ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and
analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related
notes to those statements as included elsewhere in this Annual Report on Form 10-K. In addition to historical financial information,
the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. See “Cautionary
Note Regarding Forward-looking Statements” included elsewhere in this Annual Report on Form 10-K. Our actual results may differ
materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in Part
I “Item 1A. Risk Factors” included in this Annual Report on Form 10-K. Under this “Management’s Discussion And
Analysis Of Financial Condition And Results Of Operations,” “we,” “us,” “our” “Fresh
Vine Wine,” “Fresh Vine,” “Amaze” and the “Company” refer to Amaze Holdings, Inc.
Overview
Amaze Holdings Inc. (formerly
Fresh Vine Wine, Inc.) is a producer of low carb, low calorie, premium wines in the United States. Founded in 2019, the Company brings
an innovative “better-for-you” solution to the wine market. We currently sell seven varietals: Cabernet Sauvignon, Pinot Noir,
Chardonnay, Sauvignon Blanc, Rosé, Sparkling Rosé, and a limited Reserve Napa Cabernet Sauvignon. All varietals are produced
and bottled in Napa, California.
Amaze’s wines are distributed
across the United States and Puerto Rico through wholesale, retail, and direct-to-consumer (DTC) channels. The Company is able to conduct
wholesale distribution of our wines in all 50 states and Puerto Rico. As of December 31, 2024, the Company holds relationships with wholesale
distributors in 50 states. The Company is working with leading distributors, including Southern Glazer’s Wine & Spirits (SGWS),
Johnson Brothers, and Republic National Distributing Company (RNDC), to expand our presence across the contiguous United States.
Amaze’s core wine offerings
are priced strategically to appeal to mass markets and sell at a list price between $15 and $25 per bottle. Given the Company brand’s
“better-for-you” appeal, and overall product quality, Amaze believes that it presents today’s consumers with a unique
value proposition within this price category. Additionally, the Company is one of very few products available at this price point that
includes a named winemaker, Jamey Whetstone.
Amaze’s marketing activities
focus primarily on consumers in the 21-to-34-year-old demographic with moderate to affluent income and on those with a desire to pursue
a healthy and active lifestyle.
Amaze’s asset-light operating
model allows it to utilize third-party assets, including land and production facilities. This approach helps us mitigate many of the risks
associated with agribusiness, such as isolated droughts or fires. Because the Company sources product inputs from multiple geographically
dispersed vendors, it reduces reliance on any one vendor and benefit from broad availability/optionality of product inputs. This is particularly
important as a California-based wine producer where droughts or fires can have an extremely detrimental impact to a company’s supply
chain if not diversified.
Key Financial Metrics
We use net revenue, gross profit
(loss) and net income (loss) to evaluate the performance of Amaze. These metrics are useful in helping us to identify trends in our business,
prepare financial forecasts and make capital allocation decisions, and assess the comparable health of our business relative to our direct
competitors.
Year ended December 31,
Components of Results of Operations and Trends That May Impact Our
Results of Operations
Net revenue
Our net revenue consists primarily
of wine sales to distributors and retailers, which together comprise our wholesale channel, and directly to individual consumers through
our DTC channel. Net revenues generally represent wine sales and shipping, when applicable, and to a lesser extent branded merchandise
and wine club memberships. For wine and merchandise sales, revenues are recognized at time of shipment. For Wine Club memberships, revenues
are recognized quarterly at the time of fulfilment.
We refer
to the volume of wine we sell in terms of cases. Each case contains 12 standard bottles, in which each bottle has a volume of 750 milliliters.
Cases are sold through Wholesale/Retail or DTC channels.
The
following factors and trends in our business have driven our net revenue results and are expected to be key drivers of our net revenue
for the foreseeable future:
Brand recognition: As
we drive visibility through traditional and modern marketing methods, we expect to build awareness and name recognition for Amaze in consumers’ minds. Brand awareness will be built substantially through social media channels.
Portfolio
evolution: As a relatively new, high-growth brand, we expect and seek to learn from our consumers. We intend to continuously
evolve and refine our products to meet our consumers’ specific needs and wants, adapting our offering to maximize value for our
consumers and stakeholders.
Distribution
expansion and acceleration: Purchasing by distributors and loyal accounts that continue to feature our wines are key drivers
of net revenue.
Seasonality: In
line with industry norms, we anticipate our net revenue peaking during the quarter spanning from October through December due to increased
consumer demand around the major holidays. This is particularly true in our DTC revenue channel, where marketing programs will often be
aligned with the holiday season and product promotions will be prevalent.
