Greetings. Welcome to the Splash Beverage Group 2022 fourth quarter and full year conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, John McNamara. You may begin. Thanks, Holly. Good morning, everybody. Thank you again for joining us for the Splash Beverage Group's 2022 fourth quarter and full year financial results conference call. With us this morning from management are Robert Nistico, Chairman and Chief Executive Officer, and Ron Wall, Chief Financial Officer. Before we begin, we would remind everybody that certain matters discussed during today's call or during the answers Q&A session that may be provided to investors may constitute forward-looking statements as defined under the federal securities laws. These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's annual report on Form 10-K filed with the SEC. Copies of these documents are available on the SEC's website, as well as on the company's website. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. I'd now like to turn the call over to Robert Nistico, Chief Executive Officer. Go ahead, Robert. Thank you, John, and good morning, everybody, and welcome to our very first conference call. We are extremely excited. Feels like the company's growing up. A lot of work has taken place to get us to this point, and we're very, very excited about the future. We also believe we're at a very interesting inflection point, which I'll get into in a second. You know, we've all listened to a million of these things throughout our careers. You know, everybody on this call, I'm quite sure, is capable of reading financial statements on their own. We're not gonna spend a ton of time digging into line item by line item. You know, there's also some room for that for Q&A, and I'm sure most of you have read these statements already. I'm really more interested in sharing with you, sort of the, resetting the vision for the future of Splash and really what our objectives are, more so than rehashing the history. History is important. I got to tell you know, we're very, very proud of the fact that, you know, we've said, we've done just about everything we've said. This is a great step forward for us. You know, $18 million-$19 million in revenue. We've been now on the national exchange, NYSE American, as you all know, for a year, and we're looking forward to growing our business and shareholder value as time goes on. You know, a little bit more about kind of where we are and where we're headed. It's important everybody understands that this is brick and mortar, and it takes a long time to get things set up. Once you do, it's a very, very, very fun business. As you all know, there can be tremendous cash events, you know, when a company exits a beverage brand, and that's sort of the eye on the prize that we all have here. As we grow our legacy brands, which is very, very important, because that is really what's driving our distribution efforts. Distribution, most of you heard me say this a bunch of times, but distribution is extremely important. It sounds like that's common sense, but you'd be surprised how many people miss that. Setting up our plug-and-play scenario for our legacy brands and then potential acquisitions is critical. We have done a very, very good job of that. I think you all know we have a formal relationship with AB InBev, we don't stop there. We can distribute outside that network if we choose to. The key thing here is the legacy brand growth, as I mentioned, also potential acquisitions. I get a lot of questions about that. Acquisition is a really important subject. You know, we obviously in a public environment have to be cautious of what we say and what we don't say. I've said publicly many times, we're constantly evaluating acquisition targets. We have numerous ones under evaluation right now as we speak. We've actually evaluated some and turned them down. We're very serious about that. If you look at the organization we put together, our management team, our board, Bill Meissner, our President and Chief Marketing Officer, been president and CEO of many companies. You know, Ron Wall, who's also sitting across the desk from me here, coming out of William Grant, running finance and accounting in 50 plus countries. Our board, myself, it's really a pretty good group of people. Our objective here is to grow this thing well beyond $18 million-$19 million. That said, we are laser focused on both those subjects. Also part of our legacy brand growth, I get a lot of questions about Pulpoloco and our acquisition regarding that brand. It's a very, very important acquisition for us, even though it's small. We're still dealing with the Spanish consulate and the Spanish government because it's a Spanish entity. It takes a little bit more time than we want it to. The exclusive rights to CartoCan is a very important part of our growth in the future. That's a long-term project. More to come on that, I want everybody to understand that is very much in play. We really look forward to that because for two reasons. It can really help us ratchet down our cost of goods on raw materials for certain brands that packaging works for. Also what it does, well, we