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Splash Beverage Group (SBEV)
XASE:SBEV
Risk Overview Q3, 2025
Risk Distribution
36% Finance & Corporate
20% Production
18% Ability to Sell
16% Legal & Regulatory
5% Tech & Innovation
5% Macro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Splash Beverage Group Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q3, 2025
Main Risk Category
Finance & Corporate
With 16 Risks
Finance & Corporate
With 16 Risks
Number of Disclosed Risks
44
-12
From last reportS&P 500 Average: 31
44
-12
From last reportS&P 500 Average: 31
Recent Changes
8Risks added
20Risks removed
12Risks changed
Since Sep 2025
8Risks added
20Risks removed
12Risks changed
Since Sep 2025
Number of Risk Changed
12
+12
From last reportS&P 500 Average: 3
12
+12
From last reportS&P 500 Average: 3
See the risk highlights of Splash Beverage Group in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 44
Finance & Corporate
Total Risks: 16/44 (36%)Above Sector Average
Share Price & Shareholder Rights8 | 18.2%
Share Price & Shareholder Rights - Risk 1
Although we are now in compliance with the continued listing requirements of the NYSE American, our failure to maintain continued compliance could result in the delisting of our common stock and adversely affect its future stock price.Added
Share Price & Shareholder Rights - Risk 2
Because the shares of common stock and warrants are being issued in a private placement transaction, shares of common stock so issued or issuable under the warrants will be restricted securities unless and until they may be resold by investors under an effective registration statement or pursuant to Rule 144.Added
Because the securities being sold to investors in the offering are being offered and sold pursuant to an exemption from the registration provisions of the Securities Act, such securities will be restricted securities. This means that the shares of common stock issued or issuable to investors cannot be resold by the investors until the registration statement pursuant to the Registration Rights Agreement has been filed and declared effective, or the conditions of Rule 144 under the Securities Act are satisfied. Investors will therefore be subject to the risks associated with an inability to sell or transfer shares unless and until one of these conditions has been met, which risk exacerbates the risks described elsewhere herein regarding the potential for stock price decline, dilution and other negative impacts on your investment.
Share Price & Shareholder Rights - Risk 3
We have issued multiple classes of preferred stock and other securities of the Company that will result in dilution to existing stockholders upon their conversion and exercise.Changed
The issuance of common stock upon conversion of our Series A-1, our Series B, and our Series C will result in immediate and substantial dilution to the interests of other stockholders. These series of preferred stock are convertible into a total of up to 17,393,787 shares of common stock, subject to beneficial ownership limitations and certain adjustments. Further, the Series A-1 and Series B each allow the holders to convert at a reduced conversion price equal to 80% of the average of the five trading day volume weighted average price calculated as of the date an applicable conversion notice,subject to a floor price of $1.25. Although conversions are subject to stockholder approval and thereafter holders may not receive shares of common stock exceeding 4.99% of our outstanding shares of common stock immediately after affecting such conversion, this restriction does not prevent holders from receiving shares up to the 4.99% limit, selling those shares, and then receiving the rest of the shares it is due, in one or more tranches, while still staying below the 4.99% limit. In addition, outstanding Warrants issued in connection with the sales of Series A-1 since June 2025 entitle the holders thereof to receive additional shares of common stock upon exercises thereof. If holders choose to do this, it will cause substantial dilution to the then holders of our common stock. Additionally, the continued sale of shares issuable upon successive conversions will likely create significant downward pressure on the price of our common stock as holders sell material amounts of our common stock over time and/or in a short period of time. This could place further downward pressure on the price of our common stock and in turn result in holders receiving an ever-increasing number of additional shares of common stock upon conversion of its securities, and adjustments thereof, which in turn will likely lead to further dilution, reductions in the exercise/conversion price of holders securities and even more downward pressure on our common stock, which could lead to our common stock becoming devalued or worthless.
The Company's stockholders are voting on whether to approve the conversions and exercises of the Series A-1, Series B, Series C and Warrants at the Company's Annual Meeting scheduled for October 31, 2025 and, if such conversions and exercises are approved, it would result in substantial dilution to investors in the offering. While the Company has yet to file a registration statement registering the resale of the shares of common stock underlying these securities, it has a contractual obligation to do so, and even if such a registration statement is not filed and declared effective, the holders will be eligible to use Rule 144 under the Securities Act subject to applicable holding periods. Conversions and exercises and/or sales of the underlying shares by the holders of these securities will dilute investments in the offering, and would likely have a negative effect on the Company's stock price.
