Splash Beverage Group’s Financial Performance: A Comprehensive Analysis

Splash Beverage Group, Inc. is a company that seeks to identify, acquire, and build early-stage or undervalued beverage brands with strong growth potential. The company’s financial report for the three and nine months ended September 30, 2024, provides valuable insights into its performance and the challenges it faces.

Revenue Trends

• Revenues for the three months ended September 30, 2024, were approximately $1 million, compared to $5.1 million for the same period in 2023, a decrease of $4.1 million.
• The decrease in sales was due to a $0.2 million decline in beverage sales and a $3.9 million (97.6%) decrease in revenues from the company’s vertically integrated B2B and B2C e-commerce distribution platform, Qplash.
• For the nine months ended September 30, 2024, revenues were $3.6 million, compared to $16.2 million for the same period in 2023, a decrease of $12.6 million.
• The $12.6 million decrease in sales was driven by declines in both the e-commerce and beverage businesses, which decreased by $11.6 million and $1 million, respectively.

Cost of Goods Sold

• Cost of goods sold for the three months ended September 30, 2024, was $0.7 million, compared to $3.8 million for the same period in 2023, a decrease of $3.1 million.
• For the nine months ended September 30, 2024, cost of goods sold was $2.9 million, compared to $11.3 million for the same period in 2023, a decrease of $8.5 million.
• The decreases in cost of goods sold were driven by the lower sales in both the e-commerce and beverage businesses.

Operating Expenses

• Operating expenses for the three months ended September 30, 2024, were $3 million, compared to $5.6 million for the same period in 2023, a decrease of $2.6 million.
• For the nine months ended September 30, 2024, operating expenses were $10.3 million, compared to $16.8 million for the same period in 2023, a decrease of $6.5 million.
• The decreases in operating expenses were primarily due to reductions in marketing, freight, and Amazon selling fees, as well as lower non-cash expenses.

Net Loss

• The net loss for the three months ended September 30, 2024, was $4.7 million, compared to a net loss of $5.7 million for the same period in 2023, a decrease of $1 million.
• The net loss for the nine months ended September 30, 2024, was $14.7 million, compared to a net loss of $15 million for the same period in 2023, a decrease of $0.3 million.
• The decreases in net loss were due to lower debt discount expenses and operating expenses, partially offset by higher interest expenses.

Liquidity and Capital Resources

• As of September 30, 2024, the company had $456,889 in cash and cash equivalents, compared to $379,978 at December 31, 2023.
• Net cash used for operating activities during the nine months ended September 30, 2024, was $6.4 million, compared to $8.5 million for the same period in 2023.
• Net cash used for investing activities during the nine months ended September 30, 2024, was $3,235, compared to $12,613 for the same period in 2023.
• Net cash provided by financing activities during the nine months ended September 30, 2024, was $6.4 million, compared to $4.4 million for the same period in 2023.
• The company will need to raise additional equity or debt capital to fund its operations, as it faces substantial doubt about its ability to continue as a going concern for at least the next twelve months.

Strengths and Weaknesses

Strengths:

• Comprehensive distribution system in the US, with expanding international reach
• Diversified portfolio of beverage brands with growth potential
• Reduced operating expenses through cost-cutting measures

Weaknesses:

• Significant decline in revenue, particularly in the e-commerce and beverage businesses
• Ongoing net losses and limited liquidity, raising concerns about the company’s ability to continue as a going concern
• Dependence on external financing to fund operations

Outlook and Future Prospects

The financial report highlights the significant challenges Splash Beverage Group is facing, with a substantial decline in revenue and ongoing net losses. The company’s ability to secure additional financing will be crucial in determining its future prospects.

To address these challenges, the company will need to focus on strategies to revive its core beverage business and optimize its e-commerce operations. This may involve streamlining operations, improving inventory management, and exploring new revenue streams or strategic partnerships.

Additionally, the company will need to carefully manage its expenses and explore cost-cutting measures to improve its financial position. Successful execution of these strategies will be essential for Splash Beverage Group to regain its footing and return to a path of sustainable growth.

Overall, the financial report paints a challenging picture for Splash Beverage Group, with significant declines in revenue and ongoing liquidity concerns. The company’s ability to secure additional financing and implement effective turnaround strategies will be critical in determining its future viability and success.