IBG 20-F
Innovation Beverage Group Ltd (IBG)
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
OR
For the fiscal year ended
OR
OR
Date of event requiring this shell company report ____________
For the transition period from ____________ to ____________
Commission File No.: 333-[ ]
(Exact name of registrant as specified in its charter)
Translation of registrant’s name into English: Not applicable
| (Jurisdiction of incorporation or organization) | (Address of principal executive offices) |
Chief Executive Officer
Tel: +
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class to be registered | Trading Symbol(s) | Name of each exchange on which each class is to be registered | ||
share |
The |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2025: Ordinary Shares.
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
If this report is an annual or transition report,
indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act of 1934.
Yes ☐
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 during the preceding
12 months.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Emerging Growth Company |
If an emerging growth company that prepares its financial
statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act.
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has
filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report.
If securities are registered pursuant to Section 12(b)
of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements.
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
| International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark
whether the registrant is a shell company. Yes ☐
TABLE OF CONTENTS
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INTRODUCTION
Unless the context otherwise requires, references in this annual report on Form 20-F to the “Company,” “IBG,” “we,” “us,” “our” and other similar designations refer to Innovation Beverage Group Limited. All references to “ordinary shares” are to our ordinary shares, no par value.
The financial statements were prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
Unless otherwise indicated, or the context otherwise requires, references in this Annual Report to financial and operational data for a particular year refer to the fiscal year of our Company ended December 31 of that year.
Our reporting currency is the U.S. dollar. The functional currency of IBG is the Australian dollar, while the functional currency of our U.S. subsidiaries is the U.S. dollar. In this Annual Report, “AUD$” or “AUD” refer to Australian dollars, and “$,” “US$” and “U.S. dollars” refer to U.S. dollars.
On September 26, 2025, we effected a reverse split of our ordinary shares at a ratio of 1-for-5 (the “September Reverse Split”). On January 30, 2026, we effected an additional reverse split of our ordinary shares at a ratio of 1-for-5 (the “January Reverse Split,” and together with the September Reverse Split, the “Reverse Splits”). All share and per share amounts presented in this Annual Report, including the consolidated financial statements and related notes, have been retroactively adjusted to give effect to the Reverse Splits for all periods presented.
EMERGING GROWTH COMPANY STATUS
We qualify as an “emerging growth company,” as defined in the U.S. Jumpstart Our Business Startups Act of 2012, or JOBS Act, and we may take advantage of certain exemptions, including exemptions from various reporting requirements that are otherwise applicable to publicly traded entities that do not qualify as emerging growth companies. These exemptions include:
| ● | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act; and |
| ● | not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis). |
Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, for complying with new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of the accounting standards election, we will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies which may make comparison of our financials to those of other public companies more difficult. In addition, the information that we provide in this annual report may be different than the information you may receive from other public companies in which you hold equity interests.
We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion; (ii) the last day of the fiscal year following the fifth anniversary of the date of our initial public offering; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the aggregate worldwide market value of our ordinary shares, including ordinary shares represented by warrants, held by non-affiliates is at least $700 million as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during any three-year period.
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TRADEMARKS
We own or have rights to trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website names. All trademarks, service marks, or trade names referred to in this Annual Report on Form 20-F are the property of their respective owners. Solely for convenience, the trademarks, service names, and trade names in this Annual Report on Form 20-F are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that we and any of their other respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included or incorporated by reference in this Annual Report on Form 20-F may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often characterized by the use of forward-looking terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” or other similar words or expressions denoting uncertainty or an action that may, will or is expected to occur in the future, but are not the only way these statements are identified.
These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Examples of forward-looking statements include:
| ● | the timing of the development of future products; |
| ● | projections of revenue, earnings, capital structure and other financial items; |
| ● | statements regarding the capabilities of our business operations; |
| ● | statements of expected future economic performance; |
| ● | statements regarding competition in our market; and |
| ● | assumptions underlying statements regarding us or our business. |
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
Important factors that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the factors summarized below:
| ● | the size of the market opportunity for our products and future products; |
| ● | the success of competing products that are or may become available; |
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| ● | our plans relating to the further development of our future products, including additional products we may develop, manufacture, market, export, and/or retail; |
| ● | existing regulations and regulatory developments in the United States and other jurisdictions; |
| ● | our plans and ability to obtain or protect intellectual property rights and our ability to avoid infringing the intellectual property rights of others; |
| ● | the need to hire additional personnel and our ability to attract and retain such personnel; |
| ● | our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| ● | our financial performance; |
| ● | the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements; |
| ● | our ability to generate revenue and profit margin under our anticipated contracts which is subject to certain risks; |
| ● | our ability to restructure our operations to comply with future changes in government regulation; and |
| ● | those factors referred to in “Item 3.D. Risk Factors,” “Item 4. Information on the Company,” and “Item 5. Operating and Financial Review and Prospects,” as well as in this Annual Report on Form 20-F generally. |
These and other factors could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Consequently, you should not place undue reliance on these forward-looking statements.
These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this Annual Report on Form 20-F in greater detail under the heading “Risk Factors” and elsewhere in this Annual Report on Form 20-F. You should not rely upon forward-looking statements as predictions of future events.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Annual Report on Form 20-F. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
MARKET, INDUSTRY AND OTHER DATA
Market data and certain industry data and forecasts used throughout this Annual Report on Form 20-F were obtained from sources we believe to be reliable, including market research databases, publicly available information, reports of governmental agencies, and industry publications and surveys. We have relied on certain data from third party sources, including industry forecasts and market research, which we believe to be reliable based on our management’s knowledge of the industry. While we are not aware of any misstatements regarding the industry data presented in this Annual Report on Form 20-F, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” and elsewhere in this Annual Report on Form 20-F.
Statements made in this Annual Report on Form 20-F concerning the contents of any agreement, contract or other document are summaries of such agreements, contracts or documents and are not a complete description of all of their terms. If we filed any of these agreements, contracts or documents as exhibits to this Report or to any previous filing with the Securities and Exchange Commission, or SEC, you may read the document itself for a complete understanding of its terms.
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In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Cautionary Note Regarding Forward-Looking Statements.”
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
You should carefully consider the risks described below, together with all of the other information in this Annual Report on Form 20-F. The risks and uncertainties described below are those material risk factors, currently known and specific to us, that we believe are relevant to an investment in our securities. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also harm us. If any of these risks materialize our business, results of operations or financial condition could suffer, and the price of our ordinary shares could decline substantially.
Summary Risk Factors
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” below. Our business is subject to a number of risks of which you should be aware before a decision to invest in our Ordinary Shares. You should carefully consider all the information set forth in this annual report and, in particular, should evaluate the specific factors set forth in the risk factors below before deciding whether to invest in our Ordinary Shares. Among these important risks are, but not limited to, the following:
Potential decline in the consumption of products we sell due to consumer preference and taste could have a negative impact on our sales, operations, and business.
Our business depends upon consumers’ consumption of our beverage brands. Consumer preferences and tastes may shift due to, among other reasons, changing taste preferences, demographics, or perceived value. Consequently, any material shift in consumer preferences and taste in our major markets away from our beverage brands, or from the categories in which they compete could have a negative impact on our business, liquidity, financial condition, and/or results of operations. Consumer preferences may shift due to a variety of factors, including changes in demographic or social trends, and changes in leisure, dining, and beverage consumption patterns. A limited or general decline in consumption in one or more of our product categories could occur in the future due to a variety of factors, including:
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| ● | a general decline in economic or geopolitical conditions; | |
| ● | concern about the health consequences of consuming beverage alcohol products and about drinking and driving; | |
| ● | a general decline in the consumption of beverage alcohol products in on-premise establishments, which may result from stricter laws relating to driving while under the influence of alcohol; | |
| ● | the increased activity of anti-alcohol groups; |
| ● | increased federal, state, provincial, and foreign excise, or other taxes on beverage alcohol products and possible restrictions on beverage alcohol advertising and marketing; | |
| ● | increased regulation placing restrictions on the purchase or consumption of beverage alcohol products or increasing prices due to the imposition of duties or excise tax or changes to international trade agreements; | |
| ● | inflation; and | |
| ● | wars, health epidemics or pandemics, quarantines, weather, and natural or man-made disasters. |
Demand for our products may be adversely affected by changes in category trends and consumer preferences.
Consumer preferences for our beverage brands change continually. Our success depends on our ability to predict, identify and interpret the tastes and habits of consumers and to offer products that appeal to those preferences.
If we do not succeed in offering products that appeal to consumers, our sales and market share will decrease, and our profitability could suffer. We must be able to distinguish among short-term fads, mid-term trends, and long-term changes in consumer preferences. If we are unable to accurately predict which shifts in consumer preferences will be long-term, or if we fail to introduce new and improved products to satisfy those preferences, our sales could decline. In addition, because of our varied consumer base, we must offer a sufficient array of products to satisfy the broad spectrum of consumer preferences. If we fail to expand our product offerings successfully across product categories or if we do not rapidly develop products in faster growing and more profitable categories, demand for our products will decrease and our profitability could suffer.
We may experience a reduced demand for some of our products due to health concerns (including obesity) and legislative initiatives against sweetened beverages.
Consumers are concerned about health and wellness; public health officials and government officials are increasingly vocal about obesity and its consequences. There has been a trend among some public health advocates and dietary guidelines to recommend a reduction in sweetened beverages, as well as increased public scrutiny, new taxes on sugar-sweetened beverages (as described below), and additional governmental regulations concerning the marketing and labeling/packing of the beverage industry. Additional or revised regulatory requirements, whether labeling, tax or otherwise, could have a material adverse effect on our financial condition and results of operations. Further, increasing public concern with respect to sweetened beverages could reduce demand for our beverages and increase desire for more low-calorie soft drinks, water, enhanced water, coffee-flavored beverages, tea, and beverages with natural sweeteners. We are continuously working to reduce calories and sugar in our products while launching new products, to pair with existing brand extensions that round out our diversified portfolio.
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We may not be able to consummate proposed acquisitions or divestitures successfully or integrate acquired businesses successfully.
From time to time, we acquire businesses, assets, or securities of companies that we believe will provide a strategic fit with our business. We integrate acquired businesses with our existing operations; our overall internal control over financial reporting processes; and our financial, operations, and information systems. If the financial performance of our business, as supplemented by the assets and businesses acquired, does not meet our expectations, it may make it more difficult for us to service our debt obligations and our results of operations may fail to meet market expectations. We may not effectively assimilate the business or product offerings of acquired companies into our business or within the anticipated costs or timeframes, retain key customers and suppliers or key employees of acquired businesses, or successfully implement our business plan for the combined business. In addition, our final determinations and appraisals of the estimated fair value of assets acquired and liabilities assumed in our acquisitions may vary materially from earlier estimates, and we may fail to realize fully anticipated cost savings, growth opportunities, or other potential synergies. We cannot assure that the fair value of acquired businesses or investments will remain constant.
We may also divest ourselves of businesses, assets, or securities of companies that we believe no longer provide a strategic fit with our business. We may provide various indemnifications in connection with the divestiture of businesses or assets. Divestitures of portions of our business may also result in costs stranded in our remaining business. Delays in developing or implementing plans to address such costs could delay or prevent the accomplishment of our financial objectives.
In addition, our continued success depends, in part, on our ability to develop new products. The launch and ongoing success of new products are inherently uncertain, especially with respect to consumer appeal. A new product launch can give rise to a variety of costs. An unsuccessful launch, among other things, can affect consumer perception of existing brands, and our reputation. Unsuccessful implementation or short-lived popularity of our product innovations may result in inventory write-offs and other costs.
We cannot assure that we will realize the expected benefits of acquisitions, divestitures, or investments. We also cannot assure that our acquisitions, investments, or joint ventures will be profitable, that forecasts regarding our acquisitions, divestitures, or investment activities will be accurate, or that the internal control over financial reporting of entities which we must consolidate as a result of our investment activities will be as robust as the internal control over financial reporting for our wholly-owned entities. Our failure to adequately manage the risks associated with acquisitions or divestitures, or the failure of an entity in which we have an equity or membership interest, could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
We may not be able to retain and recruit executive management or build morale and performance amongst our workforce.
Our success depends upon the efforts and abilities of our executive management team, key senior management, and a high-quality employee base, as well as our ability to attract, motivate, reward, and retain them. If one of our executive officers or critical senior management terminates his or her employment, we may not be able to replace their expertise, fully integrate new personnel, or replicate the prior working relationships. The loss of critical employees might significantly delay or prevent the achievement of our business objectives. Qualified individuals with the breadth of skills and experience in our industry that we require are in high demand, and we may incur significant costs to attract them. Difficulties in hiring or retaining key executive or employee talent, or the unexpected loss of experienced employees could have an adverse impact on our business performance. In addition, we could experience business disruption and/or increased costs related to organizational changes, reductions in workforce, or other cost-cutting measures.
We may not be able to secure additional capital and achieve adequate liquidity to grow and compete.
We will require additional capital to operate, grow and compete, and failure to obtain such additional capital could limit our operations and our growth. We may need to raise additional funds through private or public equity and/or debt financing. We cannot assure that additional financing will be available to us on acceptable terms or at all. If additional capital is either unavailable or cost prohibitive, our operations and growth may be limited, and we may need to change our business strategy to slow the rate of, or eliminate, our expansion or to reduce or curtail our operations. Also, any additional financing we undertake could impose covenants upon us that restrict our operating flexibility, and, if we issue equity securities to raise capital, our existing shareholders may experience dilution and the new securities may have rights, preferences, and privileges senior to those of our ordinary shares.
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If we are not able to successfully execute on our future operating plans and objectives, our financial condition, and results of operation may be materially adversely affected, and we may not be able to continue as a going concern.
It is important that we meet our sales goals and increase sales going forward as our operating plan already reflects prior significant cost containment measures and may make it difficult to achieve top-line growth if further significant reductions become necessary. If we do not meet our sales goals, our available cash and working capital will decrease and our financial condition will be negatively impacted.
In order to be successful, we believe that we must, among other things:
| ● | increase the sales volume and gross margins for our products; | |
| ● | maintain efficiencies in operations; | |
| ● | manage our operating expenses to sufficiently support operating activities; | |
| ● | maintain fixed costs at or near current levels; and | |
| ● | avoid significant increases in variable costs relating to production, marketing, and distribution. |
We may not be able to meet these objectives, which could have a material adverse effect on our results of operations. We have incurred significant operating expenses in the past and may do so again in the future and, as a result, will need to increase revenues in order to improve our results of operations. Our ability to increase sales will depend primarily on success in expanding our current markets, improving our distribution base, entering into DTC arrangements with national accounts, and introducing new brands, products or product extensions to the market. Our ability to successfully enter new distribution areas and obtain national accounts will, in turn, depend on various factors, many of which are beyond our control, including, but not limited to, the continued demand for our brands and products in target markets, the ability to price our products at competitive levels, the ability to establish and maintain relationships with distributors in each geographic area of distribution and the ability in the future to create, develop and successfully introduce one or more new brands, products, and product extensions.
Our reliance on distributors, retailers, and brokers could affect our ability to efficiently and profitably distribute and market our products, maintain our existing markets and expand our business into other geographic markets.
Our ability to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to establish and maintain successful relationships with reliable distributors, retailers, and brokers strategically positioned to serve those areas. Most of our distributors, retailers, and brokers sell and distribute competing products, including non-alcoholic and alcoholic beverages, and our products may represent a small portion of their businesses. The success of this network will depend on the performance of the distributors, retailers, and brokers of this network. There is a risk that the mentioned entities may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities that may not be receptive to our product. Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition from other beverage companies who have greater resources than we do. To the extent that our distributors, retailers, and brokers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, including re-stocking the retail shelves with our products, our sales and results of operations could be adversely affected. Furthermore, such third-parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing, and sales activities.
Our ability to maintain and expand our distribution network and attract additional distributors, retailers, and brokers will depend on a number of factors, some of which are outside our control. Some of these factors include:
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| ● | the level of demand for our brands and products in a particular distribution area; | |
| ● | our ability to price our products at levels competitive with those of competing products; and | |
| ● | our ability to deliver products in the quantity and at the time ordered by distributors, retailers, and brokers. |
We may not be able to successfully manage all or any of these factors in any of our current or prospective geographic areas of distribution. Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results.
A key component of our business is our arrangement with Coca-Cola Europacific Partners (“CCEP”) to exclusively manufacture the bitters sold under the Australian Bitters Company brand for distribution in Australia. The disruption of this distribution strategy or the loss of this manufacturing and distribution partnership could result in a significant loss of revenue.
IBG exclusively manufactures Australian Bitters Company bitters for distribution in Australia due to our partnership with CCEP. In 2025, distribution and sales of our bitters under the Australian Bitters Company brand accounted for approximately 94% of our total revenue. If we fail to maintain good relations with CCEP and our agreement with CCEP were to expire or terminate, then we could incur a significant loss of revenue, which would negatively impact our results of operations.
Coca-Cola Europacific Partners could potentially terminate their agreement with us in the event of a change of control.
Under our Manufacturing Agreement (the “Agreement”) with Coca-Cola Europacific Partners, Coca-Cola Europacific Partners has the right to terminate the Agreement in the event of a change of control (as defined in the Agreement). Our initial public offering did not constitute a change of control for purposes of the Agreement unless an entity that is a direct competitor of Coca-Cola Europacific Partners in the beverage industry had come to hold, directly or indirectly, a legal or beneficial interest in any shares in the Company. There can be no assurance that Coca-Cola Europacific Partners will not determine that such a competitor had or has become a holder, directly or indirectly of a legal or beneficial interest in any shares in the Company. In addition, events may occur, or may have occurred, after the consummation of our initial public offering that would constitute a change of control under other elements of the definition of change of control set forth in the Agreement and thus trigger Coca-Cola Europacific Partners’ right to terminate the Agreement. Termination of the Agreement could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Upon the termination of the 2020 Manufacturing Agreement, two manufacturing and distribution licenses will expire, one of which would have a negative impact on our revenue.
On July 31, 2020, the Company (formerly known as Australian Boutique Spirits Pty Ltd) and Sway (formerly known as Elegance Brand, Inc.) entered into a Manufacturing, Supply and License Agreement, as amended on March 10, 2021, June 14, 2021, and October 21, 2022 (“2020 Manufacturing Agreement”). Upon the termination of the 2020 Manufacturing Agreement, two licenses granted thereunder will expire. Pursuant to said agreement, (i) IBG holds a royalty-free license to Twisted Shaker to manufacture, use and sell the product throughout the world, except the U.S., its territories and possessions; and (ii) Sway holds a royalty-free license to use the intellectual property rights associated with VOCO to manufacture, use and sell the brand in the U.S., its territories and possessions. The expiration of the license to manufacture and distribute Twisted Shaker would negatively impact our revenue as it accounted for $40,767 of our group consolidated revenue for fiscal year 2025, whereas the expiration of Sway’s royalty-free license to manufacture and distribute VOCO would return the rights to us. For further details about the 2020 Manufacturing Agreement, please see “Item 4. Business Overview-Material Agreements.”
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Under the 2020 Manufacturing Agreement, Sway has a right to a Favored Nations Price Adjustment and if we fail to comply with such a pricing obligation, Sway is entitled to terminate the agreement.
Sway is entitled to a Favored Nations Price Adjustment (as described further under the section “Material Agreements”) on one occasion only during each Anniversary Year (meaning the period from August 1 through July 31) and it only applies to sales and purchases of Covered Products (as defined in the section “Material Agreements”) in the next succeeding Anniversary Year. If IBG fails to provide Sway with a Favored Nations Price Adjustment to which it may be entitled, Sway may, at its option, in addition to all of its other rights under this Agreement or at law, terminate this Agreement without liability to IBG. The termination of the 2020 Manufacturing Agreement would adversely affect our revenue, financial condition and results of operations.
It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.
Our independent distributors and national accounts are not required to place minimum monthly or annual orders for our products. In order to reduce their inventory costs, independent distributors typically order products from us on a “just in time” basis in quantities and at such times based on the demand for the products in a particular distribution area. Accordingly, we cannot predict the timing or quantity of purchases by any of our independent distributors or whether any of our distributors will continue to purchase products from us in the same frequencies and volumes as they may have done in the past. Additionally, our larger distributors and national partners may make orders that are larger than we have historically been required to fill. Shortages in inventory levels, supply of raw materials, or other key supplies could negatively affect us.
If we do not adequately manage our inventory levels, our operating results could be adversely affected.
We need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis. Our inventory supply depends on our ability to correctly estimate demand for our products. Our ability to estimate demand for our products is imprecise, particularly for new products, seasonal promotions, and new markets. If we materially underestimate demand for our products or are unable to maintain sufficient inventory of raw materials, we might not be able to satisfy demand on a short-term basis. If we overestimate distributor or retailer demand for our products, we may end up with too much inventory, resulting in higher storage costs, increased trade spend, and the risk of inventory spoilage. If we fail to manage our inventory to meet demand, we could damage our relationships with our distributors and retailers and could delay or lose sales opportunities, which would unfavorably impact our future sales and adversely affect our operating results. In addition, if the inventory of our products held by our distributors and retailers is too high, they will not place orders for additional products, which would also unfavorably impact our sales and adversely affect our operating results.
We rely upon our ongoing relationships with our key flavor suppliers. If we are unable to source our flavors on acceptable terms from our key suppliers, we could suffer disruptions in our business.
We currently purchase our flavor concentrate from various flavor concentrate suppliers, and continually develop other sources of flavor concentrate for each of our products. Generally, flavor suppliers hold the proprietary rights to their flavor specific ingredients. Although we have the exclusive rights to flavor concentrates developed with our current flavor concentrate suppliers, and while we have the rights to the ingredients for our products, we do not have the list of ingredients for our flavor extracts and concentrates. Consequently, we may be unable to obtain these exact flavors or concentrates from alternative suppliers on short notice. If we have to replace a flavor supplier, we could experience disruptions in our ability to deliver products to our customers, which could have a material adverse effect on our results of operations.
We highly depend upon the protection of our trademarks and proprietary rights, and failure to protect our intellectual property rights may result in our inability to continue providing certain of our existing products and beverage brands.
Our future success depends significantly on our ability to protect our current and future brands and products and to defend our intellectual property rights. We have been granted trademark registrations covering our brands and products and have filed, and expect to continue to file, trademark applications seeking to protect newly developed brands and products. We cannot be sure that trademark registrations will be issued with respect to any of our trademark applications. We could also, by omission, fail to timely renew or protect a trademark and our competitors could challenge, invalidate, or circumvent any existing or future trademarks issued.
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Competition from traditional and large, well-financed non-alcoholic and alcoholic beverage manufacturers may adversely affect our distribution relationships and may hinder development of our existing markets, as well as prevent us from expanding our markets.
The beverage industry is highly competitive. We compete with other beverage companies not only for consumer acceptance but also for shelf space in retail outlets and for marketing focus by our distributors, all of whom also distribute other beverage brands. Our products compete with all non-alcoholic and alcoholic beverages, most of which are marketed by companies with substantially greater financial resources than ours. Some of these competitors are placing severe pressure on independent distributors not to carry competitive brands such as ours. We also compete with regional beverage producers and “private label” suppliers.
Increased competitor consolidations, market-place competition, particularly among branded beverage products, and competitive product and pricing pressures could impact our earnings, market share and volume growth. If, due to such pressure or other competitive threats, we are unable to sufficiently maintain or develop our distribution channels, we may be unable to achieve our current revenue and financial targets. Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our existing markets, as well as on our ability to expand the market for our products.
If we fail to protect our trademarks and trade secrets, we may be unable to successfully market our products and compete effectively.
We have an international registration of certain of our trademarks under the Madrid protocol. We also rely on a combination of trademark and trade secrecy laws, confidentiality procedures, formulation protection procedures and contractual provisions with employees and contractors to protect our intellectual property rights. Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks, copyrights, licenses, formulations and trade secrets, could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, and in particular our trademarks and trade secrets, to be of considerable value and importance to our business and our success. However, the steps taken by us to protect these proprietary rights may not be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade secrets, or similar proprietary rights. In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products, or recoup our associated research and development costs.
As part of the distribution strategy of our products, we grant licenses to distributors for their respective territory. Although our distribution agreements require that the use of our trademarks and designs is subject to our control and approval, any breach of these provisions, or any other action by any of our licensing partners that is harmful to our brands, goodwill and overall image, could have a material adverse impact on our business.
Supply of quality water, agricultural and other raw materials packaging materials purchased under short-term supply contracts, and glass bottles available from a limited group of suppliers, may harm our supplier which may affect our production costs and cause a shortage of our product supply.
The quality and quantity of water available for use is important to the supply of our agricultural raw materials and our ability to operate our business. Water is a limited resource in many parts of the world and if climate patterns change and droughts become more severe, there may be a scarcity of water or poor water quality which may affect our production costs or impose capacity constraints. We are dependent on sufficient amounts of quality water for operation of our facilities, as well as to conduct our other operations. The suppliers of the agricultural raw materials we purchase are also dependent upon sufficient supplies of quality water for their vineyards and fields. If water available to our operations or the operations of our suppliers becomes scarce or the quality of that water deteriorates, we may incur increased production costs or face manufacturing constraints. In addition, water purification and waste treatment infrastructure limitations could increase costs or constrain operation of our production facilities. A substantial reduction in water supplies could result in material losses of grape crops and vines or other crops, which could lead to a shortage of our product supply.
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Our facilities use a large volume of agricultural and other raw materials to produce their products. Our facilities all use large amounts of various packaging materials, including glass, aluminum, cardboard, and other paper products. Our production facilities also use electricity, natural gas, and diesel fuel in their operations. Certain raw materials and packaging materials are purchased under contracts of varying maturities. The supply, on-time availability and price of raw materials, packaging materials, and energy can be affected by many factors beyond our control, including market demand, global geopolitical events (especially as to their impact on crude oil prices), droughts, storms, and other weather conditions or natural or man-made events, economic factors affecting growth decisions, inflation, plant diseases, and theft.
Disruptions in our supply chains could impact our ability to continue production. To the extent any of the foregoing factors increases the costs of our finished products or lead to a shortage of our product supply, we could experience a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
The volatility of energy and increased regulations may have an adverse impact on our gross margin.
Over the past few years, volatility in the global oil markets has resulted in variable fuel prices, which many shipping companies have passed on to their customers by way of higher base pricing and increased fuel surcharges. If fuel prices continue to increase, we expect to experience higher shipping rates and fuel surcharges, as well as energy surcharges on our raw materials. It is hard to predict what will happen in the fuel markets in the remainder of 2026 and beyond. Due to the price sensitivity of our products, we may not be able to pass such increases on to our customers.
Disruption within our supply chain or distribution channels could have an adverse effect on our business, financial condition, and results of operations.
Our ability, through our suppliers, business partners, independent distributors, and retailers, to make, move and sell products is critical to our success. Damage or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion, terrorism, pandemics such as the COVID-19 pandemic, labor strikes, or other reasons, could impair the manufacture, distribution, and sale of our products. Many of these events are outside of our control. Failure to take adequate steps to protect against or mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition, and results of operations.
Our business operations may be interrupted and negatively affected due to economic and political uncertainties or changes associated with our international operations.
We operate facilities in Australia, which includes a distillery, and in the United States. These countries impose duties, excise taxes, and/or other taxes on beverage alcohol products, and/or on certain raw materials used to produce our beverage alcohol products, in varying amounts. Governmental bodies may propose changes to international trade agreements, treaties, taxes, and other government rules and regulations including but not limited to environmental treaties and regulations. Significant increases in import and excise duties or other taxes on, or that impact, beverage alcohol products could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
In addition, governmental agencies extensively regulate the beverage alcohol products industry concerning such matters as licensing, warehousing, trade and pricing practices, permitted and required labeling, advertising, and relations with wholesalers and retailers. Certain regulations also require warning labels and signage. New or revised regulations or increased licensing fees, requirements, or taxes could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations. Additionally, various jurisdictions may seek to adopt significant additional product labeling or warning requirements or limitations on the marketing or sale of our products because of what our products contain or allegations that our products cause adverse health effects. If these types of requirements become applicable to one or more of our major products under current or future environmental or health laws or regulations, they may inhibit sales of such products.
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These uncertainties and changes, as well as the decisions, policies, and economic strength of our suppliers and distributors, could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Volatility in the price or availability of the inputs we depend on, including raw materials, packaging, energy, and labor, could adversely impact our financial results.
The principal raw materials we use include glass bottles, aluminum cans, labels, and cardboard cartons, flavorings, and sweeteners. These ingredient costs are subject to fluctuation. Substantial increases in the prices of our ingredients, raw materials, and packaging materials, to the extent that they cannot be recouped through increases in the prices of finished beverage products, would increase our operating costs and could reduce our profitability. If our supply of these raw materials is impaired or if prices increase significantly, it could affect the affordability of our products and reduce sales.
If we are unable to secure sufficient ingredients or raw materials including glass, sugar, and other key supplies, we might not be able to satisfy demand on a short-term basis.
Operational disruptions or catastrophic loss to our properties, other production facilities, or distribution systems could cause delays in our production.
If any of our properties, production facilities, or distribution systems were to experience a significant operational disruption or catastrophic loss, it could delay or disrupt production, shipments, and revenue, and result in potentially significant expenses to repair or replace these properties. Also, our production facilities are asset intensive. As our operations are concentrated in a limited number of production and distribution facilities, we are more likely to experience a significant operational disruption or catastrophic loss in any one location from acts of war or terrorism, fires, floods, earthquakes, severe winter storms, hurricanes, pandemics, labor strike, or other labor activities, cyber-attacks, and other attempts to penetrate our information technology systems or the information technology used by our employees who work remotely, unavailability of raw or packaging materials, or other natural or man-made events. If a significant operational disruption or catastrophic loss were to occur, we could breach agreements, our reputation could be harmed, and our business, liquidity, financial condition, and/or results of operations could be adversely affected due to higher maintenance charges, unexpected capital spending, or product supply constraints.
Our insurance policies do not cover certain types of catastrophes and may not cover certain events such as pandemics. Economic conditions and uncertainties in global markets may adversely affect the cost and other terms upon which we are able to obtain property damage and business interruption insurance. If our insurance coverage is adversely affected, or to the extent we have elected to self-insure, we may be at greater risk that we may experience an adverse impact to our business, liquidity, financial condition, and/or results of operations.
Counterfeit or confusingly similar products sold by third parties could harm our brand and cause a decrease in our sales and operations.
To the extent that third parties sell products that are either counterfeit versions of our brands or brands that look like our brands, consumers of our brands could confuse our products with products that they consider inferior. This could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales and operations.
Failure to obtain satisfactory performance from our suppliers or loss of our existing suppliers could harm our business and as a result, our operations could suffer.
We do not have long-term, written agreements with any of our suppliers. The termination of our relationships or an adverse change in the terms of these arrangements could have a negative impact on our business. If our suppliers increase their prices, we may not be able to secure alternative suppliers, and may not be able to raise the prices of our products to cover all or even a portion of the increased costs. Also, our suppliers’ failure to perform satisfactorily or handle increased orders, delays in shipments of products from suppliers or the loss of our existing suppliers, especially our key suppliers, could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues. In turn, this could cause us to lose credibility in the marketplace and damage our relationships with distributors, ultimately leading to a decline in our business and results of operations. If we are not able to renegotiate these contracts on acceptable terms or find suitable alternatives, our business, financial condition, or results of operations could be negatively impacted.
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Failure of our U.S. distributors to distribute our products adequately within their territories could result in a decline of our operations.
In the U.S., we are required by law to use state-licensed distributors or, in 17 states known as “control states,” state-owned agencies performing this function, to sell our products to retail outlets, including liquor stores, bars, restaurants, and national chains in the United States. Our importer has established relationships for our brands with a limited number of wholesale distributors; however, failure to maintain those relationships could significantly and adversely affect our business, sales, and growth.
Over the past decade there has been increasing consolidation, both intrastate and interstate, among distributors. As a result, many states now have only two or three significant distributors. Also, there are several distributors that now control distribution for several states. If we fail to maintain good relations with a distributor, our products could, in some instances be frozen out of one or more markets entirely. The ultimate success of our products also depends in large part on our distributors’ ability and desire to distribute our products to our desired U.S. target markets, as we rely significantly on them for product placement and retail store penetration. In addition, all of our distributors also distribute competitive brands and product lines. We cannot assure you that our U.S. distributors will continue to purchase our products, commit sufficient time and resources to promote and market our brands and product lines, or that they can or will sell them to our desired or targeted markets. If they do not, our sales will be harmed, resulting in a decline in our results of operations.
If our third-party service providers and business partners do not satisfactorily fulfill their commitments and responsibilities, our financial results could suffer.
In the conduct of our business, we rely on relationships with third parties, including cloud data storage and other information technology service providers, suppliers, distributors, contractors, joint venture partners, and other external business partners, for certain functions or for services in support of key portions of our operations. These third-party service providers and business partners are subject to similar risks as we are, relating to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory, and market risks of their own. Our third-party service providers and business partners may not fulfill their respective commitments and responsibilities in a timely manner and in accordance with the agreed-upon terms. In addition, while we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational, and operational risk. If we are unable to effectively manage our third-party relationships, or for any reason our third-party service providers or business partners fail to satisfactorily fulfill their commitments and responsibilities, our financial results could suffer.