Revenue Channels
Our
sales and distribution platform is built upon a highly developed network of distributor accounts. Within this network, we have signed
agreements in place with several of the nation’s largest distributors including Southern Glazer’s Wine & Spirits
and RNDC, among others. While we are actively working with these distributors in certain markets, they operate across the United States,
and we intend to grow our geographic/market presence through these relationships. The development of these relationships and impacts to
our related product mix will impact on our financial results as our channel mix shifts.
Wholesale
channel sales made on credit terms generally require payment within 30 days of delivery; however our credit terms with Southern Glazer’s
Wine & Spirits requires payment within 60 days of delivery. During periods in which our net revenue channel mix reflects a greater
concentration of wholesale sales, we typically experience an increase in accounts receivable for the period to reflect the change in sales
mix; payment collections in the subsequent period generally reduce our accounts receivable balance and have a positive impact on cash
flows.
We
intend to maintain and expand relationships with existing distributors and form relationships with new distributors as we work to grow
the Company. With multiple varietals within the Amaze portfolio, we consider ourselves to be a ‘one-stop shop’ for
better-for-you wines. We continue to innovate with new products at competitive price points and strive to enhance the experience as we
increase revenue with new and existing consumers.
In the
DTC channel, our comprehensive approach to consumer engagement in both online and traditional forums is supported by an integrated e-commerce
platform. Our marketing efforts target consumers who have an interest in healthy and active lifestyles. We attempt to motivate consumers
toward a simple and easy purchasing decision using a combination of defined marketing programs and a modernized technology stack.
Increasing
customer engagement is a key driver of our business and results of operations. We continue to invest in our DTC channel and in performance
marketing to drive customer engagement. In addition to developing new product offerings and cross-selling wines in our product portfolio,
we focus on increasing customer conversion and retention. As we continue to invest in our DTC channel, we expect to increase customer
engagement and subsequently deliver greater satisfaction. We also distribute our wines via other wine e-commerce sites such as Wine.com
and Vivino.com and plan to continue to add affiliate retail websites.
Net Revenue Percentage by Channel
We calculate net revenue percentage
by channel as net revenue made through our wholesale channel to distributors, through our wholesale channel directly to retail accounts,
and through our DTC channel, respectively, as a percentage of our total net revenue. We monitor net revenue percentage across revenue
channels to understand the effectiveness of our distribution model and to ensure we are employing resources effectively as we engage customers.
Year ended December 31,
Director to consumer 85 % 27 %
Cost of Revenues
Cost
of revenues is comprised of all direct product costs such as juice, bottles, caps, corks, labels, and capsules. Additionally, we also
categorize boxes and quality assurance testing within our cost of revenues. Amaze expects that cost of revenues will increase as net revenue
increases. As the volume of the product inputs increases, the Company intends to work to renegotiate vendor contracts with key suppliers
to reduce overall product input costs as a percentage of net revenue. Based on a proposed sale of inventory at a price below the Company’s
cost, the Company completed an evaluation of the net realizable value of our inventory during the year ended December 31, 2023. As a result
of this evaluation, the Company recorded a $1.8 million inventory write down to reflect it at its net realizable value by December
31, 2023. This is recorded in cost of revenue in the financial statements. The inventory reserve balance at December 31, 2023 was approximately
$112,000. The Company estimated no inventory to be sold a price below the Company’s cost and therefore has no reserve as of December
31, 2024.
Additionally, the Company includes
shipping fees in all DTC revenues. These fees are paid by end consumers at time of order and subsequently itemized within the cost of
each individual sale.
As a commodity product, the cost
of wine fluctuates due to annual harvest yields and the availability of juice. This macroeconomic consideration is not unique to Amaze,
although we are conscious of its potential impact to our product cost structure.
Gross Profit (Loss)
Gross profit (loss) is equal
to our net revenue less cost of revenues.
Selling, General, and Administrative Expenses
Selling, general, and administrative
expenses consist of selling expenses, marketing expenses, and general and administrative expenses. Selling expenses consist primarily
of direct selling expenses in our wholesale and DTC channels, including payroll and related costs, product samples, processing fees, and
other outside service fees or consulting fees. Marketing expenses consist primarily of advertising costs to promote brand awareness, contract
fees incurred as a result of significant sports marketing agreements, customer retention costs, payroll, and related costs. General and
administrative expenses consist primarily of payroll and related costs.
