What changed in this filing

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Item 1A. Risk Factors

2022-03-31 compared with 2021-03-08 · 776 added, 830 removed, 20 unchanged (99% of the section changed)

You should carefully consider the risks

described below as well as other information provided to you in this document, including information in the section of this document

entitled “Information Regarding Forward Looking Statements.”

If any of the following risks actually occur, the Company’s

business, financial condition or results of operations could be materially adversely affected, the value of the Company’s

Common Stock could decline, and you may lose all or part of your investment.

Risk Factors.

You should carefully consider the risks described

below as well as other information provided to you in this document, including information in the section of this document entitled “Cautionary

Note Concerning Forward Looking Statements.” If any of the following risks actually occur, the Company’s business, financial

condition or results of operations could be materially adversely affected, the value of the Company’s Common Stock could decline,

and you may lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

An occurrence of an uncontrollable

event such as the COVID-19 pandemic may negatively affect our operations and our ability to raise capital.

The occurrence of

an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations.

A pandemic typically results in social

distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and

professional advisors.

This event may also limit our ability to raise capital which as noted above could trigger certain rescission

rights which could result in the Company’s incurring additional debt and preferred holders who may take preference over

other common holders.

These factors, in turn, may not only impact our operations, financial condition and demand for our products

but our overall ability to react timely to mitigate the impact of this event.

Also, it may hamper our efforts to comply with our

filing obligations with the Commission.

If we are unable to continue as

a going concern, our securities will have little or no value.

Although our audited

financial statements for the year ended December 31, 2020 were prepared under the assumption that we would continue our operations

as a going concern, the report of our independent registered public accounting firm that accompanies our financial statements for

the year ended December 31, 2020 contains a going concern qualification in which such firm expressed substantial doubt about

our ability to continue as a going concern, based on the financial statements at that time.

Specifically, we have sustained recurring

losses and we have had a working capital and stockholders’

equity deficits.

These prior losses and expected future losses

have had, and will continue to have, an adverse effect on our financial condition.

In addition, continued operations and our ability

to continue as a going concern may be dependent on our ability to obtain additional financing in the near future and thereafter,

and there are no assurances that such financing will be available to us at all or will be available in sufficient amounts or on

reasonable terms.

Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.

If we are unable to generate additional funds in the future through sales of our products, financings or from other sources or

transactions, we will exhaust our resources and will be unable to continue operations.

If we cannot continue as a going concern,

our shareholders would likely lose most or all of their investment in us.

We have experienced recurring losses

from operations and negative cash flows from operating activities and anticipate that we will continue to incur significant

operating losses in the future.

We have experienced

recurring losses from operations and negative cash flows from operating activities.

We expect to continue to incur significant

expenses related to our ongoing operations and generate operating losses for the foreseeable future.

The size of our losses will

depend, in part, on the rate of future expenditures and our ability to generate revenues.

We incurred a net loss of $28.7 million for

the year ended December 31, 2020.

Our accumulated deficit increased to $61.6 million as of December 31, 2020 compared

to the prior year’s deficit of $35.6 million.

We may encounter unforeseen

expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our financial condition.

prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition.

our products do not achieve sufficient market acceptance and our revenues do not increase significantly, we may never become profitable.

Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, expand

our business, diversify our product offerings or continue our operations.

A decline in the value of our company could cause you

to lose all or part of your investment.

If we are not able to successfully

execute on our future operating plans, 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.

meet our sales goals, our available cash and working capital will decrease and our financial condition will be negatively impacted.

for our products may be adversely affected by changes in consumer preferences or any inability on our part to innovate, market

or distribute our products effectively, and any significant reduction in demand could adversely affect our business, financial

condition or results of operations.

Our beverage portfolio

is comprised of a number of unique brands with reputations and consumer imagery that have been built over time.

Our investments

in marketing as well as our strong commitment to product quality are intended to have a favorable impact on brand image and consumer

Unfavorable publicity, or allegations of quality issues, even if false or unfounded, could tarnish our reputation

and brand image and may cause consumers to choose other products.

In addition, if we do not adequately anticipate and react to

changing demographics, consumer and economic trends, health concerns and product preferences, our financial results could be adversely

Risks Related to our Business

An recurrence of the COVID-19 pandemic may negatively

affect our operations and our ability to raise capital.

The recurrence of an uncontrollable

event such as the COVID-19 pandemic may negatively affect our operations.

A pandemic typically results in social distancing, travel bans

and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors.

may also limit our ability to raise capital which as noted above could trigger certain rescission rights which could result in the Company’s

incurring additional debt and preferred holders who may take preference over other common holders.

These factors, in turn, may not only

impact our operations, financial condition and demand for our products but our overall ability to react timely to mitigate the impact

of this event.

Also, it may hamper our efforts to comply with our filing obligations with the Commission.

If we are unable to continue as a going concern,

our securities will have little or no value.

We have sustained recurring losses

and we have had a working capital and stockholders’ equity deficits.

These prior losses and expected future losses have had, and

will continue to have, an adverse effect on our financial condition.

In addition, continued operations and our ability to continue as

a going concern may be dependent on our ability to obtain additional financing in the near future and thereafter, and there are no assurances

that such financing will be available to us at all or will be available in sufficient amounts or on reasonable terms.

Our financial statements

do not include any adjustments that may result from the outcome of this uncertainty.

If we are unable to generate additional funds in

the future through sales of our products, financings or from other sources or transactions, we will exhaust our resources and will be

unable to continue operations.

If we cannot continue as a going concern, our shareholders would likely lose most or all of their investment

We have experienced recurring losses from operations

and negative cash flows from operating activities and anticipate that we will continue to incur significant operating losses

in the future.

We have experienced recurring losses from operations and negative cash

flows from operating activities.

We expect to continue to incur significant expenses related to our ongoing operations and generate operating

losses for the foreseeable future.

The size of our losses will depend, in part, on the rate of future expenditures and our ability to

generate revenues.

