Endovia Health Sciences, Inc 10-Q for FY2022 Q2
Endovia Health Sciences, Inc. (EDVA)
About this 10-Q
Endovia Health Sciences, Inc filed this 10-Q on August 15, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).
Headline figures
Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $4.5M
- up 36.8% from $3.29M a year earlier
- Net loss
- $5.76M
- compared with a net loss of $6.56M a year earlier
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
For the transition period from _______ to _________
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation or formation) |
(I.R.S.
employer identification number) |
| (Address of principal executive offices) (Zip code) |
(
(Registrant’s telephone number, including area code)
Not
Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| American LLC | ||||
| American LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes
☒
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
As of August 15, 2022, there were shares of Common Stock issued and outstanding.
| SPLASH BEVERAGE GROUP, INC. |
| FORM 10-Q |
| June 30, 2022 |
TABLE OF CONTENTS
| Page | ||
| PART I: FINANCIAL INFORMATION | ||
| ITEM 1: | FINANCIAL STATEMENTS | 1 |
| Condensed Consolidated Balance Sheets | 2 | |
| Condensed Consolidated Statements of Operations | 3 | |
| Condensed Consolidated Statement of Changes in Shareholders’ Equity | 4 | |
| Condensed Consolidated Statements of Cash Flows | 5 | |
| Notes to the Condensed Consolidated Financial Statements | 6 | |
| ITEM 2: | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 19 |
| ITEM 3: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 21 |
| ITEM 4: | CONTROLS AND PROCEDURES | 23 |
| PART II: OTHER INFORMATION | ||
| ITEM 1 | LEGAL PROCEEDINGS | 23 |
| ITEM 1A: | RISK FACTORS | 23 |
| ITEM 2: | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 23 |
| ITEM 3: | DEFAULTS UPON SENIOR SECURITIES | 23 |
| ITEM 4: | MINE SAFETY DISCLOSURES | 23 |
| ITEM 5: | OTHER INFORMATION | 23 |
| ITEM 6: | EXHIBITS | 24 |
| SIGNATURES | 25 | |
i
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Splash Beverage Group, Inc.
Condensed Consolidated Financial Statements
June 30, 2022
1
| Splash Beverage Group, Inc. |
| Condensed Consolidated Balance Sheets |
| June 30, 2022 and December 31, 2021 |
| (Unaudited) |
| June 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts Receivable, net | ||||||||
| Prepaid Expenses | ||||||||
| Inventory, net | ||||||||
| Other receivables | ||||||||
| Assets from discontinued operations | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Deposit | $ | $ | ||||||
Goodwill | ||||||||
Other Intangible, net | ||||||||
| Investment in Salt Tequila USA, LLC | ||||||||
| Right of use asset | ||||||||
| Property and equipment, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | |||||||
| Right of use liability – current | ||||||||
| Related party notes payable | ||||||||
| Notes payable, current portion | ||||||||
| Liability to issue common stock | | |||||||
| Shareholder advances | ||||||||
| Accrued interest payable | ||||||||
| Liabilities from discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Long-term Liabilities: | ||||||||
| Notes payable – noncurrent | ||||||||
| Right of use liability – noncurrent | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Common Stock, $ par, shares authorized, and shares issued and outstanding, at June 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated Comprehensive Income – Translation | ( | |||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities, and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
| Splash Beverage Group, Inc. |
| Condensed Consolidated Statements of Operations |
| For the Three and Six Months Ended June 30, 2022 and June 30, 2021 |
| (Unaudited) |
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Gross sales | $ | $ | $ | $ | ||||||||||||
| Customer discount | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net revenues | ||||||||||||||||
| Cost of goods sold | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Contracted services | ||||||||||||||||
| Salary and wages | ||||||||||||||||
| Non-cash share-based compensation | ||||||||||||||||
| Other general and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from continuing operations | ( |
( |
) | ( |
) | ( |
) | |||||||||
| Other income/(expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Gain from debt extinguishment | ||||||||||||||||
| Total other income/(expense) | ( |
( |
) | ( |
) | ( |
) | |||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss from continuing operations, net of tax | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net income (loss) from discontinued operations, net of tax | ( |
) | ||||||||||||||
| Gain on sale of discontinued operations | |
|
||||||||||||||
| Income of discontinued operations | |
|
( |
) | |
|||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| (Loss) per share - continuing operations | ||||||||||||||||
| Basic and dilutive | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average number of common shares outstanding - continuing operations | ||||||||||||||||
