Endovia Health Sciences, Inc. 10-K

Item 9A. Controls and Procedures. (1) Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities and Exchange Commission Act of 1934 reports is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As further discussed below, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, our chief executive officer and chief financial officer concluded that, because of certain material weaknesses in our internal control over financial reporting our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of December 31, 2020. The material weaknesses relate to the absence of in-house accounting personnel with the ability to properly account for complex transactions and a lack of separation of duties between accounting and other functions. We hired a consulting firm to advise on technical issues related to U.S. generally accepted accounting principles as related to the maintenance of our accounting books and records and the preparation of our consolidated financial statements. Although we are aware of the risks associated with not having dedicated accounting personnel, we are also at an early stage in the development of our business. We anticipate expanding our accounting functions with dedicated staff and improving our internal accounting procedures and separation of duties when we can absorb the costs of such expansion and improvement with additional capital resources. In the meantime, management will continue to observe and assess our internal accounting function and make necessary improvements whenever they may be required. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. In addition, if we are unable to successfully remediate this material weakness and if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected and we may be unable to maintain compliance with applicable stock exchange listing requirements. (2) Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that our internal control over financial reporting was ineffective as of December 31, 2020 and 2019. (3) Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934 that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. 27 PART III Item 10. Directors, Executive Officers and Corporate Governance. The following table sets forth our executive officers and directors, their ages and position(s) with the Company. Name Age Position Robert Nistico 57 CEO, and Chairman of the Board Dean Huge 64 Chief Financial Officer Justin Yorke 54 Director Peter McDonough 62 Director Directors are elected annually and hold office until the next annual meeting of the stockholders of the Company and until their successors are elected. Officers are elected annually and serve at the discretion of the Board of Directors. Robert Nistico, age 57, on March 31, 2020 became the Chief Executive Officer and a member of the board of directors of the Company. Since 2012, Mr. Nistico has served as the Chief Executive Officer and a member of the board of directors of Splash Beverage Group, Inc. Mr. Nistico also served as the president of Viva Beverages, LLC. Mr. Nistico was the fifth employee at Red Bull North America, Inc. where he worked for 10 years and served as Vice President of Field Marketing and Sr. Vice President/General Manager. Mr. Nistico was instrumental in building the Red Bull brand in North and Central America and the Caribbean from no revenues to $1.45 billion in annual revenues. Earlier, he held the brand position of Regional Portfolio V.P and Division Manager for Diageo (formerly I.D.V. / Heublein), General Sales Manager for Republic National (formerly The Julius Schepps Company) and North Texas State Manager for The E & J Gallo Winery (and a variety of other management positions for those companies). Mr. Nistico serves as a Director of Apollo Brands. Mr. Nistico has more than 27 years of experience in the beverage industry, including direct and indirect sales management, strategic brand management & marketing, finance, operations, production and logistics. Mr. Nistico holds a B.A. from the University of Colorado. Dean Huge, age 64, became the Chief Financial Officer of the Company on March 31, 2020 and since June 2018 has been the Chief Financial Officer of Splash Beverage Group, Inc. From 2017 to June 2018 Mr. Huge was the Interim Chief Financial Officer of Splash Beverage Group, Inc. Mr. Huge was the President of D&H Energy Development, Inc. where he developed a toxic waste processing plant to create electrical energy from May 2013 to May 2017. With 35 years of experience, Mr. Huge’s career started on Wall Street in the private and public sectors. Mr. Huge has been involved with in-depth work in accounting, audits, IPOs, secondary offerings and complex partnership matters. Mr. Huge’s experience includes expertise in financial services, manufacturing, distribution and SAAS type programs and he has degrees in Accounting and Finance from Northern Illinois. Justin Yorke, age 54, became a member of the board of directors of the Company on the