EDGAR 10-K Filing

Company CIK: 1434737
Filing Year: 2021
Filename: 1434737_10-K_2021_0001096906-21-000778.json

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ITEM 1. BUSINESS
ITEM 1
BUSINESS.
Background of Spirits Time
Spirits Time International, Inc. was incorporated on October 18, 2005 under the laws of the State of Nevada. The Company was formed under the name of Sears Oil and Gas Corporation but effective October 22, 2018, our name was changed to Spirits Time International, Inc. to reflect our new business direction.
At the time the Company was organized, its principal business objective was to engage in the oil and gas business. The Company became a public reporting company by filing a Form S-1 Registration Statement with the SEC that was declared effective July 25, 2008. The Company’s business operations in the oil and gas business were not successful and its initial principals sold controlling interest in the Company. Prior to the Asset Acquisition Transaction (as defined below), we were a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended). As a result of the Asset Acquisition Transaction, we ceased to be a “shell company” and intend to commence operations in the beverage industry (initially in the tequila beverage industry).
We have limited operating history, no revenue, and negative working capital.
The Company files reports with the Securities and Exchange Commission under Section 15(d) of the Securities Exchange act of 1934, as amended (the “Exchange Act”). We do not currently file reports under Section 12(b) or 12(g) of the Exchange Act.
Asset Acquisition
On September 28, 2018, we completed and closed upon an asset acquisition (the “Asset Acquisition Transaction”) and a loan transaction pursuant to which we intend to engage in the business of marketing tequila products under the brand name of Tequila Alebrijes. We acquired the Tequila Alebrijes brand name, trademark and certain other assets from Human Brands International, Inc., a Nevada corporation (“Human Brands”). We also closed on a loan transaction whereby we borrowed $300,000 from Auctus Fund, LLC which is described below (See Notes to the Financial Statements). Auctus has delivered a notice of default to us relating to such loan (See Notes to the Financial Statements).
The Assets acquired are certain “Tequila Alebrijes Products and Property Rights.” We did not acquire an ownership interest in or any ongoing operation of Human Brands. We did not merge with or acquire an equity interest in Human Brands. We made no changes in our officers or directors as a result of the Asset Acquisition Transaction. We did not hire any employee of Human Brands. The transaction was essentially the acquisition of certain rights to distribute, rights to use a brand and a limited amount of inventory. Human Brands is involved in the marketing of other beverage products and brands in which we have no ownership or other interest.
“Tequila Alebrijes Products and Property Rights” means collectively, the intangible legal rights we acquired from Human Brands pertaining to: (a) rights associated with the product known as Tequila Alebrijes, including but not limited to Tequila Alebrijes Blanco, Reposado, and Añejo and any and all related products or extension of that product including other related Tequila Blends and formulas from the same or other related supplier as well as physical extensions of the Tequila Alebrijes brand in the form of logos, trademarks, marketing material and related copyrights, copyright applications and copyright registrations and moral rights, trademarks, service marks, logos, trade dress, trade names and
service names and all goodwill associated therewith; (b) rights related to the protections of trade secrets and confidential information, including, but not limited to, rights in industrial property, vendor lists and all associated information and other confidential or proprietary information; (c) industrial design rights; and (d) any rights analogous to those set forth in the preceding clauses and any other proprietary rights relating to intangible property, including, but not limited to, any applications, registrations or recordings in connection with the foregoing. Human Brands also granted us the exclusive right to sell directly or distribute Tequila Alebrijes products (including any product Extension of the Assets) on a worldwide basis.
The Acquired Assets include any and all product line extensions. The Acquired Assets include but are not limited to the following:
·Trade Mark Design;
·Packaging Design;
·Formulas for Production of Tequila Alebrijes;
·Finished Tequila Alebrijes Product of not less than 11,000 Mixed 750 ML bottles to be shipped to third parties as designated by the Company (less write-off, see below);
·All Tequila Alebrijes Rights for Worldwide Use;
·All Tequila Alebrijes Extensions for Worldwide Use;
·The exclusive rights to sell the assets directly by the Company or through designated distributors or brand managers worldwide.
We issued 3,500,000 shares of our common stock to Human Brands and paid Human Brands $50,000 for the brand name, trademark and other acquired assets. We did not acquire an ownership interest in or any ongoing operation of Human Brands. No officer, director or employee of Human Brands became an officer, director or employee of the Company.
Name Change
Effective October 22, 2018, we changed our name from Sears Oil and Gas Corporation to Spirits Time International, Inc. Copies of our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws were filed as exhibits to a Form 8-K filed October 31, 2018 and can be obtained on the SEC EDGAR Website. Our new CUSIP number is 84861Y107.