| Basic | ||||||||||||||||
| Income/(Loss) per share - discontinuing operations | ||||||||||||||||
| Basic and dilutive | $ | $ | $ | ( |
$ | |||||||||||
| Weighted average number of common shares outstanding - discontinuing operations | ||||||||||||||||
| Basic | ||||||||||||||||
| Dilutive | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
| Splash Beverage Group, Inc. |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity |
| For the Three and Six months ended June 30, 2022 and 2021 |
| (Unaudited) |
| Total | ||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-In | Accumulated | Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balances at December 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of warrants for services | — | — | ||||||||||||||||||||||||||
| Issuance of common stock for services | — | |||||||||||||||||||||||||||
| Issuance of common stock and warrants for cash | — | |||||||||||||||||||||||||||
| Mezzanine shares | — | |||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at March 31, 2021 | ( | ) | ||||||||||||||||||||||||||
| Issuance of warrants for services | — | — | ||||||||||||||||||||||||||
| Issuance of common stock for services | — | — | ||||||||||||||||||||||||||
| Issuance of common stock and warrants for cash | — | |||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balances at June 30, 2021 | ( | ) | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-In | Accumulated | Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balances at December 31, 2021 | ( |
) | ||||||||||||||||||||||||||
| Issuance of common stock on convertible instruments | — | |||||||||||||||||||||||||||
| Issuance of warrants for services | — | — | ||||||||||||||||||||||||||
| Issuance of common stock for services | — | |||||||||||||||||||||||||||
| Issuance of common stock and warrants for cash | — | |||||||||||||||||||||||||||
| Net loss | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
| Balances at March 31, 2022 | ( |
) | ||||||||||||||||||||||||||
| Issuance of warrants for services | — | |||||||||||||||||||||||||||
| Issuance of common stock for services | — | |||||||||||||||||||||||||||
| Issuance of common stock and warrants for cash | — | |||||||||||||||||||||||||||
| Accumulated Comprehensive Income - Translation | ( |
) | ( |
) | ||||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Balances at June 30, 2022 | ( |
) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
| Splash Beverage Group, Inc. |
| Condensed Consolidated Statements of Cash Flows |
| For the Six -Months Ended June 30, 2022 and 2021 |
| (Unaudited) |
| 2022 | 2021 | |||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Gain from debt extinguishment | ( |
) | ||||||
| Gain from sale of discontinued operation | ||||||||
| Non-cash share-based compensation | ||||||||
| Changes in working capital items: | ||||||||
| Accounts receivable, net | ( |
) | ( |
) | ||||
| Inventory, net | ( |
) | ( |
) | ||||
| Prepaid expenses and other current assets | ( |
) | ||||||
| Deposits | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued Interest payable | ( |
) | ||||||
| Net cash used in operating activities - continuing operations | ( |
) | ( |
) | ||||
| Net cash used in operating activities - discontinued operations | ( |
) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Net cash used in investing activities - continuing operations | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Net Proceeds from issuance of Common stock | ||||||||
| Cash advance from shareholder | ||||||||
| Repayment of cash advance | ( |
) | ||||||
| Proceeds from issuance of debt | ||||||||
| Principal repayment of debt | ( |
) | ( |
) | ||||
| Net cash provided by financing activities - continuing operations | ||||||||
| Net cash provided by financing activities - discontinued operations | ||||||||
| Net Change in Cash and Cash Equivalents | ||||||||
| Cash and Cash Equivalents, beginning of year | ||||||||
| Cash and Cash Equivalents, end of year | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for Interest | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Notes payable and accrued interest converted to common stock (shares) | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 1 – Business Organization and Nature of Operations
Splash seeks to identify, acquire, and build early stage or under-valued beverage brands that have strong growth potential within its distribution system. Splash’s distribution system is comprehensive in the US and is now expanding to select attractive international markets. The Splash brand portfolio is growing and diverse, covering multiple categories that are exhibiting strong growth in both the non-alcohol and alcohol sectors. Through its wholly owned subsidiary Qplash, Splash’s distribution reach includes e-commerce access to both B-to-B and B-to-C customers. Q-plash markets well known beverage brands to customers throughout the US that prefer delivery direct to their office, facilities and or homes.