We incurred a net loss of $29.1 million for the year ended December 31, 2021.

Our accumulated deficit

increased to $91.0 million as of December 31, 2021, compared to the prior year’s deficit of $61.6 million.

We may encounter unforeseen expenses,

difficulties, complications, delays, and other unknown factors that may adversely affect our financial condition.

Our prior losses and

expected future losses have had, and will continue to have, an adverse effect on our financial condition.

If our products do not achieve

sufficient market acceptance and our revenues do not increase significantly, we may never become profitable.

Even if we achieve profitability

in the future, we may not be able to sustain profitability in subsequent periods.

Our failure to become and remain profitable would decrease

the value of our company and could impair our ability to raise capital, expand our business, diversify our product offerings or continue

our operations.

A decline in the value of our company could cause you to lose all or part of your investment.

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;

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 Direct-To-Retail (DTR) 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.

Demand for our products

may be adversely affected by changes in consumer preferences or any inability on our part to innovate, market or distribute our products

effectively, and any significant reduction in demand could adversely affect our business, financial condition or results of operations.

Our beverage portfolio is comprised

of a number of unique brands with reputations and consumer imagery that have been built over time.

Our investments in marketing as well

as our strong commitment to product quality are intended to have a favorable impact on brand image and consumer preferences.

not adequately anticipate and react to changing demographics, consumer and economic trends, health concerns and product preferences, our

financial results could be adversely affected.

Additionally, failure to introduce

new brands, products or product extensions into the marketplace as current ones mature and to meet the changing preferences of consumers

could prevent us from gaining market share and achieving long-term profitability.

Product lifecycles can vary and consumer preferences

and loyalties change over time.

Although we try to anticipate these shifts and innovate new products to introduce to our consumers, we

may not succeed.

Consumer preferences also are affected by factors other than taste, such as health and nutrition considerations and obesity

concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product and pricing

Sales of our products may be adversely affected by the negative publicity associated with these issues.

In addition, there

may be a decreased demand for certain products as a result of the COVID-19 outbreak.

If we do not adequately anticipate or adjust to respond

to these and other changes in consumer preferences, we may not be able to maintain and grow our brand image and our sales may be adversely

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 .

Our financial results

could be adversely impacted by changes in the cost or availability of raw materials and packaging.

Continued growth would require

us to hire, retain and develop a highly skilled workforce and talented management team.

Any unplanned turnover or our failure

to develop an adequate succession plan for current positions could erode our competitiveness.

In addition, our financial results

could be adversely affected by increased costs due to increased competition for employees, higher employee turnover or increased

employee benefit costs.

Changes in government regulation

or failure to comply with existing regulations could adversely affect our business, financial condition and results of operations.

Our business and properties

are subject to various federal, state and local laws and regulations, including those governing the production, packaging, quality,

labeling and distribution of beverage products.

In addition, various governmental agencies have enacted or are considering additional

taxes on soft drinks and other sweetened beverages.

Changes in existing laws or regulations could require material expenses and

negatively affect our financial results through lower sales or higher costs.

We compete in an industry that is

brand-conscious, so brand name recognition and acceptance of our products are critical to our success.

Our business is dependent

upon awareness and market acceptance of our products and brands by our target market, trendy, young consumers looking for a distinctive

tonality in their beverage choices.

In addition, our business depends on acceptance by our independent distributors and retailers

of our brands as beverage brands that have the potential to provide incremental sales growth.

If we are not successful in the

revitalization and growth of our brand and product offerings, we may not achieve and maintain satisfactory levels of acceptance

by independent distributors and retail consumers.

In addition, we may not be able to effectively execute our marketing strategies

in light of the various closures and event cancellations caused by the COVID-19 outbreak.

Any failure of our brand to maintain

or increase acceptance or market penetration would likely have a material adverse effect on our revenues and financial results.

Our brands and brand images are

keys to our business and any inability to maintain a positive brand image could have a material adverse effect on our results

of operations.

Our success depends

on our ability to maintain brand image for our existing products and effectively build up brand image for new products and brand

We cannot predict whether our advertising, marketing and promotional programs will have the desired impact on our

products’

branding and on consumer preferences.

In addition, negative public relations and product quality issues, whether

real or imagined, could tarnish our reputation and image of the affected brands and could cause consumers to choose other products.

Our brand image can also be adversely affected by unfavorable reports, studies and articles, litigation, or regulatory or other

governmental action, whether involving our products or those of our competitors.

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 beverages and alcoholic, most of which are marketed by companies with substantially greater financial resources

Some of these competitors are placing severe pressure on independent distributors not to carry competitive brands such

We also compete with regional beverage producers and “private label”

hydration 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.

We compete in an industry characterized

by rapid changes in consumer preferences and public perception, so our ability to continue developing new products to satisfy

our consumers’

changing preferences will determine our long-term success.

Failure to introduce

new brands, products or product extensions into the marketplace as current ones mature and to meet our consumers’

preferences could prevent us from gaining market share and achieving long-term profitability.

Product lifecycles can vary and

consumers’

preferences and loyalties change over time.

Although we try to anticipate these shifts and innovate new products

to introduce to our consumers, we may not succeed.

Customer preferences also are affected by factors other than taste, such as

health and nutrition considerations and obesity concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer

information and competitive product and pricing pressures.

Sales of our products may be adversely affected by the negative publicity

associated with these issues.

In addition, there may be a decreased demand for our product as a result of the COVID-19 outbreak.

we do not adequately anticipate or adjust to respond to these and other changes in customer preferences, we may not be able to

maintain and grow our brand image and our sales may be adversely affected.

Legislative or regulatory changes

that affect our products, including new taxes, could reduce demand for products or increase our costs.

Taxes imposed on the

sale of certain of our products by federal, state and local governments in the United States, or other countries in which we operate

could cause consumers to shift away from purchasing our beverages.

