UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31,2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER:001-41147
(Exact name of registrant as specified in its charter)
| Nevada | 87-3905007 |
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| (State or other jurisdiction of | (IRS Employer |
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| incorporation or organization) | Identification No.) |
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P.O. Box 78984
**Charlotte, NC 28271 **
(Address and Zip Code of principal executive offices)
(Registrant’s telephone number, including area code):**(855) 766-9463 **
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
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| Common stock, $0.001 par value | VINE | NYSE American |
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No ☒
Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
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| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
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| Emerging growth company | ☒ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐No ☒.
The aggregate market value of the registrant’s common stock held by non-affiliates was $3,207,021 as of June 30, 2023 (the last business day of the registrant’s most recently completed second fiscal quarter), based on a total of 14,190,359 shares of common stock held by non-affiliates and a closing price of $0.226 as reported on the NYSE American on June 30, 2023. For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors or 10% beneficial owners are, in fact, affiliates of the registrant.
As of March 8, 2024, Fresh Vine Wine, Inc. had 15,976,227 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
| Page |
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| PART I | 1 | |
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| ITEM 1. | Business | 1 |
| ITEM 1A. | Risk factors | 13 |
| ITEM 1B. | Unresolved staff comments | 36 |
| ITEM 1C. | Cybersecurity | 36 |
| ITEM 2. | Properties | 36 |
| ITEM 3. | Legal proceedings | 37 |
| ITEM 4. | Mine safety disclosures | 37 |
| PART II | | 38 | |
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| ITEM 5. | Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities | 38 |
| ITEM 6. | [RESERVED] | 39 |
| ITEM 7. | Management’s discussion and analysis of financial condition and results of operations | 39 |
| ITEM 7A. | Quantitative and qualitative disclosures about market risk | 48 |
| ITEM 8. | Financial statements and supplementary data | 48 |
| ITEM 9. | Changes in and disagreements with accountants on accounting and financial disclosure | 48 |
| ITEM 9A. | Controls and procedures | 48 |
| ITEM 9B. | Other information | 50 |
| ITEM 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. | 50 |
| PART III | | 51 | |
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| ITEM 10. | Directors, executive officers and corporate governance | 51 |
| ITEM 11. | Executive compensation | 54 |
| ITEM 12. | Security ownership of certain beneficial owners and management and related stockholder matters | 60 |
| ITEM 13. | Certain relationships and related transactions, and director independence | 62 |
| ITEM 14. | Principal accounting fees and services | 66 |
| PART IV | | 67 | |
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| ITEM 15. | Exhibits, financial statement schedules | 67 |
| SIGNATURES | 68 | |
i
Cautionary Statement Concerning Forward-Looking Statements
We make forward-looking statements in this Annual Report on Form 10-K. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “should,” “would,” “could,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties, and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties described in this report under the caption “Risk Factors.”
While we believe we have identified material risks, these risks and uncertainties are not exhaustive. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements in this report represent our views as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise, and we do not intend to do so.
Forward-looking statements include, but are not limited to, statements about:
| ● | our ability to complete, on a timely basis or at all, the proposed Merger (as defined below) with Notes Live, Inc. announced on January 29, 2024, pursuant to the terms and conditions of the Merger Agreement (as defined below); |
| ● | the likelihood of the satisfaction of certain conditions to the completion of the Merger and whether and when the Merger will be completed; |
| ● | the expected number of Fresh Vine securities included in the fully diluted number of outstanding shares of Fresh Vine common stock for purposes of calculating the exchange ratio for the Merger transaction; |
| ● | the continued listing of our common stock on the NYSE American pending closing of the proposed Merger, or the combined company’s ability to satisfy the initial listing standards of the NYSE American; |
| ● | our ability to engage in a sale, license, transfer, disposition, divestiture or other monetization transaction, or winding down of Fresh Vine’s current wine production business in a manner reasonably acceptable to Notes Live, Inc., which is a condition to the closing of the Merger transaction, and the terms, conditions and timing of a such a transaction; |
| ● | the relative values ascribed to Fresh Vine, Inc. and Notes Live, Inc. for purposes of the Merger transaction, and the risk that as a result of adjustments to the exchange ratio in the merger transaction, Fresh Vine stockholders or Notes Live shareholders could own less of the combined company than is currently anticipated; |
ii
| ● | the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement; |
| ● | the sufficiency of Fresh Vine’s cash and working capital to support continuing operations, to pay transaction costs through a closing of the proposed Merger transaction and to satisfy the net cash requirements that are a condition to the closing of the Merger transaction; |
| ● | the effect of the announcement, pendency or completion of the proposed Merger on Fresh Vine’s or Notes Live’s business relationships, operating results and business generally; |