Pandemics, such as the global COVID-19 pandemic, outbreaks of communicable infections or diseases, or other public health concerns in the markets in which our consumers or employees live and/or in which we or our distributors, retailers, and suppliers operate may damage our business and disrupt our operations.
Disease outbreaks and other public health conditions could result in disruptions and damage to our business caused by potential negative consumer purchasing behavior as well as disruption to our supply chains, production processes, and operations. Consumer purchasing behavior may be impacted by reduced consumption by consumers who may not be able to leave home or otherwise shop in a normal manner as a result of quarantines or other cancellations of public events and other opportunities to purchase our products, from bar and restaurant closures, or from a reduction in consumer discretionary income due to reduced or limited work and layoffs. Supply disruption may result from restrictions on the ability of employees and others in the supply chain to travel and work, caused by quarantine or individual illness, or which may result from border closures imposed by governments to deter the spread of communicable infection or disease, or determinations by us or our suppliers or distributors to temporarily suspend operations in affected areas, or other actions which restrict the ability to distribute our products or which may otherwise negatively impact our ability to produce, bottle, and ship our product, for our distributors to distribute our products, or for our suppliers to provide us our raw materials. Ports or channels of entry may be closed or operate at only a
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portion
of capacity, or transportation of products within a region or country may be limited, if workers are unable to report to work due to travel
restrictions or personal illness. Our operations and the operations of our suppliers may become less efficient or otherwise become negatively
impacted if our executive leaders or other personnel critical to our operations are unable to work or if a significant percentage of the
workforce is unable to work or is required to work from home. Our cyber-security could be compromised if persons who are forced to work
from home do not maintain adequate information security. A prolonged quarantine or border closure could result in temporary or longer-term
disruptions of sales patterns, consumption and trade patterns, supply chains, production processes, and operations. A widespread health
crisis, such as the COVID-19 pandemic, could negatively affect the economies and financial markets of many countries resulting in a global
economic downturn, which could negatively impact demand for our products and our ability to borrow money. Any of these events could have
a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Contamination and degradation of product quality from diseases, pests, and the effects of weather and climate conditions could delay, disrupt, and harm our sales and operations.
Contamination, whether arising accidentally or through deliberate third-party action, or other events that harm the integrity or consumer support for our brands, could adversely affect sales. Various diseases, pests, fungi, viruses, drought, frosts, and certain other weather conditions or the effects of climate conditions, such as smoke taint from wildfires, could affect the quality and quantity of agricultural raw materials available, decreasing the supply and quality of our products. Similarly, power disruptions due to weather conditions could adversely impact our production processes and the quality of our products. We cannot guarantee that we and/or our suppliers of agricultural raw materials will succeed in preventing contamination in existing and/or future vineyards or fields. Future government restrictions regarding the use of certain materials used in growing grapes or other agricultural raw materials may increase vineyard costs and/or reduce production of grapes or other crops. It is also possible that a supplier may not provide materials or product components which meet our required standards or may falsify documentation associated with the fulfillment of those requirements.
Product contamination or tampering or the failure to maintain our standards for product quality, safety, and integrity, including with respect to raw materials, naturally occurring compounds, packaging materials, or product components obtained from suppliers, may also reduce demand for our products or cause production and delivery disruptions. Contaminants or other defects in raw materials, packaging materials, or product components purchased from third parties and used in the production of our products, or defects in the fermentation or distillation process could lead to low beverage quality as well as illness among, or injury to, consumers of our products and may result in reduced sales of the affected brand or all our brands.
If any of our products become unsafe or unfit for consumption, are misbranded, or cause injury, we may have to engage in a product recall and/or be subject to liability and incur additional costs. A widespread product recall, multiple product recalls, or a significant product liability judgment could cause our products to be unavailable for a period, which could further reduce consumer demand and brand equity.
Class action or other litigation relating to abuse of our products, the misuse of our products, product liability, or marketing or sales practices could cause a disruption in our operations.
There has been public attention directed at the beverage alcohol industry, which we believe is due to concern over problems related to harmful use of alcohol, including drinking and driving, underage drinking, and health consequences from the misuse of alcohol. We could be exposed to lawsuits relating to product liability or marketing or sales practices. Adverse developments in lawsuits concerning these types of matters or a significant decline in the social acceptability of beverage alcohol products that may result from lawsuits could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
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Failure of our distributors to secure and maintain listings in the control states in the U.S. could cause our sales to decrease which will negatively impact our operations.
In the control states, the state liquor commissions act in place of distributors and decide which products are to be purchased and offered for sale in their respective states. Products selected for listing in control states must generally reach certain volumes and/or profit levels to maintain their listings. Products in control states are selected for purchase and sale through listing procedures, which are generally made available to new products only at periodically scheduled listing interviews. Products not selected for listings can only be purchased by consumers in the applicable control state through special orders, if at all. If, in the future, we are unable to maintain our current listings in the control states, or secure and maintain listings in those states for any additional products we may develop or acquire, sales of our products could decrease significantly, which would have a material adverse financial effect on our results of operations and financial condition.
Failure of our key or service product information technology systems, a cyber-security breach, or cyber-related fraud could negatively impact our business, operations, and reputation.
We rely on information technology (“IT”) systems, networks, and services, including internet sites, data hosting and processing facilities and tools, hardware (including laptops and mobile devices), and software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist us in the management of our business.
Increased IT security threats and more sophisticated cyber-crime, pose a potential risk to the security of our IT systems, networks, and services, as well as to the confidentiality, availability, and integrity of our data. If the IT systems, networks, or service providers we rely upon fail to function properly, or if we suffer a loss or disclosure of business or other sensitive information, due to any number of causes, ranging from catastrophic events to power outages to security breaches, and our business continuity plans do not effectively address these failures on a timely basis, we may suffer interruptions in our ability to manage operations and reputational, competitive, and/or business harm, which may adversely affect our business operations and/or financial condition. In addition, such events could result in unauthorized disclosure of material confidential information, and we may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to us or to our partners, our employees, customers, suppliers, or consumers. In any of these events, we could also be required to spend significant financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and IT systems.
Litigation and litigation risks may have an adverse impact on our operations, business, and reputation.
From time to time, we may become involved in various litigation matters and claims, including employment, regulatory proceedings, administrative proceedings, governmental investigations, and contract disputes. We could face potential claims or liability for, among other things, breach of contract, defamation, libel, fraud, or negligence. We may also face employment-related litigation, including claims of age discrimination, sexual harassment, gender discrimination, immigration violations, or other local, state, and federal labor law violations. Because of the uncertain nature of litigation and insurance coverage decisions, the outcome of such actions and proceedings cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation, brand identity, and the trading price of our securities. Any such litigation, with or without merit, could also result in substantial expenditures of time and money, and divert attention of our management team from other tasks important to the success of our business.
Product liability or other related liabilities could lead to litigation which could damage our operations, business, and reputations.
Although we maintain liability insurance and will attempt to limit our contractual liability for damages arising from our products, these measures may not be sufficient for us to successfully avoid or limit product liability or other related liabilities. Our product liability insurance coverage is limited to AUD$1 million per occurrence and AUD$2 million in the aggregate and our general liability umbrella policy is capped at AUD$5 million, which may be insufficient. Further, any contractual indemnification and insurance coverage we have from parties supplying our products is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by these suppliers. In any event, extensive product liability claims could be costly to defend and/or costly to resolve and could harm our reputation or business.
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If we encounter product recalls or other product quality issues, our business may suffer.
Product quality issues, real or imagined, or allegations of product contamination, even when false or unfounded, could tarnish our image and could cause consumers to choose other products. In addition, because of changing government regulations or implementation thereof, or allegations of product contamination, we may be required from time to time to recall products entirely or from specific markets. Product recalls could affect our profitability and could negatively affect brand image.
Our business is subject to many regulations and noncompliance is costly.
The production, marketing and sale of our beverages, including contents, labels, caps, and containers, are subject to the rules and regulations of various federal, provincial, state, and local health agencies. If a regulatory authority finds that a current or future product or production batch or “run” is not in compliance with any of these regulations, we may be fined, or production may be stopped, which would adversely affect our financial condition and results of operations. Similarly, any adverse publicity associated with any noncompliance may damage our reputation and our ability to successfully market our products. Furthermore, the rules and regulations are subject to change from time to time and while we closely monitor developments in this area, we cannot anticipate whether changes in these rules and regulations will impact our business adversely. Additional or revised regulatory requirements, whether labeling, environmental, tax or otherwise, could have a material adverse effect on our financial condition and results of operations.
Significant additional labeling or warning requirements may inhibit sales of affected products.
Various jurisdictions may seek to adopt significant additional product labeling or warning requirements relating to the chemical content or perceived adverse health consequences of certain of our products. These types of requirements, if they become applicable to one or more of our products under current or future environmental or health laws or regulations, may inhibit sales of such products. In California, a law requires that a specific warning appear on any product that contains a component listed by the state as having been found to cause cancer or birth defects. This law recognizes no generally applicable quantitative thresholds below which a warning is not required. If a component found in one of our products is added to the list, or if the increasing sensitivity of detection methodology that may become available under this law and related regulations as they currently exist, or as they may be amended, results in the detection of an infinitesimal quantity of a listed substance in one of our beverages produced for sale in California, the resulting warning requirements or adverse publicity could affect our sales.
Our business and operations would be adversely impacted in the event of a failure or interruption of our information technology infrastructure or as a result of a cybersecurity attack.
The proper functioning of our own information technology (IT) infrastructure is critical to the efficient operation and management of our business. We may not have the necessary financial resources to update and maintain our IT infrastructure, and any failure or interruption of our IT system could adversely impact our operations. In addition, our IT is vulnerable to cyber-attacks, computer viruses, worms and other malicious software programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our computer systems. We believe that we have adopted appropriate measures to mitigate potential risks to our technology infrastructure and our operations from these IT-related and other potential disruptions. However, given the unpredictability of the timing, nature, and scope of any such IT failures or disruptions, we could potentially be subject to downtimes, transactional errors, processing inefficiencies, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our cash flows, competitive position, financial condition, or results of operations.
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If we fail to comply with personal data protection and privacy laws, we could be subject to adverse publicity, government enforcement actions, and/or private litigation, which could negatively affect our business and operating results.
In the ordinary course of our business, we receive, process, transmit, and store information relating to identifiable individuals (“personal data”), primarily employees, former employees, and consumers with whom we interact. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws have been subject to frequent changes, and new legislation in this area may be enacted in other jurisdictions at any time. These laws impose operational requirements for companies receiving or processing personal data, and many provide for significant penalties for noncompliance. These requirements with respect to personal data have subjected and may continue in the future to subject us to, among other things, additional costs and expenses and have required and may in the future require costly changes to our business practices and information security systems, policies, procedures, and practices. Our security controls over personal data, the training of employees and vendors on data privacy and data security, and the policies, procedures, and practices we implemented or may implement in the future may not prevent the improper disclosure of personal data by us or the third-party service providers and vendors whose technology, systems and services we use in connection with the receipt, storage, and transmission of personal data. Unauthorized access or improper disclosure of personal data in violation of personal data protection or privacy laws could harm our reputation, cause loss of consumer confidence, subject us to regulatory enforcement actions (including fines), and result in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines, and/or criminal prosecution, all of which could negatively affect our business and operating results.
International operations, worldwide and domestic economic trends, financial market conditions, geopolitical uncertainty, changes to international trade agreements and import and excise duties, other taxes, or other governmental rules and regulations could have a material adverse effect on our business and operations.
Risks associated with international operations, any of which could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations, include:
| ● | changes in local political, economic, social, and labor conditions; | |
| ● | potential disruption from socio-economic violence, including terrorism and drug-related violence; | |
| ● | restrictions on foreign ownership and investments or on repatriation of cash earned in countries outside the U.S.; | |
| ● | import and export requirements and border accessibility; | |
| ● | currency exchange rate fluctuations; | |
| ● | a less developed and less certain legal and regulatory environment in some countries, which, among other things, can create uncertainty regarding contract enforcement, intellectual property rights, privacy obligations, real property rights, and liability issues; and | |
| ● | inadequate levels of compliance with applicable anti-bribery laws, including the Foreign Corrupt Practices Act. |
Unfavorable global or regional economic conditions, including economic slowdown and the disruption, volatility, and tightening of credit and capital markets, as well as unemployment, tax increases, governmental spending cuts, or a return of high levels of inflation, could affect consumer spending patterns and purchases of our products. These could also create or exacerbate credit issues, cash flow issues, and other financial hardships for us and our suppliers, distributors, retailers, and consumers. The inability of suppliers, distributors, and retailers to access liquidity could impact our ability to produce and distribute our products.
We are also exposed to risks associated with interest rate fluctuations. We could experience changes in our ability to manage fluctuations in interest rates and, accordingly, there can be no assurance that we will be successful in reducing those risks.
We could also be affected by nationalization of our international operations, unstable governments, unfamiliar or biased legal systems, intergovernmental disputes or animus against the U.S. Any determination that our operations or activities did not comply with applicable U.S. or foreign laws or regulations could result in the imposition of fines and penalties, interruptions of business, terminations of necessary licenses and permits, and other legal and equitable sanctions.
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We are subject to risks inherent in sales of products in international markets.
Our operations outside of the United States constitute a significant portion of our revenue and profitability, and we believe that developing and emerging markets could present future growth opportunities for us. However, there can be no assurance that existing or new products that we manufacture, distribute, or sell will be accepted or be successful in any particular foreign market, due to local or global competition, product price, cultural differences, consumer preferences, or otherwise. There are many factors that could adversely affect demand for our products in foreign markets, including our inability to attract and maintain key distributors in these markets; volatility in the economic growth of certain of these markets; changes in economic, political or social conditions; the status and renegotiations of the North American Free Trade Agreement; imposition of new or increased labeling, product or production requirements, or other legal restrictions; restrictions on the import or export of our products or ingredients or substances used in our products; inflationary currency, devaluation or fluctuation; and increased costs of doing business due to compliance with complex foreign and U.S. laws and regulations. If we are unable to effectively operate or manage the risks associated with operating in international markets, our business, financial condition, or results of operations could be adversely affected.
Damage to our reputation could harm our business and cause a decline in our sales.
The success of our brands depends upon the positive image that consumers have of those brands and maintaining a good reputation is critical to selling our branded products. Our reputation could also be impacted negatively by public perception, adverse publicity (whether or not valid, such as the similarity of the name of certain of our brands or trademarks and a type of virus), negative comments in social media, or our responses relating to:
| ● | a perceived failure to maintain high ethical and ESG standards and practices for all our operations and activities; | |
| ● | a perceived failure to address concerns relating to the quality, safety, or integrity of our products, including from contamination, whether arising accidentally or through deliberate third-party action; | |
| ● | allegations that we, or persons associated with us or formerly associated with us, have violated applicable laws or regulations, including but not limited to those related to safety, employment, discrimination, harassment, whistle-blowing, privacy, corporate citizenship, improper business practices, or cyber-security; | |
| ● | our environmental impact, including use of agricultural materials, packaging, water and energy use, and waste management; or | |
| ● | efforts that are perceived as insufficient to promote the responsible use of alcohol. |
Failure to comply with federal, state, or local laws and regulations, maintain an effective system of internal controls, provide accurate and timely financial statement information, or protect our information systems against service interruptions, misappropriation of data, or breaches of security, could also hurt our reputation. Damage to our reputation or loss of consumer confidence in our products for any of these or other reasons could result in decreased demand for our products and could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations, as well as require additional resources to rebuild our reputation, competitive position, and brand equity and renew investor confidence.
Due to the highly competitive market we operate in, our sales and operations could be negatively affected by our competitors.
We are in a highly competitive industry and our sales could be negatively affected by numerous factors including:
| ● | our inability to maintain or increase prices; | |
| ● | new entrants in our market or categories; | |
| ● | the decision of wholesalers, retailers, or consumers to purchase competitors’ products instead of ours; or | |
| ● | a general decline in beverage alcohol consumption due to consumer dietary preference changes or consumers substituting legalized marijuana or other similar products in lieu of beverage alcohol. |
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Sales could also be affected by pricing, purchasing, financing, operational, advertising, or promotional decisions made by wholesalers, state and other local agencies, and retailers which could affect their supply of, or consumer demand for, our products. We could also experience higher than expected selling, general, and administrative expenses if we find it necessary to increase the number of our personnel or our advertising or marketing expenditures to maintain our competitive position or for other reasons. We cannot guarantee that we will be able to increase our prices to pass along to our customers any increased costs we incur.
Our intangible assets, such as customer contracts, software development costs, a liquor license and contract services, could have a material adverse effect in the event of a write-down of the assets.
We have a significant amount of intangible assets such as customer contracts, software development costs, a liquor license and contract services and may acquire more intangible assets in the future. Intangible assets are subject to a periodic impairment evaluation under applicable accounting standards. The write-down of any of these intangible assets could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Changes to tax laws, fluctuations in our effective tax rate, accounting for uncertain tax positions, the resolution of tax disputes, and changes to accounting standards, elections, or assertions could harm our business and operations.
The U.S. federal budget and individual state, provincial, local municipal budget deficits, or deficits in other governmental entities, could result in increased taxes on our products, business, customers, or consumers. Various proposals to increase taxes on beverage alcohol products have been made at the federal and state levels or at other governmental bodies in recent years. Federal, state, provincial, local, or foreign governmental entities may consider increasing taxes upon beverage alcohol products as they explore available alternatives for raising funds.
In addition, significant judgment is required to determine our effective tax rate and evaluate our tax positions. Our provision for income taxes includes a provision for uncertain tax positions. Fluctuations in federal, state, local, and foreign taxes, or a change to uncertain tax positions, including related interest and penalties, may impact our effective tax rate and our financial results. When tax matters arise, several years may elapse before such matters are audited and finally resolved. Unfavorable resolution of any tax matter could increase our effective tax rate and resolution of a tax issue may require the use of cash in the year of resolution.
U.S. tax changes or changes in how international corporations are taxed, including changes in how existing tax laws are interpreted or enforced, or changes to accounting standards, elections or assertions could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
We may be required in the future to record a significant charge to earnings if our intangible assets become impaired.
Under United States Generally Accepted Accounting Principles (“U.S. GAAP”), we are required to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverable include, declining or slower than anticipated growth rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth rates in our industry. We may be required in the future to record a significant charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. We had a zero balance for the years ended December 31, 2024 and 2025.
Our results of operations may fluctuate from quarter to quarter for many reasons, including seasonality.
Our sales are seasonal and we experience fluctuations in quarterly results as a result of many factors. Companies similar to ours have historically generated a greater percentage of our revenues during the warm weather months of September through December. Timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another. As a result, management believes that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the fiscal year.
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Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.
U.S. GAAP and related pronouncements, implementation guidelines, and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, stock-based compensation, trade spend and promotions, and income taxes are highly complex and involve many subjective assumptions, estimates, and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, estimates, or judgments by our management could significantly change our reported results.
If we are unable to maintain effective disclosure controls and procedures and internal control over financial reporting, our stock price and investor confidence could be materially and adversely affected.
We are required to maintain both disclosure controls and procedures and internal control over financial reporting that are effective. Because of their inherent limitations, internal control over financial reporting, however well designed and operated, can only provide reasonable, and not absolute, assurance that the controls will prevent or detect misstatements. Because of these and other inherent limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions. The failure of controls by design deficiencies or absence of adequate controls could result in a material adverse effect on our business and financial results, which could also negatively impact our stock price and investor confidence.
We have identified material weaknesses in our internal control over financial reporting, which resulted in the restatement of our previously issued financial statements for fiscal year 2024. If we fail to maintain effective internal controls over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations and/or prevent fraud.
Our management identified material weaknesses in our internal control over financial reporting relating to (i) insufficient written policies and procedures to ensure the correct application of accounting and financial reporting with respect to current U.S. GAAP and SEC disclosure requirements; (ii) the lack of segregation of duties, because, due to our size and nature, segregation of all conflicting duties may not always be possible or economically feasible; and (iii) inadequate controls to ensure that all material transactions and developments with related parties are properly identified, approved and reported. These material weaknesses contributed to errors requiring the restatement of our previously issued consolidated financial statements for fiscal year 2024, as described in Note 3 to the consolidated financial statements included elsewhere in this Annual Report. We have begun remediation efforts, including enhancing our accounting policies and procedures, evaluating additional accounting resources, and strengthening our controls over the identification and reporting of related-party transactions, but our remediation efforts may be time-consuming and costly and may not be successful. If we are unable to remediate these material weaknesses, we may be unable to provide reliable financial information, meet our reporting obligations or prevent fraud, and could be subject to sanctions or other regulatory action. Any of these outcomes could adversely affect our business, financial condition and results of operations, our stock price and investor confidence. As an emerging growth company, our independent registered public accounting firm is not required to provide an attestation report on management’s assessment of our internal control over financial reporting.
The restatement of our previously issued financial statements may subject us to additional risks and uncertainties, including increased regulatory scrutiny, litigation risk, and loss of investor confidence.
The restatement could lead to an SEC inquiry or investigation and may subject us to shareholder litigation or other claims. It could also make it more difficult for us to maintain compliance with Nasdaq listing requirements, impair our ability to raise capital on acceptable terms or at all, and subject the Company to reputational harm. Any of these risks could materially and adversely affect our business, financial condition, results of operations, stock price and investor confidence.
We face substantial competition in the alcoholic beverage industry, and we may not be able to effectively compete.
Consolidation among spirits producers, distributors, wholesalers, or retailers could create a more challenging competitive landscape for our products. Consolidation at any level could hinder the distribution and sale of our products as a result of reduced attention and resources allocated to our brands, both during and after transition periods, because our brands might represent a smaller portion of the new business portfolio. Expansion into new product categories by other suppliers, or innovation by new entrants into the market, could increase competition in our product categories. Changes to our distribution channels or partners in important markets could result in temporary or longer-term sales disruption, higher implementation-related or fixed costs, and could negatively affect other business relationships we might have with that partner. Distribution network disruption or fluctuations in our product inventory levels with distributors, wholesalers, or retailers could negatively affect our results for a particular period.
Our competitors may respond to industry and economic conditions more rapidly or effectively than we do. Our competitors offer products that compete directly with ours for shelf space, promotional displays, and consumer purchases. Pricing, (including price promotions, discounting, couponing, and free goods), marketing, new product introductions, entry into our distribution networks, and other competitive behavior by our competitors could adversely affect our sales margins, and profitability.
Our business operations may be adversely affected by social, political, and economic conditions affecting market risks and the demand for and pricing of our products.
These risks include:
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| ● | Unfavorable economic conditions and related low consumer confidence, high unemployment, weak credit or capital markets, sovereign debt defaults, sequestrations, austerity measures, higher interest rates, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations; | |
| ● | Changes in laws, regulations, or policies - especially those that affect the production, importation, marketing, sale, or consumption of our beverage alcohol products; | |
| ● | Tax rate changes (including excise, sales, duties, corporate, individual income, dividends, capital gains), or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur; | |
| ● | Dependence upon the continued growth of brand names; |
| ● | Changes in consumer preferences, consumption, or purchase patterns, and our ability to anticipate and react to them; | |
| ● | Bar, restaurant, travel, or other on premise declines; | |
| ● | Unfavorable consumer reaction to our products, package changes, product reformulations, or other product innovation; | |
| ● | Decline in the social acceptability of beverage alcohol products in our markets; | |
| ● | Production facility or supply chain disruption; | |
| ● | Imprecision in supply/demand forecasting; | |
| ● | Higher costs, lower quality, or unavailability of energy, input materials, labor, or finished goods; | |
| ● | Direct-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher implementation--related or fixed costs; | |
| ● | Inventory fluctuations in our products by distributors, wholesalers, or retailers; | |
| ● | Competitors’ consolidation or other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets; | |
| ● | Insufficient protection of our intellectual property rights; | |
| ● | Product recalls or other product liability claims; | |
| ● | Product counterfeiting, tampering, or product quality issues; | |
| ● | Significant legal disputes and proceedings; | |
| ● | Government investigations (particularly of industry or company business, trade or marketing practices); | |
| ● | Failure or breach of key information technology systems; | |
| ● | Negative publicity related to our company, brands, marketing, personnel, operations, business performance or prospects; and | |
| ● | Business disruption, decline, or costs related to organizational changes, reductions in workforce, or other cost-cutting measures, or our failure to attract or retain key executive or employee talent. |
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Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations.
Global economic uncertainties, including foreign currency exchange rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us.
The market price of our ordinary shares may be highly volatile, and you could lose all or part of your investment.
The trading price of our ordinary shares is likely to be volatile. We have a relatively small public float due to the relatively small size of our initial public offering, and the concentrated ownership of our ordinary shares among our executive officers, directors and greater than 5% stockholders. As a result of our small public float, our ordinary shares may be less liquid and have greater stock price volatility than the ordinary shares of companies with broader public ownership.
Our stock price could be subject to wide fluctuations in response to a variety of other factors, which include:
| ● | whether we achieve our anticipated corporate objectives; | |
| ● | changes in financial or operational estimates or projections; | |
| ● | general economic or political conditions in the United States or elsewhere. |
In addition, the stock market in general has recently experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Such rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares. This volatility may prevent you from being able to sell your ordinary shares at or above the price you paid for them. If the market price of our ordinary shares after this offering does not exceed the price at which you purchase our ordinary shares, you may not realize any return on your investment in us and may lose some or all of your investment.
An investment in our ordinary shares is speculative and there can be no assurance of any return on any such investment.
An investment in our ordinary shares is speculative and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.
Future sales of ordinary shares, or the perception of such future sales, by some of our existing shareholders could cause the price of our ordinary shares to decline.
The market price of our ordinary shares could decline as a result of sales of a large number of shares of our ordinary shares in the market or the perception that these sales may occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell ordinary shares in the future at a time and at a price that we deem appropriate.
From time to time, certain of our shareholders may be eligible to sell all or some of their ordinary shares by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate shareholders may sell freely subject only to the current public information requirement. Affiliates may sell subject to the Rule 144 volume, manner of sale (for equity securities), and current public information and notice requirements.
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We do not expect to pay dividends and investors should not buy our ordinary shares expecting to receive dividends.
We do not anticipate that we will declare or pay any dividends in the foreseeable future. Consequently, you will only realize an economic gain on your investment in our ordinary shares if the price appreciates. You should not purchase our ordinary shares expecting to receive cash dividends. Since we do not pay dividends, in the absence of an orderly trading market for our ordinary shares, then you may not have any manner to liquidate or receive any payment on your investment. Therefore, our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations. In addition, because we do not anticipate that we will pay dividends, we may have trouble raising additional funds which could affect our ability to expand our business operations.
There can be no assurances that our ordinary shares will not be subject to potential delisting if we do not continue to maintain the listing requirements of Nasdaq.
Nasdaq has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing (i.e., being de-listed from the Nasdaq), would make it more difficult for shareholders to sell our ordinary shares and more difficult to obtain accurate price quotations on our ordinary shares. This could have an adverse effect on the price of our ordinary shares. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our ordinary shares are not traded on a national securities exchange.
Our ordinary shares could be further diluted as the result of the issuance of additional ordinary shares, convertible securities, options, or warrants.
Our issuance of additional ordinary shares, convertible securities, options, and warrants could affect the rights of our shareholders, result in a reduction in the overall percentage holdings of our shareholders, could put downward pressure on the market price of our ordinary shares, could result in adjustments to conversion and exercise prices of outstanding notes and warrants, and could obligate us to issue additional ordinary shares to certain of our shareholders.
We are an “emerging growth company,” and any decision on our part to comply with certain reduced disclosure requirements applicable to emerging growth companies could make our ordinary shares less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, not being required to comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, not being required to comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, reduced disclosure obligations
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regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved. We could remain an emerging growth company until the earlier
of: (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our
fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration
statement; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv)
the date on which we are deemed to be a large accelerated filer. We cannot predict if investors will find our ordinary shares less attractive
if we choose to rely on these exemptions. If some investors find our ordinary shares less attractive as a result of any choices to reduce
future disclosure, there may be a less active trading market for our ordinary shares and our share price may be more volatile. Further,
as a result of these scaled regulatory requirements, our disclosure may be more limited than that of other public companies and you may
not have the same protections afforded to shareholders of such companies.
Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. We have opted for taking advantage of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Jobs Act.
Because we have elected to use the extended transition period for complying with new or revised accounting standards for an emerging growth company, our financial statements may not be comparable to companies that comply with public company effective dates.
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our consolidated financial statements may not be comparable to companies that comply with public company effective dates, and thus investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public companies, which may have a negative impact on the value and liquidity of our ordinary shares.
Breaches of our online commerce security could occur and could have an adverse effect on our reputation.
A significant barrier to online commerce and communications is the secure transmission of confidential information over public networks. There can be no assurance that advances in computer capabilities, new discoveries in the field of cryptography and cybersecurity, or other events or developments will not result in a compromise or breach of the technology used by the Company to protect customer transaction data. If any such compromise of the Company’s security were to occur, it could have a material adverse effect on the Company’s reputation and, therefore, on its business, results of operations and financial condition. Furthermore, a party who is able to circumvent the Company’s security measures could misappropriate proprietary information or cause interruptions in the Company’s operations. The Company may be required to expend significant capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches. Concerns over the security of transactions conducted on the Internet and other online services and the privacy of users may also inhibit the growth of the Internet and other online services generally, and the web in particular, especially as a means of conducting commercial transactions. To the extent that activities of the Company involve the storage and transmission of proprietary information, security breaches could damage the Company’s reputation and expose the Company to a risk of loss or litigation and possible liability. There can be no assurance that the Company’s security measures will prevent security breaches or that failure to prevent such security breaches will not have a material adverse effect on the Company’s business, results of operations and financial condition.
Increased IT security threats and more sophisticated cybercrimes and cyberattacks, including computer viruses and other malicious codes, ransomware, unauthorized access attempts, denial of service attacks, phishing, social engineering, hacking and other types of attacks pose a potential risk to the security of our IT systems, networks and services, as well as the confidentiality, availability, and integrity of our data. We may in the future experience cyberattacks and other unauthorized access attempts to our IT systems. Because the techniques used to obtain unauthorized access are constantly changing and often are not recognized until launched against a target, we or our vendors may be unable to anticipate these techniques or implement sufficient preventative or remedial measures.
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If we are unable to efficiently and effectively maintain and upgrade
our system safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access. In
the event of a ransomware or other cyber-attack, the integrity and safety of our data could be at risk or we may incur unforeseen costs
impacting our financial position. Although we carry insurance covering cyber-attacks including ransomware, these coverages are subject
to deductibles and self-insurance obligation, as well as caps on coverage that could be below the value of losses we could incur. If the
IT systems, networks or service providers we rely upon fail to function properly, or if we suffer a loss or disclosure of business or
other sensitive information due to any number of causes ranging from catastrophic events, power outages, security breaches, unauthorized
use or usage errors by employees, vendors or other third parties and other security issues, we may be subject to legal claims and proceedings,
liability under laws that protect the privacy and security of personal information (also known as personal data), litigation, governmental
investigations and proceedings and regulatory penalties, and we may suffer interruptions in our ability to manage our operations and reputational,
competitive or business harm, which may adversely affect our business, results of operations and financial results. In addition, such
events could result in unauthorized disclosure of material confidential information, and we may suffer financial and reputational damage
because of lost or misappropriated confidential information belonging to us or to our employees, stockholders, customers, suppliers, consumers
or others. In any of these events, we could also be required to spend significant financial and other resources to remedy the damage caused
by a security breach or technological failure and the reputational damage resulting therefrom, to pay for investigations, forensic analyses,
legal advice, public relations advice or other services, or to repair or replace networks and IT systems. As a result of the COVID-19
pandemic, a greater number of our employees are working remotely and accessing our IT systems and networks remotely, which may further
increase our vulnerability to cybercrimes and cyberattacks and increase the stress on our technology infrastructure and systems. Even
though we maintain cyber risk insurance, this insurance may not be sufficient to cover all of our losses from any future breaches or failures
of our IT systems, networks and services.
A failure of one or more of our key IT systems, networks, processes, associated sites or service providers could have a material adverse impact on our business operations, and if the failure is prolonged, our financial condition.
We rely on IT systems, networks, and services, including internet sites, data hosting and processing facilities and tools, hardware (including laptops and mobile devices), software and technical applications and platforms, some of which are managed, hosted, provided and used by third-parties or their vendors, to assist us in the management of our business. The various uses of these IT systems, networks and services include, but are not limited to: hosting our internal network and communication systems; supply and demand planning; production; shipping our products to customers; hosting our brand websites and marketing products to consumers; collecting and storing customer, consumer, employee, shareholder, and other data; processing transactions; summarizing and reporting results of operations; hosting, processing and sharing confidential and proprietary research, business plans and financial information; complying with regulatory, legal or tax requirements; providing data security; and handling other processes necessary to manage our business.
Any significant disruption in or unauthorized access to our computer systems and other technology or those of our customers, partners and other third parties that we utilize in our operations, could result in a loss or degradation of service, unauthorized disclosure of data, or theft or tampering of intellectual property, any of which could materially adversely impact our business.