The Company’s Business Plan - General
We have developed a business plan to obtain rights to develop a portfolio of beverage (alcoholic and non-alcoholic) product brands and to distribute and market beverage products nationally and internationally. Our first brand is the “Tequila Alebrijes” brand of tequila. We have obtained the trademark for this brand and the rights to market and distribute Tequila Alebrijes products. We also acquired approximately 12,000 bottles of tequila valued at $150,000, of which approximately 6,500 valued at approximately $80,000 are on-hand as further described below. The remaining 5,500 were never delivered to us, resulting in the write-off of inventory of $69,530 during the year ended December 31, 2019. Currently, the “Tequila Alebrijes” brand of tequila is our only product brand, and we have not yet sold any of this product to date.
We do not intend to produce beverage products but rather we intend to acquire brand and marketing rights for beverage products and thereafter commercialize our products either directly by selling to retailers and point of sale locations or through brand management agreements and/or distribution agreements with other companies involved in the beverage distribution business.
Demand for premium distilled spirits brands is driving growth and transforming the distilled spirits industry, driven by several key trends including an increasingly global market for alcoholic beverages, better and more well defined channels of distribution, an international and domestic rise of cocktail culture, the growing popularity for distilled spirits, a greater desire among consumers wanting to know more about the history and production methods behind what they drink, an increase in the willingness of consumers to enjoy experimenting and trying new brands, categories and styles of alcoholic beverages, the identifiable industry trend showing increasing demand for a broader variety and new brands at the point of sale, and a higher level of appreciation of quality over quantity, with premium and above offerings gaining market share.
Amidst the background where industry leading producers are shifting more emphasis on premium brand offerings, an emerging wave of small craft distillers is capturing an increasing market share. As the craft boom continues, we anticipate that larger brands will increase their emphasis on craft qualities and will look to emerging brands gaining consumer support as acquisition candidates.
We intend, subject to adequate financing, to build a portfolio of beverage brands of non-alcoholic and alcoholic beverages. We anticipate that we may be able to use our securities to acquire interests in additional beverage brands and as incentive for brand managers and other product distributors.
We have entered into a non-exclusive brand management agreement with CapCity Beverage, LLC (“CCB”). CCB is an affiliate of Human Brands which has been active in developing, distributing and promoting premium spirits brands since 2012. The brand management agreement calls for CCB to utilize its import and export licenses to bring the Tequila Alebrijes inventory into the U.S. from Mexico and also ship the product to other countries around the world.
As of the date of this report, the brand management agreement has not resulted in the sale of any of our product. The brand management agreement expired in October 2020 and has not been extended or renewed as of the date of this report. We anticipate that we will modify the agreement if we pursue renewal, and will seek other product market alternatives.
We have yet to generate any revenue from the acquisition of the tequila related assets and there can be no assurance we will be able to generate meaningful revenues in the near future. We anticipate that we must raise additional capital to develop a meaningful marketing program for our products and there can be no assurance that we will be able to raise adequate capital to market our products and develop active business operations.
Ultimate Business Goal
One of our ultimate business goals is to develop critical mass and a diverse portfolio of distilled spirits and non-alcoholic brands so as to make us an attractive acquisition target or an attractive partner for other companies in the beverage industry.
To achieve this goal, we plan on developing diverse channels of distribution by building relationships with strong regional and local distributors. To support our distributors, we plan to work with brand managers to create marketing, support consumer awareness, and to develop demand at the retail level in liquor stores and bars.
Our planned operating strategy
Our business strategy relates to our Tequila Alebrijes product and potentially other distilled spirits brands and non-alcoholic brands. We have developed a strategy to commence and build operations in the premium spirits industry. Our strategy is as follows:
(1)Building Our Branded Product Portfolio. We plan to build a portfolio of distilled spirit and non-alcoholic brands through distribution agreements, acquisitions of distributors and brands, and potentially the development of our own proprietary brands. We intend to attempt to add products in high-demand and in high-growth categories. Our first brand acquisition, as described throughout this Form 10-K, is the acquisition of the Tequila Alebrijes brand.
(2)Qualify for Our Own Licenses and Permits. Initially we are relying on “Brand Management Agreements” with companies that already have distributions channels and have import and export licenses and permits. In addition, we will be contracting with US domestic distributors that have permits and licenses in a large number of key states for spirits sales. In addition, our Brand Management companies will have the logistical capability to store, ship and comply with all state and federal regulations and accounting requirements. The Brand Manager will also be responsible for collecting and reporting on all taxes, customs compliance and shipping regulations. Our Brand Manager for our Tequila Alebrijes brand is CCB. The CCB Brand Management Agreement, which expired in October 2020, is further discussed below.
(3)Build Distribution. If, in the future, we obtain required permits, we intend to focus on building additional distribution for Tequila Alebrijes and other brands in the U.S. and Asia, the largest beverage market and the fastest growing beverage market, respectively.
