Executive Summary

SRSG executed a strategic pivot in Q3 2018: acquired the Tequila Alebrijes brand and related rights, changed its name from Sears Oil and Gas to Spirits Time International, and ceased shell company status to commence beverage operations .
The company secured $300,000 senior secured convertible debt (net proceeds ≈ $276,000) to fund the asset purchase and initial working capital; a warrant for 42,857 shares at $3.50 was issued to the lender .
No operating revenue or EPS were reported for Q3 2018; historical financials through Q2 2018 reflect zero revenue and modest operating losses while the business plan transitions to commercialization .
Initial commercialization steps include a brand management agreement with CapCity Beverage (10% of gross revenue) and expected U.S. product shipment in Q4 2018; additional capital will likely be needed over the next two quarters .
Liquidity and dilution risks are significant given negative working capital at June 30, 2018 and outstanding convertible notes; OTC Pink trading is thin with Q3 2018 bid range $4.25–$3.00 .

What Went Well and What Went Wrong

What Went Well

Acquisition of Tequila Alebrijes brand and IP, with worldwide exclusive rights and ~12,000 bottles of initial inventory to support launch .
Brand management agreement with CapCity Beverage to drive marketing/distribution; first activation at BB&T Center (Florida Panthers arena) to build awareness .
Management laid out a clear operating strategy and timing: “Our Tequila Alebrijes product is expected to be shipped to the US in the fourth quarter of 2018” .

What Went Wrong

Liquidity constraints: as of June 30, 2018, cash was $64 and working capital was negative $268,660, underscoring funding risk for commercialization .
No revenue history and early-stage execution risk; management cautions “we are truly beginning operations in the beverage industry on the ground floor” .
Capital structure overhang: senior secured convertible note ($300,000), existing related-party convertible notes (convertible at $1.00), and a 42,857-share warrant at $3.50 create potential dilution and financing complexity .

Financial Results

Results vs Prior Periods and Estimates

Note: SRSG did not disclose Q3 2018 revenue or EPS; historical financials were provided for Q2 2018 and Q2 2017 while the company was a shell.

Metric	Q2 2017	Q2 2018	Q3 2018
Revenue ($USD)	$0	$0	Not disclosed (company commencing operations)
SG&A ($USD)	$11,518	$16,182	Not disclosed
Interest Expense ($USD)	$8,528	$5,360	Not disclosed
Net Loss ($USD)	$20,046	$21,542	Not disclosed
EPS ($USD)	N/A	N/A	Not disclosed

Wall Street estimates for Q3 2018 EPS and revenue were unavailable via S&P Global for SRSG.

Segment Breakdown

SRSG reported a single brand focus (Tequila Alebrijes) and did not provide segment financials for Q3 2018 .

KPIs and Balance Sheet Context

KPI / Metric	Value	Context
Tequila Inventory (bottles)	Blanco 7,200; Reposado 3,600; Añejo 1,200	Launch-ready finished goods at producer in Mexico
Expected U.S. Shipment	Q4 2018	Initial commercialization timing
Brand Manager Fee	10% of gross revenue to CCB	Ongoing distribution/marketing economics
Cash (6/30/2018)	$64	Pre-acquisition liquidity baseline
Working Capital (6/30/2018)	$(268,660)	Funding gap prior to Q3 financing
Shares Outstanding	6,681,005	Post-asset issuance capital base
Ownership (votes)	Scharmann 3,361,553 (50.32%); Human Brands 3,200,000 (47.90%)	Voting control via irrevocable proxy
Auctus Note	$300,000 principal; 10% interest; default 24%	Secured by all assets
Net Proceeds from Auctus	≈ $276,000	$50,000 used for asset purchase cash portion
Auctus Warrant	42,857 shares @ $3.50, 5-year term	Anti-dilution provisions
Prior Quarter Bid Range	Q3 2018: $4.25 high; $3.00 low (bid)	Thin OTC Pink trading context

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Product shipment timing	Q4 2018	None	“Expected to be shipped to the US in the fourth quarter of 2018”	Introduced
Capital raising plan	Next two quarters	None	“We anticipate that we will attempt to raise additional capital…during the next two quarters”	Introduced
Sales network expansion	Ongoing	None	“We anticipate we will attempt to expand our sales network with additional brand management and/or distribution agreements”	Introduced
OpEx/Margins/Tax	N/A	None	Not provided	N/A
Dividends	N/A	None	“We have not declared any cash dividends…do not intend to declare dividends in the foreseeable future”	Maintained (no dividend)

Earnings Call Themes & Trends

No Q3 2018 earnings call transcript or prior-quarter transcripts were found for SRSG.

Filing-based narrative trend tracking:

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2018)	Trend
Commercialization timeline	Not disclosed	Q4 2018 U.S. shipment expected; brand activation in South Florida	Building toward initial sales
Supply chain & licensing	Not disclosed	Reliance on brand manager licenses; plans to qualify for own permits over time	Establishing compliant distribution
Funding strategy	Not disclosed	$300k secured convertible; additional capital needed to execute plan	Elevated financing needs
Regulatory environment	Not disclosed	Extensive U.S. and Mexican regulatory oversight; compliance via third parties initially	Heightened compliance requirements
Market positioning	Not disclosed	Premium tequila focus; arena sponsorship to seed brand awareness	Awareness-led go-to-market

Management Commentary

Strategic pivot: “Effective October 22, 2018, we changed our name from Sears Oil and Gas Corporation to Spirits Time International, Inc.” and commenced operations in beverages following the asset acquisition and loan transaction .
Early-stage positioning: “We are truly beginning operations in the beverage industry on the ground floor” .
Commercialization plan: “Our Tequila Alebrijes product is expected to be shipped to the US in the fourth quarter of 2018” .
Funding requirements: “We anticipate that in order to achieve our marketing strategy…we will be required to obtain significant capital from equity and debt sources” .
Distribution approach: “Initially we are relying on ‘Brand Management Agreements’…[and] will be contracting with US domestic distributors that have permits and licenses” .

Q&A Highlights

No analyst Q&A was available for Q3 2018 due to the absence of an earnings call transcript.

Estimates Context

Wall Street consensus estimates via S&P Global for SRSG’s Q3 2018 revenue and EPS were unavailable due to missing mapping; as such, comparisons to consensus cannot be made at this time.
Given the company’s pre-revenue status and transition from a shell, coverage and forecasts appear limited in the near term .

Key Takeaways for Investors

Pre-revenue pivot to premium tequila with tangible assets (brand/IP and ~12,000 bottles), but commercialization and revenue generation begin post-Q3 in Q4 2018 .
Liquidity is tight and financing risk is high; net proceeds from the $300k note bridged near-term needs, yet management expects to raise additional capital over the next two quarters .
Capital structure poses dilution risk: senior secured convertible note, related-party convertibles (at $1.00), and a 42,857-share warrant with anti-dilution provisions .
Execution hinges on brand management and distribution partnerships; 10% gross revenue fee to CCB will be a structural cost in the P&L .
Regulatory complexity across U.S. and Mexico suggests initial reliance on licensed third parties, with plans to eventually qualify for own permits .
Limited and thin OTC Pink trading; Q3 2018 bid range of $4.25–$3.00 underscores liquidity constraints for traders .
Near-term catalysts: U.S. product shipment in Q4 2018 and incremental distribution agreements; medium-term thesis depends on scaling awareness, converting to sell-through, and securing funding without excessive dilution .

SPIRITS TIME INTERNATIONAL, INC. (SRSG)·Q3 2018 Earnings Summary