Equity-Based Compensation
Equity-based compensation consists
of the accounting expense resulting from our issuance of equity or equity-based grants issued in exchange for employee or non-employee
services. We measure equity-based compensation cost at the grant date based on the fair value of the award and recognize the compensation
expense over the requisite service period, which is generally the vesting period. We recognize any forfeitures as they occur.
Results of Operations
Year ended
December 31,
Unrealized loss on equity investment (33,500 ) —
Gain on extinguishment of liabilities 757,854 —
Comparison of the Fiscal Years ended December 31, 2024 and
2023
Net Revenue, Cost of Revenues and Gross Profit
Year ended December 31, Change
We had net revenue in fiscal
2024 of approximately $300,000. Net revenue in fiscal 2023 was approximately $1.8 million. The decrease in net revenue was mostly attributable
to decreasing sales and marketing spending as the Company planned for a potential merger in the first part of 2024 and the potential business
combination in the second part of 2024. We generated net revenue of approximately $46,000 during fiscal 2024 from our wholesale distribution
channel and approximately $254,000 of net revenue from our direct-to-consumer sales channel. This revenue distribution represents 15%
and 85%, respectively, of our net revenue during the period.
Selling, general and administrative expenses
Year ended December 31, Change
For the year ended December 31,
2024, selling, general and administrative expenses decreased 51%, compared to the period ended December 31, 2023. Selling, general and
administrative expense decreases were largely driven by decreases in expenses due to lower staffing headcount and related salaries and
less consulting, legal and financial expenses as operational activity decreased from 2023 to 2024. The year-over-year decrease in marketing
expenses primarily resulted from decreased advertising, social media marketing, tastings, and other promotion materials and events as
selling and marketing expenses are directly related to sale trends. During 2024, the Company extinguished
liabilities totaling approximately $758,000.
Cash Flows
Year ended
December 31,
Cash provided by (used in):
Net cash used in operating activities
was approximately $1.9 million and $4.8 million for the years ended December 31, 2024 and December 31, 2023, respectively. Cash used in
operating activities decreased in the period ended December 31, 2024 was primarily the result of decreased overall business as sales were
down, as well as decreases in general and administrative expenses due to lower staffing headcount and related salaries and less consulting,
legal and financial expenses as operational activity decreased from 2023 to 2024. The decrease is also due to the fact that no inventory
purchases were made in 2024 to maintain our inventory levels to meet demand and reductions in costs for staffing and marketing activities.
Net cash used in investing activities
was $3,500,000 and $500,000 for the years ended December 31, 2024 and December 31, 2023, respectively. Cash used in investing activities
in the 2024 period was from the note receivable issued to Amaze Software, Inc., see Note 5 to accompanying financial statements.
Net cash provided by financing
activities was approximately $5.3 million and $3.6 million for the years ended December 31, 2024 and December 31, 2023, respectively.
The difference is due to the Rights Offering of $2,615,014, the issuance of preferred stock for a net of $950,000 during the year ended
December 31, 2023, proceeds from the issuance of preferred stock for a net of approximately $4.7 million and $500,000 from the sale of
convertible debt for the year ended December 31, 2024.
Liquidity and Capital Resources
Our primary cash needs are for
working capital purposes, such as producing or purchasing inventory and funding operating expenses. We have funded our operations through
equity and debt financings, as described under the caption “Financing Transactions” below.
We have incurred losses and negative
cash flows from operations since our inception in May 2019, including net losses of approximately ($2.5) million and ($10.6)
million during the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit
of approximately $29.2 million and a total stockholders’ equity of approximately $1.5 million. We expect to incur losses in future
periods as we continue to operate our business and incur expenses associated with being a public company.
As of
December 31, 2024, we had approximately $156,000 in cash, accounts receivable of approximately $7,000, note receivable of $3,500,000,
inventory of approximately $212,000, and prepaid expenses of approximately $34,000. On December 31, 2024, current assets amounted to approximately
$4.4 million and current liabilities were $2.9 million resulting in working capital (with working capital defined as current assets minus
current liabilities) of approximately $1.5 million.
Since
the commencement of its operations, the Company’s operating and other expenses have significantly exceeded its revenues. The Company
put in place cash preservation initiatives in the second half of 2022, including a strategic restructuring plan aimed at cash resources
while continuing to focus on accelerating sales growth. That plan resulted in the termination of members of the Company’s internal
sales team, the engagement of a third party vendor positioned to more efficiently and effectively facilitate sales, and the engagement
of a third party vendor to manage marketing initiatives and drive growth within the Direct-to-Consumer sales channel.