will have excess capacity for that, and we will, our intention will be to sell that excess capacity when the time comes. Lots of really cool projects on the docket, if you will, for 2023. I think I'll pause there, and I'll let Ron run through, the basics on the numbers, and then we'll take some questions, and then I'll close up with a few last comments. Everybody, here's Ron Wall. Thank you, Robert. Good morning, everybody. As Robert mentioned, revenues for the full year have increased. Our net revenues were $18.1 million, up from $11.3 million in 2021, a 60% increase. On a quarterly basis, the fourth quarter revenues increased to $4.8 million, up from $3.1 million in the prior year or a 56% increase. The increases were primarily due to sale increases from our company's e-commerce division distribution platform, Qplash. On an annual basis, our gross margins came in at 32.7%, which is a two percentage point decline from 2021 of 36.6%, but eight percentage points ahead of 2020. The decline in 2022 versus 2021 is predominantly driven by inflationary pressures that we're experiencing. Net losses in 2022 were $21.7 million, down from 2021 losses of $29.1 million. Our cash operating expenses increased by 36% in 2022, with the three key drivers accounting for 87% of that increase being our marketing expenses to drive sales and freight to customers and Amazon fees, which increase as our revenues grow. We used approximately $14.1 million of cash in operations during 2022. This is down slightly from 2021, when they were $14.6 million. As of December 31, 2022, the company had total cash and cash equivalents of $4.4 million compared to $4.2 million at the same time in 2021. That's the brief overview on the financials. With that, we're gonna be happy to take any questions you have. Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Your first question for today is coming from Scott Buck at H.C. Wainwright. Hey, good morning, guys. Thanks for taking my questions. Robert, a couple on distribution. First, can you talk a little bit about, you know, maybe some of the agreements that you've signed recently and what the opportunity there is for future sales? Second part of that is, you know, what's the pipeline look like for additional distribution agreements? Yeah. Hey, Scott, thank you for the question. As I mentioned over and over again, distribution is everything. Yeah, we have signed significant agreements over the last four, five, six months, really building out that network. It's also important people understand that, you know, most of these distribution agreements are what we call DSD, direct store delivery, distribution agreements with primarily AB ONE for the most part. We also have similar Coors. We also have KEHI in the Southwest, excuse me. We're covered pretty well. We also have agreements with most of the broadliners. Distribution is very important. Our ability, as I mentioned earlier, to plug-and-play is very good. That really is the key to future success, and that's one of the reasons I say all the time we're at an inflection point here. As best I can answer your question, I can't say distributor by distributor how many doors they have and what that means for us. It would be speculation. Having the ability to focus on our existing brands and any potential new brands and to plug those into that system is extremely valuable. We're nowhere near the end of the runway on this. We're really actually just getting started. I know it's a slow process, but we're extremely pleased with where we are with our distribution abilities at this point. No, that's helpful, Robert. I appreciate that. Second, can you talk a little bit about the rollout of TapouT Energy? I know that's coming up here on the horizon. Yeah. I believe Bill Meissner is on the line also. Bill, would you mind? Would you like to speak to that? He's really running that project, 24/7 right now. Sure. We're extremely excited about that. Cans are in production, and they should be available to our contract manufacturer by the end of this month, and we're hoping to roll this out the last week of April, first week or so of May. With great optimism, this brand has excellent gross margins and a lot of excitement from the distributor base that we have today. I appreciate that. Just last one from me, guys. I've spoken a little bit about improving some of the efficiencies and cost of goods, helping, you know, expand gross margins a little bit. Can you speak to that at all? Yeah, absolutely. We're at that point now where we have enough of a foundation in the business, and the business is growing. We can start drilling down a little deeper on many subjects. One might be raw materials, specifically themselves. If you look at the, I'm making this as an example, our SALT tequila bottle, the coin that's affixed to the front of the bottle, that was a fairly expensive decorative piece, and we're working on finding a better source for those sorts of you know, for those individual raw components as the brands accelerate. The portfolio approach to the whole business, that's really what that's about. where we can, we buy the same materials from the same vendors over the