Our operations, products, data and intellectual property are inherently at risk of loss, inappropriate access, or tampering by both insider threats and external bad actors. In particular, our operations face various cyber and other security threats, including attempts to gain unauthorized access to sensitive information, intellectual property, mission operations, systems and networks. Our systems (internal, customer and partner systems) and assets may also be subject to damage or interruption from natural and other disaster events or disruptions including hurricanes, floods, earthquakes, fires, other extreme weather conditions, epidemics or pandemics, acts of terrorism, power shortages and blackouts, aging infrastructures and telecommunications failures. In addition, insider threats, threats to the safety of our directors and employees, threats to the security of our facilities, infrastructure and supply chain and threats from terrorist acts or other acts of aggression could have a material adverse impact on our business.
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Our customers and partners (including our supply chain) face similar threats. Customer or partner proprietary, classified, or sensitive data and information transmitted to, from, or stored on our networks are at risk. Assets and intellectual property and products in customer or partner environments are also at risk. We also have risk where we have access to customer and partner networks and face risks of breach, disruption or loss as well. Our supply chain for products and services is becoming more diverse and therefore that risk is also growing.
While we have implemented reasonable measures consistent with government regulations aimed at reducing the risk of cyber threats as well as to help thwart bad actors and protect our data and our systems and assets, the techniques used to gain unauthorized access are constantly evolving, and we may be unable to anticipate or prevent all unauthorized access, disruption, loss, or harm. Because of our desired data and intellectual property, we (and/or partners we use) may be an attractive target for such attacks. We cannot offer assurances, however, that future attacks will not materially adversely affect our business or reputation.
Unstable market and economic conditions caused by the ongoing conflict between the Ukraine and Russia, and Israel and Hamas, could have adverse consequences on our business, financial condition and results of operations.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions as a result of the ongoing conflict between the Ukraine and Russia and between Israel and Hamas, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability. We could suffer inflationary pressure in our business such as through the increased costs of the supplies that we use to manufacture our products, bottling our bitters, and distributing our products to all our customers where we do business. Any such volatility and disruptions could have adverse consequences on us or the third parties upon whom we rely.
You should consult your independent tax advisor regarding any tax matters arising with respect to our ordinary shares.
All prospective purchasers of our ordinary shares are advised to consult their own tax advisors regarding the U.S. federal, state, local and non-U.S. tax consequences relevant to the purchase, ownership, and disposition of our ordinary shares.
Some of our directors and executive officers are non-residents of the United States and as a result, it may not be possible for shareholders to enforce civil liabilities against those directors and executive officers.
Some of our directors and executive officers are non-residents of the United States, and all or a substantial portion of the assets of such persons are located outside the United States. As a result, it may not be possible for stockholders to effect service of process within the United States upon such persons or to enforce against them judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Australia in original actions, or in actions for enforcement of judgments of U.S. courts, of civil liabilities to the extent predicated upon the federal securities laws of the United States.
The proposed merger with BlockFuel Energy, Inc. may not be completed, which could adversely affect our business, financial condition and share price.
On October 14, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with BlockFuel Energy Inc., a Texas corporation (“BlockFuel”), and InnoBev Merger Corp., a wholly owned subsidiary of the Company (“Merger Sub”). The completion of the transactions contemplated by the Merger Agreement is subject to a number of conditions, including, among others, approval by Nasdaq. There can be no assurance that these conditions will be satisfied or that the merger will be completed on the anticipated timeline, or at all.
In addition, we have undertaken a series of transactions in connection with the proposed merger, including the use of proceeds from our public offering completed on March 16, 2026, which generated approximately $6,000,000 in gross proceeds, to fund a $2,500,000 loan to BlockFuel and the acquisition of a controlling interest in BlockFuel. If the merger is not completed, we may not realize the anticipated benefits of these transactions, and we may be exposed to risks associated with such loan and investment.
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If the merger is not completed, we may experience negative market reactions, including a decline in the trading price of our ordinary shares, incur significant transaction costs, including legal, accounting and advisory fees, and face uncertainty in our business strategy, which could materially and adversely affect our business, financial condition and results of operations.
The proposed merger will result in a significant change in our business and operations.
If the merger with BlockFuel is completed, our business will shift from a beverage-focused company to a company primarily engaged in the acquisition, development and operation of oil and gas assets and the integration of those assets with digital energy infrastructure. This transition may subject us to new risks and uncertainties, including those related to operating in unfamiliar industries, integrating new operations, and managing a significantly different business model.
Following the proposed merger with BlockFuel, our existing shareholders are expected to experience substantial dilution and reduced ownership.
Upon completion of the merger, the equityholders of BlockFuel are expected to own approximately 90% of our outstanding ordinary shares on a fully diluted basis, subject to customary adjustments. As a result, our existing shareholders are expected to experience significant dilution of their ownership interests and voting power.
Following the merger, the BlockFuel equityholders are expected to have a controlling interest in the combined company and will be able to exert significant influence over matters requiring shareholder approval, including the election of directors and the approval of significant corporate transactions. Accordingly, our existing shareholders will have limited ability to influence the management, policies and operations of the combined company.
We may require additional financing, which may not be available on favorable terms, or at all.
We may require additional capital to fund our operations and to satisfy conditions to the proposed merger. There can be no assurance that we will be able to obtain additional financing on acceptable terms, or at all. Failure to secure additional capital could adversely affect our ability to complete the merger and execute our business plan.
Our at-the-market offering program may result in dilution to existing shareholders and could adversely affect the market price of our ordinary shares.
In January 2026, we established an at-the-market offering program pursuant to which we may sell up to $2,500,000 of our ordinary shares from time to time. Any sales of ordinary shares under this program will be made at prevailing market prices or at negotiated prices, and the issuance of such shares will result in dilution to existing shareholders, including a reduction in their ownership interests and voting power.
In addition, because shares may be sold into the market over time, the actual or potential issuance of ordinary shares under the at-the-market program could place downward pressure on the market price of our ordinary shares. The perception that we may issue additional shares under the program, or the timing and amount of any such sales, could also increase volatility in the trading price of our ordinary shares.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Innovation Beverage Group Limited (“IBG”) was incorporated in Australia pursuant to the Corporations Act of 2001 on April 20, 2018 as “Australian Boutique Spirits PTY LTD” and changed its name on May 2, 2022 to “Innovation Beverage Group PTY Limited”. Subsequently, on June 11, 2022, the Company converted from a proprietary company to a public limited company. Our registered office is located at 29 Anvil Road, Seven Hills, NSW 2147, Australia. Our main telephone number is +61 (02) 9620 4574. Since its beginning in 2018 as Australian Boutique Spirits Pty Ltd, IBG has been a committed innovator within the beverage industry.
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IBG has six wholly owned subsidiaries: Innovation Beverage Group USA Inc., a Nevada corporation; Reg Liquors LLC (d/b/a Wired for Wine), a New Jersey limited liability company; IBG USA, LLC, a Delaware limited liability company; InnoBev Merger Corp., a Texas corporation; IBG Treasury USA Inc., a Nevada corporation; and Bittersweet Brands Pty Ltd, an Australian company, which is wholly owned by Innovation Beverage Group USA Inc. On July 13, 2021, IBG formed Bevmart USA LLC, a Delaware limited liability company, which was subsequently renamed IBG USA, LLC on July 8, 2022. On November 3, 2021, IBG acquired 100% of the outstanding equity interests in Reg Liquors LLC, a New Jersey limited liability company formed on August 16, 2016. On October 28, 2024, IBG formed Innovation Beverage Group USA Inc., a Nevada corporation. IBG Treasury USA Inc. is a wholly owned subsidiary of IBG. Bittersweet Brands Pty Ltd is a wholly owned subsidiary of Innovation Beverage Group USA Inc. InnoBev Merger Corp. is a wholly owned subsidiary of IBG and was formed solely for purposes of effecting the transactions contemplated by the Merger Agreement.
Our company commercial website address is www.innovationbev.com and our investors relations website address is investors.innovationbev.com. Information contained on or accessible through our website is not a part of this Annual Report on Form 20-F, and the inclusion of our website address herein is an inactive textual reference only. The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our filings with the SEC will also be available to the public through the SEC’s website at www.sec.gov.
Our cash used in investing activities for equipment and intangible assets purchase in 2025, 2024 and 2023 are $0. The Company has sufficient manufacturing capacities.
Recent Developments
During 2025 and early 2026, the Company undertook a series of transactions to transition its business and capital structure in connection with its proposed business combination with BlockFuel Energy, Inc.
Proposed Merger with BlockFuel Energy, Inc.
On October 14, 2025, the Company entered into the Merger Agreement, as amended on March 16, 2026 with BlockFuel Energy, Inc. The transaction is structured as a reverse triangular merger pursuant to which BlockFuel will become a wholly owned subsidiary of the Company. Following the closing, the equityholders of BlockFuel are expected to own approximately 90% of the Company’s outstanding ordinary shares, on a fully diluted basis, subject to customary adjustments. The completion of the merger remains subject to customary closing conditions, including required financing, shareholder and regulatory approvals, including approval by Nasdaq.
Acquisition of Controlling Interest in BlockFuel
In connection with the proposed merger, the Company undertook a series of related transactions on March 16, 2026. The Company entered into the Merger Agreement and a Share Exchange Agreement, pursuant to which the Company acquired approximately 51% of the outstanding equity of BlockFuel, providing the Company with a controlling interest in BlockFuel prior to completion of the merger. In addition, the Company loaned BlockFuel $2,500,000 pursuant to an unsecured promissory note and issued warrants to purchase ordinary shares, which are subject to shareholder and Nasdaq approval and are expected to be adjusted and exercised upon completion of the merger.
$6 Million Public Offering
On March 16, 2026, the Company closed a best-efforts public offering generating approximately $6 million in gross proceeds. The offering consisted of units comprised of ordinary shares (or pre-funded warrants) and Series A and Series B warrants. The Company used $2,500,000 of the net proceeds to fund the loan to BlockFuel described above and intends to use the remaining proceeds for general corporate purposes, including supporting the proposed merger and related strategic initiatives.
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At-the-Market Offering Program
On January 14, 2026, the Company entered into a sales agreement with Aegis Capital Corp., pursuant to which the Company may sell up to $2,500,000 of its ordinary shares from time to time in an “at-the-market” offering. The Company is not obligated to sell any shares under the program and may suspend or terminate the program at any time.
B. Business Overview
We are a developer, manufacturer, marketer, exporter and retailer of a growing beverage portfolio of 70 formulation across 14 alcoholic and non-alcoholic brands. Our focus is on premium and super premium brands.
IBG has six wholly owned subsidiaries: Innovation Beverage Group USA Inc., a Nevada corporation; Reg Liquors LLC (d/b/a Wired for Wine), a New Jersey limited liability company; IBG USA, LLC, a Delaware limited liability company; InnoBev Merger Corp., a Texas corporation; IBG Treasury USA Inc., a Nevada corporation; and Bittersweet Brands Pty Ltd, an Australian company, which is wholly owned by Innovation Beverage Group USA Inc. On July 13, 2021, IBG formed Bevmart USA LLC, a Delaware limited liability company, which was subsequently renamed IBG USA, LLC on July 8, 2022. On November 3, 2021, IBG acquired 100% of the outstanding equity interests in Reg Liquors LLC, a New Jersey limited liability company formed on August 16, 2016. On October 28, 2024, IBG formed Innovation Beverage Group USA Inc., a Nevada corporation. IBG Treasury USA Inc. is a wholly owned subsidiary of IBG. Bittersweet Brands Pty Ltd is a wholly owned subsidiary of Innovation Beverage Group USA Inc. InnoBev Merger Corp. is a wholly owned subsidiary of IBG and was formed solely for purposes of effecting the transactions contemplated by the Merger Agreement.
IBG USA INC began these activities since October 2024 with several distribution agreements with Republic National Distribution Company (“RNDC”) in California, Hawaii, Alaska, Nevada, Ohio and Washington states and with Houston’s Inc. in Oregon. Reg Liquors LLC, our e-commerce retailer of wines and spirits, which operated its own marketplaces, www.wiredforwine.com and www.bevmart.com, ceased operations during October 2024.
In October of 2024, we decided to focus our efforts on building our own brands in the United States and other export markets, and as a result we have ceased retailing of certain third-party brands via our retail websites, www.wiredforwine.com and www.bevmart.com for the United States. Our long term strategy to build and grow our owned brands, which we believe will lead to significant growth in our business. We will continue to retail third-party brands in Australia via our retail website www.bevmart.au. We are currently actively looking to divest the liquor license as well as all inventory held by Reg Liquors LLC due to this focus on IBG’s own brands.
Our flagship Australian Bitters Company (“ABC”) brand accounted for approximately 91% of our revenues in 2023 and 99% of our revenues in 2024. In 2025, ABC accounted for 94%. By geographic market, our total revenues are:
| 2025 (USD) | 2024 (USD) | 2023 (USD) | ||||||||||
| Australian Market | $ | 2,743,510 | $ | 2,920,197 | $ | 2,876,251 | ||||||
| U.S. Market (1) | $ | 28,731 | $ | 2,044 | $ | 271,512 | ||||||
| Total Revenue | $ | 2,772,241 | $ | 2,922,241 | $ | 3,147,763 | ||||||
(1) Solely for the purpose of this chart, exports to the U.S. are included as revenue attributable to the U.S. market. IBG manages its business in two geographical segments, Australia and the United States, and for accounting purposes, the revenue allocation is different in our Notes to Consolidated Financial Statements given that the export sales to the U.S. Market as shown in this chart, represent revenue generated from sales to IBG’s customers or distributors located in the Australia Market, who in turn distribute the sale of those products onward to consumers in the U.S. Market.
The Australian Bitters Company (“ABC”) brand was launched in 2015 and developed as an Australian alternative to a well-known, nearly 200-year-old brand, Angostura Bitters. By the end of 2025, ABC had approximately 45% of the market share in Australia. We believe that the growth of ABC to its current position in the markets shows that ABC has become the first Australian-made challenger brand to Angostura Bitters. By way of distribution through Coca-Cola Europacific Partners (CCEP), Australia’s largest beverage distributor, ABC has managed to grow its market share substantially. CCEP has a distribution network that reaches over 90% of postcodes across Australia. As a brand in CCEP’s distribution network, we anticipate significant continued growth. ABC also has the home-field advantage of being locally produced in Australian rather than being an imported product.
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The following chart summarizes the arrangements we have with respect to our different brand-name products. For a complete description about the related agreements, see “Item 4. Business Overview-Material Agreements.”
| Brands | Summary | Governing Agreement | IP | Consideration/Royalty |
| Australis Gin | IBG owns this brand after repurchasing it from Sway Energy pursuant to the June 2021 Agreement. |
● Manufacturing, Supply and License Agreement dated July 31, 2020 between ABS and Elegance
● Termination of BevMart Agreement and Amendment to Manufacturing Agreement, between Australian Boutique Spirits Pty Ltd and Elegance Brands, Inc., dated June 14, 2021 (“June 2021 Agreement”). |
IBG owns the intellectual property rights, including formulations, associated with the brand Australis Gin. | ABS paid USD$42,500 representing 100% of the costs and expenses incurred by Elegance as at that time in developing the Australis Gin beverage and brand. |
| Twisted Shaker | IBG holds a royalty-free license to Twisted Shaker to manufacture, use and sell the product throughout the world, except the U.S., its territories and possessions. |
● Manufacturing, Supply and License Agreement dated July 31, 2020 between ABS and Elegance
● Termination of BevMart Agreement and Amendment to Manufacturing Agreement, between Australian Boutique Spirits Pty Ltd and Elegance Brands, Inc., dated June 14, 2021. |
IBG sold its intellectual property rights, including related formulations, associated with the Twisted Shaker brand to Sway.
Sway granted IBG a royalty-free non-exclusive license to use its intellectual property rights associated with the Twisted Shaker brand to manufacture, use and sell Twisted Shaker throughout the world, except for the U.S., its territories and possessions, which are Sway’s exclusive territories. The license expires upon termination of the 2020 Manufacturing Agreement. |
IBG received as consideration from Sway USD$10,000 for each of the formulations possessed by IBG with respect to the Twisted Shaker brand
IBG agreed with Sway to offset future royalties payable for Twisted Shaker to Sway in return for a royalty free right Sway to sell VOCO in the USA.
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| BitterTales |
Sway owns this brand globally, but does not own the formulations.
With respect to formulations, IBG granted Sway a license to manufacture, use and sell all formulations of BitterTales within the USA and other countries located in Sway’s territories. |
Manufacturing, Supply and License Agreement dated July 31, 2020 between ABS and Elegance. | IBG granted to Sway a non-exclusive, non-transferable, non-sublicensable license to make, use and sell all formulations with respect to the BitterTales brand of alcoholic products. |
One-time upfront royalty payment in the amount of USD$40,000 paid on August 15, 2020.
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| VOCO | IBG owns this brand and granted Sway a royalty-free license to use its intellectual property rights associated with VOCO to manufacture, use and sell the brand in the U.S., its territories and possessions. |
● Manufacturing, Supply and License Agreement dated July 31, 2020 between ABS and Elegance
● Termination of BevMart Agreement and Amendment to Manufacturing Agreement, between Australian Boutique Spirits Pty Ltd and Elegance Brands, Inc., dated June 14, 2021 |
IBG granted Sway a royalty-free, non-exclusive, non-transferable, non-sublicensable license to the intellectual property rights associated with the VOCO brand to make, use and sell the brand in the U.S., its territories and possessions. The license expires upon termination of the 2020 Manufacturing Agreement.
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Sway paid to IBG the paid-up sum of USD$200,000, in lieu of all current and future royalties due.
IBG agreed with Sway to offset future royalties payable for Twisted Shaker to Sway in return for a royalty-free right for Sway to sell VOCO in the U.S. |
| Australian Bitters Company |
Within Australia, CCEP owns the right to distribute the Australian Bitters Company brand and IBG has the exclusive right to manufacturer the product.
Outside Australia, IBG owns the brand and has the right to manufacture and distribute Australian Bitters Company products. With respect to the U.S., its territories and possessions, IBG has a distribution arrangement with Sway whereby Sway pays USD$60 per case.
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● Europa and CCA 2016 Manufacturing Agreement dated Dec. 22, 2016, which terminates on Dec. 31, 2031
● Deed of Novation, date July 2, 2018
● Manufacturing, Supply and License Agreement dated July 31, 2020 between ABS and Elegance
● Termination of BevMart Agreement and Amendment to Manufacturing Agreement, between Australian Boutique Spirits Pty Ltd and Elegance Brands, Inc., dated June 14, 2021 |
IBG sold its right, title and interest to all brands, line extensions, and flavor line extensions associated with the Australian Bitters Company brand to Sway for sale and distribution in the U.S., its territories and possessions.
Sway distributes Australian Bitters Company products in the U.S. for IBG. |
Sway pays USD$60 per case of Australian Bitters Company products
Sway and IBG terminated all agreements and sway no longer purchases products from IBG.
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Cheeky Vodka and flavor variants
Coventry Estate Gin and flavor variants
Geo Liqueurs in multiple variants
Cheeky Espresso Martini in multiple variants |
IBG owns and manufactures these brands. |
● Manufacturing, Supply and License Agreement dated July 31, 2020 between ABS and Elegance
● Termination of BevMart Agreement and Amendment to Manufacturing Agreement, between Australian Boutique Spirits Pty Ltd and Elegance Brands, Inc., dated June 14, 2021. |
IBG owns and manufactures these brands, as well as the BevMart.com.au website and business.
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IBG paid as consideration to Sway USD$188,630.41, which represented 100% of the fully burdened costs and expenses incurred by Sway in developing the website and developing and creating formulations for each of the brands. |
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Our goal is to increase our market share in the $800 million global market for bitters. Our partnership with Coca-Cola Europacific Partners (NASDAQ: CCEP), one of the world’s largest Coca-Cola bottlers, to exclusively manufacture ABC bitters for distribution in Australia is a key component of this strategy. We retain distribution rights for ABC bitters outside Australia and are actively negotiating new distribution arrangements for new markets.
Our direct-to-consumer (DTC) distribution channel is a network of eCommerce platforms, including www.bevmart.com.au. We launched BevMart.com.au in Australia in May 2021. We offer our brands, as well as other brands, through our eCommerce platforms. (Our previous eCommerce platforms, www.bevmart.com, www.wiredforwine.com, have ceased retailing third-party brands.)
We have launched Twisted Shaker, our first entry in the bottled cocktail market, in Australia. The pre-batched cocktail market grew significantly during the beginning of the COVID pandemic with consumers loving the convenience and cost efficiency of this type of product. Twisted Shaker cocktails are full-strength, high-quality bottled cocktails. We launched Twisted Shaker in the U.S. in November 2022. Currently, we are in the process of identifying distributors in Australia and the U.S.
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IBG eCommerce
Bevmart AU
Bevmart is a vertically integrated, direct-to-consumer spirits website for Australian Boutique Spirits. Bevmart specializes in exclusive spirits and imported celebrity brands for the Australian market. Bevmart offers a range of 50 SKUs (primarily our produced products) with the objective to expand this range significantly by end of our 2026 fiscal year.
Competitive Market
Spirits are driving the most growth in both premium and mainstream categories of the packaged liquor market since 2020, with younger premium customers showing the strongest overall growth than any other segment.
For premium customers, gin, liqueurs and tequila show the highest growth in the spirits category with seltzers and gin-based premix leading the premix category. The opportunity exists to capitalize on the younger premium segment through optimized channel targeting, customer service and range extension.
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Strengths
| ● | Exclusive, award winning and unique product range. | |
| ● | Product range, website and customer service highly rated with an average star rating of 4.65/5 for product and 4.72/5 for website and customer service. | |
| ● | Offers same day delivery in Sydney metro. | |
| ● | Competitive pricing. |
Weaknesses
| ● | Branding and range does not all reflect premium positioning. | |
| ● | Small range limits revenue growth. | |
| ● | Single warehouse location limits our ability to offer pick up across major cities. | |
| ● | Exclusiveness can be hard to secure for small or new brands. |
Opportunity
| ● | Range expansion through exclusive agreements and parallel importing to cover more categories to increase revenue. | |
| ● | Create corporate and gifting destination. | |
| ● | Expert validation of product quality through award shows. | |
| ● | Expand same day delivery to other major cities in Australia. | |
| ● | Leverage technology to solve customer pain points. |
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Challenges
| ● | Celebrity product range could be picked up by competitors, diluting the brand proposition. |
Wired For Wine.com and BevMart USA
Reg Liquors LLC, our e-commerce retailer of wines and spirits, which operated its own marketplaces, www.wiredforwine.com and www.bevmart.com, ceased operations during October 2024. Wired For Wine.com was our packaged wine website offering quality wines at highly competitive prices with incentivized free delivery on certain purchases. Bevmart U.S.A was our direct-to-consumer spirits platform in the U.S. market, specializing in exclusive spirits and celebrity brands.
In October of 2024, we decided to focus our efforts on building our own brands in the United States and other export markets, and as a result we have ceased retailing of certain third-party brands via our retail websites, www.wiredforwine.com and www.bevmart.com for the United States. Our long term strategy to build and grow our owned brands, which we believe will lead to significant growth in our business. We will continue to retail third-party brands in Australia via our retail website www.bevmart.au. We are currently actively looking to divest the liquor license as well as all inventory held by Reg Liquors LLC due to this focus on IBG’s own brands.
eCommerce Advantages
Technological Advantages
Our eCommerce brands, including www.bevmart.com.au are built on Shopify, including their front ends. While there are some customization restraints (ones that are not currently needed), Shopify provides a best-in-class, low-cost solution for our direct-to-consumer functionality needs. Its native features and a large library of app integrations significantly reduce our development costs and allow us to be nimble in an ever-changing digital landscape.
As we scale the brands, there may be a need for additional front end customizations in which we would adopt a headless e-Commerce architecture (custom front end) utilizing Shopify’s back end.
Operational Advantages
IBG has vertically integrated manufacturing, import, sales and marketing company with a focus on direct-to-consumer (DTC) enabling complete capture of the value chain. Our eCommerce and product team consists of members with extensive beverage industry experience garnered at some of the world’s largest alcohol companies, such as Endeavour Drinks Group (Australia’s largest liquor online and brick-and-mortar retail group), Treasury Wine Estates (Australia’s largest wine company and one of the world’s largest wine companies) and Anheuser-Busch InBev (the world’s largest brewer).
IBG’s leased warehouse in Sydney and New Jersey provide logistical advantages for the distribution for our products and those of our clients to nearby large population centers.
Cost Advantages
IBG’s product portfolio is focused on bitters, light spirits and non-alcoholic spirits, which have short manufacturing times. As a result, IBG is more capital efficient as compared to dark spirit manufacturers (e.g. whisky, brandy, etc.), which often require aging in barrels for years before being sold.
With regard to our eCommerce, the flat structure helps to reduce our operating expenses (as we have one digital marketing agency and web development team) and duplication of work. The structure also leverages the team’s experience and capabilities across our eCommerce banners. Owned products, such as Twisted Shaker, and distribution deals (i.e. Drake’s Virginia Black) allows us to retain margin and push exclusiveness as a competitive difference through our DTC banners (i.e. Bevmart).
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IBG Bitters Products
We produce a range of award-winning Bitters at our distillery and beverage manufacturing facility in Seven Hills, NSW Australia. Our BitterTales Aromatic Bitters was a Gold Medal winner at the 2021 L.A. Spirits Awards and Platinum Medal winner at the 2020 L.A. Spirits Awards. Our product also won Best In Show of the 2020 L.A. Spirits Awards. Our bitters that we manufacture as the Australian Bitters Company, was awarded Gold and Silver medals at the 2018 International Wine and Spirit Competition (IWSC), as well as two Silver Medals at the 2018 L.A. Spirits Awards.
In Australia, our Bitters are predominantly sold to Coca-Cola Europacific Partners (CCEP) under a long-term Australian contract, which expires 2033, in Australia (in 2021, our previous distributor, Coca-Cola Amatil Limited, merged with CCEP). The balance of our Bitters’ sales is exported. Bitters for our Company as a manufacturer and brand owner is a highly profitable category with a gross profit margin of approximately 80%. All of our Bitters are manufactured at our distillery and beverage manufacturing facility in Seven Hills, NSW Australia.
IBG is in discussions with global distribution partners in Europe, Asia and the Americas for its Bitters brands. BitterTales is another successful Bitters product manufactured by IBG.
On July 31, 2020, the Company (formerly known as Australian Boutique Spirits Pty Ltd) and Sway Energy Corp. (formerly known as Elegance Brand, Inc.) (“Sway”) entered into a Manufacturing, Supply and License Agreement, as amended on March 10, 2021, June 14, 2021 and October 21, 2022 (“2020 Manufacturing Agreement”). For further details about the 2020 Manufacturing Agreement, please see “Item 4. Business Overview-Material Agreements.”
Target Market Size
The global bitter market has grown rapidly over the last few years with a global market of around $800 million. Innovation, consumer trends and marketing has led to increases in the category
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The global Cocktail Bitters category has experienced growth in 2024 with a focus on premium cocktails and consumer trends. The category is expected to continue to grow in the future driven by innovation, market acceptance and consumer trends.
Competitive Market
The global bitters market has grown rapidly over the last few years with a global market size of around US$800,000,000. Innovation, consumer trends and marketing has led to category increases. Before the COVID-19 pandemic, the category was more or less evenly split by on and off-premise channels, given market differences. However, with the decline of the on-premise channel, the off-premise channel managed to grow and offset losses, particularly with the help of eCommerce. Many brands were able to pivot and transition efforts to online sales, which has helped to drive interest in the category alongside the rise of the ‘Home Premise’ and at home cocktail making during lockdowns.
Competitive Analysis
Angostura continues to lead the global Cocktail Bitters category, followed by Peychaud’s and Australian Bitters Co., all of which saw growth in 2020. Several other brands, including Fee Brothers, Bittermen’s, The Bitter Truth, and many more, were impacted in 2020 given their on-premise presence. However, quite a few of these brand owners have managed to adapt during the pandemic and shift their businesses to off-premise, as well as expand their distribution to more markets. It is expected they will return to growth alongside the category.
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The US continues to be the dominant cocktail bitters market followed by Australia, Trinidad & Tobago, UK then France, which are the five largest markets globally. According to Angostura Holdings 2024 annual report, Angostura bitters accounts for 90% of the global bitters market. According to The Spirits Business, a well reputed beverage alcohol publisher, Angostura bitters is available in 170 countries worldwide. They also reported that Angostura holdings sales exceeded US$1 billion in 2022 with bitters accounting for 54% of their revenue.
Strengths
| ● | Iconic packaging- proprietary bottle, screen printed bottle provides unique and remarkable look and feel |
| ● | All natural ingredients |
| ● | Great value offer versus Angostura |
| ● | Small size allows IBG to be nimble and adapt quickly to changes in the market with new packaging format, sizes and flavors |
| ● | CCEP distribution machine in Australia |
Weaknesses
| ● | Consumer awareness in Australia |
| ● | Growth in the U.S. will require obtaining a large distributor |
Opportunity
| ● | Innovation into bigger bottles (500ml) and smaller bottles (50ml) to increase the occasions where cocktail bitters may be utilized as an ingredient and, therefore, increase sales. For example, a smaller 50ml bottle may become an affordable yet impulse purchase option for a consumer purchasing a basket of beverages for a party as they may be more inclined to purchase a smaller bottle of our bitters in their basket mix. |
| ● | Strengthen association with cooking |
| ● | Be the “go to” bitters for mocktails (non-alcohol cocktails are commonly referred to as mocktails) |
Challenges
| ● | Market size and scale of Angostura, particularly if they drop price. |
Target Market Size
The market size of No/Low Alcohol is 349.2 million 9L cases or USD$9.9 billion in market value. The expected CAGR from 2021-25 is 8.0% or an enormous 126.4 million 9L cases.
The biggest market for No/Low spirits is the U.S. (719,000 9 Liter Equivalent (LE)), France (515,000 9LE), UK (319,000 9LE), Germany (176,000 9LE), and Australia (63,000 9LE).
Competitive Analysis
No market share data is available for this new category. However, evidence of its attractions can be shown by the market leader, Lyre’s, which closed a funding round of £20m in November 2021 that valued the business at £270m, up from a valuation of £100m earlier the same year.[1] According to Lyre’s founder Mark Livings in 2021, the business has expanded to 60 countries and was on track to generate £50m in 2021.[2]
[1] BusinessWire, “Lyre’s Hits £270 Million Valuation in Category’s Largest Funding Round To-Date” (November 15, 2021).
[2] The Spirits Business, “Lyre’s on track to reach $1bn valuation” (November 15, 2021).
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We will also utilize the same logistics back end as Bevmart in Australia.
Competitive Market
Online competition will be focused on DTC non-alcohol brands like market leader Lyre’s, Seedlip and online (packaged alcohol and non-alcoholic) retailers carrying a non-alcoholic spirits category.
We believe that due to the increased brand awareness, paid media spend (from retailers) and, through our experience, Google’s tendency to rank brand and supplier websites higher over retailers*. (*Not guaranteed. Website must have good Search Engine Optimization (SEO) practices and consistent fresh content for us to take advantage of the google algorithm.)
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Strengths
| ● | Packaging- memorable name and unique brand iconography. |
| ● | Ability to expand globally quickly with 3-tier compliant retailers already established in the U.S. |
Weaknesses
| ● | Consumer awareness |
| ● | Distribution |
| ● | Warehouse locations limits our ability to offer Pick up. |
Opportunity
| ● | Create a destination for mocktail recipe content online. |
| ● | Partner with dark warehouse, a fully automated warehouse, and several fast commerce businesses that use applications (apps) that offer 10-minute delivery in cities to reach a fast-growing audience online where our competitors are not. Milkrun and Go Puff are examples of such businesses. |
| ● | Validate quality of product through award shows. |
| ● | Expand globally to No and Low Alcohol key markets |
| ● | Build the brand via strong and relevant marketing |
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Challenges
| ● | Convenience commerce models and third-party marketplaces will continue to dominate the online space. However, we should look to partner with these brands as they are an opportunity to reach a larger audience. |
| ● | Range and category expansion from market leaders. |
| ● | Minimal regulation (compared to alcohol) makes market entry easier. |
Sources and Availability of Raw Materials
Our use of raw materials mainly includes herbs, bottles, and labels. We maintain, and seek to continue maintaining, strong and long-term relationships with our major raw material vendors to create a stable supply of such materials . We forecast raw material purchase at a minimum of 6 months in advance which allows us to control supply chain disruptions and avoid price volatility.