During
the second quarter of 2023, the Company undertook a review of the Company’s operations and strategic plans, and took measures aimed
at improving the Company’s operational efficiency, curtailing operating expenses and further preserving cash resources. During the
year ended December 31, 2024, the Company continued to work to reduce its operating expenses, including reducing its warehousing costs,
while continuing to provide customers the opportunity to experience its wine and supporting its current retail customers and those purchasing
via the Company’s wine club or from its website.
Commencing
in June 2023, the Company has worked aggressively to identify prospective new sources of capital, while working with advisors to assess
and improve its liquidity position, including from the sale of existing inventory. Early in the third quarter of 2023, the Company entered
into purchase orders for the sale of up to 45,000 cases of the Company’s wine to Grocery Outlet, a discount retailer, with sales
occurring through the last part of 2023. The Company had sales related to this agreement totaling approximately $43,000 and $829,000 for
the years ended December 31, 2024 and 2023, respectively.
On August
2, 2023, the Company entered into a Securities Purchase Agreement with two accredited investors pursuant to which the Company agreed to
issue and sell in a private placement shares of a newly created series of preferred stock designated as Series A Convertible Preferred
Stock (the “Series A Stock”). Pursuant to the Securities Purchase Agreement, the purchasers collectively purchased 10,000
shares of Series A Stock at a per share purchase price equal to $100.00, for total gross proceeds of $1.0 million.
On October
8, 2024, the Company entered into Securities Purchase Agreements with two accredited investors, pursuant to which the Company agreed to
sell up to an aggregate principal amount of $600,000 of secured convertible promissory notes (“Notes”) that will be convertible
into shares of the Company’s common stock, par value $0.001, and warrants (“Warrants”) to purchase up to 740,000 shares
of common stock. The Notes were issued with the original issuance discount of 20%, resulting in gross proceeds of $500,000 to the Company.
During
2024, we issued and sold a total of 50,000 shares of Series B Convertible Preferred Stock to accredited investors at a purchase price
of $100.00 per share in a private placement pursuant to securities purchase agreements for an aggregate purchase price of approximately
$5.0 million.
See
“Financing Transactions” below for a description of these agreements.
In August
2023, the Company announced that it had initiated an exploration of strategic opportunities by way of merger, acquisition, or any accretive
strategic transaction to enhance stockholder value, which is a focus of the Company’s plan to increase its stockholders’ equity
and regain compliance with the NYSE American’s continued listing standards. On January 25, 2024, the Company entered into the merger
agreement with Notes Live, however, on July 31, 2024 the Merger Agreement was terminated.
In November
2024, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with (i) Amaze Holdings
Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Pubco”), (ii) VINE Merger Sub Inc., a Delaware corporation
and wholly subsidiary of Pubco (“VINE Merger Sub”), (iii) Adifex Merger Sub LLC, a Delaware limited liability company
and wholly owned subsidiary of Pubco (“Adifex Merger Sub”), and (iv) Adifex Holdings LLC, a Delaware limited liability
company (“Adifex”).
The Company, Adifex and Amaze
Software, Inc subsequently decided to restructure the transactions contemplated by the Business Combination Agreement, and on March 7,
2025 the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”) to acquire Amaze
Software, Inc. Amaze Software is an end-to-end, creator-powered commerce platform offering tools for seamless product creation, advanced
e-commerce solutions, and scalable managed services.
Pursuant to the Merger Agreement,
(i) Merger Sub merged with and into Amaze (the “Merger”) with Amaze as the surviving company and a wholly owned subsidiary
of the Company, and (ii) the aggregate merger consideration paid by the Company in connection with the acquisition included 750,000 shares
of the Company’s Series D Convertible Preferred Stock, par value $0.001 per share (“Series D Preferred Stock”), plus
warrants (the “Merger Warrants”) to purchase an aggregate of 8,750,000 shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”).
As
disclosed under Item 3 - Legal Proceedings,
the Company has been a defendant in a lawsuit styled Timothy Michaels v. Fresh Vine Wine, Inc. filed May 27, 2022 in the Fourth
Judicial District Court, Hennepin County, Minnesota. On January 25, 2024, the jury in the lawsuit rendered a verdict against the
Company awarding damages to Mr. Michaels in the amount of $585,976.25. The damages awarded to Mr. Michaels by the trial court are not
covered by the Company’s insurance policies. The Company appealed the verdict and the court of appeals affirmed the judgment in
February 2025, awarding an additional $21,644 in damages. The Company petitioned the supreme court for review on March 12, 2025 and is
awaiting the supreme court’s decision on its petition. Although the Company believes it has legal grounds to appeal the verdict,
continued litigation and related actions may be expensive, the outcome of any litigation (including any appeal) is difficult to predict
and the existence of continued litigation may impact the ability of management to focus on other business matters. Furthermore, the Company
will be required to post an appeals bond in order to stay execution of the money judgment pending any appeal. Given the Company’s
current financial position, the cost of such an appeals bond is uncertain and may be higher than the typical cost of such a bond or require
the Company to provide cash or other collateral.
