debt and a decrease of $0.6 million in losses of the business, offset by a decrease of $16.5 million in working capital.
Results of Operations for the Year Ended December 31, 2022, compared to Year Ended December 31, 2021. Revenue Revenues for the year ended December 31, 2022 were $18.1m compared to revenues of $11.3m for the year ended December 31, 2021. The $6.8m increase in sales was mainly due to the increase in our ecommerce division distribution platform, Qplash of $6.4m.
Revenue Revenues for the year ended December 31, 2023 were $18.9 million compared to revenues of $18.1 million for the year ended December 31, 2022. The increase in sales was mainly due to an increase in our E-commerce segment of $0.4 million and an increase in our Splash Beverage Group segment of $0.3 million.
Added
These statements are based on current expectations and assumptions that are subject to risk, uncertainties, and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations.
Added
The remaining operating expense decrease of $0.2 million was due to decreases in sales and marketing expense and other general and administrative expenses of $1.0 million, which were offset by an increase of $0.8 million in salary and wages.
Added
Net cash used for discontinued operating activities during the year ended December 31, 2023, was $0 as compared to $0.03 million for the year ended December 31, 2022.
Added
Critical Accounting Estimates The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as the disclosure of contingent assets and liabilities.
Added
Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Revenue The Company faces significant judgment in revenue recognition due to the complexities of the beverage industry’s competitive landscape and diverse distribution channels.
Added
Determining the timing of revenue recognition involves assessing factors such as control transfer, returns, allowances, trade promotions, and distributor sell-through data. Historical analysis, market trends assessment, and contractual term evaluations inform revenue recognition judgments. However, inherent uncertainties persist, underscoring the critical nature of revenue recognition as it significantly impacts financial statements and performance evaluation.
Added
Allowance for Doubtful Accounts The allowance for doubtful accounts is established based on historical experience, current economic conditions, and specific customer collection issues. Management evaluates the collectability of accounts receivable on an ongoing basis and adjusts the allowance as necessary.
Added
Changes in economic conditions or customer creditworthiness could result in adjustments to the allowance for doubtful accounts, impacting our reported financial results. Inventory Valuation We value inventory at the lower of cost or net realizable value. Estimating the net realizable value of inventory involves significant judgment, particularly when market conditions change rapidly or when excess or obsolete inventory exists.
Added
Management regularly assesses inventory quantities on hand, future demand forecasts, and market conditions to determine whether write-downs to inventory are necessary. Fair Value Measurements We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value measurements involve significant judgment and estimation, particularly when observable inputs are limited or not available.
Added
Management utilizes valuation techniques such as discounted cash flow models, market comparables, and third-party appraisals to determine fair values.

Other SBEV 10-K year-over-year comparisons