(4)Marketing. We plan to bring the enjoyment of the Tequila Alebrijes experience to the customer. Key to scaling our business activities is our commitment to, and investment in innovative and effective sales and marketing campaigns, and supporting demand generated from those campaigns with sufficient inventory. Consumers want an experience and our marketing strategy is built around that.
Our first proprietary brand, Tequila Alebrijes, is a premium tequila.
The brand management agreement with CCB expired in October 2020 and has not been extended or renewed as of the date of this report. We anticipate that we will modify the agreement if we pursue renewal. We are discussing potential product distribution relationships with other participants in the beverage distribution industry.
Tequila Market Overview
Tequila is a distilled beverage which is made out of the blue agave plant. There exist two major categories of tequila: ‘100% agave’ and ‘Mixtos.’ The term tequila is protected and may only be used on the product label if the alcoholic beverage is produced in specific regions of Mexico and contains at least 51 percent agave.
According to Statista.com (https://www.statista.com/) the global tequila market is characterized by leading brands such as Sauza, Patrón, and El Jimador. Sauza tequila sold approximately 3.8 million 9 liter cases in 2016. Regionally, most tequila was exported to the United States from its country of origin Mexico.
Statista.com also reported that the sales volume of the American core market showed a continuous growth since 2004 and reached an all-time high with 15.87 million 9 liter cases sold in 2016. The tequila brand Jose Cuervo commanded 22 percent of U.S. tequila volume sales in 2016. Patron and Sauza tequila also accounted for a double-digit volume share in that year.
Statista.com latest consumption statistics illustrate that over 25 million people drank tequila in the United States as of spring 2017. The total U.S. consumption of tequila amounted to nearly 16 million 9 liter cases in 2016. Broken down on a state-level, California ranked first in terms of consumption. Texas and Florida rounded off the leading three consumption states.
Current projections anticipate that the tequila market will continue to grow through at least 2022. Although recent data as reported by Forbes suggests that the coronavirus ("COVID-19") outbreak has not negatively impacted the alcoholic beverage industry, the extent of the impact of COVID-19 on the financial performance of the Company will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions, and the impact of COVID-19 on the overall economy, all of which are highly uncertain and cannot be predicted. If the overall economy is impacted for an extended period, the Company’s future operating results may be materially adversely affected.
Description of Tequila Alebrijes
Tequila Alebrijes brand was first introduced in 2012 and has been sold in Asia, the United States and Europe. The Brand was developed by Autentica Tequilera SA.de CV. located in Tequila Jalisco, Mexico. The Brand was acquired by Human Brands in 2018 and subsequently sold to the Company in September 2018.
The Product
Tequila Alebrijes tequila is produced in Tequila Jalisco, Mexico. Our tequila is available in three styles: (i) tequila blanco, (ii) tequila reposado, and (iii) tequila añejo. Our product is offered in 750 ML bottle size and has 40% alcohol percentage. The retail price range of our product is approximately $33.95 to $54.95 per 750ML bottle.
Previous owners of the brand have sold product in the United States, Asia and Europe through a variety of distributors.
Marketing and Distribution Plans and Strategy
Until, if ever, we are licensed, we intend to retain third party brand managers to import and market our products. We have entered into a non-exclusive Brand Management Agreement with CCB as described below.
Brand Management Agreement
On October 29, 2018, we entered into a non-exclusive brand management agreement (“Brand Management Agreement”) with CCB for the brand Tequila Alebrijes (“Brand”). Pursuant to the Agreement, CCB has been appointed as a non-exclusive Brand Manager of the Company’s Tequila Alebrijes brand. CCB will perform certain services for the Company in connection with the planning, launch, creation, branding, market research, advertising, marketing, consulting, creative and/or digital services and sales for the Brand, the Company’s Tequila Alebrijes product and the Company. A copy of the Brand Management Agreement was attached as an Exhibit to a Form 8-K filed by the Company with the SEC on November 1, 2018,
The Company and CCB intend to develop a quarterly and annual budget pursuant to which CCB shall perform the agreed upon services under the Brand Management Agreement.
CCB will coordinate with the producer of the Company’s tequila product to ship existing inventory to CCB or to such other location as designated by CCB, to enable CCB to fulfill purchase orders from customers. If CCB anticipates that additional inventory should be produced for distribution, CCB shall discuss the inventory requirements with the Company. The Company shall be responsible for authorizing the producer to produce additional products for sale to customers on behalf of the Company.
CCB will receive 10% of the gross revenue received from the sale of the products marketed under the Brand Management Agreement.
The Brand Management Agreement was for a term of two (2) years. The Brand Management Agreement expired in October 2020 and has not been extended or renewed as of the date of this report. We anticipate that we will modify the agreement if we pursue renewal, and will seek other product market alternatives. CCB is an affiliate of Human Brands.