On February 2021, Management initiated a plan to divest its Canfied Medical Supply, Inc. (“CMS”) business. As a result, the assets and operations of CMS have been retrospectively reflected as discontinued operations. On November 12, 2021 the Company changed its state of Domicile from Colorado to Nevada.
On
June 30, 2022, the Company entered into a Business Transfer and Indemnity Agreement (“Agreement”). Pursuant to the
Agreement, the Company transferred and assigned the assets and liabilities from the CMS business. Pursuant to the Agreement the
Company was paid $
In coordination with uplisting to the NYSE on June 11, 2021, the Company consummated a 1.0 for 3.0 reverse stock split. All common stock shares stated herein have been adjusted on a retrospective basis to reflect the split.
6
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
These condensed consolidated financial statements include the accounts of Splash Beverage Group and its wholly owned subsidiaries, Splash International Holdings LLC, Splash Beverage Group Holding LLC, Splash Beverage Group II, Inc., Copa di Vino Wine Group, Inc. (“CdV”) and Splash Mexico SA de CV. CMS is reflected as discontinued operations until its disposal on June 30, 2022. All intercompany balances have been eliminated in consolidation.
Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (GAAP).
The accompanying condensed consolidated financial statements have been prepared by us without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the three and six months ended June 30, 2022 and 2021 have been made.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The results of operations for the period ended June 30, 2022 are not necessarily indicative of the operating results for the full year.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash Equivalents and Concentration of Cash Balance
We
consider all highly liquid securities with an original maturity of three months or less to be cash equivalents. We had
Our
cash in bank deposit amounts, at times, may exceed federally insured limits of $250,000. At June 30, 2022 we had $
7
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Accounts Receivable and Allowance for Doubtful Accounts
Accounts
receivable are carried at their estimated recoverable amounts and are periodically evaluated for collectability based on past credit
history with clients and other factors. We establish provisions for losses on accounts receivable on the basis of loss experience, known
and inherent risk in the account balance, and current economic conditions. At June 30, 2022 and December 31, 2021, our accounts receivable
amounts are reflected net of allowances of $
Inventory
Inventory
is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method. The inventory
balances at June 30, 2022 and December 31, 2021 consisted of raw materials, work-in-process, and finished goods held for
distribution. The cost elements of inventory consist of purchase of products, transportation, and warehousing. We establish
provisions for excess or inventory near expiration are based on management’s estimates of forecast turnover of inventories on
hand and under contract. A significant change in the timing or level of demand for certain products as compared to forecast amounts
may result in recording additional provisions for excess or expired inventory in the future. Provisions for excess inventory are
included in cost of goods sold and have historically been adequate to provide for losses on inventory. We manage inventory
levels and purchase commitments in an effort to maximize utilization of inventory on hand and under commitments. The amount of our
reserve was $
Property and Equipment
We
record property and equipment at cost when purchased. Depreciation is recorded for property, equipment, and software using the straight-line
method over the estimated economic useful lives of assets, which range from
Depreciation
expense totaled $
| Schedule of Property and equipment | ||||||||
| June 30, 2022 | December 31, 2021 | |||||||
| Machinery & Equipment | $ | |||||||
| Buildings | $ | |||||||
| Leasehold Improvements | $ | |||||||
| Office Furniture & Fixtures | $ | |||||||
| Property and equipment, at cost | $ | $ | ||||||
| Accumulated depreciation | $ | ( | ) | ( | ) | |||
| Property and equipment, net | $ | |||||||
Excise Taxes
The Company pays alcohol excise taxes based on product sales to both the Oregon Liquor Control Commission and to the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (TTB). The Company is liable for the taxes upon the removal of product from the Company’s warehouse on a per gallon basis. The federal tax rate is affected by a small winery tax credit provision which decreases based upon the number of gallons of wine production in a year rather than the quantity sold.
8
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Fair Value of Financial Instruments
Financial Accounting Standards (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:
| Level 1 - | Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. | |
| Level 2 - | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). | |
| Level 3 - | Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. |
The liabilities and indebtedness presented on the condensed consolidated financial statements approximate fair values at June 30, 2022 and December 31, 2021, consistent with recent negotiations of notes payable and due to the short duration of maturities and market rates of interest.
9
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Revenue Recognition
We recognize revenue under ASC 606, Revenue from Contracts with Customers (Topic 606). This guidance sets forth a five-step model which depicts the recognition of revenue in an amount that reflects what we expect to receive in exchange for the transfer of goods or services to customers.
We recognize revenue when our performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control of our products is transferred upon delivery to the customer. Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring goods and is presented net of provisions for customer returns and allowances. The amount of consideration we receive and revenue we recognize varies with changes in customer incentives we offer to our customers and their customers. Sales taxes and other similar taxes are excluded from revenue.
Distribution expenses to transport our finished goods, where applicable, and warehousing expense are accounted for within operating expenses. Distribution expense is capitalized as part of inventory as the materials are received by our distillery, co-packer or internal/external warehouse.
Cost of Goods Sold
Cost of goods sold include the costs of products, packaging, transportation, warehousing, and costs associated with valuation allowances for expired, damaged or impaired inventory.
Stock-Based Compensation
We account for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation”. Under the fair value recognition provisions, cost is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period, which is generally the award’s vesting period. We use the Black-Scholes option pricing model to determine the fair value of stock-based awards. We early adopted ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”, which aligns accounting treatment for such awards to non-employees with the existing guidance on employee share-based compensation in ASC 718.
Income Taxes
We use the liability method of accounting for income taxes as set forth in ASC 740, “Income Taxes”. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. We record a valuation allowance when it is more likely than not that the deferred tax assets will not be realized.
Company management assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.
For
those income tax positions where there is less than
10
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company’s convertible debt or preferred stock (if any), are not included in the computation if the effect would be anti-dilutive.
Advertising
We
conduct advertising for the promotion of our products. In accordance with ASC 720-35, advertising costs are charged to operations
when incurred. We recorded advertising expense of $
Goodwill and Intangibles Assets
Goodwill represents the excess of acquisition cost over the fair value of the net assets acquired and is not subject to amortization. The Company reviews goodwill annually in the fourth quarter for impairment or when circumstances indicate carrying value may exceed the fair value. This evaluation is performed at the reporting unit level. If a qualitative assessment indicates that it is more likely than not that the fair value is less than carrying value, a quantitative analysis is completed using either the income or market approach, or a combination of both. The income approach estimates fair value based on expected discounted future cash flows, while the market approach uses comparable public companies and transactions to develop metrics to be applied to historical and expected future operating results.
Intangible assets consist of customer lists, brands and license agreements acquired in the acquisition of CdV. The Company amortizes intangible assets with finite lives on a straight-line basis over their estimated useful lives of 15 years.
11
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Long-lived assets
The Company evaluates long-lived assets for impairment on an annual basis when relocating or closing a facility, or when events or changes in circumstances may indicate the carrying amount of the asset group, generally an individual warehouse, may not be fully recoverable. For asset groups held and used, including warehouses to be relocated, the carrying value of the asset group is considered recoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceed the respective carrying value. In the event that the carrying value is not considered recoverable, an impairment loss is recognized for the asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group. For asset groups classified as held-for-sale (disposal group), the carrying value is compared to the disposal group’s fair value less costs to sell. The Company estimates fair value by obtaining market appraisals from third party brokers or using other valuation techniques.
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Reclassifications
Certain prior period amounts have been reclassified to conform with the current year presentation.