| ● | the outcome of any legal proceedings that may be instituted against Fresh Vine, Notes Live or any of their respective directors or officers related to the Merger Agreement or the transactions contemplated thereby; |
| ● | the expected benefits of, and potential value created by, the Merger for the Fresh Vine stockholders and Notes Live stockholders; |
| ● | the strategy or future operations of the combined company following the closing of the proposed Merger with Notes Live, Inc.; |
| ● | the combined company’s projected financial performance; |
| ● | expectations concerning Fresh Vine’s or Notes Live’s relationships and actions with third parties; |
| ● | future regulatory, judicial and legislative changes in Fresh Vine’s or Notes Live’s industry; |
| ● | our ability to continue as a going concern in the absence of obtaining additional financing; |
| ● | our reliance on our brand name, reputation and product quality; |
| ● | our ability to adequately address increased demands that may be placed on our management, operational and production capabilities; |
| ● | the effectiveness of our advertising and promotional activities and investments; |
| ● | our ability to refocus our marketing and brand promotion efforts following the termination of the license agreements with our celebrity brand ambassadors; |
| ● | general competitive conditions, including actions our competitors may take to grow their businesses; |
| ● | fluctuations in consumer demand for wine; |
| ● | overall decline in the health of the economy and consumer discretionary spending; |
| ● | the occurrence of adverse weather events, natural disasters, public health emergencies, including the COVID-19 pandemic, or other unforeseen circumstances that may cause delays to or interruptions in our operations; |
| ● | risks associated with disruptions in our supply chain for grapes and raw and processed materials, including corks, glass bottles, barrels, winemaking additives and agents, water and other supplies; |
| ● | the impact of COVID-19 on our customers, suppliers, business operations and financial results; |
| ● | disrupted or delayed service by the distributors we rely on for the distribution of our wines; |
| ● | our ability to successfully execute our growth strategy, including continuing our expansion in the direct-to-consumer sales channel; |
iii
| ● | quarterly and seasonal fluctuations in our operating results; |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors; |
| ● | our ability to protect our trademarks and other intellectual property rights, including our brand and reputation; |
| ● | our ability to comply with laws and regulations affecting our business, including those relating to the manufacture, sale and distribution of wine; |
| ● | the risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions; |
| ● | claims, demands and lawsuits to which we are, and may in the future, be subject and the existence or sufficiency of our insurance or indemnities coverage; |
| ● | our ability to operate, update or implement our IT systems; |
| ● | our ability to successfully pursue strategic acquisitions and integrate acquired businesses; |
| ● | our ability to implement additional finance and accounting systems, procedures and controls in order to satisfy public company reporting requirements; |
| ● | the potential liquidity and trading of our securities; |
| ● | the future trading prices of our common stock and the impact of securities analysts’ reports on these prices; |
| ● | any statements of the plans, strategies and objectives of management for future operations, including the execution of integration plans and the anticipated timing of filings; and |
This Annual Report on Form 10-K includes market data and forecasts with respect to the wine industry. We have obtained this market data and certain industry forecasts from various independent third-party sources, including industry publications, reports by market research firms, surveys, and other independent sources. Some data and information are based on management’s estimates and calculations, which are derived from our review and interpretation of internal company research and data, surveys, and independent sources. We believe the data regarding the industry in which we compete and our market position and market share within this industry generally indicate size, position, and market share within this industry; however, this data is inherently imprecise and is subject to significant business, economic and competitive uncertainties and risks due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this report. Although we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
Risk Factor Summary
An investment in our common stock involves a high degree of risk. Any of the factors set forth under “Risk Factors” may limit our ability to successfully execute our business strategy. You should carefully consider all of the information set forth in this report, and, in particular, you should evaluate the specific factors set forth under “Risk Factors” in deciding whether to invest in our common stock. Among these important risks are the following:
iv
Risks related to the proposed Merger transaction
| ● | The Exchange Ratio will not change or otherwise be adjusted based on the market price of our common stock as the exchange ratio depends on, among other things, the relative valuations ascribed to us and Notes Live and not the market price of our common stock. |
| ● | Our stockholders and Notes Live’s shareholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience. |
| ● | Failure to complete the Merger may result in either us or Notes Live paying a termination fee to the other party. |
| ● | The transactions contemplated by the Merger Agreement must be approved by our stockholders and by Notes Live’s shareholders. |
| ● | Our stockholders will have a reduced ownership and voting interest in, and will exercise significantly less influence over the management of, the combined company following the closing of the Merger. |