The foregoing is a brief description of the material terms of the Brand Management Agreement, does not purport to be a complete description of the rights and obligations of the parties thereunder, and is qualified in its entirety by reference to the Brand Management Agreement, which was filed as an exhibit to a Form 8-K filed November 1, 2018 and can be obtained on the SEC EDGAR Website.
As of the date of this report, the brand management agreement has not resulted in the sale of any of our product and we anticipate that we will either terminate or modify the agreement and seek other product market alternatives. We have been in discussions with other entities concerning brand management and distribution services and we anticipate that we will attempt to expand brand management and distribution services to other service providers.
Production and Supplier
The Tequila Alebrijes product is produced by Autentica Tequilera, SA.de.CV (the “Producer”) in Tequila Jalisco, Mexico. The Producer is not affiliated with the Company or with the Brand Manager. In addition to our inventory stored at the Producer’s facilities, we have been informed that the Producer has the ability to continue to supply the Company with product as needed.
Current Inventory
In connection with the acquisition of the Tequila Alebrijes brand, we own approximately 6,500 bottles of tequila blanco, tequila reposado, and tequila anejo valued at $80,404. The inventory is currently stored at the producer’s facilities in Tequila Jalisco, Mexico and will be shipped to the Brand Manager as needed for distribution.
Other Brands
Tequila Alebrijes is our first brand. Subject to adequate capital, of which there can be no assurance, we intend to attempt to acquire additional distilled spirits brands and non-alcoholic beverage brands and to market and distribute other branded alcoholic and non-alcoholic beverage products.
Competition
The global distilled spirits industry, in general, and the tequila industry specifically is very competitive. The tequila industry is comprised of both major, well financed, participants and smaller boutique type producers or brands. We anticipate that we will compete on the basis of product quality, brand image, innovation, price, and service in response to consumer preferences. Top selling tequila brands in the US include Jose Cuervo, Sauza, Patron, Don Julio, El Jimada and Hernitos.
We anticipate that in order to expand our portfolio of brands we will focus on partnering with small to mid-size brands as opposed to major companies. We intend to use our capital stock to attempt to acquire other brands or partnership arrangements with other brands. As a result of our limited capital position and our lack of operating history in the beverage industry, we anticipate that it will be difficult to compete with these larger companies in pursuing agency distribution agreements and acquiring brands. We plan to seek acquisitions and other transactions with smaller privately-owned and family-owned brands, offering flexible transaction structures and providing brand owners the option to retain local production and “home” market sales. Given our size relative to our major competitors, most of which have multi-billion dollar operations, we believe that we must have greater focus on smaller brands and tailor transaction structures based on individual brand owner preferences. However, our relative capital position and resources may limit our marketing capabilities, limit our ability to expand into new markets and limit our negotiating ability with our distributors and other parties.
Intellectual Property
We anticipate that trademarks will be an important aspect of our business. We currently plan to sell products under the Tequila Alebrijes trademark. We anticipate that we will sell products under other trademarks as a product line increase. We plan to either own or license such trademarks.
Protection of our intellectual property is a strategic priority for our business. We currently own one trademark, Tequila Alebrijes. We will rely on a combination of copyright, trademark and trade secret laws, as well as confidentiality agreements, to establish and protect our proprietary rights. We do not rely on third-party licenses of intellectual property for use in our business.
The Tequila Alebrijes trademark was first registered on June 17, 2006 and was assigned to us by Human Brands, on September 13, 2018, pursuant to an assignment filed with the United States Patent and Trademark Office on September 25, 2018.
If our business plan is achieved, of which there can be no assurance, we anticipate that we will acquire other brands and their related trademarks, and other intellectual property.
As of the date of this Form 10-K, we had acquired one registered internet domain name, www.tequilaalebrijes.com.
Regulatory Environment
Federal, state, local, and foreign authorities regulate how we produce, store, transport, distribute, and sell our products. Some countries and local jurisdictions prohibit or restrict the marketing or sale of distilled spirits in whole or in part.
In the United States, at the federal level, the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury regulates the spirits and wine industry with respect to the production, blending, bottling, labeling, sales, advertising, and transportation of beverage alcohol. Similar regulatory regimes exist at the state level and in most non-U.S. jurisdictions where we sell our products. In addition, beverage alcohol products are subject to customs duties or excise taxation in many countries, including taxation at the federal, state, and local level in the United States.
Mexican authorities regulate the production and bottling of tequilas; they mandate minimum aging periods for extra añejo (three years), añejo (one year), and reposado (two months) tequilas. Other beverage products that we may eventually become involved with have their own regulatory requirements as to production, labeling and other issues. We intend to comply with all applicable laws and regulations.
Accordingly, in the US we are subject to the jurisdiction of the Federal Alcohol Administration Act, U.S. Customs Laws, Internal Revenue Code of 1986, and the Alcoholic Beverage Control Laws of all fifty states.