Several municipalities in the United States have implemented

or are considering implementing taxes on the sale of certain “sugared”

beverages, including non-diet soft drinks,

fruit drinks, teas and flavored waters to help fund various initiatives.

These taxes could materially affect our business and

financial results.

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

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.

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.

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.

Changes in government regulation or failure

to comply with existing regulations could adversely affect our business, financial condition and results of operations.

Our business and properties are

subject to various federal, state and local laws and regulations, including those governing the production, packaging, quality, labeling

and distribution of beverage products.

In addition, various governmental agencies have enacted or are considering additional taxes on

soft drinks and other sweetened beverages.

Changes in existing laws or regulations could require material expenses and negatively affect

our financial results through lower sales or higher costs.

We compete in an industry that is brand-conscious,

so brand name recognition and acceptance of our products are critical to our success.

Our business is dependent upon

awareness and market acceptance of our products and brands by our target market, trendy, young consumers looking for a distinctive tonality

in their beverage choices.

In addition, our business depends on acceptance by our independent distributors and retailers of our brands

as beverage brands that have the potential to provide incremental sales growth.

If we are not successful in the revitalization and growth

of our brand and product offerings, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and

retail consumers.

In addition, we may not be able to effectively execute our marketing strategies in light of the various closures

and event cancellations caused by the COVID-19 outbreak.

Any failure of our brand to maintain or increase acceptance or market penetration

would likely have a material adverse effect on our revenues and financial results.

Our brands and brand images are keys to our

business and any inability to maintain a positive brand image could have a material adverse effect on our results of operations.

Our success depends on our ability

to maintain brand image for our existing products and effectively build up brand image for new products and brand extensions.

predict whether our advertising, marketing and promotional programs will have the desired impact on our products’ branding and on

consumer preferences.

In addition, negative public relations and product quality issues, whether real or imagined, could tarnish our reputation

and image of the affected brands and could cause consumers to choose other products.

Our brand image can also be adversely affected by

unfavorable reports, studies and articles, litigation, or regulatory or other governmental action, whether involving our products or those

of our competitors.

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

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” hydration 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.

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.

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

TapouT products while launching new products, to pair with existing brand extensions that round out our diversified portfolio.

Legislative or regulatory changes that affect

our products, including new taxes, could reduce demand for products or increase our costs.

Taxes imposed on the sale of certain

of our products by federal, state and local governments in the United States, or other countries in which we operate could cause consumers

to shift away from purchasing our beverages.

Several municipalities in the United States have implemented or are considering implementing

taxes on the sale of certain “sugared” beverages, including non-diet soft drinks, fruit drinks, teas and flavored waters to

help fund various initiatives.

These taxes could materially affect our business and financial results.

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:

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;

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.

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.

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.

If we fail to maintain relationships

with our independent contract manufacturers, our business could be harmed.

We do not manufacture

our products but instead outsource the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers).

We do not own the plants or the majority of the equipment required to manufacture and package our beverage products, and we do

not anticipate bringing the manufacturing process in-house in the future.

Our ability to maintain effective relationships with

contract manufacturers and other third parties for the production and delivery of our beverage products in a particular geographic

distribution area is important to the success of our operations within each distribution area.

We may not be able to maintain

our relationships with current contract manufacturers or establish satisfactory relationships with new or replacement contract

manufacturers, whether in existing or new geographic distribution areas.

The failure to establish and maintain effective relationships

with contract manufacturers for a distribution area could increase our manufacturing costs and thereby materially reduce gross

profits from the sale of our products in that area.

Poor relations with any of our contract manufacturers could adversely affect

the amount and timing of product delivered to our distributors for resale, which would in turn adversely affect our revenues and

financial condition.

In addition, our agreements with our contract manufacturers are terminable at any time, and any such termination

could disrupt our ability to deliver products to our customers.

Increases in costs or shortages

of raw materials could harm our business and financial results.

The principal raw

materials we use include glass bottles, aluminum cans, labels and cardboard cartons, aluminum closures, flavorings, sucrose/inverted

pure cane sugar and sucralose.

In addition, certain of our contract manufacturing arrangements allow such contract manufacturers

to increase their charges to us based on their own cost increases.

These manufacturing and 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.

Moreover, in the past there have been industry-wide shortages of certain concentrates, supplements

and sweeteners and these shortages could occur again from time to time in the future, which could interfere with and delay production

of our products and could have a material adverse effect on our business and financial results.

In addition, suppliers

could fail to provide ingredients or raw materials on a timely basis, or fail to meet our performance expectations, for a number

of reasons, including, for example, disruption to the global supply chain as a result of the COVID-19 outbreak, which could cause

a serious disruption to our business, increase our costs, decrease our operating efficiencies and have a material adverse effect

on our business, results of operations and financial condition.

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 increase, we expect

to experience higher shipping rates and fuel surcharges, as well as energy surcharges on our raw materials.

to predict what will happen in the fuel markets in 2021 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,

contract manufacturing or distribution channels could have an adverse effect on our business, financial condition and results

of operations.

Our ability, through

our suppliers, business partners, contract manufacturers, 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 influenza and the novel coronavirus (COVID-19), labor strikes

or other reasons, could impair the manufacture, distribution and sale of our products.

Many of these events are outside of our

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.

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.

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;

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.

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

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.

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.

If we fail to maintain relationships with our

independent contract manufacturers, our business could be harmed.

We do not manufacture our products

but instead outsource the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers).

own the plants or the majority of the equipment required to manufacture and package our beverage products, and we do not anticipate bringing

the manufacturing process in-house in the future.

Our ability to maintain effective relationships with contract manufacturers and other

third parties for the production and delivery of our beverage products in a particular geographic distribution area is important to the

success of our operations within each distribution area.

We may not be able to maintain our relationships with current contract manufacturers

or establish satisfactory relationships with new or replacement contract manufacturers, whether in existing or new geographic distribution

The failure to establish and maintain effective relationships with contract manufacturers for a distribution area could increase

our manufacturing costs and thereby materially reduce gross profits from the sale of our products in that area.

