Splash(US:SBEV)2023-11-14 21:06Financial Performance - Net revenues for the three months ended September 30, 2023, increased to $5.14 million, up 5.6% from $4.87 million in the same period of 2022[16] - Gross profit for the nine months ended September 30, 2023, was $4.84 million, compared to $4.41 million for the same period in 2022, reflecting a year-over-year increase of 9.5%[16] - The net loss for the three months ended September 30, 2023, was $5.67 million, compared to a net loss of $5.14 million for the same period in 2022, indicating a 10.4% increase in losses[16] - For the nine months ended September 30, 2023, the net loss was $15,009,628, a decrease from a net loss of $16,897,065 in the same period of 2022, representing a 11.16% improvement[22] - The Company recorded a net loss of approximately $15 million for the nine-month period ended September 30, 2023, with an accumulated deficit of approximately $127.3 million[73] Assets and Liabilities - Total assets decreased from $17.30 million on December 31, 2022, to $11.24 million on September 30, 2023, representing a decline of approximately 35%[13] - Total current liabilities surged from $4.97 million at the end of 2022 to $11.13 million by September 30, 2023, marking an increase of approximately 124%[13] - Total stockholders' equity turned negative, dropping from $9.32 million at the end of 2022 to $(657,830) by September 30, 2023[13] - The company experienced a significant increase in accounts payable and accrued expenses, rising from $3.38 million at the end of 2022 to $4.20 million by September 30, 2023, an increase of approximately 24%[13] - As of September 30, 2023, total notes payable amounted to $9,057,571, with a current portion of $5,548,830[82] Cash Flow - Cash and cash equivalents decreased significantly from $4.43 million at the end of 2022 to $96,121 by September 30, 2023, a decline of over 97%[13] - The company reported a net cash used in operating activities of $(8,503,765) for the nine months ended September 30, 2023, compared to $(10,824,652) for the same period in 2022, reflecting a 21.38% reduction in cash burn[22] - As of September 30, 2023, total cash and cash equivalents were $96,121, down from $2,601,270 at the beginning of the year, indicating a significant cash outflow[22] - The Company’s net cash used in operating activities totaled approximately $8.5 million during the nine-month period ended September 30, 2023[73] Operating Expenses - Operating expenses for the nine months ended September 30, 2023, totaled $16.84 million, down from $21.03 million in the same period of 2022, a decrease of approximately 20%[16] - Operating expenses for the three months ended September 30, 2023, decreased by $1,259,084 to $5,620,398 compared to $6,879,482 in the same quarter last year[122] - Advertising expenses for the three months ended September 30, 2023, were $248,512, a decrease of 66.8% compared to $746,965 in the same period of 2022[61] - The Company’s advertising expenses for the nine months ended September 30, 2023, were $1,075,127, down from $1,918,420 in the same period of 2022, indicating a decrease of approximately 44%[61] Debt and Financing - The Company entered into various loans totaling $1,700,000 in 2023, with interest rates of 12% and warrant coverage ranging from 50% to 100%[82] - The Company’s notes payable included a $2,000,000 convertible note entered into in February 2023, which matures in February 2024 and is non-interest bearing[79] - The company received approximately $1.9 million from the issuance of senior secured convertible notes in October 2023[114] - The company received $800,000 for the sale of convertible notes with a 12.0% interest rate and an eighteen-month term, along with 400,000 warrants at an exercise price of $0.25 per warrant[148] Future Outlook - Future profitability is contingent upon the company's ability to increase product sales and reduce manufacturing costs, which are partially fixed and cannot be easily decreased[146] - The company aims to improve stockholders' equity by increasing sales, which would enhance asset value and reduce liabilities[146] - The company has significant liquidity concerns, as it may need to raise additional equity or debt capital to fund operations[75] - The company continues to explore funding options for acquisitions, equipment purchases, and working capital through the issuance of convertible notes[148] Miscellaneous - The Company incurred shipping and handling costs of $1,279,189 for the three months ending September 30, 2023, compared to $1,268,636 for the same period in 2022, reflecting a year-over-year increase of approximately 0.16%[52] - The Company recognized share-based compensation of $300,912 and $1,025,903 during the three months and nine months ended September 30, 2023[98] - The Company has a 22.5% ownership interest in SALT Tequila USA, LLC, with the right to increase ownership to 37.5%[104] - The Company has minimum royalty payments of $165,000 due to ABG TapouT for the remaining three months of 2023[133]