The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau regulates the production, blending, bottling, sales and advertising and transportation of alcohol products. Also, each state regulates the advertising, promotion, transportation, sale and distribution of alcohol products within its jurisdiction. We are also required to conduct business in the U.S. only with holders of licenses to import, warehouse, transport, distribute and sell spirits.
We are subject to U.S. regulations on the advertising, marketing and sale of beverage alcohol. These regulations range from a complete prohibition of the marketing of alcohol in some countries to restrictions on the advertising style, media and messages used.
Labeling of spirits is also regulated in many markets, varying from health warning labels to importer identification, alcohol strength and other consumer information. All beverage alcohol products sold in the U.S. must include warning statements related to risks of drinking beverage alcohol products.
In the U.S. control states, the state liquor commissions act in place of distributors and decide which products are to be purchased and offered for sale in their respective states. Products are selected for purchase and sale through listing procedures which are generally made available to new products only at periodically scheduled listing interviews. Consumers may purchase products not selected for listings only through special orders, if at all.
The distribution of alcohol-based beverages is also subject to extensive federal and state taxation in the U.S. and internationally. Most foreign countries in which we expect to do business impose excise duties on wines and distilled spirits, although the form of such taxation varies from a simple application on units of alcohol by volume to intricate systems based on the imported or wholesale value of the product. Several countries impose additional import duty on distilled spirits, often discriminating between categories in the rate of such tariffs. Import and excise duties may have a significant effect on our sales, both through reducing the consumption of alcohol and through encouraging consumer switching into lower-taxed categories of alcohol.
We will be subject to import and export laws relating to the US and any country we either intend to sell products or import products for resale
We will be subject to foreign laws to the extent we operate in foreign markets.
Compliance costs will be a significant factor in our business. At least initially, we plan to use licensed third party Brand Management companies and licensed distributors to manage our brand and market our products.
Funding Strategy
We anticipate that in order to achieve our marketing strategy for our Tequila Alebrijes brand and acquire and market other brands, we will be required to obtain significant capital from equity and debt sources. There can be no assurance that we will be able to obtain adequate additional capital as we need it or, even if it is available, that it will be on terms and conditions that are acceptable and commercially reasonable. We anticipate that we will issue shares of our capital stock to raise additional capital, to attract third party distribution networks, attempt to acquire interests in other brands and for employee compensation.
Properties
Currently, as we are building our lines of distributions and potentially acquiring other brands, we are operating out of the business office of Mark Scharmann, our sole officer and director. We do not anticipate that in the foreseeable future we will store products in our own facilities but will arrange for products to be shipped directly from the producer or supplier to ultimate distributor. Accordingly, we do not anticipate that, at least in the foreseeable future, we will be required to obtain warehouse facilities to store products. As our business grows, and as we hire employees and agents, we anticipate that we will require additional office facilities.
Currently, our inventory is stored in the facilities of the producer Autentica Tequilera, SA.De.CV, in Tequila Jalisco, Mexico. We intend for all or some of the inventory to be shipped to the US facilities of CCB, our Brand manager, or to the facilities of one of its affiliates.
Relationship with Human Brands
As described above, we acquired the Tequila Alebrijes brand from Human Brands for $50,000 cash and 3,500,000 shares of our common stock. As a result of such asset acquisition, on the acquisition date Human Brands owned approximately 52.4 % of our then-issued and outstanding shares of common stock. So as not to effect a change in control, Human Brands granted our President, Mark Scharmann, an Irrevocable Proxy to vote 300,000 of its shares of our common stock. We have since issued additional shares of our common stock to other individuals and HBI has transferred 296,154 of its shares to other shareholders, thereby reducing HBI’s ownership percentage to 44% (3,203,846 shares) as of the date of this filing. On May 24, 2019 the Company and proxy holder Mark Scharmann terminated the proxy and such proxy is of no further force or effect. HBI has full voting rights as to the 300,000 shares described in the proxy. No officer, director, shareholder, affiliate or agent of Human Brands is an officer or director of our company.
In October 2018 we entered into a non-exclusive Brand Management Agreement with CapCity Beverage, LLC which is a wholly-owned subsidiary of Human Brands. The Brand Management Agreement expired in October 2020 and has not been extended or renewed as of the date of this report.
Employees
As of the date of this report, we have no employees. Subject to adequate financing and business needs we will retain employees, third party consultants, agents and other service providers on an as needed basis.

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ITEM 1A. RISK FACTORS
ITEM 1A
RISK FACTORS.
Not Applicable. The Company is a “smaller reporting company.”

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B
UNRESOLVED STAFF COMMENTS.
Not Applicable. The Company is a “smaller reporting company.”

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ITEM 2. PROPERTIES
ITEM 2
PROPERTIES.
We do not own any property. The principal offices are located at 1661 Lakeview Circle, Ogden, Utah 84403

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3
LEGAL PROCEEDINGS.