Poor relations with any

of our contract manufacturers could adversely affect the amount and timing of product delivered to our distributors for resale, which

would in turn adversely affect our revenues and financial condition.

In addition, our agreements with our contract manufacturers are terminable

at any time, and any such termination could disrupt our ability to deliver products to our customers.

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 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 2021 and

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, contract

manufacturing or distribution channels could have an adverse effect on our business, financial condition and results of operations.

Our ability, through our suppliers,

business partners, contract manufacturers, independent distributors and retailers, to make, move and sell products is critical to our

Damage or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire

or explosion, terrorism, pandemics such as influenza COVID-19, 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.

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.

we have the exclusive rights to flavor concentrates developed with our current flavor concentrate suppliers, 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.

If we are unable to attract and

retain key personnel, our efficiency and operations would be adversely affected;

in addition, management turnover causes uncertainties

and could harm our business.

Our success depends

on our ability to attract and retain highly qualified employees in such areas as finance, sales, marketing and product development.

We compete to hire new employees, and, in some cases, must train them and develop their skills and competencies.

We may not be

able to provide our employees with competitive salaries, and our operating results could be adversely affected by increased costs

due to increased competition for employees, higher employee turnover or increased employee benefit costs.

Recently, we have

experienced significant changes in our key personnel, especially on our finance team, and more could occur in the future.

to operations, policies and procedures, which can often occur with the appointment of new personnel, can create uncertainty, may

negatively impact our ability to execute quickly and effectively, and may ultimately be unsuccessful.

In addition, management

transition periods are often difficult as the new employees gain detailed knowledge of our operations, and friction can result

from changes in strategy and management style.

Management turnover inherently causes some loss of institutional knowledge, which

can negatively affect strategy and execution.

Until we integrate new personnel, and unless they are able to succeed in their positions,

we may be unable to successfully manage and grow our business, and our financial condition and profitability may suffer.

Further, to the extent

we experience additional management turnover, our operations, financial condition and employee morale could be negatively impacted.

addition, competition for top management is high and it may take months to find a candidate that meets our requirements.

are unable to attract and retain qualified management personnel, our business could suffer.

Moreover, our operations could be

negatively affected if employees are quarantined as the result of exposure to a contagious illness such as COVID-19.

If we lose the services of

our Chief Executive Officer, our operations could be disrupted and our business could be harmed.

Our business plan

relies significantly on the continued services of Robert Nistico, our Chief Executive Officer.

If we were to lose the

services of Mr.

Nistico, our ability to execute our business plan could be materially impaired.

We are not aware of

any facts or circumstances that suggest he might leave us.

If we fail to protect our trademarks

and trade secrets, we may be unable to successfully market our products and compete effectively.

We rely on a combination

of trademark and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property

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 and trade secrets, could result in the expenditure of significant financial and managerial resources.

We regard our intellectual

property, particularly our trademarks and trade secrets to be of considerable value and importance to our business and our success,

and we actively pursue the registration of our trademarks in the United States and internationally.

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

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 licensing

strategy of our brands, we enter into licensing agreements under which we grant our licensing partners certain rights to use our

trademarks and other designs.

Although our 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.

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

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.

Litigation or legal proceedings

could expose us to significant liabilities and damage our reputation.

We may become party

to litigation claims and legal proceedings.

Litigation involves significant risks, uncertainties and costs, including distraction

of management attention away from our business operations.

We evaluate litigation claims and legal proceedings to assess the likelihood

of unfavorable outcomes and to estimate, if possible, the amount of potential losses.

Based on these assessments and estimates,

we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate.

These assessments and

estimates are based on the information available to management at the time and involve a significant amount of management judgment.

Actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates.

Our policies and

procedures require strict compliance by our employees and agents with all U.S.

and local laws and regulations applicable to our

business operations, including those prohibiting improper payments to government officials.

Nonetheless, our policies and procedures

may not ensure full compliance by our employees and agents with all applicable legal requirements.

Improper conduct by our employees

or agents could damage our reputation or lead to litigation or legal proceedings that could result in civil or criminal penalties,

including substantial monetary fines, as well as disgorgement of profits.

We are subject to risks inherent

in sales of products in international markets.

Our operations outside

of the United States, contribute to 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;

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.

If we are unable to attract and retain key personnel,

our efficiency and operations would be adversely affected;

in addition, management turnover causes uncertainties and could harm our business.

Our success depends on our ability

to attract and retain highly qualified employees in such areas as finance, sales, marketing and product development.

We compete to hire

new employees, and, in some cases, must train them and develop their skills and competencies.

We may not be able to provide our employees

with competitive salaries, and our operating results could be adversely affected by increased costs due to increased competition for employees,

higher employee turnover or increased employee benefit costs.

Recently, we have experienced

significant changes in our key personnel, especially on our finance team, and more could occur in the future.

Changes to operations, policies

and procedures, which can often occur with the appointment of new personnel, can create uncertainty, may negatively impact our ability

to execute quickly and effectively, and may ultimately be unsuccessful.

In addition, management transition periods are often difficult

as the new employees gain detailed knowledge of our operations, and friction can result from changes in strategy and management style.

Management turnover inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution.

we integrate new personnel, and unless they are able to succeed in their positions, we may be unable to successfully manage and grow our

business, and our financial condition and profitability may suffer.

Further, to the extent we experience

additional management turnover, our operations, financial condition and employee morale could be negatively impacted.

In addition, competition

for top management is high and it may take months to find a candidate that meets our requirements.

If we are unable to attract and retain

qualified management personnel, our business could suffer.

Moreover, our operations could be negatively affected if employees are quarantined

as the result of exposure to a contagious illness such as COVID-19.

If we lose the services of our Chief

Executive Officer, our operations could be disrupted, and our business could be harmed.