Merger date and serves as Director of Splash Beverage Group, Inc. Since March 31, 2020, Mr. Yorke has also served as the Company’s Secretary. Mr. Yorke has over 25 years of experience in finance. Based in Hong Kong for a little over 10 years, he managed funds for a private Swiss Bank, Darier Henstch. Prior to that, Mr. Yorke managed funds for Peregrine Investments and Unifund, a high net worth family based in Switzerland. For the past 10 years, Mr. Yorke has been a partner in San Gabriel Advisors and is the manager of the San Gabriel Fund, JMW Fund and Richland Fund. He has a B.A. degree from UCLA. Mr. Yorke is the principal of WesBev LLC, which prior to the Merger was the majority shareholder of the Company. Peter J. McDonough, age 62, has served as an independent director of the Company since March 31, 2020 and previously served as a member of the board of directors of Splash Beverage Group, Inc. beginning in 2014. Mr. McDonough currently serves as Chief Executive Officer of Trait Biosciences, Inc. and previously served as President, Chief Marketing and Innovation Officer for Diageo North America from 2006 to 2015. Prior to joining Diageo, Mr. McDonough was Vice President, European Marketing at The Procter & Gamble Company from 2004 to 2006, where he led the Duracell Battery and Braun Appliance marketing organizations. From 2002 to 2004, Mr. McDonough was a member of the business school faculty and lecturer at the University of Canterbury in Christchurch, New Zealand. Prior to this academic post he served as Vice President of Marketing for Gillette North America’s Blade Razor & Grooming Products Business where he directed the market launch of industry leading shaving brands like Mach3 Turbo Razors, Venus Razors and Right Guard Extreme Antiperspirants . Earlier in his career, Mr. McDonough served as Director of North American Marketing at Black & Decker where he was involved in launching the DeWalt Power Tool Company. Mr. McDonough received a B.A. from Cornell University and a Master of Business Administration from the Wharton School of Business. 28 Family Relationships None. Committees of the Board of Directors Our shares are currently quoted on the OTCQB under the symbol “SBEV.” We have no separately designated standing audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors. The functions of those committees are currently undertaken by our Board of Directors. Our Board of Directors believes that, considering our size, decisions relating to director nominations can be made on a case-by-case basis by all members of the Board of Directors without the formality of a nominating committee or a nominating committee charter. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right to do so in the future. The Board of Directors does not have an express policy with regard to the consideration of any director candidates recommended by stockholders since the Board of Directors believes that it can adequately evaluate any such nominees on a case-by-case basis; however, the Board of Directors will evaluate stockholder recommended candidates under the same criteria as internally generated candidates. Although the Board of Directors does not currently have any formal minimum criteria for nominees, substantial relevant business and industry experience would generally be considered important, as would the ability to attend and prepare for board, committee and stockholder meetings. Any candidate must state in advance his or her willingness and interest in serving on the board of directors. Meetings of the Board of Directors Our Board held no live meetings during the year ended December 31, 2020 but we did act via board consent. Director Independence Pursuant to Item 407(a)(1)(ii) of Regulation S-K promulgated under the Securities Act, we have adopted the definition of “independent director” as set forth in Rules 5000(a)(19) and 5605(a)(2) of the rules of the Nasdaq Stock Market. The Board determined that Peter McDonough qualifies as “independent directors” pursuant to such rules. Involvement in Certain Legal Proceedings During the past ten years no current or incoming director, executive officer, promoter or control person of the Company has to its knowledge been involved in any of the following: (1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; 29 (2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; ii. Engaging in any type of business practice; or iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or Federal commodities laws; (4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; (5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; (6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; (7) Such person was the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: i. Any federal or state securities or commodities law or regulation; or ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 30 Board leadership structure and role in risk oversight Our Board consists of three members who are stated in Item 10. Code of Ethics We have adopted a business conduct and ethics that applies to our directors, officers (including our Chief Executive Officer, Chief Financial Officer an any person performing similar functions) and employees. Our Code of Ethics is available at our website at www.splashbeveragegroup.com. Item 11. Executive Compensation. The following table sets forth information for our two most recently completed fiscal years concerning all of the compensation awarded to, earned by or paid to the executive officers named below. No other employees earned a salary over $100,000 in the last two completed fiscal years. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards($) Option Awards($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings($) All Other Compensation ($) Total($) Robert Nistico 2019 275,000 137,500 350,000 367,307 - - - 1,129,807 2020 325,000 162,500 - 1,000,000 - - - 1,487,500 Dean Huge 2019 140,000 28,000 180,000 157,417 - - - 505,417 2020 150,000 30,000 105,000 75,000 - - - 360,000 William Meissner 2019 - - - - - - - - 2020 272,500 - - 437,500 - - - 710,000 Directors Compensation Our directors have not been paid any compensation for serving as Directors of the Company and there are no present plans or understandings with respect to future compensation. Name Year Fees Earned or Paid in Cash ($) Stock Awards Option(1) Awards Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation All Other Compensation Total Outstanding Equity Awards at Fiscal Year-End Name Year Fees Earned or Paid in Cash ($) Stock Awards Option(1) Awards Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation All Other Compensation Total Robert Nistico 2019 275,000 137,500 350,000 152,647 - - 915,147 2020 325,000 162,500 - 2,799,999 - - 3,287,499 Dean Huge 2019 140,000 28,000 180,000 65,420 - - 413,420 2020 150,000 30,000 364,000 210,000 - - 754,000 William Meissner 2019 - - - - - - - 2020 272,500 - - 1,224,999 - - 1,497,499 31 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth certain information with respect to the beneficial ownership of our common stock as of December 31, 2020, and as adjusted to reflect the sale of common stock in this offering, for: ● each of our current directors and executive officers; ● all of our current directors and executive officers as a group; and ● each person, or group of affiliated persons, who beneficially owned more than 5% of our common stock. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole investment power with respect to all shares of common stock that they beneficially owned, subject to applicable community property laws. Name and Address of Beneficial Owner Beneficial Ownership(1)(2) Approximate Percent Owned Robert Nistico 5.2 % 5.2 % Justin Yorke 24.7 % 24.7 % Peter McDonough 0.1 % 0.1 % Dean Huge 1.2 % 1.2 % 5% or greater owners: James Sjoerdsma 5.7 % 5.7 % * less than one percent. Item 13. Certain Relationships and Related Transactions and Director Independence. The following is a description of the transactions and series of similar transactions, since January 1, 2020, that were a participant or will be a participant, in which: ● transactions in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the smaller reporting company’s total assets at year-end for the last two completed fiscal years; and ● any of our directors, executive officers, holders of more than 5% of our capital stock (which we refer to as “5% stockholders”) or any member of their immediate family had or will have a direct or indirect material interest, other than compensation arrangements with directors and executive officers. Item 14. Principal Accounting Fees and Services. Audit $ 120,352.00 Audit related 101,389.00 Tax 2,750.00 Total $ 224,491.00 PART IV Item 15. Exhibits and Financial Statement Schedules. The following documents are filed as part of this Annual Report on Form 10-K: 1. Financial Statements. See the Financial Statements starting on page F-1. 2. Exhibits. The exhibits listed in the Exhibit Index, which appears immediately following the signature page and is incorporated herein by reference, and filed as part of this Annual Report on Form 10-K. 32 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SPLASH BEVERAGE GROUP, INC. (Registrant) Date: March 8, 2021 By: /s/ Robert Nistico Name: Robert Nistico Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Act of 1934 this Annual Report on Form 10-K was signed by the following persons on behalf of the Registrant and in the capacities and on the dates stated: Signature Title Date /s/ Robert Nistico Robert Nistico President, Chief Executive Officer and Director March 8, 2021 (Principle Executive Officer) /s/ Dean Huge Dean Huge Chief Financial Officer, Treasurer, Secretary March 8, 2021 (Principal Financial and Accounting Officer) /s/ Justin Yorke Justin Yorke Director March 8, 2021 /s/ Peter McDonough Director March 8, 2021 Peter McDonough 33 EXHIBIT INDEX Exhibit No. Description of Exhibit 2.1 Agreement and