The Company is currently not a party to any pending legal proceedings. As described in Notes to the Financial Statements, we have been notified that Auctus Fund, LLC has claimed a default under the promissory note we issued to Auctus in September 2018. Although we are attempting to resolve this issue with Auctus, there can be no assurance that Auctus will not commence a legal proceeding in connection with such claimed default.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4
MINE SAFETY DISCLOSURES.
Not Applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
The Company’s common stock is included on the OTC Pink Marketplace under the symbol “SRSG.” On March 26, 2021, the published closing price was $1.19 for the Company’s common stock on the OTC Pink Marketplace.
At December 31, 2020, there were approximately 40 holders of record of the Company’s common stock, as reported by the Company’s transfer agent. In computing the number of holders of record, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single stockholder.
The following represents trading ranges per quarter.
Quarter Ending3/31/2019High $2.84 Low $2.60
Quarter Ending 6/30/2019 High $ NA Low $ NA
Quarter Ending 9/30/2019High $ NA Low $ NA
Quarter Ending 12/31/2019High $2.35 Low $ 1.65
Quarter Ending3/31/2020High $ NA Low $ NA
Quarter Ending 6/30/2020 High $ NA Low $ NA
Quarter Ending 9/30/2020High $1.40 Low $1.37
Quarter Ending 12/31/2020High $ NA Low $ NA
No dividends have ever been paid on the Company’s securities, and the Company has no current plans to pay dividends in the foreseeable future.
Equity Compensation Plans
We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.
Transfer Agent
Colonial Stock Transfer Co., Inc., 66 Exchange Place, Suite 100, Salt Lake City, Utah 84111, telephone (801) 355-5740, serves as the transfer agent and registrar for our stock.
Recent Sales of Unregistered Securities
On August 29, 2019, the Company issued 50,000 shares of its common stock for legal services rendered to the Company totaling $15,000.
On November 21, 2019, the Company issued 30,000 shares of its common stock for the conversion of accrued interest and conversion fees totaling $12,600.
On December 10, 2019, the Company issued 5,000 shares of its Series D Preferred Stock for the conversion of accrued interest of $10,000. The Series D were valued by a qualified independent valuation firm at $.046 per share, or $228 for the 5,000 shares. Accordingly, the difference of $9,772 has been recorded as forgiveness of related party debt in additional paid-in capital.
Issuer Purchases of Equity Securities
We have not adopted a stock repurchase plan and we did not purchase any shares of our equity securities during the 2020 fiscal year.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6
SELECTED FINANCIAL DATA.
Not Applicable. The Company is a “smaller reporting company.”

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to the results of operations and financial condition of Spirits Time International, Inc. for the years ended December 31, 2020 and 2019.
The Report of Independent Registered Public Accounting Firm on the Company’s 2020 audited financial statements addresses an uncertainty about the Company’s ability to continue as a going concern, indicating that the Company has incurred losses since its inception and has no on-going operations. The report further indicates that these factors raise substantial doubt about the Company’s ability to continue as a going concern. At December 31, 2020, the Company had a working capital deficit of $814,238 and a stockholders’ deficit of $539,238. The Company incurred net losses of $164,621 and $295,395 for its fiscal years ended December 31, 2020 and 2019, respectively. Our primary creditor has claimed a default under the Promissory Note we issued to such creditor. The Company has not entered into any agreements or arrangements for the provision of additional debt or equity financing and there can be no assurance that it will be able to obtain the additional debt or equity capital required to continue its operations.
Critical Accounting Policies
The preparation of our financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts in the financial statements. There have been no material changes to these policies during fiscal 2020 and 2019. As of December 31, 2020, the Company has not identified any critical estimates that are used in the preparation of the financial statements.
Liquidity and Capital Resources. As of December 31, 2020, we had cash of $342 and a negative working capital of $814,238. This compares with cash of $163 and negative working capital of $649,617 as of December 31, 2019.
Net cash used by operating activities totaled $40,371 for the year-ended December 31, 2020 consisting of a loss from operations of $164,621 which was offset by a change in accounts payable and accrued expenses of $97,901 and a change in accrued interest - related parties of $26,349. This compares with net cash used by operating activities totaled $103,761 for the year-ended December 31, 2019 consisting of a loss from operations of $295,395 which was offset by stock-based compensation of $15,000, amortization of debt discount of $17,812, loss on impairment of prepaid inventory of $69,530, a change in inventory of $66, a change in accounts payable and accrued expenses of $78,287 and a change in accrued interest - related parties of $10,939.
There were no investing activities for the years ended December 31, 2020 and 2019.