Our business plan relies significantly

on the continued services of Robert Nistico, our Chief Executive Officer.

If we were to lose the services of Mr.

ability to execute our business plan could be materially impaired.

We are not aware of any facts or circumstances that suggest

he might leave us.

If we fail to protect our trademarks and trade

secrets, we may be unable to successfully market our products and compete effectively.

We rely on a combination of trademark

and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights.

protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively.

enforcing or defending our intellectual property rights, including our trademarks, copyrights, licenses and trade secrets, could result

in the expenditure of significant financial and managerial resources.

We regard our intellectual property, particularly our trademarks

and trade secrets to be of considerable value and importance to our business and our success, and we actively pursue the registration

of our trademarks in the United States and internationally.

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

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 licensing strategy

of our brands, we enter into licensing agreements under which we grant our licensing partners certain rights to use our trademarks and

other designs.

Although our 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.

We may be required in the future to record a

significant charge to earnings if our goodwill or 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.

such charge would adversely impact our results of operations.

As of December 31, 2021, our goodwill totaled approximately $5.7 million.

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

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

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.

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

Litigation or legal could expose us to significant

liabilities and damage our reputation.

We may become party to litigation

claims and legal proceedings.

Litigation involves significant risks, uncertainties and costs, including distraction of management attention

away from our business operations.

We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes

and to estimate, if possible, the amount of potential losses.

Based on these assessments and estimates, we establish reserves and disclose

the relevant litigation claims or legal proceedings, as appropriate.

These assessments and estimates are based on the information available

to management at the time and involve a significant amount of management judgment.

Actual outcomes or losses may differ materially from

those envisioned by our current assessments and estimates.

Our policies and procedures require strict compliance by our employees and

agents with all U.S.

and local laws and regulations applicable to our business operations, including those prohibiting improper payments

to government officials.

Nonetheless, our policies and procedures may not ensure full compliance by our employees and agents with all

applicable legal requirements.

Improper conduct by our employees or agents could damage our reputation or lead to litigation or legal

proceedings that could result in civil or criminal penalties, including substantial monetary fines, as well as disgorgement of profits.

Additionally, 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 with respect to our alcoholic products.

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 results of operations.

We are subject to risks inherent in sales of

products in international markets.

Our operations outside of the

United States, contribute to 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;

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;

increased costs of doing business due to compliance with complex

foreign and U.S.

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.

Climate change may negatively affect

our business.

There is growing concern

that a gradual increase in global average temperatures may cause an adverse change in weather patterns around the globe resulting

in an increase in the frequency and severity of natural disasters.

While warmer weather has historically been associated

with increased sales of our products similar to ours, changing weather patterns could have a negative impact on agricultural productivity,

which may limit availability or increase the cost of certain key ingredients.

Also, increased frequency or duration of extreme

weather conditions may disrupt the productivity of our facilities, the operation of our supply chain or impact demand for our

In addition, the increasing concern over climate change may result in more regional, federal and global legal and regulatory

requirements and could result in increased production, transportation and raw material costs.

As a result, the effects of climate

change could have a long-term adverse impact on our business and results of operations.

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.

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 cyberattacks, 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.

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 April through September.

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.

Changes in accounting standards

and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect

our financial results.

The United States

generally accepted accounting principles 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.

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.

Due to the size of

the Company, we have an inherent material weakness relating to Internal Controls over Financial Reporting.

We are dependent on a distiller

in Mexico, to provide us with our finished SALT tequila product.

Failure to obtain satisfactory performance from them or a loss

of their services could cause us to lose sales, incur additional costs, and lose credibility in the marketplace.

We depend on a distiller

in Mexico, a company in Jalisco, for the production, bottling, labeling, capping and packaging of our finished tequila product.

We do not have a written agreement with our distiller in Mexico obligating it to produce our product.

The termination of our relationship

with our distiller in Mexico distiller or an adverse change in the terms of its services could have a negative impact on our business.

If our distiller in Mexico increases its prices, we may not have alternative sources of supply at comparable prices and may not

be able to raise the prices of our products to cover all, or even a portion, of the increased costs.

In addition, if our distiller

in Mexico fails to perform satisfactorily, fails to handle increased orders, or the loss of the services of our distiller in Mexico,

along with delays in shipments of products, could cause us to fail to meet orders, 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 our customers and consumers, ultimately leading to a decline in our business and results of operations.

Regulatory decisions and changes

in the legal, regulatory and tax environment where our tequila is produced and where we operate could limit our business activities

or increase our operating costs and reduce our margins.

Our business is subject

to extensive regulation regarding production, distribution, marketing, advertising and labeling of beverage alcohol products in

and in Mexico, where our tequila is produced.

We are required to comply with these regulations and maintain various permits

and licenses.

We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute,

and sell spirits.

We cannot assure you that these and other governmental regulations, applicable to our industry, will not change

or become more stringent.

Moreover, because these laws and regulations are subject to interpretation, we may not be able to predict

when, and to what extent, liability may arise.

Additionally, due to increasing public concern over alcohol-related societal problems,

including driving while intoxicated, underage drinking, alcoholism and health consequences from the abuse of alcohol, various

levels of government may seek to impose additional restrictions or limits on advertising or other marketing activities promoting

beverage alcohol products.

Failure to comply with any of the current or future regulations and requirements relating to our industry

and products, could result in monetary penalties, suspension or even revocation of our licenses and permits.

Costs of compliance

with changes in regulations could be significant and could harm our business, as we may find it necessary to raise our prices

in order to maintain profit margins, which could lower the demand for our products and reduce our sales and profit potential.

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.

Water scarcity and poor quality could negatively impact our

costs and capacity.

Water is a main ingredient in substantially all of

our products, is vital to the production of the agricultural ingredients on which our business relies and is needed in our manufacturing

It also is critical to the prosperity of the communities we serve.