At
the current reduced pace of incurring expenses and without receipt of additional financing, the Company projects that the existing cash
balance will be sufficient to fund current operations into the second quarter of 2025. The Company requires additional debt or equity
financing to satisfy its existing obligations, sustain existing operations, pay expenses associated with its pending business combination
transaction and to satisfy financial related conditions to the closing of such transaction. See “Current Strategy - The Merger”
below. Additional financing may not be available on favorable terms or at all. If additional financing is available, it may be highly
dilutive to existing stockholders and may otherwise include burdensome or onerous terms. The Company’s inability to raise additional
working capital in a timely manner will negatively impact the ability to fund operations, generate revenues, maintain or grow the business
and otherwise execute the Company’s business plan, including its pursuit of its pending business combination transaction, leading
to the reduction or suspension of operations and ultimately potentially ceasing operations altogether and initiating bankruptcy proceedings.
Should this occur, the value of any investment in the Company’s securities would be adversely affected.
These factors raise substantial
doubt about the Company’s ability to continue as a going concern. Our financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
Our ability to continue as a
going concern in the future will be determined by our ability to generate sufficient cash flow to sustain our operations, raise additional
capital in the form of debt or equity financing and/or complete a successful combination transaction with a suitable target company. Our
forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our expenses
could vary materially as a result of a number of factors. We have based our estimates on assumptions that may prove to be wrong, and our
revenue could prove to be less and our expenses higher than we currently anticipate. Management does not know whether additional financing
will be on terms favorable or acceptable to us when needed, if at all. If we are unable to generate sufficient cash flow to fund our operations
and adequate additional funds are not available when required, management may need to curtail its sales and marketing efforts, which would
adversely affect our business prospects, or we may be unable to continue operations.
Current Strategy
Acquisition of Amaze Software, Inc.
On March
7, 2025, the Company completed the acquisition of Amaze Software, Inc., pursuant to an Amended and Restated Agreement and Plan of Merger
(the “Merger Agreement”) by and among the Company, Amaze Holdings Inc., a Delaware corporation and wholly owned subsidiary
of Fresh Vine (“Merger Sub”), Amaze Software, Inc., a Delaware corporation (“Amaze Software”), the stockholders
of Amaze Software listed on Schedule I thereto (each, a “Holder” and together the “Holders”), and Aaron Day, solely
in his capacity as the Holders’ Representative (the “Holders’ Representative”). Amaze Software is an end-to-end,
creator-powered commerce platform offering tools for seamless product creation, advanced e-commerce solutions, and scalable managed services.
Pursuant
to the Merger Agreement, (i) Merger Sub merged with and into Amaze (the “Merger”) with Amaze as the surviving company and
a wholly owned subsidiary of Fresh Vine, and (ii) the aggregate merger consideration paid by the Company in connection with the acquisition
included 750,000 shares of the Company’s Series D Convertible Preferred Stock, par value $0.001 per share (“Series D Preferred
Stock”), plus warrants (the “Merger Warrants”) to purchase an aggregate of 8,750,000 shares of Fresh Vine’s common
stock, par value $0.001 per share (the “Common Stock”).
The
Merger Agreement contains various covenants of the parties, including covenants providing for (a) the Company to prepare and a file with
the Securities and Exchange Commission (SEC) a proxy statement related to the solicitation of stockholder votes to approve the Fresh
Vine Stockholder Matters (as defined in the Merger Agreement), including the issuance of shares of Common Stock in excess of the Exchange
Share Cap and Individual Holder Share Cap (as defined in the Certificate) and the resulting change in control of Fresh Vine; and (b)
for the Company to prepare and file with the SEC a registration statemen for the purpose of registering for resale the shares of Common
Stock issuable upon conversion of the Series D Preferred Stock and exercise of the Merger Warrants.
Financing Transactions
We have funded our operations
through a combination of debt and equity financings.