Supply Chain Disruptions
Supply chain disruptions have become a constant source of stress for many beverage companies with global footprints like IBG. Any disruption along the supply chain can disrupt plant operations, production schedules, logistics, and the customer experience. IBG was impacted by the supply chain disruption due to:
| ● | transportation delay for some materials (e.g., bottles) purchased from certain areas such as China; | |
| ● | shipping container shortage that postponed the export of our BitterTales products to the United States; | |
| ● | labor shortages internally and externally due to COVID-associated sick and carer leaves; and | |
| ● | customer demand drops and surges. |
While not every disruption can be avoided, many of them can be managed. Preparation and planning are vital for businesses that want to avoid delays and shutdowns now and in the future. IBG’s management has been working on different aspects to strengthen the resilience of our supply chain. IBG’s key actions include:
| ● | establishing more robust sales and operations planning to monitor customer demand, raw material availability and labor scheduling; | |
| ● | optimize inventory and freight process by implementing a new warehouse management system; |
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| ● | renegotiating the manufacturing agreements with main customers by passing the logistic responsibilities from IBG to the buyers; | |
| ● | diversify the supply networking to avoid heavy reliance on a certain supplier or suppliers from one certain area; and | |
| ● | encourage flexible and remote working arrangements to improve productivity and minimize employee turnover. |
Seasonality
Our business does not experience significant seasonality.
Material Agreements
Deed of Novation
Europa International Pty Ltd. (“Europa”), Coca-Cola Amatil (Australia) Pty Ltd (succeeded by Coca-Cola Europacific Partners, “CCA”) and Australian Boutique Spirits Pty Ltd (“ABS”) entered into a novation agreement on July 2, 2018 (“Europa-CCA-ABS Novation Agreement”). Pursuant to the Europa-CCA-ABS Novation Agreement, we have been assigned Europa’s rights and obligations under the Manufacturing Agreement entered into December 22, 2016; the Manufacturing Agreement dated June 9, 2017, the Intellectual Property Assignment Agreement, the Intellectual Property Co-Existence Deed, and the Deed Poll. As such, the following Manufacturing Agreements of 2016, 2017, and the Notice Under Manufacturing Agreement all fall within the scope of the Deed of Novation.
2016 Europa Manufacturing Agreement
On December 22, 2016, Europa and CCA entered into a Manufacturing Agreement (“2016 Europa Manufacturing Agreement”) that began on January 1, 2017. The 2016 Europa Manufacturing Agreement is effective until December 31, 2031, unless terminated earlier for cause.
In the 2016 Europa Manufacturing Agreement, CCA appointed Europa to manufacture bitters of all flavors produced by Europa, or any product bearing the AUSTRALIAN BITTERS Brand and granted Europa an exclusive, non-transferable, royalty free license to use the AUSTRALIAN BITTERS intellectual property in the territory to the extent needed to manufacture the products. Specifically, the products include (a) 250 mL bottle of Australian Bitters supplied in a case of 12 and (b) 125 mL bottle of Australian Bitters supplied in a case of 12. The territory consists of Australia, New Zealand, and Fiji. CCA must pay Europa within 20 business days of the end of the month in which Europa sends CCA the invoice for products delivered to them. Additionally, in consideration of CCA’s providing marketing services, Europa agreed to pay CCA a contribution amount on all products receipted by CCA from time to time. The aggregate payment may not exceed 50% of the direct marketing expenditure.
While the agreement was originally exclusive in the Commonwealth of Australia, the Commonwealth of New Zealand and the Republic of Fiji, now, since neither CCA nor any of its related parties supplied any products to any customer located in New Zealand or Fiji by January 1, 2019, both Fiji and New Zealand ceased being considered territories. As such, we are able to expand our markets.
Notice Under 2016 Europa Manufacturing Agreement
On January 9, 2019, we sent a letter to CCA regarding the 2016 Agreement. We notified CCA, in accordance with clause 1.1 of the 2016 Agreement, that we would now be able to import, sell, allow or procure any third party to sell, any products to any person within New Zealand and Fiji. We are able to sell in these territories because neither CCA nor any of its related parties have supplied any products to any customer located in Fiji or New Zealand from the start date of the 2016 Agreement to January 1, 2019.
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Manufacturing, Supply and License Agreement between Australian Boutique Spirits Pty Ltd and Elegance Brands, Inc. dated July 31, 2020, as amended (“2020 Manufacturing Agreement”) by that certain Amendment Agreement dated March 10, 2021 (“March 2021 Amendment Agreement”), that certain Termination of BevMart Agreement and Amendment to Manufacturing Agreement between Australian Boutique Spirits Pty Ltd and Elegance Brands, Inc. dated June 14, 2021 (“June 2021 Amendment Agreement”) and that certain Amendment Agreement dated October 21, 2022 (“October 2022 Amendment Agreement”)
On July 31, 2020, IBG and Elegance Brands, Inc. (now known as Sway Energy Corp.) (“Sway”) entered into a manufacturing, supply and license agreement whereby IBG agreed to manufacture and sell Covered Products (as defined below) to Sway. Subsequently on March 10, 2021, June 14, 2021 and October 21, 2022, sections of the agreement were amended by that certain March 2021 Amendment Agreement, the June 2021 Amendment Agreement and the October 21, 2022 Amendment Agreement.
The term of the 2020 Manufacturing Agreement is such that at its initial execution in July 2020, the initial term was July 31, 2020 through July 21, 2022 pursuant to a 24-month initial term period. The March 10 Amendment Agreement changed the initial term from a 24-month initial term period to a 36-month initial term period. As a result of the amendment, the initial term period of the 2020 Manufacturing Agreement was July 31, 2020 through July 31, 2023, at which time the term automatically renewed for 24 months to July 31, 2025. Each subsequent term may be automatically renewed for up to 24 months, unless either party provides written notice of non-renewal.
A description of the material terms of the 2020 Manufacturing Agreement follows. “Covered Products” means the individual and collective reference to (a) the alcoholic drinks and Formulations sold as (i) each of the BevMart Brands, (ii) BitterTales, (iii) Cocktail Bitters, (iv) VOCO and (v) Australian Bitters Company. “BevMart Brands” means the individual brands and line extensions of: (a) Cheeky Vodka and flavor variants, (b) Coventry Estate Gin and flavor variants, (c) Geo Liqueurs in multiple variants, (d) Cheeky Espresso Martini in multiple variants., and (e) all future brands developed by Sway which ABS determines to offer for sale on the BevMart websites www.bevmart.com and www.bevmart.com.au.
Pursuant to the 2020 Manufacturing Agreement, Sway purchases Covered Products from IBG, who manufactures and sells such products in accordance with purchase orders received from Sway. Sway also provides its best projections and estimates as to the quantity, in units and cases, of each of the Covered Products that Sway will need to purchase from IBG for the next succeeding 90 days. Based on such projections, IBG maintains sufficient manufacturing capacity, stocks of raw materials and packaging to enable it to meet such requirements.
During a requisite 12 month period following July 31, 2020, IBG had the right, but not the obligation, to manufacture and sell to Sway all new alcoholic products branded under Sway’s intellectual property rights and to be sold or distributed by Sway in its territory, meaning, only the U.S., its territories and possessions with respect to the Australian Bitters Company Covered Products and VOCO covered products, and the rest of the world with respect to all other Covered Products. Sway accepted IBG’s exercise of such right; consequently, IBG gained the right to manufacture and sell other new products in addition to the Covered Products.
The 2020 Manufacturing Agreement may be terminated by either party for cause. Sway may terminate by providing written notice to IBG: (a) if IBG repudiates or threatens to repudiate, any of its obligations under this Agreement; (b) except as otherwise specifically provided under Sway’s right to terminate for cause, if IBG is in material breach of, or threatens to breach, any material representation, warranty or covenant of IBG under this Agreement and either the breach cannot be cured or, if the breach can be cured, it is not cured by IBG within a commercially reasonable period of time under the circumstances, in no case exceeding sixty (60) days following IBG’s receipt of written Notice of such breach; (c) if IBG repeatedly fails to, or threatens not to, timely deliver Covered Products conforming to the requirements of, and otherwise in accordance with, the terms and conditions of this Agreement; (d) if IBG (i) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due, (ii) files or has filed against it, a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law, (iii) makes or seeks to make a general assignment for the benefit of its creditors, or (iv) applies for or has appointed a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business; (e) if IBG fails to provide Sway, within a commercially reasonable time after Sway’s request (but in no case exceeding 30 days after such request) with adequate and reasonable assurance of IBG’s financial and operational capability to perform timely any of IBG’s obligations under the 2020 Manufacturing Agreement; (f) if, as a result of any repeated and material breach by IBG of any of its obligations under
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this Agreement, Sway’s customer requires that Sway obtain another supplier of Covered Products;
(g) if IBG takes any action, or fails to take any action, required under this Agreement or any other agreement between Sway and IBG, or
as reasonably requested by Sway, the result of which is an imminent interruption or delay, or the threat of an imminent interruption or
delay, in any production at any of Sway’s or its customer’s manufacturing facilities; (h) if, without obtaining Sway’s
prior written consent, (i) IBG sells, leases or exchanges a material portion of IBG’s assets, (ii) IBG merges or consolidates with
or into another Person (as defined in said agreement), other than Sway, or (iii) a change in Control (meaning the possession, directly
or indirectly, of the power to direct or cause the direction of the management or policies of another Person (as defined in said agreement),
whether through the ownership or voting securities, by contract, or otherwise) of IBG occurs; or (i) upon the occurrence of any other
event constituting grounds for termination set forth in under the 2020 Manufacturing Agreement.
Any termination under Sway’s right to terminate for cause will be effective on IBG’s receipt of Sway’s written notice of termination or such later date (if any) set forth in such termination notice. Upon the occurrence of any of the events described under Sway’s right to terminate for cause, Sway may, in addition to any of its other rights to suspend performance under the 2020 Manufacturing Agreement or applicable law, immediately suspend its performance under all or any part of such agreement, without any liability of Sway to IBG, and, notwithstanding anything to the contrary contained in such agreement Sway may, at its election, recover any and all direct and indirect actual and incidental damages (but not including consequential damages) and costs (including attorneys’ and other professionals’ fees and costs), expenses and losses incurred by Sway as a result of any event described under Sway’s right to terminate for cause or any breach of the 2020 Manufacturing Agreement by IBG.
With respect to IBG, the Company has a right to terminate the 2020 Manufacturing Agreement for cause by providing written notice to Sway: (a) if Sway is in material breach of any material representation, warranty or covenant of Sway under said Agreement, and either the breach cannot be cured or, if the breach can be cured, it is not cured by Sway within a commercially reasonable period of time, in no case exceeding sixty (60) days, after Sway’s receipt of written notice of such breach; or (b) if Sway (i) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due, (ii) files or has filed against it, a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law, (iii) makes or seeks to make a general assignment for the benefit of its creditors, or (iv) applies for or has appointed a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.
Any termination by IBG will be effective on Sway’s receipt of IBG’s written notice of termination or such later date (if any) set forth in such notice.
Immediately upon the effectiveness of a notice of termination delivered by Sway to IBG, IBG shall promptly, unless otherwise directed by Sway, and subject to IBG’s obligation provide resourcing cooperation: (i) terminate all performance under the 2020 Manufacturing Agreement and under any outstanding purchase orders; (ii) transfer title and deliver to Sway all Covered Products produced and paid for pursuant to the 2020 Manufacturing Agreement prior to effectiveness of the notice of termination; and (iii) return to Sway all bailed property and any other property furnished by or belonging to Sway or any of Sway’s customers, or dispose of such bailed property or other property in accordance with Sway’s instructions (provided that Sway will reimburse IBG for the actual, reasonable costs associated with such disposal). The expiration or termination of the then-current term will not affect any rights or obligations of Sway or IBG that: (i) come into effect upon or after termination or expiration of the 2020 Manufacturing Agreement; or (ii) otherwise survive the expiration or earlier termination of such agreement pursuant to its terms and were incurred by the parties prior to such expiration or earlier termination. Upon the expiration or earlier termination of the 2020 Manufacturing Agreement, each party shall: (i) return to the other party all documents and tangible materials (and any copies) containing, reflecting, incorporating or based on the other party’s confidential information, and not retain any copies thereof; (ii) permanently erase all of the other party’s confidential information from its computer systems, except for copies that are maintained as archive copies on its disaster recovery and/or information technology backup systems, Sway and IBG each shall destroy any such copies upon the normal expiration of its backup files; and (iii) upon the other party’s written request, certify in writing to such other party that it has complied with the termination requirements. Termination of the 2020 Manufacturing Agreement will not constitute a waiver of any of the terminating party’s rights or remedies/either party’s rights, remedies or defenses under said agreement, at law, in equity or otherwise.
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Subject to price adjustments, including a favored nations price adjustment herein described, Sway purchases the Covered Products according to the following pricing schedule: (a) for all Covered Products, other than Cocktail Bitters, (i) IBG’s actual manufacturing cost for each of the Covered Products, plus (ii) 54% of the manufacturing cost for such Covered Products; and (b) for Cocktail Bitters, the same price per case as IBG charges to and receives from its largest customer, Coca-Cola Europacific Partners, which is equal to or less than AUD$81.75 per case. If a price adjustment is warranted (a) for Covered Products, other than Cocktail Bitters, as a result of IBG’s increased manufacturing costs, or (b) for Cocktail Bitters, as a result of IBG’s increased pricing to Coca-Cola Europacific Partners, IBG shall provide Sway with evidence, reasonably acceptable to Sway, of such increased manufacturing costs or increases prices charged to Coca-Cola Europacific Partners, as applicable. Applicable price adjustments are effective immediately for all purchase orders not yet accepted by IBG. If at any time during the then-term, either (a) Sway demonstrates to IBG that Sway is able to purchase from one or more unaffiliated third party sources similar quantities of Covered Products on similar delivery dates and delivery terms, either at lower prices or on more favorable payment terms than those earlier stated, or (b) IBG charges any other buyer of similar quantities of Covered Products on similar delivery date and delivery terms, a lower price, or agrees to payment terms that are more favorable to such buyer than those set forth in the agreement for the same Covered Products, IBG shall adjust its pricing and apply that lower price and more favorable payment terms to all same or similar Covered Products covered by 2020 Manufacturing Agreement and under applicable purchase orders, statements of work or invoices (the “Favored Nations Price Adjustment”). Sway is entitled to a Favored Nations Price Adjustment on one occasion only during each Anniversary Year (meaning the period from August 1 through July 31) and it shall apply only to sales and purchases of Covered Products in the next succeeding Anniversary Year. If IBG fails to provide Sway with a Favored Nations Price Adjustment to which it may be entitled, Sway may, at its option, in addition to all of its other rights under this Agreement or at law, terminate this Agreement without liability to IBG.
Upon termination of the 2020 Manufacturing Agreement, two licenses granted thereunder will expire: (i) IBG’s royalty-free license to Twisted Shaker to manufacture, use and sell the product throughout the world, except the U.S., its territories and possessions; and (ii) Sway’s royalty-free license to use the intellectual property rights associated with VOCO to manufacture, use and sell the brand in the U.S., its territories and possessions.
The June 2021 Amendment Agreement also terminated a Management, Supply and License Agreement between IBG and Sway dated December 31, 2020. Under the terms of such agreement. IBG obtained the sole and exclusive right to own and operate the BevMart business in Australia, including its website and the BevMart Brands.
The June 2021 Amendment Agreement also set forth the intellectual property arrangements between IBG and Sway, which are described in the chart below. The chart also reflects amendments under the October 2022 Amendment Agreement. Pursuant to the October 2022 Amendment Agreement, a purchase option previously granted by IBG to Sway whereby, within 90 days following the termination of the 2020 Manufacturing Agreement for any reason other than an automatic termination or termination by IBG for Cause as provided therein, Sway held a purchase option to acquire the formulations, but no intellectual property rights, of Australian Bitters Company for USD$2,000,000 (along with those for BitterTales). The October 2022 Amendment removed the purchase option and the exclusivity of certain licenses granted to Sway with respect to the Australian Bitters Company, BitterTales and VOCO brands.
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| Australis Gin |
IBG owns the intellectual property rights, including formulations, associated with the brand Australis Gin.
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ABS paid USD$42,500 representing 100% of the costs and expenses incurred by Elegance as at that time in developing the Australis Gin beverage and brand |
| Twisted Shaker |
IBG sold its intellectual property rights, including related formulations, associated with the Twisted Shaker brand to Sway.
Sway granted IBG a royalty-free non-exclusive license to use its intellectual property rights associated with the Twisted Shaker brand to manufacture, use and sell Twisted Shaker throughout the world, except for the U.S., its territories and possessions, which are Sway’s exclusive territories. The license expires upon termination of the 2020 Manufacturing Agreement.
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IBG received as consideration from Sway USD$10,000 for each of the formulations possessed by IBG with respect to the Twisted Shaker brand
IBG agreed with Sway to offset future royalties payable for Twisted Shaker to Sway in return for a royalty free right Sway to sell VOCO in the USA. |
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| VOCO |
IBG granted Sway a royalty-free non-exclusive, non-transferable and non-sublicensable license to the intellectual property rights associated with the VOCO brand to make, use and sell the brand in the U.S., its territories and possessions. The license expires upon termination of the 2020 Manufacturing Agreement.
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Sway paid to IBG the paid-up sum of USD$200,000, in lieu of all current and future royalties due.
IBG agreed with Sway to offset future royalties payable for Twisted Shaker to Sway in return for a royalty-free right for Sway to sell VOCO in the U.S.
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| Australian Bitters Company |
Within Australia, CCEP owns the right to distribute the Australian Bitters Company brand and IBG has the exclusive right to manufacturer the product.
Outside Australia, IBG owns the brand and has the right to manufacture and distribute Australian Bitters Company products. With respect to the U.S., its territories and possessions, IBG has a distribution arrangement with Sway whereby Sway pays USD$60 per case.
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Elegance pays USD$60 per case of Australian Bitters Company products. |
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Cheeky Vodka and flavor variants
Coventry Estate Gin and flavor variants
Geo Liqueurs in multiple variants
Cheeky Espresso Martini in multiple variants |
IBG owns and manufactures these brands (the BevMart Brands), as well as the BevMart.com.au website and business.
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IBG paid as consideration to Sway USD$188,630.41, which represented 100% of the fully burdened costs and expenses incurred by Sway in developing the website and developing and creating formulations for each of the brands. |
Loan Agreement between Australian Boutique Spirits Pty Ltd and Amit Beri as of June 30, 2021, as novated to Meena Beri on December 27, 2021
On June 30, 2021, ABS and Amit Beri entered into an unwritten loan agreement for the aggregate amount of AUD$2,853,105 for loans received from the Company between January 2020 through such date (the “Beri Loan”) bearing an interest rate of 4.52%. The repayment term was such that in lieu of a cash payment by Mr. Beri to ABS, ABS would offset the loan against the dividend declared for the period to June 30, 2021. In accordance with the Corporations Act (Cth), the Board declared a dividend of AUD$2,138,610 from ABS’ historical retained earnings as of June 30, 2021 and offset the dividend against the loan owing from Mr. Beri.
Subsequently on December 27, 2021, ABS, Mr. Beri and Meena Beri entered into a novation agreement (“Novation of Debt Agreement”) whereby the Beri Loan was novated to Ms. Beri such that the repayment of the remaining balance of AUD$960,759.60 was assumed by Ms. Beri, which is repayable upon demand by ABS.
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Agreement and Plan of Merger dated March 16, 2026 with the Company, BlockFuel Energy Inc., a Texas corporation, and InnoBev Merger Corp., a wholly owned subsidiary of the Company
On October 14, 2025, the Company entered into the Agreement and Plan of Merger, as amended and restated on March 16, 2026, with BlockFuel Energy, Inc., a Texas corporation, and InnoBev Merger Corp., a wholly owned subsidiary of the Company. The transaction is structured as a reverse triangular merger pursuant to which the Merger Sub will merge with and into BlockFuel, with BlockFuel surviving as a wholly owned subsidiary of the Company. Under the terms of the A&R Merger Agreement, at the effective time of the merger, each outstanding share of BlockFuel common stock will be converted into the right to receive ordinary shares of the Company such that, following completion of the merger, the owners of BlockFuel are expected to own approximately 90% of the Company’s outstanding ordinary shares and existing Company shareholders approximately 10%, in each case on a post-transaction, fully diluted basis and subject to equitable adjustments for interim financings. No cash consideration is payable to BlockFuel equityholders in connection with the merger. The completion of the merger remains subject to specified closing conditions, including, among others, (i) the completion by the Company of interim financings of at least $10 million, (ii) the authorization for listing of the Company’s ordinary shares to be issued in the merger on a mutually agreed stock exchange, (iii) the absence of any law, court order or regulatory injunction prohibiting the consummation of the merger, (iv) subject to specified materiality standards, the accuracy of representations and warranties of each party, (v) compliance by each party in all material respects with its covenants and agreements, (vi) the absence of a material adverse effect on each party, and (vii) applicable shareholder and regulatory approvals, including approval by Nasdaq. The Merger Agreement contains customary representations, warranties and covenants of each party, including covenants relating to the conduct of each party’s business between signing and closing, as well as customary termination provisions.
Share Exchange Agreement dated March 16, 2026 by and between the Company and the shareholders of BlockFuel Energy Inc.
In connection with the proposed merger, the Company entered into a Share Exchange Agreement dated March 16, 2026 (the “Share Exchange Agreement”) with certain shareholders of BlockFuel, including Daniel Joseph Lanskey, Russell H. Didlake, Bekana Investments Pty Ltd, Anil Beri Holdings Inc., and Beri Holdings LLC (collectively, the “Selling Shareholders”). Pursuant to the Share Exchange Agreement, the Selling Shareholders transferred to the Company an aggregate of 127,628 shares of BlockFuel common stock, representing approximately fifty-one percent (51%) of the outstanding equity of BlockFuel. As consideration for the transferred shares, the Company issued to the Selling Shareholders warrants to purchase an aggregate of 3,815,766 ordinary shares of the Company at an exercise price of $0.0001 per share (the “Warrants”). The Warrants have a term of five years and are not exercisable until shareholder approval and approval by The Nasdaq Stock Market LLC are obtained, including Nasdaq’s approval of any change of control resulting from their exercise. The Warrants represent approximately 45.9% of the Company’s issued and outstanding ordinary shares as of issuance and will represent 51% of the merger consideration payable at the time of the closing of the merger. Upon consummation of the merger, the Warrants will be automatically adjusted to an aggregate of 20,643,297 ordinary shares of the Company and will be deemed exercised. In addition, in connection with the Share Exchange Agreement and the proposed merger, the Company loaned BlockFuel $2,500,000 pursuant to an unsecured, non-interest bearing promissory note (the “Promissory Note”). BlockFuel used the proceeds of the Promissory Note to exercise its call right under a Common Stock Purchase Agreement dated December 24, 2025 and repurchase and cancel certain outstanding shares of BlockFuel common stock.
Intellectual Property
Our success and future revenue growth depend, in part, on our ability to protect our intellectual property. We sell our products under trademarks, which we own or use under license. The chart below sets forth the intellectual property we own or license.
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| Brands | Summary | IP |
| Drummerboy | IBG owns this brand. | IBG owns all intellectual property rights, including formulations, associated with the brand Drummerboy. |
| Australis Gin | IBG owns this brand after repurchasing it from Sway Energy pursuant to the June 2021 Agreement. | IBG owns the intellectual property rights, including formulations, associated with the brand Australis Gin. |
| Twisted Shaker | IBG holds a royalty-free license to Twisted Shaker to manufacture, use and sell the product throughout the world, except the U.S., its territories and possessions. |
IBG previously sold its intellectual property rights, including related formulations, associated with the Twisted Shaker brand to Sway.
Sway then granted IBG a royalty-free non-exclusive license to use its intellectual property rights associated with the Twisted Shaker brand to manufacture, use and sell Twisted Shaker throughout the world, except for the U.S., its territories and possessions, which are Sway’s exclusive territories. The license expires upon termination of the 2020 Manufacturing Agreement.
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| BitterTales |
Sway owns this brand globally, but does not own the formulations.
With respect to formulations, IBG granted Sway a license to manufacture, use and sell all formulations of BitterTales within the USA and other countries located in Sway’s territories. |
IBG granted to Elegance a non-exclusive, non-transferable and non-sublicensable license to make, use and sell all formulations with respect to the BitterTales brand of alcoholic products. |
| VOCO | IBG owns this brand and granted Sway a royalty-free license to use its intellectual property rights associated with VOCO to manufacture, use and sell the brand in the U.S., its territories and possessions. |
IBG granted Sway a royalty-free non-exclusive, non-transferable and non-sublicensable license to the intellectual property rights associated with the VOCO brand to make, use and sell the brand in the U.S., its territories and possessions. The license expires upon termination of the 2020 Manufacturing Agreement.
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| Australian Bitters Company |
Within Australia, CCEP owns the right to distribute the Australian Bitters Company brand and IBG has the exclusive right to manufacturer the product.
Outside Australia, IBG owns the brand and has the right to manufacture and distribute Australian Bitters Company products. With respect to the U.S., its territories and possessions, IBG has a distribution arrangement with Sway whereby Sway pays USD$60 per case. |
ABS sold its right, title and interest to all brands, line extensions, and flavor line extensions associated with the Australian Bitters Company brand to Sway for sale and distribution in the U.S., its territories and possessions.
Elegance distributes Australian Bitters Company products in the U.S. for IBG. |
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Cheeky Vodka and flavor variants
Coventry Estate Gin and flavor variants
Geo Liqueurs in multiple variants
Cheeky Espresso Martini in multiple variants |
IBG owns and manufactures these brands. |
IBG owns and manufactures these brands, as well as the BevMart.com.au website and business.
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We have trademarks registered in Australia for “Twisted Shaker” (mark no. 2231533) and “Drummerboy” (mark no. 2235565). In the United States, we have a trademark registration for “Wired for Wine”.
We expect to register our trademarks in additional markets as we expand our distribution territories to protect our business interests and ensure our competitive position in our industry. We intend to vigorously protect our intellectual property rights, but there can be no assurance that our efforts will be successful. If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue, and incur costly litigation to protect our rights. Even if our efforts are successful, we may incur significant costs in defending our rights. For further details about our intellectual property, see “Risk Factors.”
Also included in our intellectual property are our domain and social channel ownerships. We own the following domains: abspirits.com.au; australianboutiquespirits.com; beveragemart.com.au; bevmart.cn; bevmart.co.in; bevmart.co.nz; bevmart.co.uk; bevmart.com; bevmart.com.au; bevmart.in; cinderella-wine.com; cinderellawin.com; distyl.com; drinkdistyl.com; drinkpellicano.com; drinkpellicano.com.au; drinkriveria.com; drinkriveria.com.au; drummerboy.ca; drummerboy.co.uk; drummerboy.com; drummerboy.de; drummerboy.es; drummerboy.fr; innovationbev.com; lpt18.com; twistedshakercocktails.com; virginiablack.com.au; virginiablackwhiskey.com.au; winetilsoldou.com; wire4wine.com; wired4wine.com; wiredforcheese.com; wiredforcigars.com; wiredforjava.com; wiredforpot.com; wiredforspirits.com; wiredforwine.com; wiredonwine.com; wireforwine.com.
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We own the following social media handles.
| ● | Instagram: www.instagram.com/wiredforwine; www.instagram.com/drinkdrummerboy; www.instagram.com/bevmartau; www.instagram.com/bevmartus; www.instagram.com/australianboutiquespirits; www.instagram.com/twistedshakercocktails; www.instagram.com/innovationbeveragegroup | |
| ● | Facebook: www.facebook.com/bevmartau; www.facebook.com/bevmartus; www.facebook.com/twistedshakercocktails; www.facebook.com/wiredforwineus; www.facebook.com/drinkdrummerboy | |
| ● | Youtube: |
| o | Drummerboy: www.youtube.com/channel/UC-z4dp67m_I2--nwU5jtB8w | |
| o | Bevmart - www.youtube.com/channel/UCDu32Yxt4OloteZZG2DrHRQ |
| ● | TikTok: www.tiktok.com/@drinkdrummerboy | |
| ● | LinkedIn: www.linkedin.com/company/australian-boutique-spirits; www.linkedin.com/company/bevmart |
Government Regulation
Australia
The conduct of our businesses, including the production, importation, under-bond storage/warehousing, distribution, sale, display, advertising, marketing, labeling, content, quality, safety, transportation, packaging, disposal, recycling and use of our products, as well as our employment and occupational health and safety practices and protection of personal information, are subject to various laws and regulations administered by federal, state and local governmental authorities in the state of New South Wales and the country of Australia. It is our policy to abide by the laws and regulations around the world that apply to our businesses. We are in compliance with the Australian Taxation Office (ATO) which regulates the manufacture, importation, licensing, distribution within Australia, and exportation of all products which we produce. We are in compliance with the state of New South Wales which regulates the sale of our alcohol products as a wholesale producer directly to consumers over the age of 18 years. (The legal alcohol consumption age in New South Wales, Australia is 18 years of age). We are in compliance with all state and federal licenses granted to us.
United States
The conduct of our businesses, including the production, importation, under-bond storage/warehousing, distribution, sale, display, advertising, marketing, labeling, content, quality, safety, transportation, packaging, disposal, recycling and use of our products, as well as our employment and occupational health and safety practices and protection of personal information, are subject to various laws and regulations administered by federal, state and local governmental agencies in the United States. It is our policy to abide by the laws and regulations around the world that apply to our businesses. We are in compliance with the federal government (FDA and ATF-TTB) and with each state’s local regulatory requirements for the sale of wine and spirits.
In addition, certain jurisdictions have either imposed, or are considering imposing, product labeling or warning requirements or other limitations on the marketing or sale of certain of our products as a result of ingredients or substances contained in such products or the audience to whom products are marketed. These types of provisions have required that we highlight perceived concerns about a product, warn consumers to avoid consumption of certain ingredients or substances present in our products, restrict the age of consumers to whom products are marketed or sold or limit the location in which our products may be available. It is possible that similar or more restrictive requirements may be proposed or enacted in the future.
In addition, certain jurisdictions have either imposed or are considering imposing regulations designed to increase recycling rates or encourage waste reduction. These regulations vary in scope and form from deposit return systems designed to incentivize the return of beverage containers, to extended producer responsibility policies and even bans on the use of some types of single-use plastics. It is possible that similar or more restrictive requirements may be proposed or enacted in the future.
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Employees
As of September 15, 2026, we had 8 full time employees located in Australia and the United States. These employees are engaged in manufacturing, sales and marketing, customer support, finance, and general management. We rely upon and engage consultants on a contract basis to provide services to assist us to carry on our technical development, administrative, shareholder communication and marketing activities. None of our employees are represented by labor unions or covered by collective bargaining agreements.
Legal Proceedings
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. We are not currently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
C. Organizational Structure
The legal name of our company is Innovation Beverage Group Limited and we are a public limited company incorporated under the laws of Australia. IBG has six wholly owned subsidiaries: Innovation Beverage Group USA Inc., a Nevada corporation; Reg Liquors LLC (d/b/a Wired for Wine), a New Jersey limited liability company; IBG USA, LLC, a Delaware limited liability company; InnoBev Merger Corp., a Texas corporation; IBG Treasury USA Inc., a Nevada corporation; and Bittersweet Brands Pty Ltd, an Australian company, which is wholly owned by Innovation Beverage Group USA Inc. We conduct some of our operations through our subsidiaries. IBG USA INC was formed in October 2024 for the purpose of importing, producing via co-packers, marketing and wholesaling the IBG owned portfolio of brands in the United States. IBG USA INC began these activities since October 2024 with several distribution agreements with Republic National Distribution Company (“RNDC”) in California, Hawaii, Alaska, Nevada, Ohio and Washington states and with Houston’s Inc. in Oregon.Reg Liquors LLC is an e-commerce retailer of wines and spirits, which operated its own marketplaces, www.wiredforwine.com and www.bevmart.com, until October 2024. In October of 2024, we decided to focus our efforts on building our own brands in the United States and other export markets, and as a result we have ceased retailing of certain third-party brands via our retail websites, www.wiredforwine.com and www.bevmart.com for the United States.
Investments in our securities are not purchases of equity securities of these operating subsidiaries in the United States but instead are purchases of equity securities of IBG.
D. Property, Plant and Equipment
The Company leases office space in Arndell Park, New South Wales, Australia, consisting of a distillery, beverage manufacturing facility and office space, pursuant to a five-year lease agreement commencing on April 1, 2026 and expiring on March 31, 2031, covering approximately 1,600 square meters of rentable space, with base rent of AU$298,350.00 per annum payable in accordance with the terms of the lease agreement. The Company relocated its operations from Seven Hills to Arndell Park in April 2026.
We believe that our existing facilities are generally adequate to meet our current of future needs, but we expect to seek additional space as needed to accommodate future growth.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this annual report. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” elsewhere in this annual report.
Overview
We are a developer, manufacturer and exporter of a growing portfolio of 75 formulations across 14 alcoholic and non-alcoholic brands of beverages such as Australian Bitters Company. Our distribution capabilities include sales to large distributors and high-margin direct-to-consumer sales. We have partnered with Coca-Cola Europacific Partners (NASDAQ:CCEP), one of the world’s largest Coca-Cola bottlers, to exclusively distribute “Australian Bitters Company” bitters in Australia while retaining the rights throughout the rest of the world, and we are negotiating distribution to new European markets, including expansion of our new brands into Australia and Europe. We focus on direct-to-consumer (DTC) sales through our network of eCommerce platforms. We launched BevMart, a DTC marketplace, in Australia in May 2021.
