Endovia Health Sciences, Inc 10-Q for FY2022 Q3
Endovia Health Sciences, Inc. (EDVA)
About this 10-Q
Endovia Health Sciences, Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $4.87M
- up 72.3% from $2.83M a year earlier
- Net loss
- $5.14M
- compared with a net loss of $12.17M 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 November 14, 2022, there were shares of Common Stock issued and outstanding.
| SPLASH BEVERAGE GROUP, INC. |
| FORM 10-Q |
| September 30, 2022 |
TABLE OF CONTENTS
| Page | ||
| PART I: FINANCIAL INFORMATION | ||
| ITEM 1: | FINANCIAL STATEMENTS | 1 |
| Condensed Consolidated Balance Sheets | 1 | |
| Condensed Consolidated Statements of Operations | 2 | |
| Condensed Consolidated Statement of Changes in Shareholders’ Equity | 3 | |
| Condensed Consolidated Statements of Cash Flows | 4 | |
| Notes to the Condensed Consolidated Financial Statements | 5 | |
| ITEM 2: | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 18 |
| ITEM 3: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 20 |
| ITEM 4: | CONTROLS AND PROCEDURES | 20 |
| PART II: OTHER INFORMATION | ||
| ITEM 1 | LEGAL PROCEEDINGS | 22 |
| ITEM 1A: | RISK FACTORS | 22 |
| ITEM 2: | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 22 |
| ITEM 3: | DEFAULTS UPON SENIOR SECURITIES | 22 |
| ITEM 4: | MINE SAFETY DISCLOSURES | 22 |
| ITEM 5: | OTHER INFORMATION | 22 |
| ITEM 6: | EXHIBITS | 23 |
| SIGNATURES | 24 | |
| i |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| Splash Beverage Group, Inc. Condensed Consolidated Balance Sheets September 30, 2022 and December 31, 2021 (Unaudited) |
| Assets | ||||||||
| September 30, 2022 | December 31, 2021 | |||||||
| 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 assets, 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 (Deficit) | ||||||||
| Liabilities: | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | |||||||
| Right of use liability - current | ||||||||
| Due to related parties | ||||||||
| Related party notes payable | ||||||||
| Notes payable, current portion | ||||||||
| Liability to issue shares | ||||||||
| 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 September 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 financial statements.
| 1 |
| Splash Beverage Group, Inc. Condensed Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2022 and September 30, 2021 (Unaudited) |
| Three months ended September 30, | Nine months ended September 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): | ||||||||||||||||
| Other Income | ||||||||||||||||
| 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 (loss) from discontinued operations, net of tax | ( |
) | ( |
) | ||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Loss per share - continuing operations | ||||||||||||||||
| Basic and dilutive | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average number of common shares outstanding - continuing operations | ||||||||||||||||
| Basic | ||||||||||||||||
| Income(loss) per share - discontinued operations | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Dilutive | $ | $ | $ | $ | ||||||||||||
| Weighted average number of common shares outstanding - discontinued operations | ||||||||||||||||
| Basic | ||||||||||||||||
| Dilutive | ||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| 2 |
| Splash Beverage Group, Inc. Condensed Consolidated Statements of Changes in Shareholders’ Equity For the Three and Nine months ended September, 2022 and 2021 (Unaudited) |
| Total | ||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional | Accumulated | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Paid-In Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||
| Balances at December 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of warrants for services | — | — | ||||||||||||||||||||||||||
| Issuance of common stock for services | — | |||||||||||||||||||||||||||
| Issuance of common stock and warrants or 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 or cash | — | |||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at June 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance of warrants for services | — | — | ||||||||||||||||||||||||||
| Issuance of common stock for services | — | |||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at September 30, 2021 | $ | $ | $ | ( | ) | |||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional | Accumulated | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Paid-In Capital | Deficit | Equity (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 | ( | ) | ||||||||||||||||||||||||||
| Issuance of warrants for services | — | |||||||||||||||||||||||||||
| Issuance of common stock for APA | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Issuance of common stock and warrants for cash | — | |||||||||||||||||||||||||||
| Accumulated Comprehensive Income - Translation | ||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balances at September 30, 2022 | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
| Splash Beverage Group, Inc. Condensed Consolidated Statement Cash Flows For the Nine -Months Ended September 30, 2022 and 2021 (Unaudited) |
| Nine months ended | Nine months ended | |||||||
| September 30, | September 30, | |||||||
| 2022 | 2021 | |||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| ROU assets | ||||||||
| 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: | ||||||||
| Capital Expenditures | ( |
) | ||||||
| Net cash used in investing activities - continuing operations | ( |
) | ||||||
| Net cash used in investing activities - discontinued operations | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of Common stock | ||||||||
| Cash advance from shareholder | ( |
) | ||||||
| Repayment of cash advance | ( |
) | ||||||
| Proceeds from issuance of debt | ||||||||
| Principal repayment of debt | ( |
) | ( |
) | ||||
| ROU liability | ( |
) | ( |
) | ||||
| 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 (223,596 shares) | $ | $ | ||||||
| Liability issued for investment in SALT Tequila USA, LLC | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
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 B2B and B2C 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.