Water is a limited resource in many parts of the world, facing

unprecedented challenges from overexploitation, increasing demand for food and other consumer and industrial products whose manufacturing

processes require water, increasing pollution and emerging awareness of potential contaminants, poor management, lack of physical or financial

access to water, sociopolitical tensions due to lack of public infrastructure in certain areas of the world and the effects of climate

As the demand for water continues to increase around the world, and as water becomes scarcer and the quality of available water

deteriorates, we may incur higher costs or face capacity constraints and the possibility of reputational damage, which could adversely

affect our profitability or net operating revenues in the long run.

Fluctuations in quantity and quality of grape

supply could adversely affect our business.

A shortage in the supply of quality

grapes may result from a variety of factors that determine the quality and quantity of our grape supply, including weather conditions,

pruning methods, diseases and pests, the ability to buy grapes on long and short-term contracts and the number of vines producing grapes.

Any shortage in grape production could cause a reduction in the amount of wine we are able to produce, which could reduce sales and adversely

impact our results from operations.

Factors that reduce the quantity of our grapes may also reduce their quality, which in turn could

reduce the quality or amount of wine we produce.

Deterioration in the quality of our wines could harm our brand name, reduce sales and

adversely impact our business and results of operations.

Contamination of our wines could harm our business.

We are subject to certain hazards

and product liability risks, such as potential contamination, through tampering or otherwise, of ingredients or products.

Contamination

of any of our wines could force us to destroy wine held in inventory and could cause the need for a product recall, which could significantly

damage our reputation for product quality.

We maintain insurance against certain of these kinds of risks, and others, under various insurance

However, the insurance may not be adequate or may not continue to be available at a price or on terms that are satisfactory

to us and this insurance may not be adequate to cover any resulting liability.

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.

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 cyberattacks, computer viruses, worms and other malicious software

programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our computer systems.

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.

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 the Company 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.

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.

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.

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 April through September.

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.

Changes in accounting standards and subjective

assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.

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.

Due to the size of the Company, we have an inherent material weakness

relating to Internal Controls over Financial Reporting

We are dependent on a distiller in Mexico, to

provide us with our finished SALT tequila product.

Failure to obtain satisfactory performance from them or a loss of their services could

cause us to lose sales, incur additional costs, and lose credibility in the marketplace.

We depend on a distiller in Mexico,

a company in Jalisco, for the production, bottling, labeling, capping and packaging of our finished tequila product.

We do not have a

written agreement with our distiller in Mexico obligating it to produce our product.

The termination of our relationship with our distiller

in Mexico distiller or an adverse change in the terms of its services could have a negative impact on our business.

If our distiller in

Mexico increases its prices, we may not have alternative sources of supply at comparable prices and may not be able to raise the prices

of our products to cover all, or even a portion, of the increased costs.

In addition, if our distiller in Mexico fails to perform satisfactorily,

fails to handle increased orders, or the loss of the services of our distiller in Mexico, along with delays in shipments of products,

could cause us to fail to meet orders, 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 our customers and consumers, ultimately leading to a

decline in our business and results of operations.

Regulatory decisions and changes in the legal,

regulatory and tax environment where our tequila is produced and where we operate could limit our business activities or increase our

operating costs and reduce our margins.

Our business is subject to extensive

regulation regarding production, distribution, marketing, advertising and labeling of beverage alcohol products in the U.S.

and in Mexico,

where our tequila is produced.

We are required to comply with these regulations and maintain various permits and licenses.

required to conduct business only with holders of licenses to import, warehouse, transport, distribute, and sell spirits.

We cannot assure

you that these and other governmental regulations, applicable to our industry, will not change or become more stringent.

Moreover, because

these laws and regulations are subject to interpretation, we may not be able to predict when, and to what extent, liability may arise.

Additionally, due to increasing public concern over alcohol-related societal problems, including driving while intoxicated, underage drinking,

alcoholism and health consequences from the abuse of alcohol, various levels of government may seek to impose additional restrictions

or limits on advertising or other marketing activities promoting beverage alcohol products.

Failure to comply with any of the current

or future regulations and requirements relating to our industry and products, could result in monetary penalties, suspension or even revocation

of our licenses and permits.

Costs of compliance with changes in regulations could be significant and could harm our business, as we may

find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our

sales and profit potential.

In addition, the distribution

of beverage alcohol products is subject to extensive taxation both in the United States and internationally (and, in the United

States, at both the federal and state government levels), and beverage alcohol products themselves are the subject of national

import and excise duties in most countries around the world.

An increase in taxation or in import or excise duties could also

significantly harm our sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers

to switch to lower-taxed categories of beverage alcohol.

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 route-to-consumer models 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

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 tequila products.

These risks include:

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

Changes in laws, regulations, or policies –

those that affect the production, importation, marketing, sale, or consumption of our beverage alcohol products;

Tax rate changes (including excise, sales, tariffs, 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;

of beverage alcohol products is subject to extensive taxation both in the United States and internationally (and, in the United States,

at both the federal and state government levels), and beverage alcohol products themselves are the subject of national import and excise

duties in most countries around the world.

An increase in taxation or in import or excise duties could also significantly harm our sales

revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories

of beverage alcohol.

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.

to our route-to-consumer models 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 tequila products.

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, tariffs, 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

particularly away from tequila, 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;

Changes in consumer preferences, consumption, or purchase patterns – particularly away from tequila, 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;

Route-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;

Higher costs, lower quality, or unavailability of energy, input materials, labor, or finished goods;

Route-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;

product counterfeiting, tampering, or product quality issues;

Significant legal disputes and proceedings;

government investigations

(particularly of industry or company business, trade or marketing practices);

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;

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

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.

Negative publicity related to our company, brands, marketing, personnel, operations, business performance or prospects;

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.

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.

Our limited operating history makes

it difficult to forecast our future results, making any investment in us highly speculative.