entire portfolio. As all brands grow, efficiencies grow and costs get ratcheted down. In addition to that, we're also sensitive to manufacturing locations. TapouT's a great example. We're now producing TapouT in multiple locations across the country, to really ratchet down freight out and ultimately fuel costs and freight costs. We're at that point right now where we really can start making material adjustments, and we look forward to gaining tremendous efficiencies for the rest of this year and into 2024. That's helpful. Appreciate the time, guys. Thank you very much, and congrats on the year. Thanks, Scott. Your next question is coming from Cobb Sadler at Catamount. Hey, guys. Thanks, thanks for the update call, and congrats on doing your first one. I had a question on... Look, the Q1's been over for 10 days. You gotta have some idea how it looks. Can you share with us, you know, what kind of growth metrics you're seeing or, you know, 'cause the inflection? Does it start during the quarter? Is it gonna start after the quarter? Is it gonna start midyear? Just give us an update of what you saw in Q1. I've a couple follow-ups. I appreciate the question very much. Hello, Cobb, by the way. Hey, how you doing? Good. Yeah. So, you know, we're not giving guidance here on this call, so I'll be a little bit general in my response to you. What I say to people, before we release the 10-K as an example, we, you know, we've done a pretty good job of continuing momentum and growth quarter-to-quarter, year-over-year, and we don't see any reason for that to change. Along with the very clear communication that I've given with respect to distribution and brand placements, we are expecting to see acceleration for each brand throughout the year, and that's just a function of putting more product on shelves. The other positive thing that I can say to help answer your question is, you know, once one chain brings something on, one brand on, a lot of times it's easier to get the second brand on. If you recall about a week or so ago, we formally announced our relationship with 7-Eleven and Pulpoloco Sangria. Once that happens, they're much more open to see other brands authorized for that particular chain. You can expect to see more of that this year as well, quarter to quarter to quarter. All those things equal up to meaningful growth, and that's as vague and specific as I can be. Okay. Okay, it sounds like as far as accelerating growth, though, what that's gonna take is multiple brands taking off, kind of the flywheel effect, basically. You get a couple brands selling into a particular chain and then you add. That's gonna be the growth. But do you have any metrics on velocity? I mean, what have you seen so far? Could you just take a customer and as an example and let us know what you've seen, you know, from the first sale to that customer to kind of today? You know, if you have one that's starting to mature or getting close to maturing, or is it just too early days to know, to do? Yeah. Yeah. It's I'm not evading your question, but it's awfully early to get any real meaningful data out of that. Now, I can say when we, when we activated Circle K on the West Coast of the U.S. with Copa di Vino, the same-store sales in that example were very, very good, and that is allowing us to present other brands into that, into that environment. I know exactly what you're looking for. Yep. I can tell you that the early returns here are good, but we don't have enough data back from the chains yet to really give a hard evaluation on that. I can tell you anecdotally, so far so good. Okay. On your acquisition strategy, I think you outlined that you were on your last, on your, in your, actually it was a presentation you did. You have three kind of targets that have made it through the funnel and, or at least, most of the funnel. I think you're at, like, 90% completion for one. I mean, could you tell us, like, what the timeframe is on that and what needs to happen? What's in the remaining 10% of them to sign the dock? Like, how long is it gonna be and what's the hold up, on the one you're closest to? Just a little more generally about the pipeline, the two others and any other pipeline that you may be close with and how you'll finance it. Thanks. Yeah. Those are pretty specific questions. You know, yeah, I gave an example of, you know, there are constantly brands coming across our desk. I mean, same for Bill, same for myself, same for Ron. We, you know, some, you know, just to give you what I gave the other day was just a general example, not a specific example on a specific brand. You know, we might be just opening a deck on one brand to evaluate, and others we might be really vetting those brands, and we might be 90% through that vetting process. That doesn't mean we're 90% through acquiring the brand. I hope that's clear. Again, I appreciate the question very much. Yep. The best way I can re-answer that is the board that we have, is really a who's who in beverage and business. Same with our executive team. I think everybody knows all of our resumes. We're not here to build an $18 million or $19 million company. Acquisition is a very