We have facilities, which are FDA certified, kosher compliant and meet Coca-Cola’s stringent standards, and include the ability to engage in the process of making our products in-house, including innovation and development, maceration, blending, distillation, rectification and bottling. We believe that we currently have the capacity to increase production by 10x with minimal capital expenditures.
For more information regarding our business and operations, see “Item 4B. Business Overview” above.
Recent Offerings
On March 16, 2026, the Company closed a best-efforts public offering generating approximately $6 million in gross proceeds. The offering consisted of units comprised of ordinary shares (or pre-funded warrants) and Series A and Series B warrants. The Company used $2,500,000 of the net proceeds to fund a loan to BlockFuel in connection with the proposed merger transaction and intends to use the remaining proceeds for general corporate purposes.
On January 14, 2026, the Company entered into a sales agreement with Aegis Capital Corp. pursuant to which the Company may, from time to time, sell up to $2,500,000 of its ordinary shares in an “at-the-market” offering. As of the date of this Annual Report, the Company has sold an aggregate of approximately $2,013,687 of ordinary shares under this program.
A. Operating Results
Key Components of Our Results of Operations
We consider a variety of financial and operating measures in assessing the performance of our business. The key financial performance measures we use are revenue, gross profit and gross margin. Our review of these indicators facilitates timely evaluation of the performance of our business and effective communication of results and key decisions, allowing our business to respond promptly to competitive market conditions and different demands and preferences from our customers. The key measures that we use to evaluate the performance of our business are set forth below and are discussed in greater details under “Results of Operations”.
Revenues
Our revenues are derived primarily from the sales of bitters products to Coca-Cola Europacific Partners and overseas customers and direct-to-consumer (DTC) sales through our on-line marketplaces.
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Cost of Revenues
Cost of revenues includes the costs of direct materials and delivery costs, direct labor, import duties and other taxes, and an appropriate proportion of variable and fixed overhead expenditures based on normal operating capacity.
General and Administrative Expenses
General and administrative expenses consist primarily of insurance, public company and compliance costs, depreciation and amortization, occupancy-related costs and other corporate administrative expenses.
Salaries and Wages
Salaries and wages consist primarily of employee compensation, executive compensation, director fees, employee benefits and applicable stock-based compensation.
Sales and Marketing
Sales and marketing expenses consist primarily of advertising, promotional and other sales-related costs.
Contracted Services
Contracted services consist primarily of consulting, legal, accounting, audit and other professional service costs.
Interest Expense
Interest expense consists primarily of interest incurred on lines of credit and other financing arrangements, including insurance and equipment financing.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
Revenues
The following table summarizes the results of our revenues for the years ended December 31, 2025 and 2024.
| 12 Months Ended December 31, | Year-over-Year | |||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| (As Restated) | ||||||||||||||||||||
| Australian Bitters Company | $ | 2,595,538 | 94 | % | $ | 2,795,537 | 96 | % | -7.2 | % | ||||||||||
| BitterTales and others | $ | 153,684 | 5 | % | $ | 81,536 | 2 | % | 88.5 | % | ||||||||||
| Total Brand Products | $ | 2,749,222 | 99 | % | $ | 2,877,073 | 98 | % | -4.4 | % | ||||||||||
| Spirits | $ | 23,019 | 1 | % | $ | 45,168 | 2 | % | -49.0 | % | ||||||||||
| Total E-Commerce | $ | 23,019 | 1 | % | $ | 45,168 | 2 | % | -49.0 | % | ||||||||||
| Total Revenues | $ | 2,772,241 | 100 | % | $ | 2,922,241 | 100 | % | -5.1 | % | ||||||||||
Revenues for the year ended December 31, 2025, were $2,772,241 compared to $2,922,241 for the year ended December 31, 2024, as restated, a decrease of $150,000, or 5.1%. The decrease in revenues was primarily attributable to lower Australian Bitters Company sales and was due to a missed order cycle from Coca-Cola Europacific Partners in 2025, resulting in 11 months of recognized sales in 2025 compared to a full 12-month period in 2024.
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Cost of Revenues
Cost of revenues for the year ended December 31, 2025 was $1,546,570 compared to $697,182 for the year ended December 31, 2024, as restated, an increase of $849,388, or 122%. The increase in cost of revenues was primarily attributable to inventory-related adjustments, including a $330,250 inventory writedown, and higher raw material costs.
Gross Profit and Gross Margin
Gross profit for the year ended December 31, 2025 was $1,225,671 compared to $2,225,059 for the year ended December 31, 2024, as restated, a decrease of $999,388, or 44.9%. Gross margin decreased to 44.2% for 2025 from 76.1% for 2024. The decrease in gross margin was primarily attributable to the increase in cost of revenues described above, including inventory-related adjustments and higher raw material costs, while revenues decreased by 5.1%.
Operating Expenses
The following table summarizes our operating expenses for the years ended December 31, 2025 and 2024.
| 12 Months Ended December 31, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| (As Restated) | ||||||||||||||||
| General and administrative | $ | 1,514,464 | 23 | % | $ | 1,342,468 | 18 | % | ||||||||
| Salaries and wages | $ | 2,243,852 | 34 | % | $ | 2,459,586 | 34 | % | ||||||||
| Sales and marketing | $ | 293,317 | 4 | % | $ | 154,895 | 2 | % | ||||||||
| Contracted services | $ | 2,559,979 | 39 | % | $ | 1,470,782 | 20 | % | ||||||||
| Impairment expense | $ | — | — | % | $ | 1,861,833 | 26 | % | ||||||||
| Gain on disposal of equipment | $ | (3,046 | ) | 0 | % | $ | — | — | % | |||||||
| Total Operating Expenses | $ | 6,608,566 | 100 | % | $ | 7,289,564 | 100 | % | ||||||||
Operating expenses for the year ended December 31, 2025, were $6,608,566 compared to $7,289,564 for the year ended December 31, 2024, as restated, a decrease of $680,998, or 9.3%. The decrease was primarily attributable to the absence of impairment expense in 2025, partially offset by higher contracted services, general and administrative expenses, and sales and marketing expenses.
| ● | General and administrative expenses increased by $171,996, or 12.8%, primarily due to increases in insurance, filing fees, compliance costs and other public-company and administrative expenses, partially offset by lower amortization expense. | |
| ● | Salaries and wages decreased by $215,734, or 8.8%, primarily due to lower wages and executive remuneration, partially offset by higher director fees. | |
| ● | Sales and marketing increased by $138,422, or 89.4%, primarily due to increased advertising and marketing activity, including an increase in advertising costs of approximately $70,000. | |
| ● | Contracted services increased by $1,089,197, or 74.1%, primarily due to an approximately $1.2 million increase in consultancy expense, including a one-time share-based compensation charge of $795,300 and approximately $240,000 of consulting expense related to a related-party consulting engagement that commenced in January 2025. Legal costs also increased, including costs associated with merger and acquisition activities and accruals related to legal matters. These increases were partially offset by lower contract labor costs. | |
| ● | Impairment expense decreased by $1,861,833, or 100%, because no impairment expense was recognized in 2025. During 2024, as restated, the Company recognized impairment expense of $1,031,967 related to intangible assets, $716,453 related to a related-party loan receivable and accrued interest, and $113,413 related to prepaid expenses. |
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Loss from Operations
Loss from operations for the year ended December 31, 2025 was $5,382,895 compared to $5,064,505 for the year ended December 31, 2024, as restated, an increase of $318,390, or 6.3%. The increase in loss from operations was primarily attributable to the $999,388 decrease in gross profit, partially offset by the $680,998 decrease in operating expenses.
Other Income (Expense)
Other income (expense), net, for the year ended December 31, 2025 was $114,137 compared to $(120,594) for the year ended December 31, 2024, as restated, an improvement of $234,731. The improvement was primarily attributable to a $186,292 credit from the Australian Tax Office and a $174,402 decrease in interest expense, partially offset by a $144,849 decrease in gains on settlement of liabilities.
Income Tax Benefit (Expense)
The income tax benefit (expense) for the year ended December 31, 2025, was ($925,459) compared to $484,784 for the year ended December 31, 2024, as restated, a change of $1,410,243, primarily due to the change from a tax benefit in 2024 to tax expense in 2025.
Net Loss
The net loss for the year ended December 31, 2025 was $6,194,217 compared to $4,700,315 for the year ended December 31, 2024, as restated, an increase of $1,493,902, or 31.8%. The increase was primarily attributable to the change from an income tax benefit in 2024 to income tax expense in 2025, together with the $318,390 increase in loss from operations, partially offset by the $234,731 improvement in other income (expense), net.
Reportable Segments
We have two reportable segments: Australia and the United States. The Australia segment primarily consists of our Australian beverage operations and corporate activities, while the United States segment consists of the operations of our United States subsidiaries. Management evaluates the performance of the reportable segments primarily based on revenues and loss from operations. Intercompany transactions and balances are eliminated in consolidation.
Summary information with respect to our reportable segments is as follows:
| 12 Months Ended December 31, | ||||||||||||||||
| Revenues | 2025 | 2024 | ||||||||||||||
| (As Restated) | ||||||||||||||||
| Australia | $ | 2,743,510 | 99 | % | $ | 2,920,941 | 100 | % | ||||||||
| United States | $ | 28,731 | 1 | % | $ | 1,300 | 0 | % | ||||||||
| Total Revenue | $ | 2,772,241 | 100 | % | $ | 2,922,241 | 100 | % | ||||||||
Revenue from the Australia segment decreased to $2,743,510 in 2025 from $2,920,941 in 2024, as restated, primarily due to a missed order cycle from Coca-Cola Europacific Partners in 2025, resulting in 11 months of recognized sales in 2025 compared to a full 12-month period in 2024.
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| 12 Months Ended December 31, | ||||||||
| Loss from operations | 2025 | 2024 | ||||||
| (As Restated) | ||||||||
| Australia | $ | (4,703,076 | ) | $ | (3,924,549 | ) | ||
| United States | $ | (679,819 | ) | $ | (1,139,956 | ) | ||
| Total loss from operations | $ | (5,382,895 | ) | $ | (5,064,505 | ) | ||
Loss from operations for the Australia segment increased by $778,527, or 19.8%, to $4,703,076 in 2025 from $3,924,549 in 2024, as restated. Loss from operations for the United States segment decreased by $460,137, or 40.4%, to $679,819 in 2025 from $1,139,956 in 2024, as restated.
B. Liquidity and Capital Resources
For the year ended December 31, 2025, we incurred a net loss of $6,194,217 and used $1,561,456 of net cash in operating activities. As of December 31, 2025, we had cash of $127,756, a working capital deficit of $1,994,231 and an accumulated deficit of $17,327,110. These conditions raise substantial doubt about our ability to continue as a going concern for one year from the issuance of our consolidated financial statements.
To date, we have funded our operating activities through the issuance of debt and equity securities and revenues generated from our business operations. During the year ended December 31, 2025, we received $750,000 of proceeds from the issuance of convertible promissory notes to a related party and $242,308 from notes and loans payable to related parties.
Subsequent to December 31, 2025, we completed a registered public offering on March 16, 2026 that generated approximately $6.0 million of gross proceeds, a portion of which was used to fund a $2.5 million non-interest-bearing loan to BlockFuel Energy Inc. In addition, on August 25, 2026, we issued a convertible promissory note with a principal amount of $1.15 million for cash proceeds of $1.0 million. In addition, as of the date of this Annual Report, we had sold approximately $2.0 million of ordinary shares under our at-the-market offering program. Management continues to evaluate financing alternatives, pursue revenue growth initiatives and manage operating cash outflows in order to address our liquidity requirements.
The outcome of management's plans cannot be determined with any degree of certainty. Accordingly, our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result if we are unable to continue as a going concern.
Years Ended December 31, 2025, and 2024
As of December 31, 2025, we had total cash of $127,756 compared to $619,945 as of December 31, 2024. The following table summarizes our sources and uses of cash for each of the periods presented:
| Year Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Net cash (used in) operating activities | $ | (1,561,456 | ) | $ | (1,921,400 | ) | ||
| Net cash provided by (used in) investing activities | $ | 325 | $ | (7,105 | ) | |||
| Net cash provided by financing activities | $ | 1,022,574 | $ | 2,657,968 | ||||
| Impact of changes in foreign currency on cash | $ | 46,368 | $ | (123,656 | ) | |||
| Net increase (decrease) in cash | $ | (492,189 | ) | $ | 605,807 | |||
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Net cash used in operating activities
Net cash used in operating activities was $1,561,456 for 2025 compared to $1,921,400 for 2024, as restated, a decrease in cash used of $359,944. The decrease in cash used in operating activities reflected changes in working capital and other operating assets and liabilities, partially offset by the higher net loss in 2025. Significant noncash adjustments to net loss during 2025 included stock-based compensation of $1,969,723, depreciation and amortization of $70,012 and an inventory writedown of $330,250.
Net cash used in investing activities
Net cash provided by investing activities was $325 in 2025 compared to net cash used in investing activities of $7,105 in 2024, as restated. Investing activity in both periods was not significant.
Net cash provided by financing activities
Net cash provided by financing activities was $1,022,574 in 2025 compared to $2,657,968 in 2024, as restated, a decrease of $1,635,394. The decrease was primarily attributable to proceeds received from the Company's initial public offering in 2024, partially offset by $750,000 of proceeds from convertible notes in 2025 and lower repayments of notes payable and related-party notes payable.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of December 31, 2025 that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Indebtedness
As of December 31, 2025, we had aggregate notes and loans payable of $801,701, consisting of $478,780 of lines of credit, $242,308 of related-party loans, $43,696 of insurance financing and $36,917 of equipment financing. Of the total outstanding balance, $777,053 was classified as current and $24,648 was classified as non-current.
As of December 31, 2025, we had three lines of credit with third-party lenders with aggregate outstanding borrowings of $478,780. Based on interest accrued during 2025, the facilities bore effective interest rates ranging from approximately 15.7% to 16.3% per annum. The facilities had passed their original maturity dates and remained outstanding and, accordingly, were classified as current liabilities.
During 2025, we received three unsecured loans from related parties with an aggregate outstanding principal balance of $242,308 as of December 31, 2025. Of this amount, $101,995 bore interest at approximately 7.0% per annum and was due on demand, while the remaining $140,313 was non-interest bearing and due on demand.
During 2025, we also entered into an unsecured financing arrangement to finance an insurance policy. The arrangement bore interest at 12% per annum and had an outstanding balance of $43,696 as of December 31, 2025. In addition, we entered into an equipment financing arrangement during 2025 with an outstanding balance of $36,917 as of December 31, 2025. The equipment financing bears interest at approximately 13.9% per annum and matures in August 2028.
During 2025, we issued $750,000 of convertible notes to a related party for cash proceeds of $750,000. The notes were converted in full into ordinary shares during 2025 and, as of December 31, 2025, no amounts remained outstanding under the convertible notes.
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C. Research and Development, Patents and Licenses, etc.
We did not incur material research and development expenses during the years ended December 31, 2025 and 2024. For information regarding our intellectual property, trademarks and licensing arrangements, see “Item 4.B. Information on the Company—Business Overview.”
D. Trend Information
We continue to closely monitor macro-economic conditions, including the headwinds caused by supply chain problems, inflation, increased interest rates, geopolitical events, military conflicts and other trends that have been adversely impacting economic activity. We have been assessing, on an ongoing basis, the implications of those global conditions for our operations, supply chain, liquidity, cash flow and product orders, and will act in an effort to mitigate adverse consequences as needed. To the extent inflation increases our costs and expenses, we could consider price increases to offset those cost pressures. Other than as disclosed elsewhere in this annual report, we are not currently aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2025 to the present time that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
E. Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate our estimates on an ongoing basis, including those related to revenue recognition and income taxes. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.
The critical accounting policies summarized in this section are discussed in further detail in the notes to our consolidated financial statements appearing elsewhere in this annual report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.
Recently-Issued Accounting Pronouncements
Certain recently-issued accounting pronouncements are discussed in Note 4, Significant Accounting Policies, to the financial statements included in elsewhere in this Annual Report, regarding the impact of the U.S. GAAP standards as issued by the FASB that we will adopt in future periods in our financial statements.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
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Executive Officers and Directors
The following table sets forth information regarding our executive officers and directors, including their ages as of September 15, 2026:
| Name | Age | Position | ||
| Sahil Beri | 39 | Chief Executive Officer, Chief Operating Officer and Chairman | ||
Tianyi Eric Yu |
45 | Chief Financial Officer | ||
| Daniel Lanskey (1) (2) (3) | 64 | Independent Director | ||
| Sally Cardillo (1) (2) (3) | 72 | Independent Director | ||
| Justin Pettett (1) (2) (3) | 51 | Independent Director |
| (1) | Independent director under applicable Nasdaq Capital Market, as affirmatively determined by our board of directors. |
| (2) | A member of our audit committee. |
| (3) | A member of our nomination and remuneration committee. |
Sahil Beri has been the Chief Executive Officer since December 27, 2024 and the Chief Operating Officer and Chairman of the Board of Directors since April 2022. From August 2018 through April 2022, Mr. Beri served as Innovation Beverage Group’s Australian Managing/Executive Director. Mr. Beri is a highly experienced executive officer, focused on operational excellence in the beverage industry with around 10 years of experience in multiple facets of the beverage industry, with a primary focus on creating and commercializing new innovative beverages. He has strong formulation, new product development, commercialization, and business development skills. Mr. Beri has in his career, across several beverage companies he has been involved in, launched a significant number of products. Prior to his role at Innovation Beverage Group, Mr. Beri was the Executive Director and Chief Technology Officer at Sway Energy Corporation between December 2019 through March 2022, where he was responsible for the creation of all beverage systems for formulations, manufacturing systems, new innovation development and commercialization for a range of alcohol and non-alcohol beverages. Between September 2016 and July 2018, Mr. Beri was the New Product Development Manager at Europa International Pty Ltd, another beverage company headquartered in Sydney, Australia. Between January 2017 till March 2020, Mr. Beri also served as a non-executive director on the board of Cannhealth Group Limited, an Australian nutraceutical company. Mr. Beri is a registered Pharmacist who completed his Master of Pharmacy in 2012 from the University of Newcastle, Australia and concurrently worked in both the beverage industry as well as the pharmaceutical industry for several years. Mr. Beri also completed his Master in Biochemistry in 2009 from Australia’s Bond University and a Bachelor of Arts and Science in 2008 from the University of Sydney, Australia.
Tianyi Eric Yu has served as the Chief Financial Officer since July 2021. Mr. Yu has over 15 years of experience of working at the big four accounting firms, in large-scale management consulting companies and commercial corporations within the food and beverage industry. Mr. Yu has substantial experience in both private companies and public companies listed on the Australian Securities Exchange Ltd (ASX). He has worked in both Australia and China where he supported a wide range of businesses to manage end-to-end accounting functions and identify finance transformation, value creation and performance improvement opportunities. Before joining Innovation Beverage Group in July 2021, Mr. Yu was a Senior Manager with EY Oceania from August 2019 to July 2021 where he worked alongside advisory leaders and drew his skills in leading teams to support a diverse range of clients with their accounting needs and implementation of finance transformation initiatives. From June 2016 to February 2019, Mr. Yu was Head of Finance of the Bindaree Food Group where he lead a team that managed the full-cycle finance, internal control, capital raising, compliance and reporting of this vertically-integrated fast-moving consumer goods companies (FMCG) with an AUD$600 million annual turnover. Mr. Yu obtained his Masters of Accounting degree from the Australian National University. He is also a member of the Chartered Accountants Australia & New Zealand (CA ANZ).
Daniel Lanskey has served as a director since February 2024. Mr. Lanskey has over twenty-five (25) years of capital markets experience in Asia, Australia, Canada, and the United States. He has served as Chairman, Managing Director, and CEO of companies in the energy, mining, life science, investment services and information technology. As a serial entrepreneur, Mr Lanskey has a demonstrated history of managing day to day operations from Start Up, Seed Funding through to Initial Public Offering to exit. As an experienced public speaker, he has presented at Industry Conferences in Asia, Australia, Europe, Canada, and United States. Mr. Lanskey is a Director of Valross Capital Pty Ltd, an authorized representative of an Australian Financial Services License, and has been an integral driver of capital
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raising activities for
both private and public companies trading on the ASX, TSXV, and OTCQX. He is the Founder of Turntable Energy Limited and has served as
Chairman since 2016. He has served as a director of Timeless Capital Inc. (TSXV: TLC.P) since 2018. Mr. Lanskey has also served as Chairman
of Needle Capital Corp. from 2017-2019, Managing Director and Founder of Qmines Limited (ASX:QML) from 2019-2022 and Non-Executive Director
of McArthur Minerals Limited (ASX: MIO; TSX-V: MMS), among positions in other listed companies. He previously served as a member of the
Queensland Police Service in Australia and qualified as a Detective and Sergeant, while completing studies in Justice Administration,
Information Technology and Business at a Diploma level. He holds a post graduate business degree in Entrepreneurship and Venture Development
from Griffith University, Brisbane, Australia.
Sally Cardillo has served as a director since April 2022. Ms. Cardillo has over thirty (30) years of accounting experience having served as a Certified Public Accountant since 1988. Since her retirement in October 2016, she has provided accounting consultancy services to individuals and corporate clients. From 1988 to 2016, Ms. Cardillo was a CPA with Braund, Eiler and Vasko (“Braund Eiler”) and Herbein + Company, Inc., which acquired Braund Eiler in 2014. At the beginning of her career, Ms. Cardillo spent eleven (11) years in industrial engineering, production planning, and systems analysis for the Jones and Laughlin Steel Company in Pittsburgh, Pennsylvania. Then in 1988, she became a Certified Public Accountant and began providing accounting, consulting, and audit services for a variety of individual and corporate clients for the remainder of her career. Ms. Cardillo holds a Bachelor of Science in Mathematics from The Pennsylvania State University.
Justin Pettett has served as a director since May 2026. Mr. Pettett has over twenty-five (25) years of experience in the global energy sector across Australia, the United States and Southeast Asia. He has extensive experience in corporate governance, capital markets, initial public offerings and the development of energy businesses from startup through public listing and operational growth. Mr. Pettett founded and listed Pryme Energy on the Australian Securities Exchange (“ASX”) and also founded(Locality Planning Energy, where he served as Non-Executive Chairman and guided the company from seed investment through its successful ASX listing and growth phase. Mr. Pettett also held senior executive roles with Conrad Asia Energy, where he played a key role in transforming the business into an ASX-listed gas producer. He currently serves as the Co-Founding Chairman of Powershift Technologies, a clean energy company focused on mobile battery energy storage systems supporting the transition to cleaner and more efficient energy solutions. Mr. Pettett is recognized for his strategic leadership, governance capabilities and experience across both traditional and renewable energy sectors.
Family Relationships
There are no family relationships among our directors and executive officers. There are no arrangements or understanding between or among our executive officers and directors pursuant to which any director or executive officer or is to be selected as a director or executive officer.
B. Compensation
The following table presents in the aggregate all compensation we paid to all of our directors and senior management as a group for the year ended December 31, 2025. The table does not include any amounts we paid to reimburse any of such persons for costs incurred in providing us with services during this period.
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| Short Term Employment Benefits | Post Employment Benefits | Total | ||||||||||||||||||||||||||
Salary & fees(2) | Cash bonus | Non monetary benefits | Super - annuation | Retirement benefits | ||||||||||||||||||||||||
| Year | US$ | US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||||||
| Directors | ||||||||||||||||||||||||||||
| Sahil Beri | 2025 | 48,368 | 693,211 | 741,579 | ||||||||||||||||||||||||
| Sally Cardillo | 2025 | 48,368 | 82500 | 130,868 | ||||||||||||||||||||||||
| Daniel Lanskey | 2025 | 48,368 | 99,000 | 147,368 | ||||||||||||||||||||||||
| Shawn Messner (1) | 2025 | 44,337 | 148,500 | 192,837 | ||||||||||||||||||||||||
| Officers | ||||||||||||||||||||||||||||
| Sahil Beri | 2025 | 245,062 | 504,400 | 749,462 | ||||||||||||||||||||||||
| Tianyi Eric Yu | 2025 | 105,529 | 194,712 | 300,241 | ||||||||||||||||||||||||
| (1) | Mr. Messner resigned as a director on December 3, 2025, which took effect at such time. |
| (2) | Represents the directors’ and senior management’s gross salary plus payment of social benefits mandatory under the laws of Australia made by the company on behalf of such persons. |
As of December 31, 2025, no options were granted to our directors and executive officers. For a description of the terms of our options and option plans, see “Item 6.E-Equity Incentive Plan” below.
For so long as we qualify as a foreign private issuer, we will not be required to comply with the proxy rules applicable to U.S. domestic companies regarding disclosure of the compensation of certain executive officers on an individual basis. Pursuant to the Companies Law, we will be required, after we become a public company, to disclose the annual compensation of our five most highly compensated officers on an individual basis. This disclosure will not be as extensive as that required of a U.S. domestic issuer.
Employment and Consulting Agreements with Executive Officers
We have entered into written employment agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law.
C. Board Practices
Term of Office
Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our Constitution.
Directors’ Service Contracts
Our directors enter into Non-Executive Director Agreements with the Company. The terms of such agreements continue until the applicable director resigns or is removed from office, or his or her office as a director of the Company otherwise becomes vacant. Other than with respect to our directors who also serve as executive officers, such agreements do not provide for benefits upon termination of service.
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We are incorporated under the laws of Australia. Our governing documents consist of our Constitution and we have implemented a corporate governance framework that is guided by The Corporate Governance Principles and Recommendations (4th Edition) as published by the Australian Securities Exchange’s Corporate Governance Council.
We qualify as a “foreign private issuer” as defined in Section 405 of the Securities Act. As a foreign private issuer, we are exempt from certain rules under the Exchange Act that impose disclosure requirements as well as procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, the members of our board of directors and senior management are not subject to short-swing profit and insider trading reporting obligations under Section 16 of the Exchange Act. They will, however, be subject to the obligations to report changes in share ownership under Section 13 of the Exchange Act and related SEC rules, to the extent applicable.
The foreign private issuer exemption also permits us to follow home country corporate governance practices or requirements instead of certain Nasdaq listing requirements required for U.S. domestic issuers, including the following:
| ● | We rely on an exemption from the requirement that our independent directors meet regularly in executive sessions under Nasdaq listing rules. The Corporations Act does not require the independent directors of an Australian company to have such executive sessions. |
| ● | We rely on an exemption from the quorum requirements applicable to meetings of shareholders under Nasdaq listing rules. In compliance with Australian law, three shareholders present, in person or by proxy, attorney or a representative, shall constitute a quorum for a general meeting. Nasdaq listing rules require that an issuer provide for a quorum as specified in its by-laws for any meeting of the holders of ordinary shares, which quorum may not be less than 33 1/3% of the outstanding voting ordinary shares. Accordingly, because applicable Australian law and rules governing quorums at shareholder meetings differ from Nasdaq’s quorum requirements, we claim this exemption. |
| ● | We rely on an exemption from the requirement to disclose third-party director and director nominee compensation under Nasdaq listing rules. The Corporations Act does not have a similar requirement. |
Board Composition and Election of Directors
Our board of directors (“Board”) currently consists of four (4) directors. Under our Constitution, at each annual general shareholder meeting one-third of the directors, other than the Managing Director, or if their number is not a multiple of three, then the number nearest to one-third (rounded upwards in case of doubt) of the directors must retire.
Notwithstanding the above, no director, other than the Managing Director, shall hold office for a period in excess of 3 years, or until the third annual general meeting following his or her appointment, whichever is the longer, without submitting himself for re-election.
Under our Constitution, at the next shareholder annual general meeting, (i) all Board-appointed directors must present themselves for election and (ii) one third of shareholder-elected directors must present themselves for re-election. Accordingly, as each of our current directors was appointed by the Board, each stands for election at the next shareholder annual general meeting, which is anticipated to occur within five (5) months of the end of our fiscal year, December 31, 2025.
A retiring director remains in office until the relevant shareholder meeting and will be eligible for re-election at that meeting.
A director who has a material interest in a matter before our board of directors or any committee on which he or she serves is required to disclose such interest as soon as the director becomes aware of it. In situations where a director has a material interest in a matter to be considered by our board of directors or any committee on which he or she serves, such director may be required to remove himself or herself from the meeting while discussions and voting with respect to the matter are taking place.
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Meetings of Directors
Our board of directors is responsible for the stewardship of the Company and providing oversight as to the management of our business and affairs, including providing guidance and strategic oversight to management by, among other things:
| ● | Developing and reviewing the Company’s strategic and operating objectives, business plans and budgets as developed by the Board and management giving consideration to any recommendations made to the Board by any committees; | |
| ● | Overseeing the Company’s process for making timely and balanced disclosure of all material information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company’s securities | |
| ● | Reviewing and approving the Company’s financial position, systems of risk management and internal compliance and control, codes of conduct and legal compliance and ensuring the integrity and effectiveness of those systems by conducting annual internal reviews of the systems including reviewing the results of any review by the Audit Committee; | |
| ● | Annually reviewing internal and external audit reports to ensure that, where deficiencies in controls or procedures have been identified, appropriate remedial action is taken by management. | |
| ● | Appointing and removing the Chief Executive Officer; | |
| ● | Monitoring and undertaking annual performance evaluations of the Chief Executive Officer and key senior executives; | |
| ● | Ensuring that the Company has an effective corporate governance system in place which includes ensuring that policies and procedures in place are consistent with the Company’s objectives and corporate governance standards; |
Remuneration and Borrowing
The directors may receive such remuneration as our Board of Directors may determine from time to time. Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our Board of Directors or committees of our Board of Directors or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director. The Nomination and Remuneration Committee assist the directors in reviewing and approving the compensation structure for the directors. Our Board of Directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock, and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.
Board Committees
In light of the Company’s size and nature, we believe that the current size of the board of directors is a cost effective and practical method of directing and managing the Company. As our activities develop in size, nature and scope, the size of the board, the formation of board committees and the implementation of additional corporate governance policies and structures will be reviewed.
Audit Committee
The members of our Audit Committee are Sally Cardillo, Daniel Lanskey and Justin Pettett. Our board of directors has determined that Ms. Cardillo, Mr. Lanskey and Mr. Pettett satisfy the independence requirements under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. Ms. Cardillo is the chairperson of our Audit Committee. Our board of directors has determined that Ms. Cardillo is an “audit committee financial expert” within the meaning of SEC regulations. Each member of our Audit Committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, our board of directors has examined each member’s scope of experience and the nature of his or her employment.
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The Audit Committee’s duties and responsibilities are specified in our Audit Committee Charter, and include, but not be limited to:
| ● | To (1) select and retain an independent registered public accounting firm to act as the Company’s independent auditors for the purpose of auditing the Company’s annual financial statements, books, records, accounts and internal controls over financial reporting, (2) set the compensation of the Company’s independent auditors, (3) oversee the work done by the Company’s independent auditors and (4) terminate the Company’s independent auditors, if necessary. | |
| ● | At least annually, to obtain and review a report by the Company’s independent auditors that describes (1) the accounting firm’s internal quality control procedures, (2) any material issues raised by the most recent internal quality control review, peer review or Public Company Accounting Oversight Board review or inspection of the firm or by any other inquiry or investigation by governmental or professional authorities in the past five (5) years regarding one or more audits carried out by the firm and any steps taken to deal with any such issues, and (3) all relationships between the firm and the Company or any of its subsidiaries; and to discuss with the independent auditors this report and any relationships or services that may impact the objectivity and independence of the auditors. |
| ● | To assure the regular rotation of the lead audit partner at the Company’s independent auditors and consider regular rotation of the accounting firm serving as the Company’s independent auditors. | |
| ● | To review and discuss with the Company’s independent auditors (1) the auditors’ responsibilities under generally accepted auditing standards and the responsibilities of management in the audit process, (2) the overall audit strategy, (3) the scope and timing of the annual audit, (4) any significant risks identified during the auditors’ risk assessment procedures and (5) when completed, the results, including significant findings, of the annual audit. | |
| ● | To review and discuss with the Company’s independent auditors (1) all critical accounting policies and practices to be used in the audit; (2) all alternative treatments of financial information within U.S. GAAP that have been discussed with management, the ramifications of the use of such alternative treatments and the treatment preferred by the auditors; and (3) other material written communications between the auditors and management. | |
| ● | To review with management and the Company’s independent auditors: any major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company’s selection or application of accounting principles; any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including the effects of alternative GAAP methods; and the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company’s financial statements. | |
| ● | To review with management and the Company’s independent auditors the adequacy and effectiveness of the Company’s financial reporting processes, internal control over financial reporting and disclosure controls and procedures, including any significant deficiencies or material weaknesses in the design or operation of, and any material changes in, the Company’s processes, controls and procedures and any special audit steps adopted in light of any material control deficiencies, and any fraud involving management or other employees with a significant role in such processes, controls and procedures, and review and discuss with management and the Company’s independent auditors disclosure relating to the Company’s financial reporting processes, internal control over financial reporting and disclosure controls and procedures, and the independent auditors’ report on the effectiveness of the Company’s internal control over financial reporting and the required management certifications to be included in or attached as exhibits to the Company’s annual report on Form 20-F. | |
| ● | To review, approve and oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K) and any other potential conflict of interest situations on an ongoing basis, and to develop policies and procedures for the Committee’s approval of related party transactions. |
Nomination and Remuneration Committee
Our Nomination and Remuneration Committee is comprised of our non-executive directors Sally Cardillo, Daniel Lanskey and Justin Pettett, all of whom the Board has determined to satisfy the independence requirements of our board charter. Ms. Cardillo is the chair of the Nomination and Remuneration Committee.