We have a limited

operating history, and our historical financial and operating information is of limited value in predicting our future operating

We may not accurately forecast customer behavior and recognize or respond to emerging trends, changing preferences or

competitive factors facing us, and, therefore, we may fail to make accurate financial forecasts.

Our current and future expense

levels are based largely on our investment plans and estimates of future revenue.

As a result, we may be unable to adjust our

spending in a timely manner to compensate for any unexpected revenue shortfall, which could then force us to curtail or cease

our business operations.

An investment in the Securities

is speculative and there can be no assurance of any return on any such investment.

An investment in the

Securities 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 common stock, or

the perception of such future sales, by some of our existing stockholders could cause our stock price to decline.

The market price of

our common stock could decline as a result of sales of a large number of shares of our common stock 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 shares in the future at a time and at a price that we deem appropriate.

There is currently a limited liquid

trading market for the Company’s Common Stock.

Our common stock is

quoted on the OTCQB tier under the symbol “SBEV.”

Trading in stocks quoted on the OTCQB is often thin and is characterized

by wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects.

We cannot assure you that there will be a market in the future for our common stock.

OTCQB securities are

not listed or traded on the floor of an organized national or regional stock exchange.

Instead, OTCQB securities transactions

are conducted through a telephone and computer network connecting dealers in stocks.

OTCQB issuers are traditionally smaller companies

that do not meet the financial and other listing requirements of a regional or national stock exchange.

Our Board of Directors may issue

and fix the terms of shares of our Preferred Stock without stockholder approval, which could adversely affect the voting power

of holders of our Common Stock or any change in control of our Company.

Our Articles of Incorporation

authorize the issuance of up to 5,000,000 shares of “blank check”

preferred stock, with no par value per share, with

such designation rights and preferences as may be determined from time to time by the Board of Directors.

Our Board of Directors

is empowered, without shareholder approval, to issue shares of preferred stock with dividend, liquidation, conversion, voting

or other rights which could adversely affect the voting power or other rights of the holders of our Common Stock.

of such issuances, the preferred stock could be used, under certain circumstances, as a method of discouraging, delaying or preventing

a change in control of our company.

Because certain principal stockholders

own a large percentage of our voting stock, other stockholders’

voting power may be limited.

As of December 31,

2020 our ten (10) largest shareholders own or controlled approximately 52% of our outstanding common stock.

If those stockholders

act together, they would have the ability to have a substantial influence on matters submitted to our stockholders for approval,

including the election and removal of directors and the approval of any merger, consolidation or sale of all or substantially

all of our assets.

As a result, our other stockholders may have little or no influence over matters submitted for shareholder

In addition, the ownership of such stockholders could preclude any unsolicited acquisition of us, and consequently,

adversely affect the price of our common stock.

These stockholders may make decisions that are adverse to your interests.

We do not expect to pay dividends

and investors should not buy our Common Stock 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 common stock if the price appreciates.

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.

Our limited operating history makes it difficult

to forecast our future results, making any investment in us highly speculative.

We have a limited operating history,

and our historical financial and operating information is of limited value in predicting our future operating results.

We may not accurately

forecast customer behavior and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore,

we may fail to make accurate financial forecasts.

Our current and future expense levels are based largely on our investment plans and

estimates of future revenue.

As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected

revenue shortfall, which could then force us to curtail or cease our business operations.

Risks Related to our Securities

An investment in our common stock is speculative

and there can be no assurance of any return on any such investment.

An investment in tour common stock

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 common stock, or the perception

of such future sales, by some of our existing stockholders could cause our stock price to decline.

The market price of our common

stock could decline as a result of sales of a large number of shares of our common stock in the market or the perception that these sales

These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares in the

future at a time and at a price that we deem appropriate.

From time to time, certain of

our stockholders may be eligible to sell all or some of their common shares by means of ordinary brokerage transactions in the open market

pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to certain limitations.

In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information

Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), and current

public information and notice requirements.

Our Board of Directors may issue and fix the terms of shares

of our Preferred Stock without stockholder approval, which could adversely affect the voting power of holders of our Common Stock or any

change in control of our Company.

Our Articles of Incorporation authorize

the issuance of up to 5,000,000 shares of “blank check” preferred stock, with no par value per share, with such designation

rights and preferences as may be determined from time to time by the Board of Directors.

Our Board of Directors is empowered, without

shareholder approval, to issue shares of preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely

affect the voting power or other rights of the holders of our common stock.

In the event of such issuances, the preferred stock could

be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our company.

issuance would be subject to terms and conditions of any current offering that may disallow any such issuance.

Because certain principal stockholders own a

large percentage of our voting stock, other stockholders’ voting power may be limited.

As of December 31, 2021, our ten (10) largest shareholders own or controlled

approximately 36.6% of our outstanding common stock.

If those stockholders act together, they would have the ability to have a substantial

influence on matters submitted to our stockholders for approval, including the election and removal of directors and the approval of any

merger, consolidation or sale of all or substantially all of our assets.

As a result, our other stockholders may have little or no influence

over matters submitted for shareholder approval.

In addition, the ownership of such stockholders could preclude any unsolicited acquisition

of us, and consequently, adversely affect the price of our common stock.

These stockholders may make decisions that are adverse to your

We do not expect to pay dividends and investors

should not buy our Common Stock 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 common stock if the price appreciates.

You should not purchase our common stock expecting to receive cash dividends.

Since we do not pay dividends, and if we are not successful in establishing an orderly trading market for our 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 pay dividends we may have trouble raising additional funds which could affect our ability to expand our business operations.

Our common stock may be considered

a “penny stock”, and thereby be subject to additional sale and trading regulations that may make it more difficult

Our common stock may

be considered to be a “penny stock”

if it does not qualify for one of the exemptions from the definition of “penny

under Section 3a51-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

stock may be a “penny stock”

if it meets one or more of the following conditions:

(i) the stock trades at a price

less than $5 per share;

(ii) it is not traded on a “recognized”

national exchange;

or (iii) is issued by a company

that has been in business less than three years with net tangible assets less than $5 million.