During the first quarter of 2023,
the Company distributed, at no charge to holders of the Company’s common stock, non-transferable subscription rights to purchase
up to an aggregate of 6,366,129 Units. Each Unit consisted of one share of our common stock and a Warrant to purchase one share of our
common stock. The Warrants were exercisable immediately, expire five years from the date of issuance and have an exercise price of $1.25
per share. For each share of common stock held by a stockholder of the Company on February 22, 2023, the record date of the Rights Offering,
such stockholder received 0.5 subscription rights. Each whole subscription right allowed the holder thereof to subscribe to purchase one
Unit, which we refer to as the basic subscription right, at a subscription price of $1.00 per Unit. In addition, any holder of subscription
rights exercising his, her or its basic subscription right in full was eligible to subscribe to purchase additional Units that remained
unsubscribed in the Rights Offering at the same subscription price per Unit that applied to the basic subscription right, subject to proration
among participants exercising their over-subscription privilege, which we refer to as the over-subscription privilege. The subscription
rights period expired on March 9, 2023, and resulted in stockholders subscribing for 3,143,969 Units. Upon the closing of the Rights Offering,
which occurred on March 14, 2023, we issued 3,143,969 shares of common stock and 3,143,969 Warrants and received aggregate gross cash
proceeds of approximately $3.14 million. After deducting dealer-manager fees and other fees and expenses related to the Rights Offering,
we received net proceeds of approximately $2.7 million. If exercised, additional gross proceeds of up to approximately $3.93 million may
be received through the exercise of Warrants issued in the Rights Offering. The Rights Offering was made pursuant to a registration statement
on Form S-1 (Registration No. 333-269082), which was declared effective by the U.S. Securities and Exchange Commission on February 14,
2023, and the prospectus dated February 22, 2023.
On August 2, 2023, the Company
entered into a Securities Purchase Agreement with two accredited investors pursuant to which the Company agreed to issue and sell in a
private placement (the “Series A Offering”) shares of a newly created series of preferred stock designated as Series A Convertible
Preferred Stock (the “Series A Stock”). Pursuant to the Securities Purchase Agreement, the purchasers collectively agreed
to purchase up to 10,000 shares of Series A Stock at a per share purchase price equal to $100.00, for total gross proceeds of up to $1.0
million. The purchasers purchased 4,000 shares of Series A Stock for an aggregate purchase price of $400,000 on August 4, 2023, purchased
an additional 4,000 shares of Series A Stock for an aggregate purchase price of $400,000 on September 7, 2023, and purchased an additional
2,000 shares of Series A Stock for an aggregate purchase price of $200,000 on December 1, 2023. The Company previously engaged The Oak
Ridge Financial Services Group, Inc. (“Oak Ridge”) to serve as a financial adviser to the Company in connection with the capital
raising activities. The Company paid Oak Ridge a $10,000 cash advisory fee upon commencement of the engagement and, in connection with
the Series A Offering, the Company has agreed to pay the Oak Ridge a cash fee equal to 5.0% of the gross proceeds received by the Company
in the Series A Offering, in addition to reimbursing Oak Ridge for its out-of-pocket expenses.
On October 8, 2024, the Company
entered into Securities Purchase Agreements with two accredited investors, pursuant
to which the Company agreed to sell up to an aggregate principal amount of $600,000 of secured convertible promissory notes (“Notes”)
that will be convertible into shares of the Company’s common stock, par value $0.001, and warrants (“Warrants”) to purchase
up to 740,000 shares of common stock. The Notes were issued with original issuance discount of 20%, resulting in gross proceeds of $500,000
to the Company. The Notes bear no interest unless an event of default occurs, and mature on April 8, 2025. The Notes may be prepaid. Each
Note is convertible into common stock at a conversion price equal to $0.40. A holder of the Note (together with its affiliates) may not
convert any portion of the Note to the extent that the holder would beneficially own more than 9.99% of the outstanding shares of the
Company’s common stock immediately after exercise. The conversion price and number of shares of the Company’s common stock
issuable upon conversion of the Notes will be subject to adjustment from time to time for any subdivision or consolidation of shares,
dilutive issuances and other events.
During 2024, the Company sold
a total of 50,000 shares of Series B Convertible Preferred Stock to accredited investors at a purchase price of $100.00 per share in a
private placement pursuant to securities purchase agreements, for a total in gross proceeds of approximately $5 million. Each share of
Series B Stock shall be convertible at the option of the holder thereof into the number of shares common stock (“Conversion Shares”)
calculated by dividing the Stated Value by the Conversion Price (the “Conversion Ratio”)(subject to the limitations described
below). For such purposes, the “Conversion Price” means $0.45. However, if the Company’s common stock fails to continue
to be listed or quoted for trading on a stock exchange (currently, the NYSE American), then the “Conversion Price” thereafter
will mean the lesser of (i) $0.45, or (ii) the closing sale price of the common stock on the trading day immediately preceding the conversion
date; provided that the Conversion Price shall not be less than $0.05 (the “Floor Price”).