Net cash provided by financing activities totaled $40,550 for the year-ended December 31, 2020 consisting of proceeds from loans payable - related parties of $35,550 and proceeds from notes payable of $5,000. This compares with net cash used by financing activities totaled $17,815 for the year-ended December 31, 2019 consisting of proceeds from loans payable - related parties of $9,750, payments on loans payable - related parties of $17,565 and payments on notes payable of $10,000.
In September 2018, we obtained funds from the issuance of a Secured Promissory Note that is described in the Notes to the Financial Statements. Our net proceeds from that transaction have been used to repay outstanding debt, to fund the professional fees in connection with such transaction and the Asset Acquisition Transaction, for use in our beverage operations and for working capital.
As described in Notes to the Financial Statements, the lender under the Secured Promissory Note has notified us of a claimed default under the Note. The Note is secured by all of the assets of the Company. We currently do not have cash available to repay the Note and there is no assurance that we will ever have liquid assets necessary to repay the Note.
We must secure additional funds in order to continue our business. There is no guarantee we will receive the required financing to complete our business strategies; we cannot provide any assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. If we are unable to accomplish raising adequate funds then any it would be likely that any investment made into the Company would be lost in its entirety.
Results of Operations. We did not have revenue for either the year-ended December 31, 2020 or 2019. For the year-ended December 31, 2020, we incurred professional fees of $47,740. For the year-ended December 31, 2019, we incurred professional fees of $111,654, which includes stock-based compensation of $15,000. The decrease in professional fees is mainly the result of legal and accounting fees incurred during the year ended December 31, 2019 associated with the Asset Acquisition described in ITEM 1 above and the convertible promissory note
described in the Notes to the Financial Statements below. For the year-ended December 31, 2020, we incurred $9,096 of administrative expenses compared to $26,199 for the year-ended December 31, 2019. The decrease in administrative expenses is due primarily to significant marketing and travel fees incurred during the year ended December 31, 2019 related to the Asset Acquisition. For the year-ended December 31, 2020 we incurred interest expense of $107,785. For the year-ended December 31, 2019 we recorded an impairment loss on prepaid inventory of $69,530 and we incurred interest expense of $88,012 which includes the amortization of debt discount of $17,812.
As a result of the foregoing, we incurred a loss of $164,621 for the year-ended December 31, 2020 compared to a loss of $295,395 for the year-ended December 31, 2019. Since incorporation we have incurred a loss of $1,488,654.
Off-Balance Sheet Arrangements. None
Contractual Obligations. None
Recent Accounting Pronouncements
We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to our company. We have determined that none had a material impact on our financial position, results of operations, or cash flows for the years ended December 31, 2020 and 2019.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable. The Company is a “smaller reporting company.”

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our financial statements appear beginning on page, immediately following the signature page of this report.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A
CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2020, these disclosure controls and procedures were ineffective to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Chief 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.
Our evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013), to identify the risks and control objectives related to the evaluation of our control environment.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting. Based on our evaluation, management concluded that our internal control over financial reporting was ineffective for both of our fiscal years ended December 31, 2020 and December 31, 2019. A material weakness in internal control over financial reporting is defined by the Public Company Accounting Oversight Board’s Audit Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting. Management has determined that our lack of segregation of duties constitutes a material weakness, as our sole officer, director, and employee is the same person. Due to the size and operations of the Company, we are unable to remediate this deficiency until we acquire or merge with another company, or have sufficient resources to hire additional personnel.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation requirements by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting that occurred during our fiscal year ended December 31, 2020 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B
OTHER INFORMATION.
NONE
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Spirits Time International, Inc.’s executive officer and director and his respective age as of December 31, 2020 are as follows:
Directors:
Name of Director
Age
Mark A. Scharmann
Executive Officers:
Name of Director
Age
Mark A. Scharmann
The term of office for each director is one year, or until the next annual meeting of the shareholders.
Biographical Information
Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years
Mark A. Scharmann - President and Director - For the past several years Mr. Scharmann has been a private investor in residential real estate and private and public companies. Mr. Scharmann became interested in investing in emerging growth companies in December 1979 while attending Weber State College. He compiled and edited a publication titled Digest of Stocks Listed on the Intermountain Stock Exchange (Library of Congress Cat. No. 80-82407). In 1981, he compiled and edited an industry directory called the OTC Penny Stock Digest (Library of Congress Cat. No. 80-82471). For the past several years Mr. Scharmann has also consulted with both public and privately held companies relating to management, mergers and acquisitions, debt and equity financing, capital market access, and introductions to investor relations groups. In addition to being an officer and director of the Company, Mr. Scharmann is an officer and director of Bioethics, LTD., a shell company listed on the OTC Markets under the symbol (“BOTH”). He is an officer of Roycemore Corporation, a private firm specializing in the development and acquisition of self-storage facilities. Mr. Scharmann is a co-founder of wffl.com and wasatchbasketballleague.com, both youth sports information web sites. He graduated from Weber State University, Ogden, UT in 1997 with a Bachelors of Integrated Studies Degree in Business, Psychology and Health Education.