| 5 |
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 nine months ended September 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 September 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 September 30, 2022 we had $
| 6 |
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 September 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 September 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 | ||||||||
| September 30, 2022 | December 31, 2021 | |||||||
| Auto | $ | |||||||
| 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.
| 7 |
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 September 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.
| 8 |
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.
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.
Distribution expenses to transport our finished goods, where applicable, and warehousing expense are accounted for within cost of goods.
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
| 9 |
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
and marketing 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.
| 10 |
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.
| 11 |
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 | September 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 $ |
% | |||||||||||
| In August 2022, we entered into an 56-month auto loan in the amount of $ |
% | 44,713 | — | |||||||||
| Total notes payable and convertible notes payable |
$ | $ | ||||||||||
| Less current portion | ( |
) | ( |
) | ||||||||
| Long-term notes payable and convertible notes payable |
$ | $ | ||||||||||
Interest expense on notes payable was $
Interest expense on notes payable was $
| 12 |
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 | September 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 $
| 13 |
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 September
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
Common Stock
During the three-months ended September 30, 2022, the Company issued shares of common stock as part of the public offering and shares in settlement of litigation.
During the nine-months ended September 30, 2022, the Company issued shares of common stock as part of the public offerings, shares in exchange for services, shares in settlement of litigation, shares on convertible instruments, and shares for cash.
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
| 14 |
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 6 – Related Parties
There is a $
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
| 15 |
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 September 30, 2022:
| Undiscounted Future Minimum Lease Payments | Operating Lease | |||
| 2022 (three 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 September 30, 2022
| Schedule of lease costs | ||||
| Operating lease cost: | ||||
| Amortization of leased assets | ||||
| Interest of lease liabilities | ||||
| Total operating lease cost |
The table below presents lease-related terms and discount rates at September 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 | % | |||
| 16 |
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 | Nine-Months Ended | |||||||||||||||
| Net revenue | Q3 2022 | Q3 2021 | Q3 2022 | Q3 2021 | ||||||||||||
| Splash Beverage Group | ||||||||||||||||
| E-Commerce | ||||||||||||||||
| Total net revenues continuing operations | ||||||||||||||||
| Total net revenues discontinued operations | ||||||||||||||||
| Total assets | September 30, 2022 |
December 31, 2021 | ||||||
| Splash Beverage Group | ||||||||
| E-Commerce | ||||||||
| Medical Devices - Discontinued | ||||||||
| Total Assets | ||||||||
The Company has obligations to issue shares of its common stock at September 30, 2022 arising from the following transactions:
| · | shares in connection with the conversion of indebtedness in the
amount of $ | |
| · | Shares equal to $ in connection with consulting services provided | |
| · | shares in connection with consulting services provided | |
| · | shares in connection with consulting services provided | |
| · | shares in connection with consulting services provided |
Note 11 – Commitment and Contingencies
We are a party to asserted claims and are subject to regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but we do not anticipate that the outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial condition or results of operations.
Note 12– Subsequent Events
Subsequent to September 30, 2022 the Company’s Board approved the issuance of 225,000 shares associated with a 3 year contract and 18,519 shares for services. The Company issued 296,129 shares upon exercise of the underwriters’ over-allotment that generated gross amount of $459,000. We have extended a licensing agreement with ABG TapouT, LLC (“TapouT”) through 2028.
| 17 |
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 B2B and B2C customers. Q-plash markets well known beverage brands to customers throughout the US that prefer delivery direct to their office, facilities and or homes.
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.
On March 31, 2020, a wholly-owned subsidiary of a public entity called Canfield Medical Supply, Inc. (“CMS”) merged with and into Splash and Splash became a wholly-owned subsidiary of CMS. At the time of the merger CMS’s state of incorporation was Colorado. At the time of the merger CMS’s common stock was quoted on the OTCQB.