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The Committee shall provide assistance to the Board in fulfilling its corporate governance and oversight responsibilities, however, ultimate responsibility for the Company’s nomination and remuneration practices remains with the Board. The main functions and responsibilities of the Committee include the following:
| ● | assisting the Board in examining the selection and appointment practices of the Company; | |
| ● | ensuring remuneration arrangements are equitable and transparent and enable the Company to attract and retain executives and directors (executive and non-executive) who will create sustainable value for members and other stakeholders; | |
| ● | ensuring the Board is of an effective composition, size and commitment to adequately discharge its responsibilities and duties; | |
| ● | reviewing Board succession plans and Board renewal; | |
| ● | reviewing the processes for evaluating the performance of the Board, its committees and individual directors and ensuring that a fair and responsible reward is provided to executives and directors having regard to their performance evaluation; | |
| ● | reviewing levels of diversity within the Company and Board and reporting on achievements pursuant to any diversity policy developed by the Board; | |
| ● | reviewing the Company’s remuneration, recruitment, retention and termination policies for the Board and senior executives; and | |
| ● | complying with all relevant legislation and regulations. |
Code of Conduct
We have adopted a Code of Conduct applicable to all of our directors, officers and employees. We post on our website all disclosures that are required by law or the listing standards of Nasdaq concerning any amendments to, or waivers from, any provision of the Code of Conduct. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of, this annual report.
Monitoring Compliance with the Code of Business Conduct and Ethics
Our board of directors is responsible for reviewing and evaluating the Code of Conduct periodically and will make any necessary changes thereto. Our board of directors is also charged with the monitoring of compliance with the Code of Conduct and will be responsible for considering any waivers of the Code of Conduct.
Interests of Directors
A director who has a material interest in a matter before our board of directors or any committee on which he or she serves is required to disclose such interest as soon as the director becomes aware of it. In situations where a director has a material interest in a matter to be considered by our board of directors or any committee on which he or she serves, such director may be required to excuse himself or herself from the meeting while discussions and voting with respect to the matter are taking place. Directors will also be required to comply with the relevant provisions of the Corporations Act regarding conflicts of interest and any material personal interest in a matter that relates to the affairs of the Company. Under the Corporations Act, the Company may be required to obtain approval of shareholders before providing certain financial benefits to directors, unless an exemption set out in the Corporations Act applies.
In order to foster a climate of openness and honesty in which any concern or complaint pertaining to a suspected violation of the law, our Code of Conduct or any of our policies or any unethical or questionable act or behavior, the board of directors adopted a whistleblower policy that requires that our employees promptly report such violation or suspected violation. In order to ensure that violations or suspected violations can be reported without fear of retaliation, harassment or an adverse employment consequence, our whistleblower policy will contain procedures that are aimed to facilitate confidential, anonymous submissions by our employees.
D. Employees.
See “Item 4.B. Business Overview-Employees.”
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E. Share Ownership.
See “Item 7.A. Major Shareholders” below.
Equity Incentive Plan - 2022 Equity Incentive Plan
Innovation Beverage Group adopted the 2022 Equity Incentive Plan (“Plan”) to provide an additional means through the grant of awards of ordinary shares and stock options and other equity-based awards to attract, motivate, retain and reward selected employees, directors, officers, consultants and other eligible service providers. The below is a summary of the Plan’s terms. As of the date of this annual report, no awards have been granted under the Plan.
The Company has filed registration statements on Form S-8 to register an aggregate of 1,152,439 ordinary shares for issuance under the Plan, including (i) 1,013,626 ordinary shares registered in connection with the initial share reserve and the January 1, 2025 “evergreen” increase, and (ii) 138,813 ordinary shares registered in connection with the January 1, 2026 “evergreen” increase.
Our 2022 Incentive Plan was adopted by our board of directors on April 28, 2022. and will expire on the tenth (10th) anniversary of its adoption. Our employees, directors, officers, consultants, advisors, suppliers, and service providers and any other person or entity whose services are considered valuable to us are eligible to participate in this plan.
As of the date of this Annual Report, awards covering an aggregate of 228,725 ordinary shares have been granted under the Plan..
Shares Subject to the Equity Incentive Plan
The Plan provides for the issuance of up to 680,000 ordinary shares, subject to adjustment pursuant to its terms, together with additional shares that become available pursuant to the Plan’s “evergreen” provision. Subject to adjustment as provided in the Plan, the number of shares available for issuance under the Plan automatically increases on January 1 of each year during the term of the Plan in an amount equal to 20% of the total number of ordinary shares outstanding on December 31 of the immediately preceding year, unless otherwise determined by the Board (the “Evergreen Increase”). Notwithstanding the foregoing, the Board may act prior to the Evergreen Date of a given year to provide that there will be no Evergreen Increase for such year, or that the Evergreen Increase for such year will be a lesser number of shares of the Company’s ordinary shares than would otherwise occur pursuant to the preceding sentence. During the terms of any awards, the Company will keep available at all times the number of shares of Ordinary Shares required to satisfy such awards. Shares of ordinary shares available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. Any shares of ordinary shares subject to an award that expires or is cancelled, forfeited, or terminated without issuance of the full number of shares of ordinary shares to which the award related shall again be available for issuance of awards or delivery under the Plan.
Administration of the Equity Incentive Plan
The Plan is administered by a committee of one or more directors appointed by the Board to administer the Plan (the “Committee”) or, in the Board’s sole discretion, by the Board. As stated in the Plan, the Committee has the authority to: (a) to construe and interpret the Plan and apply its provisions; (b) to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan; (c) to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; (d) to delegate its authority to one or more officers of the Company with respect to awards that do not involve “insiders” within the meaning of Section 16 of the Exchange Act; (e) to determine when awards are to be granted under the Plan and the applicable grant date; (f) from time to time to select, subject to the limitations set forth in this Plan, those eligible award recipients to whom awards shall be granted; (g) to determine the number of shares of ordinary shares to be made subject to each award; (h) to determine whether each option grant is to be an incentive stock option or a non-qualified stock option; (i) to prescribe the terms and conditions of each award, including, without limitation, the exercise price and medium of payment and vesting provisions, and to specify the provisions of the award agreement relating to such grant; (j) to determine the target number of performance shares to be granted pursuant to a performance share award, the performance measures
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that will be used to establish the performance goals, the performance period(s) and the number of performance shares earned by
a participant; (k) to amend any outstanding awards, including for the purpose of modifying the time or manner of vesting, or the term
of any outstanding award; provided, however, that if any such amendment impairs a participant’s rights or increases a participant’s
obligations under his or her award or creates or increases a participant’s federal income tax liability with respect to an award,
such amendment shall also be subject to the participant’s consent; (l) to determine the duration and purpose of leaves of absences
which may be granted to a participant without constituting termination of their employment for purposes of the Plan, which periods shall
be no shorter than the periods generally applicable to employees under the Company’s employment policies; (m) to make decisions
with respect to outstanding awards that may become necessary upon a change in corporate control or an event that triggers anti-dilution
adjustments; (n) to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan
and any instrument or agreement relating to, or award granted under, the Plan; and (o) to exercise discretion to make any and all other
determinations which it determines to be necessary or advisable for the administration of the Plan.
Participation
Awards under the Plan may be granted to employees, directors and consultants of Innovation Beverage Group and its subsidiaries and such other individuals designated by the committee who are reasonably expected to become employees, consultants and directors after the receipt of awards.
Types of Awards
Awards that may be granted under the plan include: (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) restricted awards, (e) performance share awards, (f) cash awards, and (g) other equity-based awards.
Change in Control
In the event of a Change in Control (as defined in the Plan), (a) all outstanding options and stock appreciation rights shall become immediately exercisable with respect to 100% of the shares subject to such options or stock appreciation rights, and/or the Restricted Period (as defined in the Plan) shall expire immediately with respect to 100% of the outstanding shares of restricted stock or restricted stock units; and (b) with respect to performance share awards and cash awards, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met. The Committee may in its discretion and upon at least 10 days’ advance notice to the affected persons, cancel any outstanding awards and pay to the holders thereof, in cash or stock, or any combination thereof, the value of such awards based upon the price per share of ordinary shares received or to be received by other shareholders of the Company in the event. In the case of any option or stock appreciation right with an exercise price (or exercise price in the case of a stock appreciation right) that equals or exceeds the price paid for a share of ordinary shares in connection with the Change in Control (as defined in the Plan), the Committee may cancel the option or stock appreciation right without the payment of consideration therefor.
Amendment and Termination
The Board at any time, and from time to time, may amend or terminate the Plan. However, except as provided in the Plan relating to adjustments upon changes in ordinary shares, no amendment shall be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any applicable laws. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on shareholder approval.
F. Disclosure of a registrant’s action to recover erroneously awarded compensation.
There has been no erroneously awarded compensation that has required an accounting restatement, recovery of such compensation, nor has there been an outstanding balance of erroneously awarded compensation to be recovered for fiscal year 2025.
In connection with the restatement of the Company’s previously issued consolidated financial statements for the fiscal year ended December 31, 2024, as described in Note 3 to the consolidated financial statements included in this Annual Report, the Company conducted a recovery analysis pursuant to its compensation recovery policy adopted in compliance with Exchange Act Rule 10D-1 and the applicable Nasdaq listing standards. Based on its analysis, the Company determined that no incentive-based compensation (as defined in Rule 10D-1) was received by any current or former executive officer during the applicable recovery period that was granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure. Accordingly, no recovery of erroneously awarded compensation was required. There is no outstanding balance of erroneously awarded compensation to be recovered as of the date of this Annual Report.
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of September 15, 2026 by:
| ● | each person or entity known by us to own beneficially 5% or more of our outstanding Ordinary shares; |
| ● | each of our directors and executive officers individually; and |
| ● | all of our directors and executive officers as a group. |
The beneficial ownership of our ordinary shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power, or the right to receive the economic benefit of ownership. For purposes of the table below, we deem ordinary shares issuable pursuant to options that are currently exercisable or exercisable within 60 days from September 15, 2026 to be outstanding and to be beneficially owned by the person holding the options for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. Percentage of shares beneficially owned is based on ordinary shares issued and outstanding as of September 15, 2026.
Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power or the power to receive the economic benefit with respect to all ordinary shares that they beneficially own, subject to applicable community property laws. All shareholders listed below have equal voting rights of one vote per share. None of the shareholders listed in the table are a broker-dealer or an affiliate of a broker dealer.
All of our shareholders, including the shareholders listed below, have the same voting rights attached to their ordinary shares, and neither our principal shareholders nor our directors and executive officers have different or special voting rights with respect to their ordinary shares. A description of any material relationship that our principal shareholders have had with us or any of our predecessors or affiliates within the past three years is included under “Item 7.A Major Shareholders
Applicable percentage ownership prior to the offering is based on 4,220,522 ordinary shares outstanding at September 15, 2026. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Innovation Beverage Group Limited, 47 Holbeche Road, Arndell Park, New South Wales 2148, Australia.
| 5% or greater shareholders: | Ordinary Shares beneficially owned |
Percentage of Ordinary Shares beneficially owned | ||||||
| — | % | |||||||
| Directors and executive officers: | ||||||||
| Sahil Beri, Chief Executive Officer, Chief Operating Officer and Director (1) | 81,517 |
1.93 |
% | |||||
| Tianyi Eric Yu, Chief Financial Officer | 2,784 | * | ||||||
| Sally Cardillo, Director | 24,400 | * | ||||||
| Daniel Lanskey, Director | 12,000 | * | ||||||
| Justin Pettett, Director | — | — | ||||||
| All directors and executive officers as a group (five persons) | 120,701 | 2.86 | % | |||||
| * | Indicates beneficial ownership of less than 1% of the total Ordinary Shares outstanding. |
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| (1) | Includes 4,500 ordinary shares held by Beri Beverages Pty Ltd., which is owned and controlled by Sahil Beri, in lieu of accrued cash compensation owed to Mr. Beri for his service as the Chief Operating Officer of the Company. The business address of Beri Beverages Pty Ltd. is 1 Doris Hirst Place, West Pennant Hills, NSW 2125, Sydney, Australia. |
Except as otherwise disclosed in the table above, to our knowledge the company is not directly or indirectly owned or controlled by another corporation(s), any foreign government, or by any other natural or legal person(s) severally or jointly.
To our knowledge, there are no arrangements why by their operation may at a subsequent date result in a change in control of the company.
Record Holders
Based upon a review of the information provided to us by our transfer agent, as of September 15, 2026, there were 37 qualified holders of record of our ordinary shares, approximately 9 of which had registered addresses in the United States and collectively held approximately 96% of our outstanding ordinary shares. This number is not representative of the number of beneficial holders of our shares, nor is it representative of where such beneficial holders reside, because substantially all of the shares held of record by holders with registered U.S. addresses were held through Cede & Co., the nominee company of The Depository Trust Company (“DTC”), on behalf of brokers or other nominees in the United States, who in turn hold such shares on behalf of their clients and customers. Cede & Co. alone held approximately 94.8% of our outstanding ordinary shares.
We are not controlled by another corporation, by any foreign government or by any natural or legal persons. There are no arrangements known to us which would result in a change in control of our company at a subsequent date.
B. Related Party Transactions
In addition to the director and officer compensation arrangements discussed in “Compensation,” we describe below the related party transactions of our company and our subsidiaries that occurred beginning on January 1, 2024 through September 15, 2026.
Related Party Loan Receivable
The Company had a loan receivable from a related party bearing interest at 8.77%. During 2024, the Company wrote off the outstanding loan principal and accrued interest receivable, which had an aggregate carrying amount of $742,775 immediately prior to the write-off. The corresponding impairment loss was recognized in the Company’s functional currency and translated into the reporting currency at the applicable exchange rate, resulting in impairment expense of $716,453 in the consolidated financial statements for the year ended December 31, 2024.
Related Party Loans Payable
During 2025, the Company received three unsecured loans from related parties. As of December 31, 2025, the loans consisted of $101,995 from the Chief Executive Officer, $25,313 from a family member of the Chief Executive Officer, and $115,000 from another family member of the Chief Executive Officer. The $101,995 loan bears interest at approximately 7.0% per annum and is due on demand. The $25,313 and $115,000 loans are non-interest bearing and due on demand. The aggregate outstanding balance of the related party loans was $242,308 as of December 31, 2025. On January 29, 2026, the related party loans, including aggregate principal of $242,308 and accrued interest of $4,156, were fully repaid.
During 2024, the Company received a loan of $145,266 from a family member of the Chief Executive Officer and repaid this loan during 2024. The Company also repaid a loan of $155,664 to its former Chief Executive Officer and $38,810 to its Chief Commercial Officer during 2024.
PBG Consulting Partners LLC
On January 6, 2025, the Company entered into an agreement with PBG Consulting Partners LLC (“PBG”) to provide sales and distribution consulting services in connection with the Company’s manufactured spirits. PBG is entitled to compensation of $20,000 per month. The managing director of PBG is the brother of the Company’s Chief Executive Officer. The Company recognized consulting expense of approximately $240,000 related to PBG during the year ended December 31, 2025.
Intellectual Property Obligation
On February 28, 2019, the Company acquired intellectual property rights related to a proprietary manufacturing process, custom production line equipment and formula for $275,000. The purchase consideration was initially paid for on behalf of the Company by its then-Chief Executive Officer, who is the brother of the Company’s current Chief Executive Officer. During 2025, the Company satisfied its obligation to the former Chief Executive Officer through the issuance of 15,798 ordinary shares.
Convertible Notes
During 2025, the Company issued $750,000 of convertible notes to a related party for cash proceeds of $750,000. The notes were subsequently converted in full during 2025 into 72,986 ordinary shares. As of December 31, 2025, no amounts remained outstanding under the convertible notes.
Contractual Obligations to Issue Ordinary Shares
At December 31, 2024, the Company had $1,224,970 of contractual obligations to issue ordinary shares classified as other liabilities, of which $779,400 represented obligations to related parties, including the Chief Executive Officer’s IPO bonus and an obligation related to the intellectual property acquisition described above. During 2025, a related party forgave $30,084 of the Company’s obligation to issue ordinary shares, which was recognized as a contribution to additional paid-in capital. During 2025, the Company satisfied the remaining obligations through the issuance of ordinary shares.
Related Party Equity Transactions
During 2025 and 2024, the Company issued ordinary shares to certain related parties, including directors, executive officers and other related parties, in exchange for professional services, board compensation and performance-based incentives. Such issuances were measured and recognized at fair value in accordance with the Company’s stock-based compensation accounting policy. See Notes 14 and 19 to the consolidated financial statements included elsewhere in this Annual Report for additional information regarding these share issuances.
For additional information regarding the Company’s related party transactions, see Notes 11, 12, 14, 19 and 20 to the consolidated financial statements included elsewhere in this Annual Report.
Agreements and Arrangements With, and Compensation of, Directors and Executive Officers
We have entered into written employment and consulting agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance.
C. Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION.
A. Consolidated Statements and Other Financial Information.
See “Item 18. Financial Statements.”
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Legal Proceedings
[From time to time, the Company may be involved in various claims and legal proceedings arising in the ordinary course of its business. The Company is not currently a party to any legal or arbitration proceedings, including governmental proceedings, that may have, or have had in the recent past, significant effects on the Company’s financial position or profitability.]
Dividend Policy
The holders of our ordinary shares are entitled to dividends out of funds legally available when and as declared by our Board of Directors subject to the Australian Corporations Act 2001 (Cth). On June 30, 2021, our Board declared a dividend in the amount of AUD$2,138,610 based on the Company’s historical retained earnings as of June 30, 2021 and in accordance with Section 254T of the Corporations Act 2001 (Cth). Other than the foregoing dividends, our Board has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.
Should we decide in the future to pay dividends, our ability to do so and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiary and other holdings and investments. In addition, our operating company may, from time to time, be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.
B. Significant Changes
Other than as otherwise described in this Annual Report on Form 20-F and as set forth below, no significant change has occurred in our operations since the date of our financial statements included in this Annual Report on Form 20-F.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Our ordinary shares are currently traded on the Nasdaq Capital Market under the symbol “IBG”.
B. Plan of Distribution
Not applicable.
C. Markets
Our ordinary shares are listed on the Nasdaq Capital Market.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
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B. Constitution
A copy of our Constitution is attached as Exhibit 1.1 to this Annual Report. Other than as disclosed below, the information called for by this Item is set forth in Exhibit 1.1 to this Annual Report and is incorporated by reference into this Annual Report.
C. Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those described in Item 4. “Information on Our Company,” Item 7B “Major Shareholders and Related Party Transactions - Related Party Transactions” or elsewhere in this Annual Report.
D. Exchange Controls
There are currently no exchange control regulations in Australia applicable to us or our shareholders.
E. Taxation.
The following summary contains a description of certain Australian and U.S. federal income tax consequences of the acquisition, ownership and disposition of our Ordinary Shares, but it is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our Ordinary Shares that may be relevant to a decision to purchase our Ordinary Shares. The summary is based upon the tax laws of Australia and regulations thereunder and on the tax laws of the United States and regulations thereunder as of the date hereof, which are subject to change. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign, including Australian, or other taxing jurisdiction.
This summary does not address the effects of U.S. federal estate and gift tax laws, the alternative minimum tax, or any state and local tax considerations within the United States, and is not a comprehensive description of all U.S. federal or Australian income tax considerations that may be relevant to a decision to acquire or dispose of ordinary shares. Furthermore, this summary does not address U.S. federal or Australian income tax considerations relevant to holders subject to taxing jurisdictions other than, or in addition to, the United States and Australia, and does not address all possible categories of holders, some of which may be subject to special tax rules.
WE URGE POTENTIAL PURCHASERS OF OUR SECURITIES TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR SECURITIES.
United States Federal Income Taxation
The following discussion describes certain U.S. federal income tax consequences of the purchase, ownership and disposition of our securities as of the date hereof. This discussion applies only to U.S. Holders (as defined below) that hold our securities as capital assets and that have the U.S. dollar as their functional currency. This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those summarized below. The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to you if you are a beneficial owner of our securities and you are, for U.S. federal income tax purposes, any of the following:
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| ● | an individual citizen or resident of the United States, | |
| ● | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, | |
| ● | an estate the income of which is subject to U.S. federal income taxation regardless of its source, or | |
| ● | a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
The following does not represent a detailed description of the U.S. federal income tax consequences applicable to any particular investor or to persons subject to special tax treatment under the U.S. federal income tax laws, such as:
| ● | banks, | |
| ● | financial institutions, | |
| ● | insurance companies, | |
| ● | regulated investment companies, | |
| ● | real estate investment trusts, | |
| ● | broker-dealers, | |
| ● | traders that elect to mark to market, | |
| ● | U.S. expatriates, | |
| ● | tax-exempt entities, | |
| ● | persons liable for alternative minimum tax, | |
| ● | persons holding our securities as part of a straddle, hedging, conversion or integrated transaction or constructive sale, |
| ● | persons that actually or constructively own 10% or more of our securities by vote or value, |
| ● | persons required to accelerate the recognition of any item of gross income with respect to our securities as a result of such income being recognized on an “applicable financial statement” (as defined by the Code), | |
| ● | persons who acquired our securities pursuant to the exercise of any employee ordinary share option or otherwise as consideration for services, or | |
| ● | persons holding our securities through partnerships or other pass-through entities for U.S. federal income tax purposes. |
If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our securities, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Prospective purchasers that are partners of a partnership holding our securities should consult their tax advisors.
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This discussion does not contain a detailed description of all the U.S. federal income tax consequences to a prospective purchaser in light of his, her or its particular circumstances and does not address the Medicare contribution tax on net investment income, foreign currency gains or losses, U.S. federal estate and gift taxes, or the effects of any state, local or non-U.S. tax laws. Prospective purchasers are urged to consult their tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our securities.
Taxation of Dividends and Other Distributions on our Securities
Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect to the securities (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date actually or constructively received by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits as determined under U.S. federal income tax principles As a general rule, to the extent that the amount of the distribution exceeds our current and accumulated earnings and profits as determined under U.S. federal income tax principles, it will be treated first as a tax-free return of your tax basis in your securities, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain.. However, we do not intend to calculate our earnings and profits in accordance with U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will generally be treated as a dividend. Such dividends will not be eligible for the dividends-received deduction allowed to corporations under the Code.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, certain dividends received from a qualified foreign corporation may be subject to reduced rates of taxation. A foreign corporation will be treated as a qualified foreign corporation for this purpose if (i) such corporation is eligible for the benefits of a comprehensive income tax treaty with the United States or (ii) the dividends are paid on securities that are readily tradable on an established securities market in the United States. The Internal Revenue Service has determined that the U.S. - Australian tax treaty is a comprehensive tax treaty and we believe that we are eligible for benefits under it. Moreover, we will apply to list our securities on the Nasdaq Capital Market, and U.S. Treasury Department guidance indicates that securities that are so listed will be treated as readily tradable on an established securities market in the United States. Therefore, we believe that dividends paid by us will be subject to reduced rates of taxation. Non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our securities.
In addition, notwithstanding the foregoing, non-corporate U.S. Holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a passive foreign investment company (a “PFIC”) in the taxable year in which such dividends are paid or in the preceding taxable year. As discussed under “- Passive Foreign Investment Company” below, we do not believe we were a PFIC for our most recent taxable year, and we do not expect to become a PFIC in the current taxable year or in the foreseeable future, although there can be no assurance in this regard.
A U.S. Holder may be subject to Australian withholding taxes on dividends paid on our securities. Subject to certain conditions and limitations (including a minimum holding period requirement), any withholding taxes on dividends may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid on our securities will be treated as income from sources outside the United States and will generally constitute passive category income. The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.
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Taxation of Dispositions of Securities
For U.S. federal income tax purposes, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of our securities in an amount equal to the difference between the amount realized (in U.S. dollars) and your tax basis (in U.S. dollars) in the securities. Subject to the passive foreign investment company rules discussed below, such gain or loss will generally be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the securities for more than one year, you will be eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source gain or loss for foreign tax credit limitation purposes.
For U.S. federal income tax purposes, each holder of our securities must allocate the purchase price paid by the holder for such securities based on the relative fair market value of each at the time of issuance. Under U.S. federal income tax law, each investor must make his or her own determination of such value based on all the relevant facts and circumstances. Therefore, we strongly urge you to consult your tax adviser regarding the determination of value for these purposes. The price properly allocated to each ordinary share will be your tax basis in such share and any gain or loss on a disposition of an ordinary share will be the difference between the amount realized on the disposition and your tax basis in the property disposed of. Any disposition of a security (ordinary share) should be treated for U.S. federal income tax purposes as a disposition of the ordinary shares, and the amount realized on such disposition will be allocated between the ordinary shares based on their respective relative fair market values at the time of disposition (as determined by you based on all relevant facts and circumstances).
Passive Foreign Investment Company
Based on the past and projected composition of our income and assets, and the valuation of our assets, we do not believe we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our most recent taxable year, and we do not expect to become a PFIC in the current taxable year or in the foreseeable future, although there can be no assurance in this regard. In general, we will be a PFIC for any taxable year in which:
| ● | at least 75% of our gross income is passive income, or | |
| ● | at least 50% of the value of our assets (based on an average of the quarterly values of our assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). |
For this purpose, passive income generally includes dividends, interest, income equivalent to interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person). Cash is treated as an asset that produces or is held for the production of passive income. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.
The determination of whether we are a PFIC is made annually after the close of each taxable year. As a result, we may become a PFIC in the current or any future taxable year due to changes in our asset or income composition. In particular, because we have valued our goodwill based on the market price of our ordinary shares, our PFIC status will depend in large part on the market price of our ordinary shares. Accordingly, fluctuations in the market price of the securities may cause us to become a PFIC. In addition, composition of our income and assets will be affected by how, and how quickly, we spend the cash we raise in this offering. Although the determination of whether we are a PFIC is made annually, if we are a PFIC for any taxable year in which you hold our securities, you will generally continue to be subject to the special rules described below for all succeeding years during which you hold our securities (even if we do not qualify as a PFIC in such subsequent years). However, if we cease to be a PFIC, you may avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if your securities had been sold on the last day of the last taxable year during which we were a PFIC. You are urged to consult your own tax advisor about this election.
If we are a PFIC for any taxable year during which you hold our securities, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the securities, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the securities will be treated as an excess distribution. Under these special tax rules:
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| ● | the excess distribution or gain will be allocated ratably over your holding period for the securities, | |
| ● | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and | |
| ● | the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. The tax liability for amounts allocated to such years cannot be offset by any net operating losses for such years, and gains realized on the sale of the securities cannot be treated as capital, even if you hold the securities as capital assets. |
A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the special tax rules discussed above. If you make an effective mark-to-market election for the ordinary shares, for each taxable year that we are a PFIC you will include in income an amount equal to the excess, if any, of the fair market value of the ordinary shares as of the close of the taxable year over your adjusted basis in such ordinary shares. You are allowed a deduction for the excess, if any, of your adjusted basis in the ordinary shares over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of the net amount previously included in income as a result of the mark-to-market election. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ordinary shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the ordinary shares, as well as to any loss realized on the actual sale or disposition of the ordinary shares, to the extent that the amount of such loss does not exceed the net amount of previously included income as a result of the mark-to-market election. Your basis in the ordinary shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations that are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under “Taxation of Dividends and Other Distributions on our Ordinary shares” generally would not apply.
The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), which includes the Nasdaq Capital Market. If the ordinary shares are regularly traded on the Nasdaq Capital Market and if you are a holder of ordinary shares, the mark-to-market election would be available to you were we to be or become a PFIC. However, there can be no assurance that the ordinary shares will be traded in sufficient volumes to be considered “regularly traded” for purposes of the mark-to-market election. If you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ordinary shares are no longer regularly traded on a qualified exchange or other market, or the Service consents to the revocation of the election. You are urged to consult your tax advisor about the availability of the mark-to-market election, and whether making the election would be advisable in your particular circumstances.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to avoid the special tax rules discussed above. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election.
If we are a PFIC for any taxable year during which you hold our securities and any of our non-U.S. subsidiaries is also a PFIC, you will be treated as owning a proportionate amount (by value) of the securities of the lower-tier PFIC for purposes of the application of the PFIC rules. You will not be able to make the mark-to-market election described above in respect of any lower-tier PFIC. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.
If you hold our securities in any year in which we are a PFIC, you will generally be required to file U.S. Internal Revenue Service Form 8621. You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our securities and the elections discussed above.
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Information Reporting and Backup Withholding
Dividend payments with respect to our securities and proceeds from the sale, exchange or other disposition of our securities that are paid to you within the United States (and in certain cases, outside the United States) will be subject to information reporting to the U.S. Internal Revenue Service, unless you are an exempt recipient. A backup withholding tax may apply to such payments if you fail to provide a taxpayer identification number or certification of exempt status or fail to report in full dividend or interest income.
Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information.
Certain U.S. Holders are required to report information relating to our securities, subject to certain exceptions, by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold our securities.
Australian Taxation
In this section, we discuss the material Australian income tax, stamp (or transfer) duty and goods and services tax considerations related to the acquisition, ownership and disposal of ordinary shares in Innovation Beverage Group Ltd. It is based upon existing Australian tax law as of the date of this Annual Report, which is subject to change, possibly retrospectively. This discussion does not address all aspects of Australian tax law which may be important to particular investors in light of their individual investment circumstances, such as shares held by investors subject to special tax rules (for example, financial institutions, insurance companies or tax-exempt organizations) or shares /options held on revenue account or as trading stock.
This section is purposely general in nature and prospective investors are urged to consult their tax advisors regarding the Australian and non-Australian income and other tax considerations of the acquisition, ownership and disposition of the ordinary shares. This summary is based upon the assumption that the holder is not an Australian resident for tax purposes and is not carrying on business in Australia through a permanent establishment (referred to as a “Non-Australian Holder” in this summary). It does not consider any other factual scenarios. In addition, this summary does not discuss any non-Australian or Australian state tax considerations, other than transfer duty.
This summary is of a general nature only and is not, and is not intended to be, legal or tax advice for any particular shareholder, and no representations with respect to the income tax consequences for any particular shareholder are made or may be relied upon by an investor or potential investor. This summary is not exhaustive of all Australian Federal/Commonwealth income tax issues. Accordingly, you should consult your own tax advisor with respect to your particular circumstances.
Non-residents for Australian tax purposes may be liable to pay Australian tax on income derived from Australian sources. One mechanism by which that tax can be paid (for non-residents who have no permanent establishment or fixed base in Australia or where the income is not connected with a permanent establishment or fixed base) is known as withholding tax.
Dividends paid by an Australian tax resident company to a shareholder that is resident of the United States of America who is entitled to the benefits of the Australia/U.S. Double Tax Agreement (DTA) and is beneficially entitled to the dividends are subject to withholding tax at the rate of 15% to the extent the dividends are “unfranked”. This assumes that:
| ● | no shareholder beneficially entitled to the dividends: |
| o | holds directly at least 10 percent of the voting power in the Company paying the dividends; or |
| o | has owned shares representing 80 per cent or more of the voting power of the Company paying the dividends for a 12 month period ending on the date the dividend is declared; or |
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| ● | the Company is not a Regulated Investment Company or a Real Estate Investment Trust or a Listed Australian Property Trust (as those terms are defined for the purpose of the DTA). |
To the extent that dividends paid by an Australia tax resident company to non-residents have been franked, such dividends are not subject to withholding tax.
“Franked dividends” refers to dividends that have been paid out of profits which have been taxed at company level and where that tax has been allocated to the dividend.
Accordingly, an Australian tax resident company paying a fully franked dividend to a non-resident is not required to deduct any withholding tax. Dividends on which withholding tax has been paid are generally not subject to any further Australian tax. In other words, the withholding tax should represent the final Australian tax liability in relation to those dividends.
To the extent that the dividend is partially franked, dividend withholding tax will apply to the unfranked portion in the manner outlined above.
The 15% dividend withholding tax rate does not apply to dividends derived by a resident of the United States of America who has a permanent establishment or fixed base in Australia, if the holding giving rise to the dividends is effectively connected with that permanent establishment or fixed base. Such dividends may be taxed and included in assessable income as business income or independent personal services income as the case may be.
On June 30, 2021, our Board declared a dividend in the amount of AUD$2,138,610 based on the Company’s historical retained earnings as of June 30, 2021 and in accordance with Section 254T of the Corporations Act 2001 (Cth). Other than the foregoing dividends, we have not paid any cash dividends since our inception and we do not anticipate the payment of cash dividends in the foreseeable future. See “Item 8.A. Financial Statements and Other Financial Information-Dividend Policy.”
A Non-Australian Holder will not be subject to capital gains tax in Australia on the disposal of shares in an Australian tax resident company unless the Non-Australian Holder disposes of an “indirect Australian real property interest”.