Further, these series of preferred stock contain dividend rights and liquidation preferences in favor of the holders thereof that may operate to limit or reduce the rights of holders of our common stock, including with respect to dividends or liquidation events that may occur in the future. For example, the dividend rights of the preferred stock would reduce the Company's ability to declare dividends while the preferred stock is outstanding. Further, the senior ranking in liquidation preference for the preferred stockholders would operate to reduce or eliminate any amounts which may otherwise have been available to common stockholders upon a dissolution or winding up of the Company. These terms could have a material adverse effect on the holders of our common stock.
Share Price & Shareholder Rights - Risk 4
The market price of our common stock has been volatile and may continue to be volatile.Changed
The market price and trading volume of our common stock has been volatile in recent periods, and it may continue to be volatile. For example, thus far in 2025, our common stock has traded as low as $1.21 and as high as $13.60 per share. We cannot predict the price at which our common stock will trade in the future, and the price of our common stock may decline. The price at which our common stock trades may fluctuate significantly and may be influenced by many factors, including our financial results, developments generally affecting the coffee industry, general economic, industry and market conditions, the depth and liquidity of the market for our common stock, fluctuations in coffee prices, investor perceptions of our business, reports by industry analysts, negative announcements by our customers, competitors or suppliers regarding their own performances, and the impact of other Risk Factors discussed herein.
Share Price & Shareholder Rights - Risk 5
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.
The Company intends to register the resale of initially up to 10,000,000 shares of common stock pursuant to an equity line of credit entered into on September 19, 2025. In addition, pursuant to Registration Rights Agreements entered into in connection with our sale of Series A-1 Convertible Redeemable Preferred Stock ("Series A-1") and accompanying Warrants, Series B Convertible Redeemable Preferred Stock ("Series B"), as well as subsequent convertible promissory notes, we are obligated to register the resale of an additional up to 3,677,983 shares of common stock issuable to holders of those securities. See also the Risk Factor titled "We have issued multiple classes of preferred stock and other securities of the Company that will result in dilution to existing stockholders upon their conversion and exercise."
In general, 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 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.
Sales of substantial amounts of our common stock in the public market, or the perception that such sales might occur, could adversely affect the market price of our common stock. We cannot predict if and when selling stockholders may sell such shares in the public market.
Share Price & Shareholder Rights - Risk 6
Because certain principal stockholders own a large percentage of our voting stock, other stockholders' voting power may be limited.As of October 2025, a relatively small number of stockholders own or controlled a substantial portion 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 of directors, amendment to our Articles of Incorporation, approvals required by the Rules of the NYSE American 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 stockholder 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 interests.
Share Price & Shareholder Rights - Risk 7
Our common stock could be further diluted as the result of the issuance of additional common stock, convertible securities, warrants or options.We expect to need to issue additional shares of common stock and/or common stock equivalents in the near term in order to meet our capital requirements. 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.
Share Price & Shareholder Rights - Risk 8
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 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 stockholder 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.
Accounting & Financial Operations4 | 9.1%
Accounting & Financial Operations - Risk 1
Our results of operations may fluctuate from quarter to quarter for many reasons, including seasonality.Accounting & Financial Operations - Risk 2
Material weaknesses in our internal control over financial reporting may cause us to fail to timely and accurately report our financial results or result in a material misstatement of our consolidated financial statements.A material weakness exists over our financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis. In our Form 10-Q for the six months ended June 30, 2025, we identified material weaknesses in the Company's internal controls related to a limited segregation of duties due to our limited resources and insufficient accounting employees, resulting in a lack of controls to ensure maintenance of documentation supporting transactions recorded in the Company's accounting records. Management has determined that this control deficiency constitutes a material weakness which could result in material misstatements of significant accounts and disclosures that could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected. In addition, due to limited staffing, we are not always able to detect minor errors or omissions in reporting. While management has taken actions in an effort to remediate the material weakness, the material weakness over our financial reporting or the discovery of additional material weaknesses and their possible effect on our financial and operating results, could have material and adverse effect on our stock price and investor confidence.