12
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 3 – Notes Payable and Related Party Notes Payable
Notes payable are generally nonrecourse and secured by all Company owned assets.
| Interest Rate |
June 30, 2022 |
December 31, 2021 | ||||||||||
| Notes Payable and Convertible Notes Payable | ||||||||||||
| In March 2014, we entered into a short-term loan agreement with an entity in the amount of $ |
% | |||||||||||
| In September 2021, we entered into a twelve-month
loan with a company in the amount of $ |
% | |||||||||||
| In December 2020, we entered into a 56 month loan with a company in the amount of $ |
% | |||||||||||
| In April 2021, we entered into a six-month convertible loan with an individual in the amount of $ |
% | |||||||||||
| In April 2021, we entered into a six-month convertible loan with an individual in the amount of $ |
% | |||||||||||
| In May 2021, we entered into a six-month convertible loan with an individual in the amount of $ |
% | |||||||||||
| In May 2021, we entered into a six-month convertible loan with an individual in the amount of $ |
% | |||||||||||
| In May 2021, we entered into a six-month convertible loan with an individual in the amount of $ |
% | |||||||||||
| In May 2021, we entered into a six-month convertible loan with an individual in the amount of $ |
% | |||||||||||
| In November 2021, we entered into a one-year convertible loan with an individual in the amount of $ |
% | |||||||||||
| Total notes payable and convertible notes payable |
$ | $ | ||||||||||
| Less current portion | ( |
) | ( |
) | ||||||||
| Long-term notes payable and convertible notes payable |
$ | $ | ||||||||||
Interest
expense on notes payable was $
13
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 3– Notes Payable and Related Party Notes Payable
| Schedule of Related Party Notes Payable | ||||||||||
| Interest Rate | June 30, 2022 | December 31, 2021 | ||||||||
| Related Parties Notes Payable | ||||||||||
| In
December 2020, we entered into an 18 month loan with an individual in the amount of $ | ||||||||||
| Less current portion | ( | ) | ||||||||
| Long-term notes payable | $ | $ | ||||||||
Interest
expense on related party notes payable was $
14
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 4 – Licensing Agreement and Royalty Payable
We
have a licensing agreement with ABG TapouT, LLC (“TapouT”), providing us with licensing rights to the brand
“TapouT” on energy drinks, energy shots, water, teas and sports drinks for beverages sold in the United States of
America, its territories, possessions, U.S. military bases and Mexico. Under the terms of the agreement, we are required to pay a 6%
royalty on net sales, as defined. We are required to make minimum royalty monthly payments of $
There
were no unpaid royalties at June 30, 2022. Royalty payments including the minimum totaling $
In
connection with the Copa APA, we acquired the license to certain patents from 1/4 Vin SARL (“1/4 Vin”) On February 16, 2018,
the CdV entered into three separate license agreements with 1/4 Vin SARL, (1/4 Vin). 1/4 Vin has the right to license certain patents
and patent applications relating to inventions, systems, and methods used in our manufacturing process. In exchange for notes payable,
1/4 Vin granted us a nonexclusive, royalty-bearing, non-assignable, nontransferable, terminable license which would continue until the
subject equipment is no longer in service or the patents expire. Amortization is approximately $31,000 annually until the license agreement
is fully amortized. The asset is being amortized over a
Note 5– Stockholders’ Equity
Private Placement Memorandum (PPM)
In
January 2021, the Board of Directors approved a Private Placement Memorandum (PPM) offering of
shares of the common stock of the Company, $
value per share at a purchase price of $
per share for aggregate gross proceeds of $4,000,000. As part of the PPM, each purchaser received a warrant to purchase one
share for every two shares purchased. In February 2021, the Company issued a total of
During the quarter, the Company granted share-based awards to certain officers
and consultants to purchase shares of common stock at an exercise price of $. The options were valued at $
15
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 6 – Related Parties
There
is
Note 7 – Investment in Salt Tequila USA, LLC
We have a marketing and distribution agreement with SALT Tequila USA, LLC (“SALT”) for the manufacturing of our Tequila product line in Mexico.