important subject to us, like I said earlier, and we continue to evaluate brands. We've gotten all the way to the end on another brand and decided last minute it wasn't the right thing. It's, it's the only way I can really answer that question. And, you know, there are 1 million ways to finance things. There's just so many options, that would really depend on the brand, the segment that it's in, the M&A environment at the time we go to close. We're sensitive to all subjects around every bit of every acquisition. That is a very important part of our growth. We're. I'll stop there because I'm trying to answer your question as best I can, but it's a little too specific. Where are you on on other brand or other brands that you have being bottled in the CartoCan? When do you think you'll have excess capacity or maybe new drinks, but when do you think you'll have excess capacity for CartoCan and for sale? How would you handle that? Would you license it to someone else, or would you just manufacture the cans via partner and sell those? I think you do have a cost advantage there on the CartoCan, right? It's like $0.07 or, you know, $0.05-$0.12 or something like that when, you know, aluminum's, what, $0.20 or something. There's gotta be demand for it, and what, how, what would you plan for it? That'll be it. Thanks. Yeah. No, no problem. Yeah, the vision for that is varied. I mean, we could do 100 different things with that. A lot of that would depend on our relationship with CartoCan. The simplest way to look at it, and it's simply an example, would be to sell that excess capacity and pocket that margin. What I like about that, I'm not saying that's exactly how it's gonna go, make that very clear. What I like about that example is it's almost a contract manufacturing model. There's very little risk involved to that. If company X says, "Hey, we love this fully sustainable biodegradable package. We'd like to put something in it." We're sort of like, "Okay, great. Give us your labeling information, and we'll produce it for you," and it gets paid for up front, and we put X cents in our pocket. It's a nice model. Another way to handle that is to license, to use your term, off to another group and let them handle it. You could even have a royalty arrangement. There's a million ways to do it. It's hard to know what we're gonna do with that yet, as it's a little bit early. I don't have a specific timeline for you, but it's definitely something we're working towards as fast as we can. I have given an example, which is an actual live example, when I was in front of the Walmart buyer a while back. That particular buyer asked if we would be willing to sell them some excess capacity for their private label liquid. I said, "maybe," you know. Yeah. We know demand is out there, right? We don't have enough specifics to give you specifics yet, but we are definitely working towards it. We believe it'll be a really cool piece of our portfolio moving forward. Thanks for your comments and questions, Cobb. Okay. All right. Thanks a lot. Appreciate it. Your next question for today is coming from Joseph Crivelli at Jag Funds. Hey, Robert. Thank you for having the call. Nice to hear you. My question here is, has market conditions on the acquisition side changed on the multiples, and has that caused more of a delay as the multiples for acquiring has changed in the last 12 to 24 months? Well, you can... Every situation is positive, has a positive and a negative edge to the sword, right? You can argue that in a more challenging capital market environment, you might see a compression in multiples, which we believe we have. Mm-hmm. which is a great, good, we can create. Hello, Joe. Just like I forgot to say hi to Cobb. Hello, Joe. Apologize. Hey, Robert. No problem. yeah. Yeah, I mean, it can... The idea here with the portfolio approach is very simple. In positive economic environments, maybe that's the time to exit a brand. In more negative economic and capital market environments- Sure. That's probably a time to buy brands and acquire brands. You know, we all know the capital markets flipped, you know, a little over, about almost a year ago, and it changed the environment. No, we're still laser focused on acquisition and none of that's changing anything. It has to be the right thing. It has to play nice in the sandbox, if you will, in the front of the business, in the back of the business. We gain the most efficiencies, and it makes sense for our brands and our distribution network. We're not gonna force something in unless it's the right thing. No, I agree. I know the conditions have changed, which is, could be very accretive to the company going forward. The other question I had is, in the distribution front, are there markets where you feel growth is, could come down in about 8 to 10 months? In those areas, are you focused on, like, more penetration in Northeast or Southwest? What pockets of areas geographically you seem to be focused on in the next 8 to 12 months? Yeah, I mean, I think you can plot that out based on our press releases. You know, clearly the Southwest and the Southeast are focus areas for us. As we expand and given