Accounting & Financial Operations - Risk 3
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 before reaching profitability.Changed
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, our ability to execute our business plan and our ability to generate revenues. We incurred a net loss of $23,756,551 million including non-cash items and an accumulated deficit of $155,832,277 including non-cash items for the year ended December 31, 2024. We had a net loss of $9,886,045 including non-cash items for the three months ended September 30, 2025 and an accumulated deficit of $178,284,467 as of September 30, 2025.
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 we do not generate significant revenues, we may never become profitable. Even if we achieve profitability in the future, for which we can provide no assurance, 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.
Accounting & Financial Operations - Risk 4
With the $20 million of stated value included in our Series C Convertible Preferred Stock, we expect to include substantial indefinite-lived intangible assets on our balance sheet at September 30, 2025, which could result in our incurring material future impairment expenses in the future.Added
On June 25, 2025, we acquired our Water Assets by issuing the seller shares of our Series C Convertible Preferred Stock. The Series C contains a stated value of $20 million. Under Generally Accepted Accounting Principles, we will be required to account for this issuance as of June 30, 2025 by including $20 million of non-current assets on our balance sheet. Annually we will be required to review this asset and make a judgment as to whether it is impaired. If we are required to impair part or all of the Water Assets in the future, it will be recorded as a non-cash charge to our results of operations. A large impairment charge could cause investors to sell our stock resulting in a decrease in our future prevailing market price.
Debt & Financing1 | 2.3%
Debt & Financing - Risk 1
Because we lack the capital to acquire inventory and market our products, we have generated no revenue since March 2025, making our ability to remain in operation more difficult, and there are substantial doubts as to our ability to continue as a going concern.Added
Corporate Activity and Growth3 | 6.8%
Corporate Activity and Growth - Risk 1
We incur significant additional costs as a result of being a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.Added
Corporate Activity and Growth - Risk 2
Our strategic initiatives including acquisitions and divestitures may not be successful and may divert our management's attention away from operations and could create general customer uncertainty.We have begun to explore strategic alternatives to our beverage business. Our growth strategy is based in part on growth through strategic initiatives including both acquisitions and divestitures of brands and assets, which poses a number of risks. We may not be successful in identifying appropriate acquisition candidates, achieving targeted values as part of a disposition, consummating an acquisition or divestiture on satisfactory terms, integrating any newly acquired or expanded business with our current operations, or separating a divested business or commingled operation effectively. We may issue additional equity, incur long-term or short-term indebtedness, spend cash or use a combination of these for all or part of the consideration paid in future acquisitions or expansion of our operations, which may not be available to us on terms we find advantageous or acceptable, if at all. In addition, subject to any requirements in the agreements governing our outstanding indebtedness, we may have significant discretion in how we employ the consideration received in a divestiture and our management may not apply such consideration in a way that is ultimately accretive to our business.
The execution of our strategic initiatives will likely entail incurring goodwill assets or repositioning or similar actions that in turn require us to record impairments, restructuring and other charges. Any such charges would result in additional expense. We cannot guarantee that any future business acquisitions or divestitures will be pursued or that any acquisitions or divestitures that are pursued will be consummated.
Additionally, any acquisition or disposition (including the successful integration and separation of operations, products and personnel) may place a significant burden on our management and other internal resources. The diversion of management's attention, and any difficulties encountered in such a process, could harm our business, financial condition, and operating results.
Corporate Activity and Growth - Risk 3
Failure to successfully integrate acquired assets or businesses, or if integrated, failure to further the Company's business strategy, may result in the Company's inability to realize any benefit from such acquisition or other adverse consequences.Changed
In June 2025 we acquired the Water Assets in Costa Rica in exchange for 20,000 shares of a newly designated Series C Convertible Preferred Stock ("Series C") having a stated value of $20 million. Unidentified liabilities or other issues may arise with respect to the Water Assets, which could expose us to litigation, unexpected costs, regulatory actions and other negative events that could materially harm our business and financial condition. Further, we intend for the Water Assets to be a critical part of our business plan moving forward, subject to accessing the necessary capital, and the Water Assets may not yield the benefits expected or desired for our business. In addition, we may face challenges and utilizing the Water Assets, particularly given their location in a foreign country relative to our operations in the U.S., and given that the Water Rights are not accounted for as a separate business and will therefore require the investment of resources to monetize and integrate into our other operations. For example, the assets' location in Costa Rica require us to hire personnel and comply with laws in a foreign country, and to establish a production and distribution channel unique to this business which we do not currently have in place for our prior or legacy products,and we may be unable to effectively manage these efforts without incurring extensive costs or at all. These early activities will include site visits, planning and negotiating with bottlers. Further, the time needed to construct our own facility to extract water is estimated to take at least one year, if we are able to obtain the necessary capital we will need to rely on third parties for extraction, production, and distribution and pay additional expenses leading to reduced gross profit margins. In the meantime, we intend to use third parties to assist in extraction and distribution efforts, and we may be unable to negotiate favorable terms, maintain relationships or prevent uncontrollable events which may arise from our use of third parties, exposing us to risk. If we are unable to extract the water in sufficient quantities, comply with regulatory requirements or otherwise develop and meet demand for our water brands, we may be unable to launch operations from the Water Assets or generate material revenue therefrom in the near term or at all. Further, the long-term commercial success of this venture will depend on our ability to timely and in a cost-effective manner pursue and develop an infrastructure and network to extract and distribute water in high quantities and in compliance with applicable regulatory and commercial requirements. If we are unsuccessful in navigating these challenges with respect to the Water Rights, it could fail to result in benefits to our Company, and we could be materially adversely affected by any of the foregoing events.
In general, the consummation and integration of any acquired business, product or other assets into the Company may be complex and time-consuming and, if such businesses and assets are not successfully integrated, the Company may not achieve the anticipated benefits, cost-savings or growth opportunities. Furthermore, these acquisitions and other arrangements, even if successfully integrated, may fail to further the Company's business strategy as anticipated, expose the Company to increased competition or other challenges with respect to the Company's products or geographic markets, and expose the Company to additional liabilities associated with an acquired business, technology or other asset or arrangement. There are no guarantees that the Company will successfully consummate such acquisitions, and even if the Company consummates such acquisitions, the procurement of applications for licenses required to sell or distribute related products may never result in the grant of a license by any state or local governmental or regulatory agency and the transfer of any rights to licenses may never be approved by the applicable federal, state and/or local governmental or regulatory agency.
Production
Total Risks: 9/44 (20%)Above Sector Average
Manufacturing1 | 2.3%
Manufacturing - Risk 1
If we encounter product recalls or other product quality issues, our business may suffer.Employment / Personnel1 | 2.3%
Employment / Personnel - Risk 1
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.Supply Chain4 | 9.1%
Supply Chain - Risk 1
Water scarcity and poor quality could negatively impact our costs and capacity.Supply Chain - Risk 2
If we fail to maintain relationships with our independent contract manufacturers, our business could be harmed.We do not manufacture tequila but have instead outsourced the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers). We have not begun bottling water, and when we do begin bottling water it will be through third parties. We do not own the plants or the majority of the equipment required to manufacture and package these brands. 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. Our agreements with third parties enable such parties to terminate our relationship within a relatively short period of time. We may not be able to maintain our relationships with 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.
Further, if third parties on which we depend to manufacture products increases their prices, we may not be able to secure alternative suppliers, and may not be able to raise the prices of our products to cover all or even a portion of the increased costs. Also, any failure by these third parties to perform satisfactorily or handle increased orders, or delays in shipping, could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues. We are also dependent upon such third parties continued liquidity and factors which affect such third parties ability to operate including:
- adverse weather event and other acts of God;- labor uncertainties including the availability of employees;- environmental compliance;- foreign exchange exposure;- quality control;- political instability;- contract enforcement;- intellectual property protection; and - transportation disruptions.
In turn, this could cause us to lose credibility in the marketplace and damage our relationships with distributors, ultimately leading to a decline in our business and results of operations. If we are not able to renegotiate these contracts on acceptable terms or find suitable alternatives, our business, financial condition or results of operations could be negatively impacted.
Supply Chain - Risk 3
If we experience disruption within our supply chain, manufacturing or distribution channels, it could have an adverse effect on our business, financial condition and results of operations.Changed
Once we re-commence sales, our ability, through our suppliers, business partners, 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, labor strikes, geopolitical events 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.
Supply Chain - Risk 4
We expect to 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.Changed
In the past, we have purchased our flavor concentrate from various flavor concentrate suppliers, and seek to continually develop other sources of flavor concentrate for certain of our products. Generally, flavor suppliers hold the proprietary rights to their flavor-specific ingredients. 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, and in the event of a termination or failure to perform by these suppliers, 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.
Costs3 | 6.8%
Costs - Risk 1
The volatility of energy prices and increased regulations may have an adverse impact on our gross margin.Changed
Costs - Risk 2
If we do not adequately manage our inventory levels, our operating results could be adversely affected.Once we re-commence sales, we will need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis. Our inventory supply will depend available cash and 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. Additionally,our maintenance of inventory as needed to meet demand is contingent upon our access to sufficient capital, and due to our limited liquidity we have in the past and expect to continue in the future to be unable to obtain sufficient inventory unless and until we can gain access to the necessary capital. These challenges and the related risks will be heightened by recent developments such as the imposition of tariffs and any impacts thereof on us, the prices of supplies we utilize and the products we sell, delays and supply chain disruptions, similar factors relating to our vendors, and consumers and their demand for products at varying price points and quantities. 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.
Costs - Risk 3
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, polyethylene terephthalate, fiber-board, labels and cardboard cartons, flavorings and sweeteners. These component and ingredient costs are subject to fluctuation and environmental regulation. If there were to be substantial increases in the prices of these products, to the extent that they cannot be recouped through increases in the prices of finished beverage products, it would increase our operating costs. If our supply of these raw materials is impaired or if prices increase significantly due to tariffs or any other reason, it could affect the affordability of our products and reduce revenues.
If we are unable to secure sufficient ingredients or raw materials including glass, sugar, and other key supplies at acceptable prices, within a reasonable timeframe, at the locations needed or in general, we might not be able to satisfy demand on a short-term basis.
Ability to Sell
Total Risks: 8/44 (18%)Above Sector Average
Competition2 | 4.5%
Competition - Risk 1
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.Competition - Risk 2
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 markets. 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, or in maintaining and expanding upon the brands we offer, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers. Any failure of our brands to maintain or increase acceptance or market penetration would likely have a material adverse effect on our revenues and financial results.
Demand1 | 2.3%
Demand - Risk 1
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.Sales & Marketing4 | 9.1%
Sales & Marketing - Risk 1
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.Sales & Marketing - Risk 2
It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.Once we re-commence sales, we plan to use independent distributors who will not be 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 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 including by such distributors and national partners locating competitive brands to meet their demand.
Sales & Marketing - Risk 3
We could face issues including the risk of contamination of our products and/or counterfeit or confusingly similar products.Added
The success of our brands depends upon the positive image that consumers have of them. Contamination, whether arising accidentally or through deliberate third-party action, or other events that harm the integrity or consumer support for our brands, could affect the demand for our products. Contaminants in raw materials purchased from third parties and used in the production of our products or defects in the production processes, including third party manufacturers on which we rely and over which we lack control, could lead to low beverage quality, as well as illness among, or injury to, consumers of our products and could result in reduced sales of the affected brand or all of our brands and potentially serious damage to our reputation for product quality, as well as product liability claims. Also, to the extent that third parties sell products that are either counterfeit versions of our brands or brands that look like our brands, consumers of our brands could confuse our products with products that they consider inferior. This could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales and operations. For example, a key marketing feature of our Water Assets is the purity and health features of the water we have access to through extraction rights. Further, subject to receipt of the necessary funding, we intend to withdraw, bottle and distribute the water through the use of third party vendors over which we will have limited or no control outside of contractual rights. To the extent, due to our own actions or the actions of others, the water we sell becomes contaminated, it could materially adversely affect that line of business and brand, and our ability to generate material revenue and reputation could be materially adversely affected.
Contamination of any of our products could force us to destroy tequila or water held in inventory and could cause the need for a product recall, which could significantly damage our reputation for product quality.
Sales & Marketing - Risk 4
We are dependent on a distiller in Mexico to provide us with our finished tequila product. Failure to obtain satisfactory performance from them or a loss of their services could cause us to lose future sales, incur additional costs, and lose credibility in the marketplace.Changed
The Company estimates that it requires a minimum of approximately $2 million of additional capital to begin pursuing its Chispo business strategy. If we can raise sufficient capital to pursue this business strategy, we will depend on a distiller in Jalisco, Mexico for the tequila certification, 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 or an adverse change in the terms of its services could have a negative impact on our business. If our distiller in 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 we lose the services of our distiller in Mexico, along with delays in shipments of products, it 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.
Brand / Reputation1 | 2.3%
Brand / Reputation - Risk 1
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.Legal & Regulatory
Total Risks: 7/44 (16%)Below Sector Average
Regulation3 | 6.8%
Regulation - Risk 1
Because our business is subject to many regulations, noncompliance is costly.Changed
Regulation - Risk 2
Government regulations, any changes thereto and/or any failure by us to comply with these regulations, could adversely affect our business, financial condition and results of operations.Changed
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 certain non-alcoholic beverages as well as alcoholic beverages. Further, we are subject to licensing and permitting requirements in the various jurisdictions in which we conduct business. Changes in existing laws or regulations or any failure by us to fully comply with these varying and evolving requirements could require us to incur material expenses and negatively affect our financial results, including through lower sales, higher costs negative publicity and other adverse consequences.
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 revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol.
Regulation - Risk 3
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 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. For example, 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. This 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 our sales.
Litigation & Legal Liabilities3 | 6.8%
Litigation & Legal Liabilities - Risk 1
Our business, operations, financial position and timelines, could be materially adversely affected by government action and geopolitical conflicts.Changed
Litigation & Legal Liabilities - Risk 2
If we are subject to litigation, we may incur significant liabilities and litigation expenses.Added
We have been subject to and may in the future become party to litigation. 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 that could result in civil, administrative or criminal penalties, including substantial monetary fines, as well as disgorgement of profits.
Additionally, there has been public attention directed at the alcoholic beverage 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, financial condition and results of operations.
Our industry faces the possibility of litigation including class actions alleging that the continued excessive use or abuse of beverage alcohol has caused death or serious health problems or that we failed to adequately warn consumers of the risks of alcohol consumption. It is also possible that governments could assert that the use of alcohol has significantly increased government-funded healthcare costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type.
For example, lawsuits have been brought in a number of states alleging that alcoholic beverage manufacturers and marketers have improperly targeted underage consumers in their advertising. Plaintiffs in these cases allege that the defendants' advertisements, marketing and promotions violate the consumer protection or deceptive trade practices statutes in each of these states and seek repayment of the family funds expended by the underage consumers. While we have not been named in these lawsuits, we could be named in similar lawsuits in the future. Any class action or other litigation asserted against us could be expensive and time-consuming to defend against, depleting our cash and diverting our personnel resources and, if the plaintiffs in such actions were to prevail, our business could be harmed significantly.
Litigation & Legal Liabilities - Risk 3
We will be exposed to product liability or other related liabilities which could have significant negative financial repercussions on our solvency.Added
Although we maintain general liability insurance and take certain other measures in an effort to reduce the risk of liabilities, these measures may not be sufficient for us to successfully avoid or limit product liability or other related liabilities. The Company has not generated any revenue since March 2025, and it does not currently carry product liability insurance. The Company intends to acquire product liability insurance prior to shipping any products, but may not have the capital to do so. The Company carries property insurance for its locations in Fort Lauderdale, FL and Sarasota, FL. Further, any contractual indemnification and insurance coverage we have in the future from parties supplying our products is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by these suppliers. Extensive product liability claims could be costly to defend and/or costly to resolve and could harm our reputation or business, and we may face uninsured or underinsured claims and liabilities due to the factors described above.
Environmental / Social1 | 2.3%
Environmental / Social - Risk 1
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.Tech & Innovation
Total Risks: 2/44 (5%)Below Sector Average
Trade Secrets1 | 2.3%
Trade Secrets - Risk 1
If we fail to protect our trademarks and trade secrets, we may be unable to successfully market our products and compete effectively.Cyber Security1 | 2.3%
Cyber Security - Risk 1
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.Macro & Political
Total Risks: 2/44 (5%)Below Sector Average
International Operations1 | 2.3%
International Operations - Risk 1
We are subject to risks inherent in sales of products in international markets.Capital Markets1 | 2.3%
Capital Markets - Risk 1
International trade developments, including U.S. trade tariffs and retaliatory tariffs, could adversely impact our business.Changed
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.