What changed in this filing

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Item 1A. Risk Factors

2023-03-31 compared with 2022-03-31 · 166 added, 138 removed, 658 unchanged (32% of the section changed)

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.

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

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.

Our business could be materially and adversely

affected by the lingering impact of the global COVID-19 pandemic or other epidemics and outbreaks.

The COVID-19 pandemic had disrupted and affected our business

operations, which has led to business and supply chain disruptions.

The lingering effects of the pandemic are likely to continue to disrupt

our business and supply chain in the future.

For example, our ability to gain new retail authorizations could be impacted by restrictions

in retail outlets and our ability to generate sales and brand awareness in bars and restaurants could be impacted if restrictions are

place on these establishments.

However, given the unpredictable nature of COVID-19 and its variants, it is difficult, if not

impossible, to predict, whether any government-imposed restrictions will be reimposed at previous levels or enhanced in one or more ways

impacting our business operations or those of third parties upon which we rely.

The COVID-19 pandemic, including associated

business interruptions and recovery, as well as other possible epidemics or outbreaks of other contagions could result in a material adverse

impact on our or our current or anticipated customers’ or suppliers’ business operations, including reduction or suspension

of operations in the U.S.

or other parts of the world.

Our design and engineering operations, among others, cannot all be conducted remotely

and often require on-site access to materials and equipment.

We have customers, suppliers, and partners with international operations,

and our customers, suppliers, and partners also depend on suppliers and manufacturers worldwide, which means that our business and prospects

could be affected by the lingering effects of the COVID-19 pandemic anywhere in the world.

Depending upon the duration of the

lingering effects of the COVID-19 pandemic and the associated business interruptions, our customers, suppliers, manufacturers,

and partners may suspend or delay their engagements with us.

We and our customers’ and suppliers’ response to the lingering

effects of the COVID-19 pandemic may prove to be inadequate and they may be unable to continue their respective operations in

the manner they had prior to the outbreak or the worsening of the outbreak, and we may consequently endure interruptions, reputational

harm, delays in our product development, and shipments, all of which could have an adverse effect on our business, operating results,

and financial condition.

In addition, we cannot assure you as to the timing of the economic recovery given the lingering effects of the

pandemic, which could have a material adverse effect on our target markets and our business.

If we are unable to continue as a going concern,

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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 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 $21.7

million for the year ended December 31, 2 022 .

Our accumulated deficit increased to $112.3

million as of December 31, 2 022 , compared to the prior year’s deficit of $90.6

We may encounter unforeseen expenses,

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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.

the sales volume and gross margins for our products;

efficiencies in operations;

our operating expenses to sufficiently support operating activities;

fixed costs at or near current levels;

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.

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

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

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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

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 affected.

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.

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.

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.

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.

Changes in government regulation or failure

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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.

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

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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.

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

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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

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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

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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

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such charge would adversely impact our results of operations.

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

As of December 31, 2022, our intangible assets totaled approximately $5.81million.

If we encounter product recalls or other product

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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,

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, and

consumer preferences or otherwise.

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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

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 process.

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.

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 change.

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

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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

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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;

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

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;

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;

Insufficient protection of our intellectual property rights;

Product recalls or other product liability claims;

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

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;

Significant legal disputes and proceedings;

Significant legal disputes

and proceedings;

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 talent.

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 talent.

Uncertainty in the financial markets and other

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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.

Our Articles of Incorporation

authorize the issuance of up to 5,000,000 shares of “blank check” preferred stock, with par value $0.001 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.

Any such 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

As of December 31, 2022, our ten

(10) largest shareholders own or controlled approximately 35.5% 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.

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.

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.

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.

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.

There can be no assurances that our common

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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

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Legal Proceedings.

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.

Mine Safety Disclosures.

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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