certain chain authorizations, et cetera, that also helps drive us into some more areas in the Northeast. Yeah, it's there's a pretty specific approach to this. Right. A lot of it's chain driven. Okay. Well, thanks for having the call. I really appreciate it. Our pleasure. Your next question is coming from Gary Getz, a Private Investor. Hi, Robert. Good to finally speak with you. Hello, Gary. I have a couple of questions. First, is on this issue of exclusivity of CartoCan. Could you provide some clarity on it? Is it, like, for internal use or, I don't think, and maybe you could correct me, I don't think you have the exclusive worldwide rights for it. Like for example, if somebody like Coke or Pepsi wanted to use it, they would go directly to the owner of CartoCan. Or maybe. Yeah. No, no. We've never... Sorry. No, we've never said we had global exclusive rights to CartoCan. With the acquisition of Copa di Vino, the founder of Copa di Vino was importing Pulpoloco from its founder based in Madrid. As a result, those exclusive rights for the United States ported to our company when we completed the Copa di Vino acquisition. Since then, we've met with CartoCan people, and we intend to purchase the entire brand, well, just like we did with we made the press releases, just like we did with Copa di Vino. The plan is for us to expand the usage of that outside the US. No, we don't have global. You have U.S. rights to it? Like, like for example, if a major beverage company wanted to use CartoCan in the U.S., would they have to come to you? Our understanding of that agreement is, yes, we have exclusive rights in the U.S. Does that mean, a large strategic could figure a way around that? I have no idea. I can't speak to another organization. Okay. well, that's major. That's major if you have exclusive U.S. rights to CartoCan. Yeah, we're pretty excited about it. I'm very pleased to hear that. That could be like the diamond in the rough of Splash Beverage along with TapouT. My next couple of questions are financial re-related. I noticed that the gross margin in the fourth quarter was about 60%. That it looks like an anomaly, but maybe you have some insight into that and what you see it to be going forward. Hi, Gary, this is Ron Wall. I'll take that one on. In the fourth quarter, we did have some one-off adjustments. We wanted to be more transparent about the freight cost from ourselves to our customers and our Amazon selling fees. Those had been reported as part of cost of goods in the first three quarters. In the fourth quarter, we made the adjustment to put those into SG&A and highlighted that in the 10-K with the amounts associated so that the full year number represents the gross margins of the company. The key reasons for doing that, one is that transparency to get a good understanding of our gross margins without the volatility of that cost related to freight from ourselves to customers that's been moving around for the last 18, 24 months. On the Amazon selling fees, as it tends to, grow similar to the revenues on our e-commerce to have that put out as a selling cost in SG&A. That does show Q4, as a kinda one-off higher margin to make that annual adjustment. Going forward on the, on the quarterly basis and the full year, it'll all be apples to apples for comparative purposes. We have reached the end of the question-and-answer session, and I will now turn the call over to Robert Nistico for closing remarks. Thank you very much. We appreciate everybody's questions. Nice to hear from everyone and everybody else who's on the call. You know, I do wanna just say a couple more things before we close up. You know, management, the board, we are extremely excited about our progress. Yes, there's more work that needs to be done. We are executing, and we're out in the marketplace every day working hard for all of us. You know, I'll tell you know, I mentioned the term inflection point more than once. I, you know, I really believe we are at that point right now where brands really start to gain traction and accelerate. I think everybody will be pleased, you know, over the next, you know, six, 12, and 18 months, as you keep up with our execution moving forward. You know, I talk a lot about distribution being everything, and it really is. You know, most beverage companies, every beverage company has to survive. Nobody cares about Bill, Ron, and Robert's juice if it's not on shelf. We're really good about putting things on shelf. We specifically are excited about Publix grocery chain in the southeast with TapouT. We started loading those stores recently. We're getting to the end of that distribution project, a few more counties, a couple more states to work on, but, we're just, you know, we're really at a place and where we can start to execute against all of our brands and hopefully some great acquisitions coming down the line. That's it. We appreciate everybody's support very, very, very much. Everybody's been so great, and we're excited to help deliver more shareholder value in the future. We look forward to more and more positive results throughout the year. Thank you, everybody, for coming and listening, and that's it.