Item 1.01 Entry into a Material Definitive Agreement.
On December 24, 2020, Splash Beverage Group, Inc. (the "Company") entered into a
Revenue Loan and Security Agreement (the "Loan and Security Agreement") by and
among the Company, Robert Nistico ( as a "Key Person"), each of the subsidiary
guarantors from time to time party thereto (each a "Guarantor", and,
collectively, the "Guarantors"), and Decathlon Alpha IV, L.P. (the "Lender). The
Loan and Security Agreement provided for a revenue-based credit facility of
$1,578,237 (the "Gross Amount") with the Lender (the "Credit Facility").
The Credit Facility matures on the earliest of (a) August 15, 2025, (b)
immediately prior to a change in control of the Company, and (c) acceleration of
the obligations, such as upon the occurrence of any event of default under the
Loan and Security Agreement. If the Credit Facility is paid off after 6 months,
the Company will pay interest at a rate starting at 0.5 times the amount
advanced under the Credit Facility and up to 1.00 times the amount advanced if
the Credit Facility is paid off after more than 24 months have elapsed from the
effective date. The Credit Facility requires monthly payments, commencing on
February 15, 2021, equal to the product of all revenue for the immediately
preceding month and applicable revenue percentage, which is 3.75% in 2021 and
2022, 4.0% in 2023 and 2024. If the annual revenue is not equal to at least 80%
of projected revenue, the applicable revenue percentage for all subsequent
payments will automatically increase by 0.50%, without notice from the lender.
Pursuant to the Loan and Security Agreement dated December 24, 2020, the Company
instructed the Lender to pay $1,500,000 of the Gross Amount under the Credit
Facility towards the purchase prices in connection with the Company's purchase
of certain assets of Copa di Vino Corporation, an Oregon company, as fully
described below, and the balance of the Gross Amount was used for to pay off a
line of credit for one of the Company's other subsidiaries in order to make the
Lender the first-in-line creditor. Pursuant to the Loan and Security Agreement,
the Company granted the Lender a security interest in all of its assets as
listed therein.
Borrowings under the Credit Facility are subject to, among other things, a
minimum borrowing/collateral base and pursuant to which the Company granted the
Lender a security interest in its assets (as set forth and subject to the Loan
and Security Agreement) as collateral under the Credit Facility. In addition,
the Credit Facility requires the Company to, among other things (i) make
representations and warranties regarding the collateral as well the Company's
business and operations, (ii) agree to certain indemnification obligations and
(iii) agree to comply with various affirmative and negative covenants.
Pursuant to the Loan and Security Agreement, the Company, Robert Nistico and the
Lender entered into a Non-Competition, Non-Solicitation and Confidential
Information Agreement. Pursuant to this Agreement, Mr. Nistico agreed that while
he is employed by the Company and for a period of six months after such
employment he will not engage in any business activity that completes with the
business of the Company.
As of December 24, 2020, the Company, Splash Beverage Group, Inc. ("Splash
Nevada"), a Nevada corporation and wholly-owned subsidiary of the Company, Copa
di Vino Wine Group, Inc. (the "Buyer", and together with the Company and Splash
Nevada, the "Buyer Parties"), a Nevada corporation and wholly-owned subsidiary
of Splash Nevada, entered into an asset purchase agreement (the "APA") with Copa
di Vino Corporation (the "Seller"), pursuant to which the Company, through the
Buyer, purchased material assets of the Seller and assumed certain liabilities
related to trade payables and expenses as set forth in the APA for a total
purchase price of $5,980,000, payable in the combination of $2,000,000 in cash
("Cash Consideration"), $2,000,000 convertible promissory note (the "Convertible
Note") to Seller and certain shares of the Company's common stock subject to
certain revenue hurdles (the "Revenue Hurdles") as described below. The APA
provides that no later than sixty (60) days after one of the Revenue Hurdles has
been reached and the introductions to Seller's Anheuser Busch distributors have
been completed, the Company shall issue to Seller one of the following amounts
of its shares of common stock, depending on which Revenue Hurdle the Buyer
actually realizes: (a) if the monthly combined net revenue as determined under
generally accepted accounting principles generated by the Buyer and its
subsidiaries for each of two consecutive months during the twelve (12) month
period following the closing of this transaction equates to or exceeds
$455,194.00 (the "First Revenue Hurdle"), then the Company shall issue the
number of its shares of common stock equal to $1,980,000 divided by the Average
Trading Price (as defined below); or (b) if the First Revenue Hurdle was not
achieved, but the monthly combined net revenue generated by the Buyer and its
subsidiaries for each of two consecutive months during the eighteen (18) month
period following the closing of this transaction equates to or exceeds
$455,194.00 (the "Second Revenue Hurdle"), then the Company shall issue the
number of Parent Shares equal to $1,000,000 divided by the Average Trading
Price. The "Average Trading Price" means the volume weighted average price for
thirty (30) consecutive trading days of the Company's common stock as quoted on
a stock exchange or over-the-counter market and reported by Bloomberg LLP,
immediately before the date of issuance of such shares. In accordance with the
APA, upon closing of this transaction, Seller shall train Buyer and its staff on
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
10.1 Revenue Loan and Security Agreement dated December 24, 2020
10.2 Asset Purchase Agreement dated December 24, 2020
10.3 Convertible Promissory Note dated December 24, 2020
10.4 An Agreement Regarding Other Accounts Payable dated December 24,
2020
10.5 Martin Employment Agreement dated December 24, 2020
10.6 Non-Competition, Non-Solicitation and Confidential Information
Agreement
4
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SPLASH BEVERAGE GROUP, INC. 