Spirits Time International, Inc.’s Officer and sole Director has not been involved, during the past five years, in any bankruptcy, conviction or criminal proceedings; has not been subject to any order, judgment, or decree, not subsequently reversed or suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and has not been found by a court of competent jurisdiction, the Commission or the Commodity Futures trading Commission to have violated a federal or state securities or commodities law.
Significant Employees. We do not employ any non-officers who are expected to make a significant contribution to its business.
Corporate Governance
Nominating Committee. We have not established a Nominating Committee because of our limited operations; and because we have only one director and officer, we believe that we are able to effectively manage the issues normally considered by a Nominating Committee.
Audit Committee. We have not established an Audit Committee because of our limited operations; and because we have only one director and officer, we believe that we are able to effectively manage the issues normally considered by an Audit Committee.
Code of Ethics. We have adopted a Code of Ethics for our principal executive and financial officers. Our Code of Ethics is filed as an Exhibit to our registration statement filed on May 30, 2008.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11
EXECUTIVE COMPENSATION.
Summary Compensation Table
Annual Compensation
Long-Term Compensation
Name and
Principal Position
Year
Salary ($)
Bonus
Other Annual Compensation ($)
Restricted Stock Awards ($)
Securities Underlying Options (#)
LTIP Payouts ($)
All Other Compensation ($)
Mark A. Scharmann
-
-
-
-
-
-
-
Officer and Director
-
-
-
-
-
-
-
There has been no cash payment paid to the executive officer for services rendered in all capacities to us for the periods ended December 31, 2020 and 2019. There has been no compensation awarded to, earned by, or paid to the executive officer by any person for services rendered in all capacities to us for the fiscal periods ended December 31, 2020 and 2019. No compensation is anticipated within the next six months to any officer or director of the Company.
Stock Option Grants
We did not grant any stock options to the executive officer during the most recent fiscal period ended December 31, 2020. We have also not granted any stock options to the executive officer of the Company.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table provides the name of each person or entity known to Spirits Time International, Inc. to own more than 5% of the outstanding common stock as of December 31, 2020, and by the Officers and Directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.
Title Of Class
Name and Title of Beneficial Owner of Shares
Amount of Beneficial Ownership
%
Common
Mark A. Scharmann, President and Director
3,061,553
41.59
%
Common
Human Brands International, Inc.
3,203,846
43.52
%
All Directors and Officers as a group
3,061,553
41.59
%
The percent of class is based on 7,361,005 shares of common stock issued and outstanding as of December 31, 2020.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During the year ended December 31, 2020, related parties of the Company loaned a total of $35,550 to the Company in order to pay for expenses and continue the reporting requirements with the Securities and Exchange Commission. The balance due to these related parties was $235,963 plus accrued interest of $78,881 as of December 31, 2020.
Beginning August 2017, the Company entered into an oral agreement to pay the Company’s sole director $500 per month as payment for use of his personal residence as the Company’s office and mailing address.
Our board of directors consists of one person: Mark Scharmann. Our sole director is not “independent” within the meaning of Rule 5605(a)(3) of the NASDAQ Marketplace because he is an officer of the Company.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The amounts paid to our independent auditing firm for each of the past two calendar years are as follows:
2020 2019
Auditing $13,500$14,500
Audit-related services - -
Tax services - -
Other services[2]____ -____ _____-___
Total $13,500$14,500
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)
The following documents have been filed as a part of this Annual Report on Form 10-K.
1.
Financial Statements
Page
Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity (Deficit)
Statements of Cash Flows
Notes to Financial Statements
-13
2.
Financial Statement Schedules.
All schedules are omitted because they are not applicable or not required or because the required information is included in the Financial Statements or the Notes thereto.
3.
Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Annual Report:
Exhibit
Number
SEC Reference Number
Title of Document
Location
3.1
Articles of Incorporation
Incorporated by Reference(1)
3.2
Bylaws
Incorporated by Reference(1)
31.1
Section 302 Certification of Chief Executive and Chief Financial Officer
This Filing
32.1
Section 1350 Certification of Chief Executive and Chief Financial Officer
This Filing
101.INS(2)
XBRL Instance Document
This Filing
101.SCH(2)
XBRL Taxonomy Extension Schema
This Filing
101.CAL(2)
XBRL Taxonomy Extension Calculation Linkbase
This Filing
101.DEF(2)
XBRL Taxonomy Extension Definition Linkbase
This Filing
101.LAB(2)
XBRL Taxonomy Extension Label Linkbase
This Filing
101.PRE(2)
XBRL Taxonomy Extension Presentation Linkbase
This Filing
(1)Incorporated by reference to Exhibits 3(i) and 3(ii) of the Company’ 2003 Form 10-KSB report, filed March 30, 2004.
(2)XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.