We
have a
16
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 8 – Operating Lease Obligations
Effective
July 2018, we entered into a lease agreement for the right to use and occupy office space. The lease term commenced
Effective
November 2019, we entered into a new lease with Interport Logistics, LLC. The lease term commenced on
Effective
May 2019, we entered into a new lease in Mexico. The lease commenced
Effective
January 2021, we entered into a lease agreement for the right to use and occupy office space. The lease term commenced
Effective
January 2021, we entered into a lease agreement for the right to use and occupy office and manufacturing space. The lease term commenced
The following table presents the discounted present value of minimum lease payments for our office and warehouses to the amounts reported as financial lease liabilities on the condensed consolidated balance sheet at June 30, 2022:
| Schedule of maturities of lease liabilities | ||||
| Undiscounted Future Minimum Lease Payments | ||||
| 2022 (six months) | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| Total | ||||
| Amount representing imputed interest | ( | ) | ||
| Total Operating Lease Liability | ||||
| Current portion operating lease liability | ||||
| Operating lease liability, non-current | ||||
The table below presents information for lease costs related to our operating leases at June 30, 2022
| Schedule of lease costs | ||||
| Amortization of leased assets | ||||
| Interest of lease liabilities | ||||
| Total operating lease cost |
The table below presents lease-related terms and discount rates at June 30, 2022
| Summary of lease-related terms and discount rates | ||||
| Summary of lease-related terms and discount rates | ||||
| Remaining term on leases | ||||
| Incremented borrowing rate | % | |||
17
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 9 – Segment Reporting
The Company evaluates segment reporting in accordance with the FASB Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Executive Officer and Chief Financial Officer.
The CdV business is included in our Splash Beverage Group segment.
| Schedule of Segment Reporting Information | Three-Months Ended | Six-Months Ended | ||||||||||||||
| Revenue | Q2 2022 | Q2 2021 | Q2 2022 | Q2 2021 | ||||||||||||
| Splash Beverage Group | ||||||||||||||||
| E-Commerce | ||||||||||||||||
| Total Revenues continuing operations | ||||||||||||||||
| Total Revenues discontinued operations | ||||||||||||||||
| Total assets | 2022 | 2021 | ||||||
| Splash Beverage Group | ||||||||
| E-Commerce | ||||||||
| Medical Devices - Discontinued | ||||||||
| Total Assets | ||||||||
Note 10 – Commitment and Contingencies
The Company signed an agreement to acquire 80% of Pulpoloco Sangria in a transaction that will give Splash control over the manufacturing and distribution of Pulpoloco across the US while adding international markets and capturing the additional margin and revenue.
On June 10, 2022, Copa Di Vino Corporation (“Copa”) filed a lawsuit against the Company in Broward County, Florida. The complaint alleges that the Company still owes part of the final payment under the December 24, 2020 Asset Purchase Agreement (“APA”) between Copa and the Company. Specifically, Copa maintains that 380,959 shares are owed. The parties are actively discussing amicable resolution on a framework both sides appear to be agreeable to. The Company will vigorously defend the case if a settlement is not reached. Litigation is uncertain, however, and no particular result can be assured.
We are a party to asserted claims and are subject to regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but we do not anticipate that the outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial condition or results of operations.
Note 11– Subsequent Events
Subsequent to June 30, 2022 the Company's Board approved the issuance of 250,000 shares as a performance bonus pursuant to a consulting agreement.
18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
The information in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements that are not of historical fact may be deemed to be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties. In some cases you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue”, the negative of the terms or other comparable terminology. Actual events or results may differ materially from the anticipated results or other expectations expressed in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks included from time to time in other reports or registration statements filed with the United States Securities and Exchange Commission. These factors may cause our actual results to differ materially from any forward-looking statements. We disclaim any obligation to publicly update these statements or disclose any difference between actual results and those reflected in these statements.
Unless the context otherwise requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer to Splash Beverage Group and its subsidiaries.
The following discussion and analysis should be read in conjunction with the Condensed Financial Statements (unaudited) and Notes to Condensed Financial Statements (unaudited) filed herewith.
Business Overview
Splash seeks to identify, acquire, and build early stage or under-valued beverage brands that have strong growth potential within its distribution system. Splash’s distribution system is comprehensive in the US and is now expanding to select attractive international markets. The Splash brand portfolio is growing and diverse, covering multiple categories that are exhibiting strong growth in both the non-alcohol and alcohol sectors. Through its wholly owned subsidiary Qplash, Splash’s distribution reach includes e-commerce access to both B-to-B and B-to-C customers. Q-plash markets well known beverage brands to customers throughout the US that prefer delivery direct to their office, facilities and or homes.
On June 30, 2022, Management completed its plan to divest its CMS business. CMS was the entity used to execute the reverse merger for Splash to uplist its common stock to NYSE American. As a result, the assets and operations of CMS have been retrospectively reflected as discontinued operations. On November 12, 2021 the Company changed its state of Domicile from Colorado to Nevada.
In coordination with uplisting to the NYSE American on June 11, 2021 the Company consummated a 1.0 for 3.0 reverse stock split.
The 2020 Plan has an “EVERGREEN” feature, which provides for the annual increase in the number of shares issuable under the plan by an amount equal to 5% of the number of issued and outstanding common shares at year end, unless otherwise adjusted by the board.
19
Results of Operations for the Three and Six Months Ended June 30, 2022 compared to Three and Six Months Ended June 30, 2021.
Net Revenue
Net revenues for the three and six months ended June 30, 2022 were higher compared to revenues for the three and six months ended June 30, 2021 due to an increase from our vertically integrated B2B and B2C e-commerce distribution platform called Qplash (Qplash sells goods on both Amazon and Shopify), increased distribution on the beverage portfolio and a price increase on CdV.
Cost of Goods Sold
Cost of goods sold for the three and six months ended June 30, 2022 were higher compared to cost of goods sold for the three and six months ended June 30, 2021. The increase in cost of goods sold is primarily due to higher sales at Qplash, incremental volumes in the beverage portfolio and higher supply chain costs on both ingredients and freight.
Operating Expenses
Operating expenses for the three months ended June 30, 2022 were lower compared to the three months ended June 30, 2021 due to a decrease in share based compensation partially offset by increases in marketing spend. Operating expenses for the six months ended June 30, 2022 were higher compared to the six months ended June 30, 2021 driven by an increase in sales and marketing cost partially offset by lower non-cash compensation for services cost
Interest Expense
Interest expenses for the three and six months ended June 30, 2022 were lower compared to the three and six months ended June 30, 2021 due to the paydown of notes payable.
Net Loss
The net loss for the three months ended June 30, 2022 was lower compared to the three months ended June 30, 2021. The decrease in the net loss is due to our lower operating expenses and an increase in revenues. The net loss for the six months ended June 30, 2022 was higher compared to the six months ended June 30, 2021. The increase in the net loss is due to our higher cost of goods sold and operating expenses against the increase in revenues.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
As of June 30, 2022, we had total cash and cash equivalents of $4,206,208 as compared with $4,181,383 at December 31, 2021.
Net cash used for operating activities during the six months ended June 30, 2022 was $7,107,851 as compared to the net cash used by operating activities for the six months ended June 30, 2021 of $7,673,122. The primary reasons for the change in net cash used is due to losses sustained, increases in inventory and costs incurred in connection with the company’s shelf registration statement on Form S-3.
For the period ended June 30, 2022 and 2021, we did not use or receive cash relating to investing activities.
Net cash provided by financing activities during the six months ended June 30, 2022 was $7,132,676 compared to $19,477,363 provided from financing activities for the six months ended June 30, 2021. During the six months ended June 30, 2022, we received $9,203,074 from investors from the Company Shelf Registration Statement on Form S-3, which was offset by repayments to debt holders of $942,398 and financing fees associated with the Shelf Registration Statement $1,128,000.
20
CONTRACTUAL OBLIGATIONS
Minimum Royalty Payments:
We have a licensing agreement with ABG TapouT, LLC (“TapouT”). Under the licensing agreement, we have minimum royalty payments to TapouT for $653,400 in 2022.
Inventory Purchase Commitments:
None.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, and capital expenditures or capital resources.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for Smaller Reporting Companies.
ITEM 4. CONTROLS AND PROCEDURES
| (a) | Evaluation of Disclosure Controls and Procedures |
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities and Exchange Commission Act of 1934 reports is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As further discussed below, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, our chief executive officer and chief financial officer concluded that, because of certain material weaknesses in our internal control over financial reporting, our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of June 30, 2022.
21
We hired a consultant to advise on technical issues related to U.S. generally accepted accounting principles as relates to the maintenance of our accounting books and records and the preparation of our consolidated financial statements. Although we are aware of the risks associated with not having dedicated accounting personnel, we are also at an early stage in the development of our business. We anticipate expanding our accounting functions with dedicated staff and improving our internal accounting procedures and separation of duties when we can absorb the costs of such expansion and improvement with additional capital resources. In the meantime, management will continue to observe and assess our internal accounting function and make necessary improvements whenever they may be required. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. In addition, if we are unable to successfully remediate this material weakness and if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected and we may be unable to maintain compliance with applicable stock exchange listing requirements.
| (b) | Changes in Internal Controls over Financial Reporting |
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Our management assessed the effectiveness of the Company’s internal control over financial reporting at June 30, 2022, and this assessment identified some deficiencies in our internal control over financial reporting.
Remediation plan
The company has established two procedures to begin addressing the controls area. Each quarter Senior Managers respond to a questionnaire to identify areas that would impact the company’s financial statements to be reviewed against the reported financial statements. Also, quarterly financial packages are collected and reviewed with each subsidiary to analyze and ensure completeness of their financial statements.
Actions have been taken regarding the remediation plan, however there remain actions to complete:
| ● | Walk through and document critical process. This portion of the plan will commence in Q3 | |
| ● | Review resources and organizational structure to address segregation of duty issues and support the | |
| jobs assigned. The structure has been defined and resources are being identified. | ||
| ● | Implement a BI tool that will replace Excel worksheets that can be prone to errors. The tool has been selected and implementation is taking place. |
22
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On June 10, 2022, Copa Di Vino Corporation (“Copa”) filed a lawsuit against the Company in Broward County, Florida. The complaint alleges that the Company still owes part of the final payment under the December 24, 2020 Asset Purchase Agreement (“APA”) between Copa and the Company. Specifically, Copa maintains that 380,959 shares are owed. The parties are actively discussing amicable resolution on a framework both sides appear to be agreeable to. The Company will vigorously defend the case if a settlement is not reached. The result of litigation is uncertain, however, and no particular result can be assured.
ITEM 1A. RISK FACTORS
No new risk factors noted since our Annual Report on Form 10-K for the year ended December 31, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2022, we issued 550,000 shares of common stock in exchange for services, and 2,300,000 shares was S3 and 223,596 shares was convertible instruments. For the three-month-ended June 30, 2022 we issued 500,000 shares in exchange for service provided that were valued at a fair market value stock price based on the agreement date and 100,000 shares for cash. We recognized share-based compensation and warrant expense for the six-months ended June 30, 2022 of $4,122,702 which is classified within non-cash compensation on our Condensed Consolidated Statements of Operations.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
No disclosure required.
ITEM 5. OTHER INFORMATION
None.
23
ITEM 6. EXHIBITS
(a) Exhibits required by Item 601 of Regulation S-K.
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SPLASH BEVERAE GROUP, INC. | ||
| Date: August 15, 2022 | By: | /s/ Robert Nistico |
| Robert Nistico, Chairman and CEO | ||
| (principal executive officer) | ||
| Date: August 15, 2022 | By: | /s/ Ron Wall |
| Ron Wall, CFO | ||
| (principal accounting officer and principal financial officer) |
25
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert Nistico, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Splash Beverage Group Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within the registrant, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 15, 2022 |
| /s/ Robert Nistico |
| Robert Nistico |
| Chief Executive Officer |
| (principal executive officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ron Wall, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Splash Beverage Group Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within the registrant, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 15, 2022 |
| /s/ Ron Wall |
| Ron Wall |
| Chief Financial Officer |
| (principal accounting officer and principal financial officer) |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Form 10-Q of Splash Beverage Group Inc., a company duly formed under the laws of Nevada (the “Company”), for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert Nistico, President (Chief Executive Officer) of the Company, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 15, 2022 | /s/ Robert Nistico |
| Robert Nistico Chief Executive Officer (principal executive officer) |
This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to Canfield Medical Supply, Inc. and will be retained by Canfield Medical Supply, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Form 10-Q of Splash Beverage Group, Inc., a company duly formed under the laws of Nevada (the “Company”), for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ron Wall, Chief Financial Officer of the Company, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of her knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 15, 2022 | /s/ Ron Wall |
| Ron Wall Chief Financial Officer (principal accounting officer and principal financial officer) |
This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to Canfield Medical Supply, Inc. and will be retained by Canfield Medical Supply, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.