An “indirect Australian real property interest” includes a membership interest held by an entity (known as the holding entity) in another entity (known as the test entity) if:
| ● | at that time or throughout a 12 month period that begins no earlier than 24 months before that time and ends no later than that time, the interest passes the “non-portfolio interest test”; and | |
| ● | the interest passes the “principal asset test”. |
The non-portfolio test is satisfied where the sum of the “direct participation interests” held by the holding entity and its associates is 10 per cent or more.
The principal asset test is effectively satisfied where more than 50% of the market value of the test entity’s assets is attributable to taxable Australian real property.
Dual Residency
If an investor is a tax resident of both Australia and the United States, that investor may be subject to tax as an Australian resident. If, however, the shareholder is determined to be a United States resident for the purposes of the DTA, the Australian tax applicable would be limited by the DTA. Shareholders should obtain specialist taxation advice in these circumstances.
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Transfer Duty
Any transfer of shares through trading on the Nasdaq should not be subject to transfer duty.
Inheritance and Estate Taxes in Australia
Australia does not have estate or death duties. Generally, no capital gains tax liability is realized upon the inheritance of a deceased person’s shares. The disposal of inherited shares by beneficiaries, may, however, give rise to a capital gains tax liability.
Goods and Services Tax
The issue or transfer of shares will not incur Australian goods and services tax and does not require a stockholder to register for Australian goods and services tax purposes.
THE DISCUSSION ABOVE IS A GENERAL SUMMARY AND IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT RELATING TO THE PURCHASE, OWNERSHIP, AND DISPOSITION OF ORDINARY SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We are subject to certain information reporting requirements of the Exchange Act, applicable to foreign private issuers and under those requirements will file reports with the SEC. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our filings with the SEC will also be available to the public through the SEC’s website at www.sec.gov.
As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act. However, we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and may submit to the SEC, on a Form 6-K, unaudited quarterly financial information.
I. Subsidiary Information.
Not applicable.
J. Annual Report to Security Holders
Not applicable.
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures About Market Risk
Liquidity Risk
Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with our financial liabilities that are settled in cash. We monitor forecasts of our liquidity requirements to ensure we have sufficient cash to meet operational needs. We may be reliant on our ability to raise additional investment capital from the issuance of both debt and equity securities to fund our business operating plans and future obligations.
Credit risk
Credit risk is the risk of financial loss to us if a debtor or counterparty to a financial instrument fails to meet its contractual obligations, and arises mainly from our receivables. We restrict exposure to credit risk in the course of our operations by investing only in bank deposits.
Equity price risk
As we have not invested substantial amounts in securities riskier than short-term bank deposits, we do not believe that changes in equity prices pose a material risk to our holdings. However, decreases in the market price of our Ordinary Shares could make it more difficult for us to raise additional funds in the future or require us to raise funds at terms unfavorable to us.
Inflation risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations in the reporting period. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through hedging transactions. Our inability or failure to do so could harm our business, financial condition and results of operations.
Foreign Currency Exchange Risk
Currency fluctuations could affect us through increased or decreased costs, mainly for goods and services acquired outside of Australia. Currency fluctuations did not have a material effect on our results of operations during the years ended December 31, 2025 and 2024.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities.
Not applicable.
B. Warrants and rights.
Not applicable.
C. Other Securities.
Not applicable.
D. American Depositary Shares
Not applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
A. Material Modifications to Instruments
There are no material modifications to any instruments defining the rights of our security holders.
B. Material Modifications to Qualified Rights
There have been no material modifications or qualifications of the rights evidenced by any class of our securities by issuing or modifying any other class of securities.
C. Withdrawn or Substituted Assets
There has been no withdrawal or substitution of a material amount of the assets securing any class of our securities.
D. Trustees or Paying Agents
We have not changed any trustees or paying agents during the last financial year.
ITEM 15. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2025, or the Evaluation Date. Based on such evaluation, those officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures are not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be included in periodic filings under the Exchange Act and that such information is accumulated and communicated to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.
The material weaknesses that contributed to the ineffectiveness of our disclosure controls and procedures are described below under “Management’s Annual Report on Internal Control over Financial Reporting.” Management has identified the following material weaknesses in the Company’s internal control over financial reporting: (i) There are insufficient written policies and procedures to ensure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements; (ii) Due to the Company’s size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals; (iii) The Company does not have adequate written policies and procedures for the identification, approval and reporting of related-party transactions, and the Company’s controls are not adequate to ensure that all material transactions and developments with related parties will be properly identified, approved and reported. These material weaknesses contributed to the errors that required the restatement of the Company’s previously issued consolidated financial statements for the fiscal year ended December 31, 2024, as described in Note 3 to the consolidated financial statements included elsewhere in this Annual Report.
(b) Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 based on the criteria established in the 2013 Internal Control, Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2025 due to the material weaknesses described above under Item 15(a). Notwithstanding the material weaknesses, management has concluded that the consolidated financial statements included in this Annual Report present fairly, in all material respects, the Company’s financial position and results of operations.
(c) Attestation Report of the Registered Public Accounting Firm
This Annual Report on Form 20-F does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting due to an exemption for emerging growth companies provided in the JOBS Act.
(d) Changes in Internal Control over Financial Reporting
In connection with the restatement of the Company’s previously issued consolidated financial statements for the fiscal year ended December 31, 2024, management identified the material weaknesses described above under Item 15(a). Following the identification of these material weaknesses, the Company has begun taking measures to remediate the control deficiencies, including enhancing its accounting policies and procedures, evaluating additional accounting resources, and strengthening its controls over the identification and reporting of related-party transactions. The Company’s remediation efforts are ongoing.
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ITEM 16. RESERVED
Not applicable.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
The members of our Audit Committee are Sally Cardillo, Daniel Lanskey and Justin Pettett. Our board of directors has determined that Ms. Cardillo, Mr. Lanskey and Mr. Pettett satisfy the independence requirements under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. Ms. Cardillo is the chairperson of our Audit Committee. Our board of directors has determined that Ms. Cardillo is an “audit committee financial expert” within the meaning of SEC regulations. Ms. Cardillo is independent as defined in 17 CFR 240.10A-3. Each member of our Audit Committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, our board of directors has examined each member’s scope of experience and the nature of his or her employment.
ITEM 16B. CODE OF ETHICS
Our Board has adopted a Code of Business Conduct and Ethics applicable to all of our directors, officers and employees, including our Chief Executive Officer, Chief Financial Officer, controller or principal accounting officer, or other persons performing similar functions, which is a “code of ethics” as defined in Item 16B of Form 20-F promulgated by the SEC. The full text of our code of business conduct and ethics is available under the Governance section of our website at https://investors.innovationbev.com/governance-documents. In addition, we intend to post on our website all disclosures that are required by law or the Nasdaq Rules concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this Annual Report on Form 20-F.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
On October 15, 2025, we engaged M&K CPA PLLC as our principal independent registered public accounting firm for the fiscal year ending December 31, 2025. Astra Audit & Advisory LLC, an independent registered public accounting firm, served as our principal independent registered public accounting firm for the years ended December 31, 2024 and 2023 until its resignation on July 17, 2025. Our previous independent registered public accounting firm, Accell Audit & Compliance, P.A., served as our auditor from 2021 through December 10, 2024.
The following table sets forth the aggregate fees by categories specified below in connection with services rendered by our independent registered public accounting firms for the periods indicated.
| Year Ended December 31, | ||||||||
| (Dollars) | 2025 | 2024 | ||||||
| Audit fees (1) | $ | 100,000 | $ | 90,341 | ||||
| Audit-related fees (2) | 30,000 | — | ||||||
| Tax fees (3) | 6,848 | 32,944 | ||||||
| All other fees | — | — | ||||||
| Total | 136,848 | 123,285 | ||||||
| (1) | Audit fees consist of professional services provided in connection with the audit of our annual financial statements. |
| (2) | Audit-related fees in 2024 consist of services in connection with our initial public offering. |
| (3) | Tax fees consist of fees for professional services for tax compliance and tax advice |
The policy of our Audit Committee is to pre-approve all audit and non-audit services provided by our principal auditors, including audit services, audit-related services, and other services as described above, other than those for de minimis services which are approved by the Audit Committee or our Board of Directors prior to the completion of the services.
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ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
There have been no share repurchases made by or on behalf of the Company or any “affiliated purchaser” of ordinary shares registered pursuant to Section 12 of the Exchange Act.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
On October 15, 2025, the Company engaged M&K CPA PLLC as its independent registered public accounting firm for the fiscal year ending December 31, 2025. On December 12, 2024, we engaged Astra Audit & Advisory LLC (“Astra”) as our independent registered public accounting firm to audit the Company’s financial statements for the fiscal years ended December 31, 2024 and 2023, following approval by the Company’s Board of Directors and Audit Committee. On July 17, 2025, Astra resigned as the Company’s independent registered public accounting firm. Astra’s resignation was not the result of any disagreement with the Company on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.
Astra replaced Accell Audit & Compliance, P.A. (“Accell”), which was dismissed on December 10, 2024. Accell’s audit reports on the Company’s financial statements for the fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion, disclaimer of opinion, or qualification. During the Company’s two most recent fiscal years and the interim period through Accell’s dismissal, there were no disagreements with Accell on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures. Prior to engaging Astra, the Company did not consult with Astra regarding any matters involving accounting principles, the type of audit opinion that might be rendered, or any reportable events.
ITEM 16G. CORPORATE GOVERNANCE
The Sarbanes-Oxley Act, as well as related rules subsequently implemented by the SEC, require foreign private issuers, such as us, to comply with various corporate governance practices. In addition, following the listing of our ordinary shares on the Nasdaq Capital Market, we are required to comply with the Nasdaq Stock Market rules. Under those rules, we may elect to follow certain corporate governance practices permitted under the applicable laws in Australia and the Corporations Act in lieu of compliance with corresponding corporate governance requirements otherwise imposed by the Nasdaq Stock Market rules for U.S. domestic issuers.
In accordance with Australian law and practice and subject to the exemption set forth in Rule 5615 of the Nasdaq Stock Market rules, we have elected to follow the provisions of the applicable Australian law, rather than the Nasdaq Stock Market rules, with respect to the following requirements:
The Nasdaq listing rules allow for a foreign private issuer, such as us, to follow its home country practices in lieu of certain of the Nasdaq’s corporate governance standards. In connection with our Nasdaq Listing Application, we expect to rely on exemptions from certain corporate governance standards that are contrary to the laws, rules, regulations or generally accepted business practices in Australia. These exemptions being sought are described below:
| ● | We rely on an exemption from the requirement that our independent directors meet regularly in executive sessions under Nasdaq listing rules. The Corporations Act does not require the independent directors of an Australian company to have such executive sessions, accordingly, we seek to claim this exemption. |
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| ● |
We rely on an exemption from the quorum requirements applicable to meetings of shareholders under Nasdaq listing rules. In compliance with Australian law, three shareholders present, in person or by proxy, attorney or a representative, shall constitute a quorum for a general meeting. Nasdaq listing rules require that an issuer provide for a quorum as specified in its by-laws for any meeting of the holders of ordinary shares, which quorum may not be less than 33 1/3% of the outstanding voting ordinary shares. Accordingly, because applicable Australian law and rules governing quorums at shareholder meetings differ from Nasdaq’s quorum requirements, we seek to claim this exemption.
We rely on an exemption from the requirement to disclose third-party director and director nominee compensation under Nasdaq listing rules. The Corporations Act does not have a similar requirement, accordingly, we seek to claim this exemption |
| ● | We rely on an exemption from the requirement prescribed by Nasdaq Listing Rules that issuers obtain shareholder approval prior to the issuance of securities in connection with certain acquisitions, private placements of securities, or the establishment or amendment of certain stock option, purchase or other compensation plans. Applicable Australian law provides for restrictions on us, as an Australian public company, issuing securities to related parties (including directors and their associates) other than in certain exceptions which include issues with shareholder approval, issues as reasonable remuneration or issues which are on arm’s length (or terms worse for the related party than arm’s length terms). We are also prohibited from issuing securities to investors without disclosure (by way of a prospectus or other Australian offer document under which disclosure is made in accordance with Australian law) unless an exemption applies to that investor or class of investors as provided for under Australian law (the exemptions included exceptions for defined professional and sophisticated investors). As we have more than 50 shareholders, an investor and their associates also must not acquire a relevant interest in 20% or more of our issued voting shares unless an exception applies under Australian law, which exceptions include shareholder approval and a regulated takeover offer. Due to differences between Australian law and rules and the Nasdaq shareholder approval requirements, we seek to claim this exemption. |
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
We have adopted a statement of trading policies that governs the trading in our securities by our directors, officers and certain other covered persons, and which is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to the Company. A copy of the Insider Trading Compliance Policy is included as Exhibit 11.2 to this annual report. In addition, with regard to any trading in our own securities, it is our policy to comply with the federal securities laws and the applicable exchange listing requirements.
ITEM 16K. CYBERSECURITY
Our cybersecurity risk management process has been integrated into our overall risk management system, policy and process, and is solely internally managed. Management is responsible for identifying risks that threaten achievement of the control activities stated in the management’s description of the services organizations systems. Management has implemented a process for identifying relevant risks that could affect the organization’s ability to provide secure and reliable service to its users. The risk assessment occurs annually, or as business needs change, and covers identification of risks that could act against our objectives as well as specific risks related to a compromise to the security of data.
82
The level of each identified risk is determined by considering the impact of the risk itself and the likelihood of the risk materializing, and high level risks are actioned upon. Risks are analyzed to determine whether the risk meets Company risk acceptance criteria to be accepted or whether a mitigation plan will be applied. Mitigation plans include both the individual or department responsible for the plan and may include budget considerations. The oversight of cybersecurity threats is undertaken by our Board of Directors and our Interim Chief Executive Officer who is responsible for cybersecurity monitoring risk.
As of the date of this report, we have not, to our knowledge, experienced any material IT system failures or any material cybersecurity attacks, and we are not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Governance
Our board of directors is responsible for overseeing our cybersecurity risk management. Our board of directors shall review, approve and maintain oversight of the disclosure (i) on Form 6-K for material cybersecurity incidents (if any) and (ii) related to cybersecurity matters in the periodic reports (including annual report on Form 20-F) of our Company.
At management level, our Interim Chief Executive Officer is responsible for assessing, identifying and managing material risks from cybersecurity threats to our Company and monitoring the prevention, detection, mitigation and remediation of material cybersecurity incident. Our Interim Chief Executive Officer meets with the board of directors (i) in connection with each current report to furnish information concerning any material cybersecurity incident, report the status of any material cybersecurity incidents or material risks from cybersecurity threats to our Company, if any, and the relevant disclosure issue, and (ii) in connection with each annual report, will present the disclosure concerning cybersecurity matters in Form 20-F.
If a cybersecurity incident occurs, our executive officers will promptly organize relevant personnel for internal assessment and if it is determined that the incident could potentially be a material cybersecurity event, our executive officers will promptly report the incident and assessment results to our board of directors and external legal counsel, to the extent appropriate. Our executive officers shall prepare disclosure material on the cybersecurity incident for review and approval by the board of directors, and external legal counsel (if necessary), before it is disseminated to the public.
As of the date of this report, we are not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
PART III
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide financial statements and related information pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
The financial statements and the related notes required by this Item are included in this Annual Report on Form 20-F beginning on page F-1.
83
ITEM 19. EXHIBITS.
84
85
| * | Filed herewith. |
| ^ | Portions of this exhibit (indicated by asterisks) have been omitted under rules of the U.S. Securities and Exchange Commission permitting the confidential treatment of select information. |
86
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on Form 20-F filed on its behalf.
| INNOVATION BEVERAGE GROUP LIMITED | ||
| Date: September 17, 2026 | By: | /s/ Sahil Beri |
| Sahil Beri | ||
| Chief Executive Officer | ||
87
Innovation Beverage Group Limited
CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended
December 31, 2025 and 2024
INNOVATION BEVERAGE GROUP LIMITED FOR THE YEARS ENDED DECEMBER 31, 2025 and 2024
F-1
| INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES |
| INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |
F-2
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Stockholders of Innovation Beverage Group Limited
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Innovation Beverage Group Limited and subsidiaries (the Company) as of December 31, 2025, and the related consolidated statement of operations, changes in shareholders’ equity (deficit), and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its consolidated operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements of the Company as of December 31, 2024 and for the year then ended, before the effects of the adjustments described in Note 3, were audited by other auditors whose report dated May 15, 2025 expressed an unqualified opinion on those financial statements.
We also have audited the adjustments described in Note 3 that were applied to restate the 2024 consolidated financial statements to correct errors. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 consolidated financial statements of the Company, other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 consolidated financial statements taken as a whole.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses, a net working capital deficit, and has an accumulated deficit, which raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Going Concern
The Company has incurred recurring losses, has a net working capital deficit, and has an accumulated deficit, which raise substantial doubt about its ability to continue as a going concern, as discussed in Note 2 to the consolidated financial statements. Auditing management's assessment of the Company's ability to continue as a going concern involved significant auditor judgment because the assessment included estimates of future revenues, expenses and financing activities that are inherently uncertain.
Our audit procedures included, among other things, evaluating management's assessment of the Company's ability to continue as a going concern, testing certain underlying financial information, evaluating the reasonableness of significant assumptions used by management, considering management's plans to mitigate the conditions giving rise to substantial doubt, and evaluating the related disclosures in the consolidated financial statements.
/s/
We have served as the Company’s auditor since 2025.
The
September 17, 2026
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Innovation Beverage Group Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Innovation Beverage Group Limited (the Company) as of December 31, 2024 and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year ended December 31, 2024, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Restatement of Prior-Period Financial Statements
Our report dated May 15, 2025, expressed an unqualified opinion on the 2024 consolidated financial statements before restatement. As discussed in Note 3, those consolidated financial statements have been restated. We were not engaged to audit, review, or apply any procedures to the adjustments described in Note 3 and, accordingly, we do not express an opinion or any other form of assurance on them. Those adjustments were audited by M&K CPA PLLC.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
 | |
|
|
|
| We have served as the Company’s auditor since 2025. | |
| Tampa, Florida | |
| September 17, 2026, except for Note 3, as to which the date is September 16, 2026 | |
F-4
| INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, at cost | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Deposits | ||||||||
| Operating right of use asset, net | ||||||||
| Equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Deferred tax asset | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Notes and loans payable - related party | ||||||||
| Notes and loans payable | ||||||||
| Operating lease liability, current portion | ||||||||
| Other liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Accrued employee benefits, non-current | ||||||||
| Notes and loans payable, less current portion | ||||||||
| Operating lease liability, less current portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies - See Note 13 | ||||||||
| Stockholders' equity (deficit): | ||||||||
| Ordinary shares, par value; no authorization limit; and shares issued and outstanding at December 31, 2025 and 2024, respectively | ||||||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total stockholders' equity (deficit) | ( |
) | ||||||
| Total liabilities and stockholders' equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-5
| INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Revenues, net | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Salaries and wages | ||||||||
| Sales and marketing | ||||||||
| Contracted services | ||||||||
| Gain on disposal of equipment | ( |
) | ||||||
| Impairment expense | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( |
) | ( |
) | ||||
| Other income (expense): | ||||||||
| Australian Tax Office credit | ||||||||
| Gain on settlement of liabilities | ||||||||
| Interest expense | ( |
) | ( |
) | ||||
| Other | ( |
) | ||||||
| Total other income (expense), net | ( |
) | ||||||
| Net loss before income taxes | ( |
) | ( |
) | ||||
| Income tax benefit (expense) | ( |
) | ||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Other comprehensive loss: | ||||||||
| Foreign currency translation adjustment | ( |
) | ( |
) | ||||
| Comprehensive loss | $ | ( |
) | $ | ( |
) | ||
| Net loss per share: | ||||||||
| Basic and diluted | $ | ) | $ | ) | ||||
| Weighted average number of shares outstanding: | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-6
| INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) |
| FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| Accumulated | Total | |||||||||||||||||||
| Other | Stockholders' | |||||||||||||||||||
| Ordinary | Comprehensive | Accumulated | Equity | |||||||||||||||||
| Shares | Amount | Income (Loss) | Deficit | (Deficit) | ||||||||||||||||
| Balance - December 31, 2023 (As Restated) | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||
| Ordinary shares issued for services | ||||||||||||||||||||
| Ordinary shares issued for cash, net of direct offering costs | ||||||||||||||||||||
| Ordinary shares contributed back to the Company | ( |
) | ||||||||||||||||||
| Ordinary shares issued in connection with notes payable | ||||||||||||||||||||
| Ordinary shares to be issued in connection with notes payable | — | |||||||||||||||||||
| Warrants issued for services | — | |||||||||||||||||||
| Foreign currency translation adjustment | — | ( |
) | ( |
) | |||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||
| Balance - December 31, 2024 (As Restated) | ( |
) | ( |
) | ||||||||||||||||
| Ordinary shares issued for services | ||||||||||||||||||||
| Ordinary shares issued upon conversion of convertible notes | ||||||||||||||||||||
| Ordinary shares issued to settle other liabilities | ||||||||||||||||||||
| Ordinary shares issued to settle accrued expense | ||||||||||||||||||||
| Forgiveness of liability for shares to be issued | — | |||||||||||||||||||
| Foreign currency translation adjustment | — | ( |
) | ( |
) | |||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||
| Balance - December 31, 2025 | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-7
| INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Provision for credit losses | ||||||||
| Depreciation and amortization | ||||||||
| Inventory writedown | ||||||||
| Gain on disposal of equipment | ( |
) | ||||||
| Impairment expense | ||||||||
| Interest capitalized to line of credit | ||||||||
| Stock-based compensation | ||||||||
| Operating right of use assets and liabilities | ( |
) | ( |
) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( |
) | ||||||
| Inventories | ( |
) | ||||||
| Prepaid expenses and other current assets | ( |
) | ||||||
| Deposits | ( |
) | ||||||
| Deferred tax asset | ( |
) | ||||||
| Accounts payable | ( |
) | ||||||
| Contracts payable | ( |
) | ||||||
| Other liabilities | ||||||||
| Accrued employee benefits | ( |
) | ( |
) | ||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchases of equipment | ( |
) | ( |
) | ||||
| Proceeds from disposals of equipment | ||||||||
| Net cash provided by (used in) investing activities | ( |
) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from issuance of shares, net | ||||||||
| Proceeds from notes payable - related parties | ||||||||
| Repayments of notes payable - related parties | ( |
) | ||||||
| Proceeds from notes payable | ||||||||
| Repayments of notes payable | ( |
) | ( |
) | ||||
| Proceeds from issuance of convertible notes payable - related party | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ( |
) | ||||||
| Net increase (decrease) in cash | ( |
) | ||||||
| Cash at beginning of year | ||||||||
| Cash at end of year | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-8
| INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Ordinary shares issued in settlement of other liabilities | $ | $ | ||||||
| Ordinary shares issued upon conversion of convertible notes | $ | $ | ||||||
| Ordinary shares issued to settle accrued expenses | $ | $ | ||||||
| Equipment acquired through issuance of note payable | $ | $ | ||||||
| Forgiveness of liability for shares to be issued | $ | $ | ||||||
| Reclassification of previously capitalized IPO costs to equity upon completion of IPO | $ | $ | ||||||
| Operating right-of-use asset acquired in exchange for operating lease liability | $ | $ | ||||||
| Ordinary shares issued in connection with notes payable | $ | $ | ||||||
| Ordinary shares to be issued in connection with notes payable | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-9
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
NOTE 1 — NATURE OF BUSINESS
Overview
Innovation Beverage Group Limited (“IBG” or the “Company”) is a developer, manufacturer and exporter of a growing portfolio of alcoholic and non-alcoholic brands of beverages. Its distribution capabilities include sales to large distributors and high-margin direct-to-consumer sales. IBG is located in Arndell Park, New South Wales, Australia.
IBG has partnered with Coca Cola Europacific Partners (CCEP), the world’s largest Coca-Cola bottler, to exclusively distribute IBG Bitters in Australia, while retaining the rights throughout the rest of the world.
IBG focuses on direct-to-consumer (DTC) sales through its network of technology-focused retail marketplaces and established BevMart, a DTC marketplace, in Australia in May 2021 and in the United States in November 2021. On November 3, 2021, IBG acquired 100% of the outstanding equity interests in REG Liquors, LLC d/b/a Wired for Wine (“W4W”), located in Stockton, New Jersey. W4W and BevMart USA, LLC are wholly owned subsidiaries of IBG.
IBG successfully closed its initial public offering
(IPO) on September 27, 2024, raising $
NOTE 2 — GOING CONCERN AND MANAGEMENT’S CAPITAL RAISING EVENTS
During the year ended December 31, 2025, the
Company sustained a net loss of $
To date, the Company has funded its operating activities through sales of debt and equity securities and revenues generated from business operations. During the year ended December 31, 2025, the Company received proceeds of $750,000 from the issuance of convertible promissory notes to a related party and $242,308 from the issuance of notes and loans payable to related parties.
Management has executed and continues to evaluate several strategic financing initiatives in order to address its liquidity requirements and support ongoing operations including:
| ● | Public Equity Offering: On March 16, 2026, the Company completed a registered public offering for gross proceeds of approximately $6,000,000. The proceeds provided additional liquidity to fund the Company’s operations and strategic initiatives, including a $2,500,000 non-interest-bearing loan to BlockFuel Energy Inc. (“BFE”). |
| ● | Convertible Promissory Note: On August 25, 2026, the Company issued a Convertible Promissory Note to ClearThink Capital Partners, LLC with a principal amount of $1,150,000 (including a purchase price of $1,000,000 and an original issue discount of $150,000) maturing on August 25, 2027. The Note carries a one-time interest charge of 10% ($115,000) applied on the issue date and is convertible into ordinary shares at the option of the holder upon the earlier of the effectiveness of a registration statement or six months from issuance, at a conversion price equal to 80% of the lowest closing price during the five trading days prior to conversion, subject to a floor price. |
| ● | Revenue Growth and Cash Management Initiatives: Management continues to focus on growing revenues across core beverage distribution channels, optimizing operating efficiency, and managing cash outflows. |
The outcome of management’s plans cannot be determined with any degree of certainty. Accordingly, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business for one year from the date the consolidated financial statements are issued. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
F-10
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
NOTE 3 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
During the preparation of the Group’s consolidated financial statements for the year ended December 31, 2025, management identified errors in the previously issued consolidated financial statements as of and for the year ended December 31, 2024. The Group has restated the 2024 consolidated financial statements to correct these errors. The principal corrections are summarized below.
Intangible Assets and Accumulated Deficit (IP Rights).
The Group corrected the timing of recognition of certain intellectual property (“IP”) rights acquired in August 2019 that
had previously been recognized based on the subsequent share issuance. The correction reflects the IP asset and related historical amortization
in the appropriate periods. The correction increased intangible assets, net by $
Asset Write-offs and Impairment. The Group
corrected the accounting for the Rockland distribution agreement and the Wired for Wine liquor license. In addition, the Group wrote off
a loan receivable and accrued interest receivable due from a related party. These corrections resulted in the write-off or impairment
of the related asset balances and increased 2024 impairment expense. As restated, impairment expense for the year ended December 31, 2024
was $
Unrecorded Equity Commitments. Management identified
an aggregate of $
Debt Issuances with Equity Components. The Group previously accounted for certain debt issuances that included an equity component by recognizing the value attributed to the equity component as an expense. The Group determined that the proceeds should instead be allocated between the debt and equity components on a relative fair value basis. The correction reduced previously recognized expense and adjusted the carrying amount of the related debt and ordinary shares.
Other Corrections and Reclassifications. The restatement also includes corrections and reclassifications affecting certain prepaid expenses, right-of-use assets and lease balances, equipment, accounts payable and accrued expenses, revenue and operating expense classifications, and foreign currency translation. These corrections have been reflected in the restated consolidated balance sheet, statement of operations and comprehensive loss, statement of stockholders’ equity, and statement of cash flows.
Impact of Restatement on 2024 Financial Statements
The following tables summarize the effects of the corrections on the Group’s previously reported consolidated financial position as of December 31, 2024 and its consolidated results of operations and cash flows for the year then ended.
F-11
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Impact of Restatement on Consolidated Balance Sheet — December 31, 2024
| Financial Statement Line Item | As
Previously Reported |
Adjustments | As Restated | |||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||
| Accounts receivable, net | ||||||||||||
| Inventory, at cost | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Loan receivable - stockholder, current portion | ( |
) | ||||||||||
| Total current assets | ( |
) | ||||||||||
| Deposits | ||||||||||||
| Finance right-of-use asset, net | ( |
) | ||||||||||
| Operating right-of-use asset, net | ( |
) | ||||||||||
| Loan receivable - stockholder, net of current portion | ( |
) | ||||||||||
| Equipment, net | ( |
) | ||||||||||
| Intangible assets, net | ||||||||||||
| Prepaid distribution cost | ( |
) | ||||||||||
| Deferred tax asset | ||||||||||||
| Total assets | ( |
) | ||||||||||
| Accounts payable and accrued expenses | ||||||||||||
| Notes payable | ||||||||||||
| Operating lease liability, current portion | ||||||||||||
| Other liabilities | ||||||||||||
| Total current liabilities | ||||||||||||
| Accrued employee benefits, non-current | ||||||||||||
| Operating lease liability, less current portion | ||||||||||||
| Total liabilities | ||||||||||||
| Ordinary shares | ||||||||||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ( |
) | ||||||
| Accumulated deficit | ( |
) | ( |
) | ( |
) | ||||||
| Total stockholders' equity | ( |
) | ||||||||||
| Total liabilities and stockholders' equity | $ | $ | ( |
) | $ | |||||||
F-12
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Impact of Restatement on Consolidated Statement of Operations and Comprehensive Loss — Year Ended December 31, 2024
| Financial Statement Line Item | As
Previously Reported |
Adjustments | As Restated | |||||||||
| Revenues, net | $ | ($ | ) | $ | ||||||||
| Cost of revenues | ( |
) | ||||||||||
| Gross profit | ( |
) | ||||||||||
| General and administrative | ( |
) | ||||||||||
| Salaries and wages | ||||||||||||
| Sales and marketing | ( |
) | ||||||||||
| Contracted services | ( |
) | ||||||||||
| Impairment expense / loss on asset write-off | ||||||||||||
| Total operating expenses | ||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ||||||
| Gain on settlement of liabilities and other | ( |
) | ||||||||||
| Interest income | ( |
) | ||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ||||||
| Total other income (expense), net | ( |
) | ( |
) | ||||||||
| Net loss before income taxes | ( |
) | ( |
) | ( |
) | ||||||
| Income tax benefit (expense) | ( |
) | ||||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ||||||
| Foreign currency translation adjustment | ( |
) | ( |
) | ( |
) | ||||||
| Comprehensive loss | ($ | ) | ($ | ) | ($ | ) | ||||||
| Basic and diluted net loss per share* | ($ | ) | ($ | ) | ($ | ) | ||||||
| Weighted average shares outstanding - basic and diluted* | ||||||||||||
* As previously reported share and per-share amounts have been retroactively adjusted for the cumulative 1-for-25 reverse stock split (1-for-5 on September 26, 2025 and 1-for-5 on January 30, 2026) to conform to the current presentation.
F-13
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Impact of Restatement on Consolidated Statement of Cash Flows — Year Ended December 31, 2024
| Financial Statement Line Item | As
Previously Reported |
Adjustments | As Restated | |||||||||
| Net loss | ($ | ) | ($ | ) | ($ | ) | ||||||
| Depreciation and amortization | ( |
) | ||||||||||
| Stock compensation / stock-based compensation | ||||||||||||
| Share issuance for services | ( |
) | ||||||||||
| Loss on write-off of assets / impairment expense | ||||||||||||
| Interest capitalized to line of credit | ||||||||||||
| Accounts receivable | ( |
) | ||||||||||
| Inventories | ( |
) | ( |
) | ||||||||
| Prepaid expenses and other current assets | ( |
) | ( |
) | ( |
) | ||||||
| Right-of-use assets and liabilities | ( |
) | ( |
) | ||||||||
| Deposits | ||||||||||||
| Deferred tax asset | ( |
) | ( |
) | ||||||||
| Accounts payable and accrued expenses | ( |
) | ( |
) | ( |
) | ||||||
| Deferred revenue / contracts payable | ( |
) | ( |
) | ||||||||
| Other liabilities | ||||||||||||
| Accrued employee benefits | ( |
) | ( |
) | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ( |
) | ||||||
| Purchases of equipment | ( |
) | ( |
) | ( |
) | ||||||
| Net activity on due from related parties | ( |
) | ||||||||||
| Net cash provided by (used in) investing activities | ( |
) | ( |
) | ||||||||
| Proceeds from issuance of shares, net | ||||||||||||
| Proceeds from notes payable - related parties | ||||||||||||
| Repayments of notes payable - related parties | ( |
) | ( |
) | ||||||||
| Repayments of notes payable | ( |
) | ( |
) | ||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rate changes on cash | ( |
) | ( |
) | ||||||||
| Net increase in cash | ||||||||||||
| Cash at beginning of year | ( |
) | ||||||||||
| Cash at end of year | $ | $ | $ | |||||||||
The restatement did not change the Group’s cash flows in the aggregate; however, it changed the classification and presentation of certain operating, investing, financing and foreign-currency amounts.