Our common stock could be further

diluted as the result of the issuance of additional Common Shares, convertible securities, warrants or options.

Our issuance of additional

common stock, convertible securities, options and warrants could affect the rights of our stockholders, result in a reduction

in the overall percentage holdings of our stockholders, could put downward pressure on the market price of our common stock, could

result in adjustments to conversion and exercise prices of outstanding notes and warrants, and could obligate us to issue additional

Common Stock to certain of our stockholders.

Common Shares eligible for future

sale may adversely affect the market.

From time to time,

certain of our stockholders may be eligible to sell all or some of their Common 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 stockholders may sell freely after six months subject only to the current public information requirement.

Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), and current public

information and notice requirements.

If we are not able to achieve our

objectives for our business, the value of an investment in our company could be negatively affected.

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

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 Direct-To-Retail (DTR) 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.

Any future equity or debt issuances

by us may have dilutive or adverse effects on our existing shareholders.

From time to time,

we may issue additional shares of common stock or convertible securities.

The issuance of these securities could dilute our shareholders’

ownership in our company and may include terms that give new investors rights that are superior to those of our current shareholders.

Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our common stock and in any

event may have a dilutive impact on our shareholders’

ownership interest, which could cause the market price of our common

stock to decline.

You should consult your independent

tax advisor regarding any tax matters arising with respect to the Securities.

All prospective purchasers

of the Securities 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 the Securities.

Our operations are susceptible to changing weather patterns

and other environmental factors.

Over the past several years, changing weather

patterns and climatic conditions have added to the unpredictability and frequency of natural disasters, such as hail storms, wildfires

and wind, snow and ice storms.

Any such extreme weather condition could negatively impact the harvest of grapes at our vineyards

and/or the other vineyards that supply us with grapes for our wine.

In particular, Oregon has an unpredictable rainfall pattern

particularly in early autumn.

If significantly above-average rains occur just prior to the autumn grape harvest, the quality of

harvested grapes is often materially diminished, thereby affecting that year’s wine quality.

Additionally, long-term changes in weather

patterns could adversely affect the Company, especially if such changes impacted the amount or quality of grapes harvested.

cannot anticipate changes in weather patterns/conditions, and we cannot predict their impact on our operations if they were to

As weather patterns evolve, the contracted

vineyards, have become susceptible to potential smoke damage as a result of wildfires within the region.

In extreme events, smoke

can produce effects on grapes that make them unusable in the production of wine.

The Company cannot predict smoke events or their

potential impact were they to occur.

Fluctuations in quantity and quality of grape supply could

adversely affect the Company.

A shortage in the supply of quality grapes may result from a

variety of factors that determine the quality and quantity of the Company’s grape supply, including weather conditions, pruning

methods, diseases and pests, the ability to buy grapes on long and short term contracts and the number of vines producing grapes.

Any shortage in the Company’s grape production could cause a reduction in the amount of wine the Company is able to produce,

which could reduce sales and adversely impact the Company’s results from operations.

Factors that reduce the quantity of

the Company’s grapes may also reduce their quality, which in turn could reduce the quality or amount of wine the Company

Deterioration in the quality of the Company’s wines could harm its brand name and could reduce sales and adversely

impact the Company’s results of operations.

Contamination of the Company’s wines would harm

the Company’s business.

The Company is subject to certain hazards and product liability

risks, such as potential contamination, through tampering or otherwise, of ingredients or products.

Contamination of any of the

Company’s wines could cause it to destroy its wine held in inventory and could cause the need for a product recall, which

could significantly damage the Company’s reputation for product quality.

The Company maintains insurance against certain

of these kinds of risks, and others, under various insurance policies.

However, the insurance may not be adequate or may not continue

to be available at a price or on terms that are satisfactory to the Company and this insurance may not be adequate to cover any

resulting liability.

Unresolved Staff

Splash’s physical office is located

at 1500 Cordova Rd;

Fort Lauderdale, FL 33316 and 1491 2 nd Street, Sarasota FL 34236 while our business office is located

at 1314 East Las Olas Blvd, Suite 221, Fort Lauderdale, FL 33301.

Copa’s office/manufacturing facility is located at 901

do not pay dividends, and if we are not successful in establishing an orderly trading market for our 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 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 common

stock will not be subject to potential delisting if we do not continue to maintain the listing requirements of the NYSE American.

Since June 11, 2021, our common

stock has been listed on the NYSE American, under the symbol “SBEV”.

The NYSE American 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 NYSE American), would make it more difficult for shareholders to sell our common stock and more difficult to obtain accurate

price quotations on our common stock.

This could have an adverse effect on the price of our common stock.

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 common stock is not traded on a national securities exchange.

Our common stock could be further diluted as

the result of the issuance of additional common stock, convertible securities, warrants or options.

Our issuance of additional common

stock, convertible securities, options and warrants could affect the rights of our stockholders, result in a reduction in the overall

percentage holdings of our stockholders, could put downward pressure on the market price of our common stock, could result in adjustments

to conversion and exercise prices of outstanding notes and warrants, and could obligate us to issue additional common stock to certain

of our stockholders.

Unresolved Staff Comments.

We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or

financial conditions.

We may, however, be subject to various claims and legal actions arising in the ordinary course of business from

time to time.

Splash’s physical office is located at 1500

Fort Lauderdale, FL 33316 and 1491 2 nd Street, Sarasota FL 34236 while our business office is located at 1314 East

Las Olas Blvd, Suite 221, Fort Lauderdale, FL 33301.

Copa’s office/manufacturing facility is located at 901 E.

The Dalles, OR 97058.

On April 24, 2017, a note holder filed

a complaint against the Company for a promissory note in default.

The note holder is requesting summary judgment in the amount

As of the filing date, no new information has come to our attention.

Safety Disclosures.

Legal Proceedings.

Mine Safety Disclosures.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors