Splash(US:SBEV)2023-08-14 20:02Financial Performance - Net revenues for Q2 2023 reached $5.19 million, a 15.5% increase from $4.50 million in Q2 2022[14] - Gross profit for Q2 2023 was $1.78 million, up 31.6% from $1.35 million in Q2 2022[14] - The net loss for Q2 2023 was $5.61 million, slightly improved from a net loss of $5.76 million in Q2 2022[14] - Net loss for the first half of 2023 was $9,339,548, an improvement from a net loss of $11,753,264 in the same period of 2022, representing a reduction of approximately 20.5%[1] - For the six months ended June 30, 2023, net revenues were $11,017,678, up $2,592,164 from $8,425,514 in 2022, driven by increases in both e-commerce and beverage businesses[120] - The e-commerce segment's revenue increased by $924,428 in Q2 2023, while the beverage segment saw a decline of $228,417 due to phasing of purchases[118] Expenses and Costs - Operating expenses for Q2 2023 totaled $6.00 million, a decrease of 16.4% from $7.18 million in Q2 2022[14] - Operating expenses for the three months ended June 30, 2023, decreased by $1,180,381 to $5,998,432 compared to $7,178,813 in 2022, primarily due to lower non-cash expenses[123] - Cost of goods sold for the three months ended June 30, 2023, was $3,417,868, an increase of $268,593 from $3,149,275 in 2022, driven by increased sales and a shift to lower margin items[121] - Shipping and handling costs for the six months ending June 30, 2023, were $2,737,205, an increase of 37.4% compared to $1,992,630 in the same period of 2022[1] - Advertising expenses for the three months ended June 30, 2023, were $194,415, an increase from $131,327 in the same period in 2022[58] - The company recorded advertising expenses of $389,462 for the six months ended June 30, 2023, compared to $218,917 for the same period in 2022[58] Assets and Liabilities - Total current assets decreased to $6.90 million as of June 30, 2023, down 35.7% from $10.66 million at December 31, 2022[11] - Total liabilities increased to $9.16 million as of June 30, 2023, compared to $7.98 million at December 31, 2022, representing a 14.8% rise[11] - The company reported a total stockholders' equity of $3.97 million as of June 30, 2023, down 57.5% from $9.32 million at December 31, 2022[11] - Cash and cash equivalents decreased to $903,235 as of June 30, 2023, down 79.6% from $4.43 million at December 31, 2022[11] - Total cash and cash equivalents at the end of the period were $903,235, down from $4,206,208 at the end of 2022, reflecting a decrease of approximately 78.5%[1] Shareholder Information - The weighted average number of common shares outstanding for Q2 2023 was 42,058,047, compared to 36,675,323 for Q2 2022[14] - The company incurred a loss per share of $0.13 for Q2 2023, compared to a loss per share of $0.16 for Q2 2022[14] - As of June 30, 2023, the Company's convertible note balances are convertible into 7,697,968 shares of common stock[83] - The Company granted share-based awards totaling 116,666 shares at a weighted average price of $1.10, recognizing share-based compensation of $127,999 for the three months ended June 30, 2023[91] - The company issued 216,666 shares of common stock to consultants for services, recognizing non-cash compensation of $131,866[147] Financing and Capital - The company may need to raise additional equity or debt capital to fund operations, which could be dilutive to existing stockholders[72] - The company raised approximately $0.85 million from a private placement of convertible notes in July 2023, with a term of 12 to 18 months and an interest rate of 12.0%[114] - The company plans to raise up to $8.5 million to fund acquisitions, equipment purchases, and working capital through future financing activities[114] - The Company entered into multiple loans totaling $8,088,418, with a significant portion maturing in 2024 and 2025, including a $2,000,000 loan in February 2023[82] - Interest expense on notes payable for the three months ended June 30, 2023, was $170,078, compared to $69,015 for the same period in 2022, indicating a year-over-year increase of approximately 146%[82] Internal Controls and Compliance - As of June 30, 2023, the company identified material weaknesses in its internal controls over financial reporting, leading to ineffective disclosure controls and procedures[139] - The company plans to enhance its internal controls by potentially engaging additional internal staff, external staff, or an advisory firm for support on U.S. GAAP technical issues[140] - During the quarter ended June 30, 2023, the company engaged an advisory firm to assist with U.S. GAAP compliance in financial statement preparation[141] Other Financial Metrics - The company incurred a foreign currency translation net loss of $15,773 for the three months ended June 30, 2023, compared to a loss of $6,570 for the same period in 2022[67] - The company has determined that there are no material uncertain tax positions as of June 30, 2023[53] - The company evaluates long-lived assets for impairment when events indicate that the carrying amount may not be fully recoverable[63] - The company adopted ASU No. 2016-13 on January 1, 2023, which requires the immediate recognition of management's estimates of current and expected credit losses, with no material impact on financial statements[65]