NOTE 4 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles accepted in the United States of America (U.S. GAAP) for financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Innovation Beverage Group Limited and its wholly owned subsidiaries BevMart USA LLC and W4W (collectively, the “Group”). All intercompany transactions and balances have been eliminated in consolidation.
F-14
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying Notes. Actual results could differ materially from those estimates. The Company’s most significant estimates include the allowance for credit losses, valuation and classification of inventories and obsolescence reserves, depreciable lives and salvage values of equipment, the carrying value of the right-of-use (“ROU”) assets, valuation of deferred tax assets and liabilities, fair value of stock-based compensation, lease term, incremental borrowing rate and fair value of lease liabilities, valuation of loss contingencies, the fair value of warrants.
Cash and Cash Equivalents
The Company considers all highly
liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are stated at the amount the Group expects to collect, net of an allowance for credit losses. The Group recognizes an allowance for credit losses in accordance with ASC 326, Financial Instruments—Credit Losses, based on expected credit losses over the contractual life of the receivables. The Group estimates expected credit losses based on historical collection experience, the aging of accounts receivable, the financial condition of individual customers, current economic conditions, and reasonable and supportable forecasts, as applicable.
Accounts
receivable are written off against the allowance when they are deemed uncollectible after reasonable collection efforts have been exhausted
and the likelihood of recovery is considered remote. At December 31, 2025 and 2024, the allowance for credit losses relating to the Company’s
accounts receivable was $
Inventories
Inventories, consisting primarily of raw materials and finished goods, are stated at the lower of cost and net realizable value, with cost determined using the first-in, first-out (“FIFO”) method. Cost includes direct materials and delivery costs, direct labor, import duties and other taxes, and an appropriate allocation of variable and fixed production overhead based on normal operating capacity. Costs of purchased inventory are determined net of rebates and discounts received or receivable. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
The Group periodically reviews its inventories for excess, slow-moving, or obsolete items and writes down inventories to net realizable value, as appropriate. Inventory write-downs are recognized in cost of goods sold. When inventory is written down, a new cost basis is established and subsequent recoveries in value are not recognized.
Equipment
Equipment is stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows:
| Category | Depreciation Period | |
| Furniture and fixtures | | |
| Office equipment | | |
| Plant and equipment | |
Expenditures for additions and improvements that extend the useful life or increase the value of an asset are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Upon disposal, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the consolidated statements of operations.
F-15
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Intangible Assets
The Group’s intangible assets consist of a customer contract, an intellectual property (“IP”) asset, and software development costs. The customer contract was acquired in connection with a business combination.
Intangible assets with finite useful lives are stated at cost less accumulated amortization and are amortized on a straight-line basis over their estimated useful lives. The estimated useful life of an intangible asset is determined based on the specific facts and circumstances related to the asset, including its contractual term, expected period of benefit, legal or regulatory limitations, the Group’s expected use of the asset, and other relevant economic factors.
The estimated useful lives of the Group’s intangible assets are as follows:
| Category | Amortization Period | |
| Customer contract | | |
| Intellectual property (IP) asset | | |
| Software development costs | |
Finite-lived intangible assets are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Impairment of Long-Lived Assets
The Group reviews its long-lived assets, including equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability is assessed by comparing the carrying amount of the asset or asset group to the undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount is not recoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds its fair value. Long-lived assets to be sold are reported at the lower of their carrying amount or fair value less cost to sell.
Leases
The Group determines whether an arrangement is or contains a lease at inception. Right-of-use (“ROU”) assets represent the Group’s right to use an underlying asset for the lease term, and lease liabilities represent the Group’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the rate implicit in the lease is not readily determinable, the Group uses its incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments.
Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease ROU assets are amortized on a straight-line basis over the shorter of the estimated useful life of the underlying asset or the lease term, unless ownership transfers to the Group or the Group is reasonably certain to exercise a purchase option, in which case the ROU asset is amortized over the useful life of the underlying asset. Interest on finance lease liabilities is recognized using the effective interest method.
The Group has elected not to recognize ROU assets and lease liabilities for leases with an initial term of 12 months or less. Lease expense for such short-term leases is recognized on a straight-line basis over the lease term.
F-16
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Fair Value Measurements
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:
| ● | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. |
| ● | Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. |
Fair Value of Financial Instruments
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 825-10, “Financial Instruments” (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The estimated fair value of certain financial instruments, including accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the consolidated financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk.
Revenue Recognition
The Group recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Group’s revenues are primarily derived from the sale of beverage products through its brand-product distribution channels and direct-to-consumer e-commerce channels.
Revenue is recognized when control of the promised products is transferred to the customer in an amount that reflects the consideration the Group expects to receive in exchange for those products. The Group’s customer arrangements generally contain a single performance obligation related to the sale of products, which is satisfied at a point in time, generally upon delivery to the customer.
Revenue is presented net of discounts, rebates, returns and other forms of variable consideration, as applicable. The Group estimates variable consideration based on the terms of the underlying customer arrangements and historical experience and includes such amounts in the transaction price only to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Sales and other similar taxes collected from customers are excluded from revenue.
The Group’s brand-product sales are primarily made through distribution partners in Australia and other international markets. The Group also sells wine, spirits and other beverage products directly to consumers through its e-commerce platforms. Payment terms for brand-product sales are generally 21 days, while e-commerce transactions are generally paid at the time of sale.
The Group typically provides warranties for the replacement of products with defects that existed at the time of sale, as required by law. Based on historical experience, management does not believe that a material allowance for sales returns or warranty claims is necessary, and no such allowance was recorded as of December 31, 2025 or 2024.
The Group had no contract liabilities as of December 31, 2025 or 2024.
F-17
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Set forth below is the disaggregation of the Group’s revenue based on its two primary distribution channels, brand products and e-commerce products:
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Brand products - Australia | $ | $ | ||||||
| Brand products - United States | ||||||||
| Total brand products | ||||||||
| E-commerce - Australia | ||||||||
| E-commerce - United States | ||||||||
| Total e-commerce products | ||||||||
| Total revenues | $ | $ | ||||||
Advertising Costs
The Group expenses advertising
costs as incurred. Advertising costs were approximately $
Stock-Based Compensation
Stock-based compensation expense is measured based on the grant-date fair value of equity awards issued in exchange for services and is recognized over the requisite service period. The Group estimates the fair value of warrants issued for services on the grant date using the Black-Scholes option-pricing model. The Black-Scholes model incorporates assumptions regarding the expected volatility of the Group’s share price, expected term of the warrants, risk-free interest rates and expected dividend yields. These assumptions are based on historical experience, market data and other relevant factors, as applicable.
For awards with graded vesting schedules, the Group has elected to recognize compensation cost using the graded-vesting attribution method, under which each separately vesting portion of an award is treated as a separate award and compensation cost is recognized over the respective requisite service period of each portion.
Income Taxes
The Group accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect of a change in enacted tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Group evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized.
The Group recognizes the financial statement effects of an uncertain tax position when it is more likely than not that the position will be sustained upon examination based on its technical merits. A recognized tax benefit is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. Changes in the recognition or measurement of uncertain tax positions are reflected in the period in which the change in judgment occurs. The Group records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses.
F-18
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Basic earnings (loss) per ordinary share is calculated by dividing net income (loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period.
Diluted earnings (loss) per ordinary share is calculated in a manner consistent with basic earnings (loss) per ordinary share while giving effect to all potentially dilutive ordinary shares outstanding during the period, including warrants and convertible instruments. Potential ordinary shares are excluded from the calculation of diluted earnings (loss) per ordinary share when their effect would be antidilutive.
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Warrants | ||||||||
| Total potentially dilutive shares | ||||||||
Foreign Currency Translation
The Group’s reporting currency is the U.S. dollar. The functional currency of IBG is the Australian dollar, while the functional currency of its U.S. subsidiaries, BevMart USA LLC and W4W, is the U.S. dollar. The functional currency of each entity is determined based on the currency of the primary economic environment in which the entity operates.
For entities whose functional currency is other than the U.S. dollar, assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while revenues and expenses are translated at weighted-average exchange rates for the reporting period. Equity transactions are translated at historical exchange rates, as applicable. Resulting foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity (deficit).
Transactions denominated in a currency other than an entity’s functional currency are remeasured into the entity’s functional currency using the exchange rate applicable on the transaction date. Monetary assets and liabilities denominated in currencies other than the entity’s functional currency are remeasured at exchange rates in effect at the balance sheet date. Foreign currency transaction gains and losses resulting from such remeasurement are recognized in earnings in the period in which they arise.
Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes revenues, expenses, gains and losses that, under U.S. GAAP, are included in comprehensive income (loss) but excluded from net income (loss). The Group’s other comprehensive income (loss) consists of foreign currency translation adjustments.
Segment Reporting
The Group determines its operating segments based on the manner in which its chief operating decision maker (“CODM”), identified as the Chief Executive Officer, evaluates performance and allocates resources. The Group has identified two reportable segments: Australia and the United States. See Note 17 for additional information regarding the Group’s reportable segments.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to provide additional disclosures regarding certain expenses included in the statements of operations. The amendments require disaggregation of certain expense captions by specified natural expense categories, including, as applicable, purchases
F-19
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
of inventory, employee compensation, depreciation, intangible asset amortization, and depletion, as well as certain
additional disclosures regarding selling expenses. The amendments are effective for annual reporting periods beginning after December
15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted.
The Group is currently evaluating the impact of adopting this guidance on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient for estimating expected credit losses on certain current accounts receivable and contract assets. The amendments are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those annual reporting periods, with early adoption permitted. The amendments are applied prospectively. The Group is currently evaluating the impact of adopting this guidance and does not expect the adoption to have a material impact on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The amendments refine the scope of derivative accounting for certain contracts and clarify the accounting for share-based noncash consideration received from a customer in a revenue contract. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Group is currently evaluating the impact of adopting this guidance on its consolidated financial statements and related disclosures.
The Group has evaluated other accounting pronouncements issued but not yet effective and does not expect them to have a material impact on its consolidated financial statements or related disclosures.
NOTE 5 — INVENTORIES
Management reviews listed inventory items to identify
slow-moving or obsolete inventory and evaluates such items for impairment based on estimated net realizable value. At December 31, 2025
and 2024, management determined that the carrying value of certain inventory items exceeded their net realizable value. Accordingly, the
Company recognized inventory obsolescence expense of $
Inventories consisted of the following at December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Allowance for slow-moving inventory | ( |
) | ||||||
| Inventories, at cost | $ | $ | ||||||
Raw materials consisted primarily of glass bottles, aluminum cans, labels, cardboard cartons, flavorings, and sweeteners.
Finished goods consisted of bottled alcoholic and non-alcoholic products.
NOTE 6 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
During the year ended December 31, 2024, management
determined that the carrying value of prepaid expenses exceeded their net realizable value. Accordingly, the Company recognized impairment
expense of $
F-20
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Prepaid expenses and other current assets consisted of the following at December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid excise return | ||||||||
| Prepayment | ||||||||
| Inventory in transit | ||||||||
| Other receivables | ||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
NOTE 7 — EQUIPMENT
Equipment consisted of the following at December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Equipment | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Equipment, net | $ | $ | ||||||
Depreciation expense was $
NOTE 8 — INTANGIBLE ASSETS
During the year ended December 31, 2024, management
determined that the carrying value of certain intangible assets exceeded their net realizable value. Accordingly, the Company recognized
impairment expense of $
F-21
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Intangible assets consisted of the following at December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Customer contract | $ | $ | ||||||
| IP asset | ||||||||
| Software development costs | ||||||||
| Less: accumulated amortization | ( |
) | ( |
) | ||||
| Intangible assets, net | $ | $ | ||||||
| Carrying value at December 31, 2023 | $ | |||||||
| Add: Additions | ||||||||
| Less: Amortization | ( |
) | ||||||
| Less: Impairments | ( |
) | ||||||
| Carrying value at December 31, 2024 | ||||||||
| Add: Additions | ||||||||
| Less: Amortization | ( |
) | ||||||
| Less: Impairments | ||||||||
| Foreign currency exchange effect | ||||||||
| Carrying value at December 31, 2025 | $ | |||||||
Amortization expense was $40,829 and $391,636 for the years ended December 31, 2025 and 2024, respectively.
Estimated future amortization expense for intangible assets is as follows.
| Fiscal year | |||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
NOTE 9 — RIGHT TO USE ASSET AND LEASE LIABILITY
Operating Lease
The Group leases office space in Australia. The Group’s
lease for office space in Seven Hills commenced on July 1, 2018 and expired on June 30, 2024. In April 2024, the Group entered into a
lease for office space in Arndell Park, New South Wales, Australia, which expires in April 2026. The Arndell Park lease provides for annual
increases in base rent. As of December 31, 2025, the monthly lease payment was approximately $
As of December 31, 2025, the weighted-average remaining
lease term for the Group’s operating lease was approximately
During the years ended December 31, 2025 and 2024,
the Group recognized $
F-22
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
The following is a summary of the operating lease right-of-use asset and liability as of December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Operating lease right-of-use asset | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Operating lease right-of-use assets, net | $ | $ | ||||||
| Operating lease liability | $ | $ | ||||||
| Less: accumulated reduction | ( | ) | ( | ) | ||||
| Operating lease liability, net | $ | $ | ||||||
| Current operating lease liability | $ | $ | ||||||
| Non-current operating lease liability | ||||||||
| Total operating lease liability | $ | $ | ||||||
The following is a summary of future lease payments required under the lease agreement as of December 31, 2025.
| Lease | ||||
| Year | Payments | |||
| 2026 | $ | |||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of operating leases liabilities | $ | |||
NOTE 10 — ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Trade creditors | $ | $ | ||||||
| Tax authority | ||||||||
| Employee benefits and executive remuneration | ||||||||
| Accrued litigation expense | ||||||||
| Other accruals | ||||||||
| Total accrued expenses | $ | $ | ||||||
F-23
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
NOTE 11 — NOTES AND LOANS PAYABLE
Notes and loans payable consisted of the following at December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Insurance financing | $ | $ | ||||||
| Related-party loans | ||||||||
| Lines of credit | ||||||||
| Equipment financing | ||||||||
| Total notes and loans payable | ||||||||
| Less: related parties | ( |
) | ||||||
| Total loans to unaffiliated parties | ||||||||
| Less: current portion | ( |
) | ( |
) | ||||
| Long-term portion | $ | $ | ||||||
Insurance Financing
During the year ended December 31, 2025, the Group
entered into an unsecured financing arrangement to finance an insurance policy. The financing bears interest at
Related Party Loans
During the year ended December 31, 2025, the Group
received three unsecured loans from related parties. As of December 31, 2025, the loans consisted of $
Lines of Credit
The Group has three lines of credit with third party
lenders. As of December 31, 2025, the outstanding balances under the three facilities were $
Equipment Financing
On September 4, 2025, the Group entered into a specific
security agreement to finance the acquisition of equipment. The original amount financed was $
Interest expense related to notes and loans payable consisted of the following for the year ended December 31, 2025 and 2024:
| For the Year Ended December 31, 2025 | For the Year Ended December 31, 2024 | |||||||||||||||||||||||
| (As Restated) | ||||||||||||||||||||||||
| Unaffiliated Parties | Related Parties | Total | Unaffiliated Parties | Related Parties | Total | |||||||||||||||||||
| Interest expense | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
F-24
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Accrued interest payable related to notes and loans payable consisted of the following as of December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||
| Unaffiliated Parties | Related Parties | Total | Unaffiliated Parties | Related Parties | Total | |||||||||||||||||||
| Accrued interest payable | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
See also Notes 19 and 20.
NOTE 12 — OTHER LIABILITIES
Other liabilities consisted of the following at December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Liabilities for shares to be issued | $ | $ | ||||||
| Other | ||||||||
| Total other liabilities | $ | $ | ||||||
At December 31, 2024, other liabilities included $
of contractual obligations to issue ordinary shares, of which $
During 2025, a related party forgave $
During 2025, the Group satisfied the remaining obligations through the issuance of ordinary shares, as follows:
| Description | Issue Date | Shares Issued | Fair Value | |||||||
| $ | ||||||||||
| $ | ||||||||||
The fair value of the ordinary shares issued was determined based on the fair value of the shares on the respective issuance dates and, accordingly, differed from the carrying amounts of the related obligations at December 31, 2024. See Note 14 for additional information regarding the issuance of ordinary shares in settlement of these obligations.
NOTE 13 — COMMITMENTS AND CONTINGENCIES
Litigation and Other Legal Matters
Employment Matter
As of December 31, 2025, the Group had accrued $
F-25
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Tradigital Matter
As of December 31, 2025, the Group had accrued $
The Group evaluates loss contingencies in accordance with ASC 450, Contingencies, and records an accrual when a loss is probable and can be reasonably estimated. Except for the matters described above, as of December 31, 2025, the Group was not aware of any other material loss contingencies requiring accrual or disclosure in the consolidated financial statements.
Leases
See Note 9 for information regarding the Group’s operating lease commitments.
NOTE 14 — STOCKHOLDERS’ EQUITY (DEFICIT)
Reverse Stock Splits
On September 26, 2025 and January 30, 2026, the Company effected one-for-five reverse stock splits of its ordinary shares. No fractional shares were issued, and no cash or other consideration was paid in connection with the reverse stock splits. All share and per-share amounts presented in the accompanying consolidated financial statements and related notes have been retrospectively adjusted to reflect the reverse stock splits (See Note 20).
Ordinary Shares
As of December 31, 2025 and 2024, the Company had and ordinary shares issued and outstanding, respectively.
Ordinary Shares Issued for Services
During the years ended December 31, 2025 and 2024,
the Company issued and ordinary shares, respectively, to employees, consultants, directors and other service providers
in exchange for professional services, compensation and contractual bonus arrangements. The aggregate fair value of the shares issued
for services during 2025 and 2024 was $
Initial Public Offering
On September 26, 2024, the Company completed its initial
public offering and issued ordinary shares for gross proceeds of $
Shareholder Contribution
On September 26, 2024, certain shareholders voluntarily returned ordinary shares to the Company for no consideration. The transaction was accounted for as a capital contribution.
Shares Issued in Settlement of Notes Payable
On December 18, 2024, the Company issued ordinary
shares in settlement of outstanding notes payable with a carrying amount of $
F-26
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Shares Issued Upon Conversion of Convertible Notes
During 2025, the Company issued $
Shares Issued and Amount Forgiven in Settlement of Other Liabilities
During 2025, the Company issued an aggregate of
ordinary shares, with an aggregate fair value of $
During 2025, a related party forgave $
See Note 12 for additional information regarding these obligations.
Shares Issued in Settlement of Accrued Expenses
During 2025, the Company issued an aggregate of
ordinary shares, with an aggregate fair value of $
NOTE 15 — WARRANTS
During 2024, the Company granted two directors warrants
to purchase an aggregate of ordinary shares in exchange for services. The warrants had an aggregate grant-date fair value of $
The Company determined the grant date fair value of the warrants granted using the Black Scholes Method using the following assumptions:
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Expected Volatility | n/a | % | ||||||
| Expected Term | n/a | years | ||||||
| Risk-Free Rate | n/a | % - % | ||||||
| Dividend Rate | n/a | % | ||||||
F-27
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
The following table summarizes the Company’s warrant activity for the years ended December 31, 2025 and 2024:
| Weighted | Weighted | |||||||||||||||
| Average | Average | |||||||||||||||
| Number of | Exercise | Remaining Life | Intrinsic | |||||||||||||
| Warrants | Price[1] | In Years | Value | |||||||||||||
| Outstanding, December 31, 2023 | $ | |||||||||||||||
| Granted | $ | |||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited/Expired | ( | ) | $ | |||||||||||||
| Outstanding, December 31, 2024 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited/Expired | ( | ) | $ | |||||||||||||
| Outstanding, December 31, 2025 | $ | $ | — | |||||||||||||
| Exercisable, December 31, 2025 | $ | $ | — | |||||||||||||
[1]The exercise prices of the Company’s warrants are denominated in Australian dollars. Accordingly, all weighted-average exercise prices presented in the table below are stated in Australian dollars.
NOTE 16 — INCOME TAXES
The components of loss before income taxes attributable to the Group’s operations by tax jurisdiction were as follows:
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Australia | $ | ( |
) | $ | ( |
) | ||
| United States | ( |
) | ( |
) | ||||
| Loss before income taxes | $ | ( |
) | $ | ( |
) | ||
The components of the income tax provision (benefit) were as follows:
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Current: | ||||||||
| Australia | $ | $ | ||||||
| United States | ||||||||
| Deferred: | ||||||||
| Australia | ( |
) | ||||||
| United States | ||||||||
| Total deferred | $ | $ | ( |
) | ||||
| Income tax provision (benefit) | $ | $ | ( |
) | ||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effects of net operating loss carryforwards. The significant components of the Group’s deferred tax assets and liabilities were as follows:
F-28
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets: | ||||||||
| Employee leave provisions | $ | $ | ||||||
| Accrued expenses | ||||||||
| Inventory obsolescence | ||||||||
| Superannuation | ||||||||
| Depreciation | ||||||||
| Contract-related temporary differences | ||||||||
| Amortization-related temporary differences | ||||||||
| Share-based compensation | ||||||||
| Capitalized offering costs | ||||||||
| Intangible assets | ||||||||
| Tax loss carryforwards | ||||||||
| Other | ||||||||
| Gross deferred tax assets | ||||||||
| Deferred tax liabilities: | ||||||||
| Foreign exchange | ( |
) | ( |
) | ||||
| Prepayments | ( |
) | ( |
) | ||||
| Leases | ( |
) | ( |
) | ||||
| Software | ( |
) | ( |
) | ||||
| Other | ( |
) | ||||||
| Gross deferred tax liabilities | ( |
) | ( |
) | ||||
| Net deferred tax asset before valuation allowance | ||||||||
| Valuation allowance | ( |
) | ||||||
| Net deferred tax asset | $ | $ | ||||||
The Group evaluates the realizability of its deferred tax assets in accordance with ASC 740, Income Taxes. In assessing whether deferred tax assets are more likely than not to be realized, management considers all available positive and negative evidence, including historical operating results, cumulative losses, expectations of future taxable income and available tax-planning strategies. As of December 31, 2025, based primarily on the Group’s history of cumulative losses and uncertainty regarding the generation of sufficient future taxable income, management concluded that it was more likely than not that its net deferred tax assets would not be realized. Accordingly, the Group recorded a full valuation allowance against its net deferred tax assets as of December 31, 2025.
A reconciliation of the income tax expense (benefit) computed at the Australian statutory income tax rate to the Group’s reported income tax expense (benefit) is as follows:
F-29
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
| For the Year Ended | For the Year Ended | |||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||
| Tax benefit at Australian statutory rate | $ | ) | % | $ | ) | % | ||||||||||
| Foreign tax rate differential | % | % | ||||||||||||||
| Share-based compensation | % | % | ||||||||||||||
| Valuation allowance and other changes in deferred tax assets | % | % | ||||||||||||||
| Income tax provision (benefit) | $ | % | $ | ) | % | |||||||||||
As of December 31, 2025, the Group had Australian
tax loss carryforwards that resulted in a deferred tax asset of approximately $
As of December 31, 2025 and 2024, the Group had net
operating loss carryforwards for state and local income tax purposes of approximately $
The Company has provided a full valuation allowance against its net deferred tax assets as of December 31, 2025, since, in the opinion of management, based upon the earnings history of the Company, it is more likely than not that the benefits of these assets will not be realized.
The Group accounts for uncertain tax positions in accordance with ASC 740, Income Taxes. A tax benefit from an uncertain tax position is recognized only when it is more likely than not that the position will be sustained upon examination by the applicable taxing authority, based on the technical merits of the position. The amount recognized is measured as the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the taxing authority.
The Group is subject to income taxation in Australia, the United States and various state and local jurisdictions. The Group’s tax returns are subject to examination by the applicable taxing authorities in the jurisdictions in which it operates. Tax years generally remain subject to examination for the periods prescribed under applicable statutes of limitation. In addition, to the extent the Group has tax loss carryforwards, taxing authorities may examine the years in which such losses arose when the losses are utilized in a subsequent period, subject to applicable tax laws.
The Group recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense.
NOTE 17 — REPORTABLE SEGMENTS
The Group determines its operating segments based on the management approach used by the Chief Operating Decision Maker (“CODM”), identified as the Chief Executive Officer, to evaluate performance and allocate resources. The CODM regularly reviews financial information organized by the Group’s principal operating entities, which consist of the operations of the Australian parent company and its United States subsidiaries.
Accordingly, the Group has identified two reportable segments: Australia and the United States. The Australia segment primarily consists of the Group’s Australian beverage operations and corporate activities. The United States segment consists of the operations of the Group’s United States subsidiaries. The CODM evaluates the performance of the reportable segments primarily based on revenues and loss from operations and uses such information in assessing performance and allocating resources. Intercompany transactions and balances are eliminated in consolidation.
F-30
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Revenue by reportable segment was as follows:
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues: | (As Restated) | |||||||
| Australia | $ | $ | ||||||
| United States | ||||||||
| Total revenues | $ | $ | ||||||
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Loss from operations: | (As Restated) | |||||||
| Australia | $ | ( | ) | $ | ( | ) | ||
| United States | ( | ) | ( | ) | ||||
| Total loss from operations | $ | ( | ) | $ | ( | ) | ||
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Depreciation and amortization: | (As Restated) | |||||||
| Australia | $ | $ | ||||||
| United States | ||||||||
| Total depreciation and amortization | $ | $ | ||||||
Depreciation and amortization includes amortization of right-of-use assets recorded in connection with the Group’s operating leases.
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Capital expenditures: | (As Restated) | |||||||
| Australia | $ | $ | ||||||
| United States | ||||||||
| Total capital expenditures | $ | $ | ||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Total assets: | (As Restated) | |||||||
| Australia | $ | $ | ||||||
| United States | ||||||||
| Effect of exchange rate changes | ( |
) | ||||||
| Total assets | $ | $ | ||||||
Total assets excludes intercompany balances and, for the Australia segment, investments in consolidated subsidiaries.
NOTE 18 — CONCENTRATIONS
Concentration of Revenues
For the years ended December 31, 2025 and 2024, the
following customers accounted for more than
F-31
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
| For the Year Ended December 31, | |||||||||
| 2025 | 2024 | ||||||||
| Customer 1 | % | % | |||||||
| Totals | % | % | |||||||
Concentration of Accounts Receivable
As of December 31, 2025 and 2024, the following customers
accounted for more than
| December 31, | |||||||||
| 2025 | 2024 | ||||||||
| Customer 1 | % | ||||||||
| Customer 2 | % | ||||||||
| Totals | % | % | |||||||
NOTE 19 — RELATED PARTY TRANSACTIONS
The Company enters into transactions with certain officers, directors, shareholders, immediate family members of such persons, and entities affiliated with such persons. The following summarizes the Company’s material related party transactions and balances.
Related Party Loan Receivable
The Company had a loan receivable from a related party
bearing interest at 8.77%. During 2024, the Company wrote off the outstanding loan principal and accrued interest receivable, which had
an aggregate carrying amount of $
Related Party Loans Payable
During the year ended December 31, 2025, the Group
received three unsecured loans from related parties. As of December 31, 2025, the loans consisted of $
During 2024, the Company received a loan of $
PBG Consulting Partners LLC
F-32
INNOVATION BEVERAGE GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
Intellectual Property Obligation
On February 28, 2019, the Company acquired intellectual
property rights related to a proprietary manufacturing process, custom production line equipment and formula for $
Related Party Equity Transactions
During the years ended December 31, 2025 and 2024, the Company issued ordinary shares to certain related parties, including directors, executive officers and other related parties, in exchange for professional services, board compensation and performance-based incentives. Such issuances were measured and recognized at fair value in accordance with the Company’s stock-based compensation accounting policy. See Note 14 for additional information regarding these share issuances.
NOTE 20 — SUBSEQUENT EVENTS
On January 13, 2026, Innovation Beverage Group Limited
(the “Company”) entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Aegis Capital
Corp., as exclusive sales agent, under which the Company could issue and sell its Ordinary Shares, without par value per share, from time
to time for aggregate gross proceeds of up to the lesser of $
Effective January 14, 2026, the Company and Tradigital Marketing Group (“Tradigital”) reached an agreement to settle a contractual dispute regarding the number of additional ordinary shares issuable under a prior agreement. Pursuant to the settlement, the Company issued 4,800 Ordinary Shares in full and final settlement of the matter. See Note 13.
On January 29, 2026, related party loans including
an aggregate principal amount of $
On January 30, 2026, the Company effected one-for-five reverse stock splits of its ordinary shares. All share and per-share amounts presented in the accompanying consolidated financial statements and related notes have been retrospectively adjusted to reflect the reverse stock split.
On February 15, 2026, the Company issued 50,000 Ordinary Shares in settlement of accounts payable.
Effective March 15, 2026, the Group entered into a
new lease agreement for a property located at 47 Holbeche Road, Arndell Park, replacing the previous Seven Hills arrangement. The new
lease has a term of five years, expiring in March 2031, with an option to extend it for an additional five years. The commencement rental
is approximately $
On March 16, 2026, the Company closed a follow-on
offering through Aegis Capital Corp., issuing (i)
On March 16, 2026, Innovation Beverage Group Limited (“IBG”) acquired a controlling interest in BlockFuel Energy Inc. (“BFE”) through a share exchange transaction with certain existing stockholders of BFE. Pursuant to the agreement, stockholders holding an aggregate of 127,628 shares of BFE’s common stock transferred such shares to IBG in exchange for warrants to acquire shares of IBG. Following the transaction, IBG owned approximately 51% of the outstanding common stock of BFE, and BFE became a majority-owned subsidiary of IBG.
On March 20, 2026, the Company issued 20,000 Ordinary Shares in exchange for services.
On August 25, 2026, Innovation Beverage Group Limited
issued a Convertible Promissory Note to ClearThink Capital Partners, LLC with a principal amount of $
In accordance with ASC 855-10, Subsequent Events, the Group has analyzed its operations subsequent to December 31, 2025, through the date when the consolidated financial statements were available to be issued and has determined that it does not have any other material subsequent events to disclose in these financial statements.
F-33
EXHIBIT 4.3
Exhibit 8.1 - Subsidiaries
| Entity Name | Jurisdiction of Incorporation | |
| Innovation Beverage Group USA Inc. | Nevada | |
| Reg Liquors LLC (d/b/a Wired For Wine) | New Jersey | |
| IBG USA, LLC | Delaware | |
| IBG Treasury USA Inc. | Nevada | |
| InnoBev Merger Corp. | Texas | |
| Bittersweet Brands Pty Ltd | Australian |
Exhibit 12.1
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a) or 15d-14(a)
I, Sahil Beri, certify that:
| 1. | I have reviewed this annual report on Form 20–F of Innovation Beverage Group Limited (the “Company”); |
| 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 Company as of, and for, the periods presented in this report; |
| 4. | The Company’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)) [language omitted in accordance with Exchange Act Rule 13a-14(a)] for the Company 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 Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | [paragraph omitted in accordance with Exchange Act Rule 13a-14(a)]; |
| c. | Evaluated the effectiveness of the Company’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 Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function): |
| 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 Company’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 Company’s internal control over financial reporting. |
| Date: September 17, 2026 | /s/ Sahil Beri |
| Sahil Beri | |
| Chief Executive Officer |
Exhibit 12.2
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a) or 15d-14(a)
I, Tianyi Eric Yu, certify that:
| 1. | I have reviewed this annual report on Form 20–F of Innovation Beverage Group Limited (the “Company”); |
| 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 Company as of, and for, the periods presented in this report; |
| 4. | The Company’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)) [language omitted in accordance with Exchange Act Rule 13a-14(a)] for the Company 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 Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | [paragraph omitted in accordance with Exchange Act Rule 13a-14(a)]; |
| c. | Evaluated the effectiveness of the Company’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 Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function): |
| 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 Company’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 Company’s internal control over financial reporting. |
| Date: September 17, 2026 | /s/ Eric Yu |
| Tianyi Eric Yu | |
| Chief Financial Officer |
Exhibit 13.1
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350
In connection with the filing of the Annual Report on Form 20-F for the period ended December 31, 2025 (the “Report”) by Innovation Beverage Group Limited (the “Company”), the undersigned, as the Chief Executive Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, that, to my knowledge:
| (1) | the Report fully complies with the requirements of Section 13(a) or Section 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: September 17, 2026 | /s/ Sahil Beri |
| Sahil Beri | |
| Chief Executive Officer |
Exhibit 13.2
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350
In connection with the filing of the Annual Report on Form 20-F for the period ended December 31, 2025 (the “Report”) by Innovation Beverage Group Limited (the “Company”), the undersigned, as the Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, that, to my knowledge:
| (1) | the Report fully complies with the requirements of Section 13(a) or Section 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: September 17, 2026 | /s/ Tianyi Eric Yu |
| Tianyi Eric Yu | |
| Chief Financial Officer |