On July 31, 2020, we changed our name from Canfield Medical Supply, Inc. to Splash Beverage Group, Inc.
On June 11, 2021, our common stock and warrants to purchase common stock began trading on the NYSE American under the symbols “SBEV” and SBEV WS,” respectively
On November 8, 2021, we changed our state of incorporation from Colorado to Nevada.
On June 30, 2022, Management completed its plan to divest its CMS’s business.
In coordination with uplisting to the NYSE American on June 11, 2021 the Company consummated a 1.0 for 3.0 reverse stock split.
| 18 |
Results of Operations for the Three and Nine Months Ended September 30, 2022 compared to Three and Nine Months Ended September 30, 2021.
Net Revenue
Net revenues for the three and nine months ended September 30, 2022 were higher compared to revenues for the three and nine months ended September 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), a number of retail chain authorizations has led to increased distribution on the beverage portfolio and a price increase on CdV.
Cost of Goods Sold
Cost of goods sold for the three and nine months ended September 30, 2022 were higher compared to cost of goods sold for the three and nine months ended September 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 September 30, 2022 were lower compared to the three months ended September 30, 2021 due to a decrease in share based compensation partially offset by increases in marketing expenses. Operating expenses for the nine months ended September 30, 2022 were higher compared to the nine months ended September 30, 2021 driven by an increase in sales and marketing cost partially offset by lower non-cash compensation for services cost. In September 2021 we granted 1,065,000 options to purchase common stock of the Company to employees, consultants, and directors. These options vest over three years.
Interest Expense
Interest expenses for the three and nine months ended September 30, 2022 were lower compared to the three and nine months ended September 30, 2021 due to the paydown of notes payable.
Net Loss
The net loss for the three months ended September 30, 2022 was lower compared to the three months ended September 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 nine months ended September 30, 2022 was lower compared to the nine months ended September 30, 2021. The decrease in the net loss is due to our increase in e-commerce revenue and lower operating expenses.
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 September 30, 2022, we had total cash and cash equivalents of $2,601,270 as compared with $4,181,383 at December 31, 2021.
Net cash used for operating activities during the nine months ended September 30, 2022 was $10,626,135 as compared to the net cash used by operating activities for the nine months ended September 30, 2021 of $11,615,297. 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 nine months ended September 30, 2022, an SUV was purchased and financed with a loan. We did not use or receive cash relating to investing activities during the nine months ended September 30,2021
Net cash provided by financing activities during the nine months ended September 30, 2022 was $9,091,442 compared to $19,597,565 provided from financing activities for the nine months ended September 30, 2021. During the nine months ended September 30, 2022, we received $12,300,000 from investors from the Company Shelf Registration Statement on Form S-3, which was offset by repayments to debt holders of $1,285,861 and financing fees associated with the Shelf Registration Statement $1,738,896.
Inventory increased for the three months ended September in preparation to fulfil orders related to new retail chain authorizations.
| 19 |
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 September 30, 2022.
| 20 |
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 September 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. |
| 21 |
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 alleged that the Company still owed part of the final payment under the December 24, 2020 Asset Purchase Agreement (“APA”) between Copa and the Company. The Company settled the lawsuit with Copa Di Vino Corporation. This matter was settled in September 2022 without the admission of liability or wrongdoing on the part of Splash. In exchange for full release from COPA, the Company agreed to issue 380,959 shares of the Company’s common stock. The Company entered into the settlement solely to avoid the costs and uncertainty of litigation.
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, 2,300,000 shares pursuant to our public offering to increase working capital, and 223,596 shares were issued on 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. During the three-months ended September 30, 2022 we issued 2,000,000 shares pursuant to our public offering to support inventory increases. The Company also issued 380,959 shares in settlement of litigation. We recognized share-based compensation and warrant expense for the nine-months ended September 30, 2022 of $6,717,504 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.
| 22 |
ITEM 6. EXHIBITS
(a) Exhibits required by Item 601 of Regulation S-K.
| 23 |
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: November 14, 2022 | By: | /s/ Robert Nistico |
| Robert Nistico, Chairman and CEO | ||
| (principal executive officer) | ||
| Date: November 14, 2022 | By: | /s/ Ron Wall |
| Ron Wall, CFO | ||
| (principal accounting officer and principal financial officer) |
24
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: November 14, 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: November 14, 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 September 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: November 14, 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 September 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: November 14, 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.