Critical Accounting Policies and Estimates
Management uses estimates and
assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States
of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.
While all significant accounting
policies are more fully described in Note 1 (Summary of Significant Accounting Policies) to our audited financial statements, we
believe that the following accounting policies and estimates are critical to our business operations and understanding of our financial
results.
Allowance for Doubtful Accounts
Accounts receivable consists
of amounts owed to us for sales of our products on credit and are reported at net realizable value. Credit terms are extended to customers
in the normal course of business. We perform ongoing credit evaluations of our customers’ financial conditions. We estimate allowances
for future returns and doubtful accounts based upon historical experience and its evaluation of the current status of receivables. Accounts
considered uncollectible are written off against the allowance. As of December 31, 2024 and 2023 we had $13,403 and $0 in the allowance
for doubtful accounts, respectively.
Allowance for Inventory Reserve
Inventories primarily include
bottled wine which is carried at the lower of cost (calculated using the first-in-first-out (“FIFO”) method) or net realizable
value. We reduce the carrying value of inventories that are obsolete or for which market conditions indicate cost will not be recovered
to estimated net realizable value. Our estimate of net realizable value is based on analysis and assumptions including, but not limited
to, historical experience, future demand and market requirements. Reductions to the carrying value of inventories are recorded in cost
of revenues. As of December 31, 2024 and 2023 there was $0 and $111,710 inventory reserve related to estimated net realizable value,
respectively.
Equity-Based Compensation
We measure equity-based compensation
cost at the grant date based on the fair value of the award and recognize the compensation expense over the requisite service period,
which is generally the vesting period. We recognize any forfeitures as they occur.
We measure equity-based compensation
when the service date precedes the grant date based on the fair value of the award as an accrual of equity-based compensation and adjusts
the cost to fair value at each reporting date prior to the grant date. In the period in which the grant occurs, the cumulative compensation
cost is adjusted to the fair value at the date of the grant.
Off-Balance Sheet Arrangements
We have not engaged in any off-balance
sheet activities as defined in Item 303(a)(4) of Regulation S-K.
Accounting Standards and Recent Accounting Pronouncements
See Note 1 (Summary of Significant
Accounting Policies) to our audited financial statement for a discussion of recent accounting pronouncements.
Emerging Growth Company Status
Pursuant to the JOBS Act, a company
constituting an “emerging growth company” is, among other things, entitled to rely upon certain reduced reporting requirements
and is eligible to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public
companies. We are an emerging growth company and have elected to use this extended transition period for complying with new or revised
accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no
longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS
Act. Our financial statements may, therefore, not be comparable to those of other public companies that comply with such new or revised
accounting standards.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our financial statements and
supplementary data are included beginning on pages F-1 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended (the Exchange Act), defines the term “disclosure controls and procedures” as those controls
and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms
and that such information is accumulated and communicated to our management, including our principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management, with the participation
of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures,
as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of December 31, 2024. Based on that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) were not effective as of December 31, 2024 due to the material weakness in internal control over
financial reporting as described below.
Management’s Report on Internal Control Over Financial Reporting
We are responsible for establishing
and maintaining adequate internal control over financial reporting. As defined in the securities laws, internal control over financial
reporting is a process designed by, or under the supervision of, our principal executive and principal financial officer and effected
by our Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes
those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
acquisitions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Under the supervision and with
the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of
the effectiveness of our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of
1934) as of December 31, 2024 based on the criteria in “Internal Control - Integrated Framework (2013)” issued by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013. Based upon this evaluation, we concluded that our
internal control over financial reporting was not effective as of December 31, 2024 due to the following material weaknesses.
Material Weaknesses in Internal Control Over Financial Reporting; Remediation
Activities
Management had previously determined
that there were material weaknesses in our internal control over financial reporting resulting from (i) a lack of segregation of incompatible
duties based on the limited number of employees responsible for the Company’s accounting and reporting functions and (ii) the lack
of controls to prevent a misstatement in accounting for extinguishments of liabilities in a timely manner. In an effort to remediate the
material weakness in our internal control over financial reporting described above, we intend to take the actions to implement the processes
described below.
