Fresh Vine Wine(US:VINE)2024-05-14 20:52Financial Performance - For the three months ended March 31, 2024, net revenue was $104,568, a decrease of 74% compared to $408,630 in the same period of 2023[135]. - Gross loss for the same period was $111,248, representing a significant increase of 3,209% from a gross loss of $3,362 in the prior year[154]. - The company incurred net losses of approximately $1.2 million for the three months ended March 31, 2024, compared to $2.0 million in the same period of 2023, with an accumulated deficit of approximately $27.7 million as of March 31, 2024[161]. Revenue Channels - The direct-to-consumer (DTC) channel accounted for 73% of net revenue in Q1 2024, up from 29% in Q1 2023, while the wholesale channel dropped to 27% from 71%[146]. - Fresh Vine Wine expects net revenue to peak during the holiday season, particularly in the DTC channel[139]. Operating Expenses - Selling, general, and administrative expenses decreased by 34% to $1,099,480 from $1,672,766 year-over-year[155]. - Cash used in operating activities was $332,814 for the three months ended March 31, 2024, compared to $2,091,809 in the same period of 2023[156]. - Net cash used in operating activities decreased to ($332,814) for the three months ended March 31, 2024, compared to ($2,091,809) in the same period of 2023, primarily due to one-time expenses related to a settlement of approximately $1.7 million paid in 2023[158]. Strategic Initiatives - The company anticipates revenue growth through expanded relationships with distributors and new product offerings[142]. - Fresh Vine Wine's marketing strategy will need to adapt following the termination of celebrity endorsement agreements on September 7, 2023[137]. - The company is focusing on increasing customer engagement through its DTC channel and performance marketing initiatives[144]. - Fresh Vine announced an exploration of strategic opportunities for merger or acquisition to enhance stockholder value, culminating in a Merger Agreement with Notes Live, Inc. on January 25, 2024[171]. Financial Position - As of March 31, 2024, the company had current assets of approximately $385,000 and current liabilities of $2.9 million, resulting in a working capital deficit of approximately $2.5 million[162]. - The company raised total gross proceeds of $1.0 million from the issuance of 10,000 shares of Series A Convertible Preferred Stock at a price of $100.00 per share in August 2023[165]. - The company has received subscriptions for 6,785 shares of Series B Convertible Preferred Stock, amounting to gross subscription funds of $678,500 as of May 14, 2024[167]. - The company projects that its existing cash balance will be sufficient to fund operations through the second quarter of 2024, but requires additional financing to meet existing obligations and sustain operations[168]. Going Concern - The company faces substantial doubt about its ability to continue as a going concern, with potential implications for asset recoverability and liability classification[169]. - If the Merger does not close, the company may consider suspending operations, liquidating assets, or initiating bankruptcy proceedings, which could significantly affect stockholder investments[173]. - The company has not engaged in any off-balance sheet activities as defined in Regulation S-K[175].