| ● | During the pendency of the Merger, we may not be able to enter into a business combination with another party on more favorable terms because of restrictions in the Merger Agreement. |
| ● | Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals. |
| ● | There is no public market for Notes Live common stock. |
| ● | If the conditions to the Merger are not satisfied or waived, the Merger will not occur. |
| ● | If the Merger is not completed, our board of directors may decide to pursue a dissolution of our company. |
| ● | We are substantially dependent on our remaining employees to facilitate the consummation of the Merger. |
| ● | Our ability to complete the Fresh Vine Legacy Transaction is uncertain, and we cannot predict the terms and conditions of any such Fresh Vine Legacy Transaction. |
| ● | Lawsuits may be filed in the future against us and the members of our board of directors arising out of the proposed Merger. |
v
Risks related to our company and our business
| ● | We have a limited operating history and have generated limited revenue to date. |
| ● | We have not generated profits from operations to date. |
| ● | We need to hire additional executive officers and other personnel. |
| ● | The success of our existing business depends heavily on the strength of our wine brand. |
| ● | Business growth will place increased demands on our management, operational and production capabilities. |
| ● | Our advertising and promotional investments may affect our financial results but not be effective. |
| ● | We have relied heavily on celebrities to endorse our wines and market our brand pursuant to license agreements which have been terminated. |
| ● | We rely heavily on third-party suppliers and service providers. |
| ● | We face significant competition with an increasing number of products and market participants. |
| ● | Consolidation of the distributors of our wines, as well as the consolidation of retailers, may increase competition in an already crowded space. |
| ● | A reduction in consumer demand for wine could materially and adversely affect our business. |
| ● | We are heavily reliant on distributors that resell alcoholic beverages in all states in which we do business. |
| ● | Our marketing strategy involves continued expansion into the direct-to-consumer channel, which may present risks and challenges for which we are not adequately prepared. |
| ● | Inclement weather, drought, pests, plant diseases and other factors could reduce the amount or quality of the grapes available to produce our wines. |
| ● | If we are unable to obtain adequate supplies of premium juice from third-party juice suppliers, the quantity or quality of our wine production could be adversely affected. |
| ● | We may be unable to identify and obtain adequate supplies of quality agricultural, raw and processed materials, or the cost of the commodities or products may increase. |
| ● | We have been engaged in litigation with our former Chief Operating Officer. |
| ● | The impact of U.S. and worldwide economic trends and financial market conditions could materially and adversely affect our business, liquidity, financial condition and results of operations. |
| ● | If we are unable to secure and protect our intellectual property, the value of our wine brands and intellectual property could decline. |
| ● | We may not be fully insured against catastrophic perils, which may cause us to experience a material financial loss. |
| ● | From time to time, we may become subject to litigation. |
| ● | A failure of one or more of our key IT systems, networks, processes, associated sites or service providers could have a material adverse impact on business operations and financial condition. |
vi
| ● | Our failure to adequately maintain and protect the personal information of our customers or our employees in compliance with evolving legal requirements could have a material adverse effect on our business. |
Risks related to regulation
| ● | As a producer of alcoholic beverages, we are regularly the subject of regulatory reviews, proceedings and audits by governmental entities. |
| ● | New and changing environmental requirements, and new market pressures related to climate change, could materially and adversely affect our business, results of operations and financial results. |
| ● | Changes in foreign and domestic laws and government regulations to which we are currently subject may increase our costs or limit our ability to sell our wines into certain markets. |
Risks related to our common stock
| ● | Our failure to maintain compliance with NYSE American listing requirements could result in the delisting of our common stock, and our common stock could become subject to the penny stock rules. |
| ● | We incur significant legal, accounting, and other expenses associated with being a public company. |
| ● | We cannot be certain that the reduced disclosure requirements applicable to emerging growth companies will not make our shares less attractive to investors. |
| ● | We may fail to develop and/or maintain adequate internal control over financial reporting. |
| ● | Provisions of our corporate governance documents could make an acquisition of our Company more difficult and may prevent attempts by our stockholders to replace or remove our current management. |
| ● | Your percentage ownership in us may be diluted by future issuances of capital stock. |
| ● | An active, liquid trading market for our common stock may not develop. |
| ● | Sales of a substantial number of shares of our common stock in the public market could cause the market price of our common stock to drop significantly, even if our business is performing well. |
| ● | As a public company, we are subject to additional laws, regulations and stock exchange listing standards, which will result in additional costs to us and may strain our resources and divert our management’s attention. |
| ● | We have no current plans to pay cash dividends on our common stock. |
General risks
| ● | Our operating results and share price may be volatile, and the market price of our common stock may drop below the price you pay. |
| ● | We may require additional debt and equity capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances. |
vii