Plan of Merger dated December 31, 2019 by and among Canfield Medical Supply, Inc., SBG Acquisition, Inc., and Splash Beverage Group, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K dated January 7, 2020) 2.2 Form of Amendment No. 1 to the Agreement and Plan of Merger (incorporated by reference herein to Exhibit 10.1 filed with Form 8-K filed with the SEC on October 7, 2020) 3.1 Articles of Incorporation (incorporated by reference herein to Exhibit 3.1 filed with Form S-1 filed with the SEC on July 12, 2012) 3.2 Bylaws (incorporated by reference herein to Exhibit 3.2 filed with Form S-1 filed with the SEC on July 12, 2012) 3.3 Certificate of Amendment of Articles of Incorporation of Canfield Medical Supply, Inc. 4.1 Description of Registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (filed herewith). 10.1 Canfield Medical Supply, Inc. 2020 Long-Term Incentive Compensation Plan (incorporated by reference herein to the Schedule 14C Information Statement filed on June 8, 2020) 10.2 Form of Replacement Promissory Note (incorporated by reference herein to Exhibit 2.1 filed with Form 8-K filed with the SEC on April 6, 2020) 10.3 Form of Subscription Agreement (incorporated by reference herein to Exhibit 10.1 filed with Form 8-K filed with the SEC on August 18, 2020) 10.4 Form of Promissory Note Conversion Agreement (incorporated by reference herein to Exhibit 10.2 filed with Form 8-K filed with the SEC on April 6, 2020) 10.4 Form of Preferred Stock Conversion Agreement (incorporated by reference herein to Exhibit 10.3 filed with Form 8-K filed with the SEC on April 6, 2020) 10.5 Form of SBG Warrant (incorporated by reference herein to Exhibit 10.4 filed with Form 8-K filed with the SEC on April 6, 2020) 10.6 Form of New Warrant (incorporated by reference herein to Exhibit 10.5 filed with Form 8-K filed with the SEC on April 6, 2020) 10.7 Form of Warrant (incorporated by reference herein to Exhibit 10.2 filed with Form 8-K filed with the SEC on August 18, 2020) 10.8 Form of Amendment No. 1 the Promissory Note Conversion Agreement (incorporated by reference herein to Exhibit 10.2 filed with Form 8-K filed with the SEC on October 7, 2020) 10.9 Form of Amendment No. 1 to the Preferred Stock Conversion Agreement (incorporated by reference herein to Exhibit 10.3 filed with Form 8-K filed with the SEC on October 7, 2020) 10.10 Revenue Loan and Security Agreement dated (incorporated by reference herein to Exhibit 10.1 filed with Form 8-K filed with the SEC on December 31, 2020) 34 10.11 Asset Purchase Agreement dated (incorporated by reference herein to Exhibit 10.2 filed with Form 8-K filed with the SEC on December 31, 2020) 10.12 Convertible Promissory Note dated (incorporated by reference herein to Exhibit 10.3 filed with Form 8-K filed with the SEC on December 31, 2020) 10.13 An Agreement Regarding Other Accounts Payable dated (incorporated by reference herein to Exhibit 10.4 filed with Form 8-K filed with the SEC on December 31, 2020) 10.14 Martin Employment Agreement dated (incorporated by reference herein to Exhibit 10.5 filed with Form 8-K filed with the SEC on December 31, 2020) 10.15 Non-Competition, Non-Solicitation and Confidential Information Agreement (incorporated by reference herein to Exhibit 10.6 filed with Form 8-K filed with the SEC on December 31, 2020) 1016 Form of Subscription Agreement (incorporated by reference herein to Exhibit 10.1 filed with Form 8-K filed with the SEC on January 21, 2021) 10.17 Form of Warrant (incorporated by reference herein to Exhibit 10.2 filed with Form 8-K filed with the SEC on January 21, 2021) 10.18 Form of Subscription Agreement (incorporated by reference herein to Exhibit 10.1 filed with Form 8-K filed with the SEC on February 2, 2021) 10.19 Form of Warrant (incorporated by reference herein to Exhibit 10.2 filed with Form 8-K filed with the SEC on February 2, 2021) 21.1 Subsidiaries 23.1 Consent of Independent Registered Public Accounting Firm 31.1 Certification by CEO (filed herewith electronically) 31.2 Certification by CFO (filed herewith electronically) 32.1 Certification of CEO pursuant to 18. U.S.C. Section 1350 as adopted, pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (filed herewith electronically) 32.2 Certification of CFO pursuant to 18. U.S.C. Section 1350 as adopted, pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (filed herewith electronically) *101.INS Inline XBRL Instance Document (filed herewith) *101.SCH Inline XBRL Taxonomy Extension Schema (filed herewith) *101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith) *101.LAB Inline XBRL Taxonomy Extension Label Linkbase (filed herewith) *101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith) *101.DEF Inline XBRL Taxonomy Definition Linkbase (filed herewith) *104 Cover Page Interactive Data File (embedded within the Inline XBRL document filed as Exhibit 101) * Interactive data files are furnished but not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended. 35