Lack
of segregation of duties. To ensure timely and accurate financial reporting, management is designing processes to keep authorization,
recordkeeping, custody of assets, and reconciliation duties separate, and intends to reevaluate its overall staffing levels within the
accounting, finance and information technology departments and may hire additional staff to enable segregation of duties.
Review
of gain on extinguishment of liabilities. To ensure timely and accurate financial reporting, management intends to design and
implement additional internal controls to ensure proper support for extinguished liabilities meets the requirements of generally accepted
accounting principles.
Once the above actions and processes
have been in operation for a sufficient period of time for our management to conclude that the material weaknesses have been fully remediated
and our internal controls over financial reporting are effective, we will consider these material weaknesses fully addressed.
This annual report does not include
an attestation report of Wipfli, LLP, our independent registered public accounting firm, regarding internal control over financial reporting.
Our management report was not subject to attestation by our independent registered public accounting firm pursuant to the Dodd-Frank Wall
Street Reform and Consumer Protection Act, which exempts nonaccelerated filers from the independent registered public accounting firm
attestation requirement.
Changes in Internal Control Over Financial Reporting
There were no changes in our
internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the fiscal year
ended December 31, 2024 that has materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not Applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
The information required by this item will be included
in our definitive proxy statement for the annual meeting of stockholders to be filed with the SEC on or before April 30, 2025, and is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item will be included
in our definitive proxy statement for the annual meeting of stockholders to be filed with the SEC on or before April 30, 2025, and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required by this
item will be included in our definitive proxy statement for the annual meeting of stockholders to be filed with the SEC on or before April
30, 2025, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE.
The information required by this
item will be included in our definitive proxy statement for the annual meeting of stockholders to be filed with the SEC on or before April
30, 2025, and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by this
item will be included in our definitive proxy statement for the annual meeting of stockholders to be filed with the SEC on or before April
30, 2025, and is incorporated herein by reference
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following exhibits and financial
statements are filed as part of, or are incorporated by reference into, this report:
(1) Financial Statements
The following financial statements
are filed with this Annual Report and can be found beginning at page F-1 of this report:
• Report of independent registered public accounting firm
• Statements of operations for the years ended December 31, 2024 and 2023
• Statements of cash flows for the years ended December 31, 2024 and 2023
• Notes to financial statements
(2) Financial Statement Schedules
Separate financial schedules
have been omitted because such information is inapplicable or is included in the financial statements or notes described above.
(3) Exhibits
See “Exhibit Index”
following the signature page of this Form 10-K for a description of the documents that are filed as Exhibits to this Annual Report on
Form 10-K or incorporated by reference herein.
ITEM 16. FORM 10-K SUMMARY.
Not applicable.
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: March 31, 2025
AMAZE HOLDINGS, INC
By: /s/ Michael Pruitt
Michael Pruitt Interim Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS,
that each person whose signature appears below constitutes and appoints each of Michael Pruitt and Keith Johnson, and each of them, as
his or her true and lawful attorney-in-fact and agent with full power of substitution and resubstituting, for such individual in any and
all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection
therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or the individual’s substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities
and on the dates indicated.
Signatures Title
/s/ Michael Pruitt Interim Chief Executive Officer and Director March 31, 2025
Michael Pruitt (Principal executive officer)
/s/ Keith Johnson Interim Chief Financial Officer March 31, 2025
Keith Johnson (Principal financial and accounting officer) and Secretary
/s/ Eric Doan Director March 31, 2025
Eric Doan
/s/ Brad Yacullo Director March 31, 2025
Brad Yacullo
/s/ David Yacullo Director March 31, 2025
David Yacullo
EXHIBIT INDEX
AMAZE HOLDINGS, INC.
FORM 10-K
Exhibit Number Description
23.1* Consent of Wipfli LLP
24.1 Power of Attorney (included on the signature page of this report)
31.1* Section 302 Certification of the Chief Executive Officer
31.2* Section 302 Certification of the Chief Financial Officer
101.INS Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
* Filed herewith.
# Management contract or compensatory plan
The audited financial statements for the periods ended
December 31, 2024 and December 31, 2023 are included on the following pages:
INDEX TO FINANCIAL STATEMENTS
Page
Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID# 00344) F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Changes in Stockholders’ Equity (Deficit) F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
Report of Independent Registered Public Accounting
Firm
To the Board of Directors and Shareholders
Amaze Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of
Amaze Holdings, Inc. (formerly known as Fresh Vine Wine, Inc.) (the “Company”) as of December 31, 2024 and 2023, and the related
statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and cash
flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a history of operating
losses and insufficient cash flows from operations, that raises substantial doubt about its ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent