U.S. SECURITIES ANDEXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from _______ to _________
Commission File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or formation) | (I.R.S. employer identification number) |
| (Address of principal executive offices) (Zip code) |
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) ofthe Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| American LLC | ||||
| American LLC |
Indicate by check mark whether the registrant (1)has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirementsfor the past 90 days.
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Indicate by check mark whether the registrant hassubmitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. Seethe definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and“emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company Emerging growth company |
If an emerging growth company, indicate by check markif the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standardsprovided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).
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Check whether the registrant has filed all documentsand reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmedby a court. ☐ Yes ☐ No
As of July11, 2025, there were shares of Common Stock issued and outstanding.
| SPLASH BEVERAGE GROUP, INC. |
| FORM 10-Q |
| March 31, 2025 |
TABLE OF CONTENTS
i
PART I – FINANCIALINFORMATION
ITEM 1. FINANCIAL STATEMENTS
Splash Beverage Group, Inc.
Condensed Consolidated Financial Statements
March 31, 2025
1
| Splash Beverage Group, Inc. |
| Condensed Consolidated Balance Sheets |
| March 31, 2025 and December 31, 2024 |
| March31, 2025 | December31, 2024 | |||||||
| Assets | (unaudited) | |||||||
| Currentassets: | ||||||||
| Cashand cash equivalents | $ | $ | ||||||
| Accountsreceivable, net | ||||||||
| Prepaidexpenses | ||||||||
| Inventory | ||||||||
| Otherreceivables | ||||||||
| Totalcurrent assets | ||||||||
| Non-currentassets: | ||||||||
| Deposits | $ | $ | ||||||
| Investmentin Salt Tequila USA, LLC | ||||||||
| Rightof use assets | ||||||||
| Propertyand equipment, net | ||||||||
| Totalnon-current assets | ||||||||
| Totalassets | $ | $ | ||||||
| Liabilitiesand Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Currentliabilities | ||||||||
| Accountspayable and accrued expenses | $ | $ | ||||||
| Rightof use liability, current portion | ||||||||
| Relatedparty notes payable | ||||||||
| Notespayable, net of discounts | ||||||||
| Shareholderadvances | ||||||||
| Accruedinterest payable | ||||||||
| Totalcurrent liabilities | ||||||||
| Long-termliabilities: | ||||||||
| Notespayable, net of discounts | ||||||||
| Rightof use liability – net of current portion | ||||||||
| Totallong-term liabilities | ||||||||
| Totalliabilities | ||||||||
| Stockholders’equity: | ||||||||
| Preferredstock, $ par value, shares authorized, shares issued | ||||||||
| CommonStock, $ par, shares authorized, shares issued, shares outstanding at March 31, 2025 and December31, 2024 | ||||||||
| Additionalpaid in capital | ||||||||
| Accumulatedother comprehensive loss | ||||||||
| Accumulateddeficit | ( | ) | ( | ) | ||||
| Totalstockholders’ equity | ( | ) | ( | ) | ||||
| Totalliabilities and stockholders’ equity | $ | $ | ||||||
Shares and per share amounts are reflective of the1 for 40 reverse split that occurred on March 27, 2025.
The accompanying notes are an integral part of thesecondensed consolidated financial statements.
2
| Splash Beverage Group, Inc. |
| Condensed Consolidated Statements of Operations and Comprehensive Loss |
| For the Three Months Ended March 31, 2025 and 2024 |
| (Unaudited) |
| Three months endedMarch 31, | ||||||||
| 2025 | 2024 | |||||||
| Netrevenues | $ | $ | ||||||
| Costof goods sold | ( | ) | ( | ) | ||||
| Grossprofit | ( | ) | ||||||
| Operatingexpenses: | ||||||||
| Contractedservices | ||||||||
| Salaryand wages | ||||||||
| Non-cashshare-based compensation | ||||||||
| Othergeneral and administrative | ||||||||
| Salesand marketing | ||||||||
| Totaloperating expenses | ||||||||
| Lossfrom continuing operations | ( | ) | ( | ) | ||||
| Otherincome/(expense): | ||||||||
| Otherincome | ( | ) | ( | ) | ||||
| Amortizationof debt discount | ( | ) | ( | ) | ||||
| InterestIncome | ||||||||
| Interestexpense | ( | ) | ( | ) | ||||
| Totalother expense | ( | ) | ( | ) | ||||
| Provisionfor income taxes | ||||||||
| Netloss from continuing operations, net of tax | ( | ) | ( | ) | ||||
| Netloss | $ | ( | ) | $ | ( | ) | ||
| Othercomprehensive loss foreign currency translation loss, net of tax | ( | ) | ( | ) | ||||
| Totalcomprehensive loss | ( | ) | ( | ) | ||||
| Lossper share - continuing operations | ||||||||
| Basicand dilutive | $ | ) | $ | ) | ||||
| Weightedaverage number of common shares outstanding - continuing operations | ||||||||
| Basicand dilutive | ||||||||
Shares and per share amounts are reflective of the1 for 40 reverse split that occurred on March 27, 2025.
The accompanying notes are an integral part of thesecondensed consolidated financial statements.
3
Splash Beverage Group, Inc.
Condensed Consolidated Statement of Changesin Stockholders’ Equity
For the Three months ended March 31, 2025 and 2024
(Unaudited)
| CommonShares | Amount | Additionalpaid-in capital | Accumulatedother comprehensive loss | Accumulateddeficit | Total stockholders’ equity | |||||||||||||||||||
| Balancesat December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Issuanceof common stock for note extension | ||||||||||||||||||||||||
| Sharebased compensation | — | |||||||||||||||||||||||
| Adoptionof ASU 2020-06 | ( | ) | ( | ) | ||||||||||||||||||||
| Issuanceof warrants on convertible instruments | — | |||||||||||||||||||||||
| Conversionof notes payable to common stock | ||||||||||||||||||||||||
| Issuanceof common stock for services | ||||||||||||||||||||||||
| AccumulatedComprehensive loss – translation, net | — | ( | ) | ( | ) | |||||||||||||||||||
| Netloss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balancesat March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Balancesat December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Sharebased compensation | — | |||||||||||||||||||||||
| Issuanceof warrants on convertible instruments | — | |||||||||||||||||||||||
| Conversionof notes payable to common stock | ||||||||||||||||||||||||
| Issuanceof common stock for services | ||||||||||||||||||||||||
| AccumulatedComprehensive loss – translation, net | — | ( | ) | ( | ) | |||||||||||||||||||
| Netloss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balancesat March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
Shares and per share amounts are reflective of the1 for 40 reverse split that occurred on March 27, 2025.
The accompanying notes are an integral part of thesecondensed consolidated financial statements.
4
| Splash Beverage Group, Inc. |
| Condensed Consolidated Statement of Cash Flows |
| For the Three Months Ended March 31, 2025 and 2024 |
| (Unaudited) |
| 2025 | 2024 | |||||||
| Netloss | $ | ( | ) | $ | ( | ) | ||
| Adjustmentsto reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciationand amortization | ||||||||
| Amortizationof debt discount | ||||||||
| ROUassets, net | ||||||||
| Non-cashshare-based compensation | ||||||||
| Changesin working capital items: | ||||||||
| Accountsreceivable, net | ||||||||
| Inventory,net | ||||||||
| Prepaidexpenses and other current assets | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ( | ) | ||||
| Accountspayable and accrued expenses | ||||||||
| Accruedinterest payable | ||||||||
| Netcash used in operating activities | ( | ) | ( | ) | ||||
| Cashflows from investing activities: | ||||||||
| Capitalexpenditures | ||||||||
| Netcash used in investing activities | ||||||||
| Cashflows from financing activities: | ||||||||
| Cashadvance (repayment) from related party | ( | ) | ||||||
| Cashadvance from shareholder | ||||||||
| Proceedsfrom issuance of debt | ||||||||
| Principalrepayment of debt | ( | ) | ( | ) | ||||
| Netcash provided by financing activities | ||||||||
| Netcash effect of exchange rate changes on cash | ( | ) | ( | ) | ||||
| Netchange in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cashand cash equivalents, beginning of year | ||||||||
| Cashand cash equivalents, end of period | $ | $ | ||||||
| Supplementaldisclosure of cash flow information: | ||||||||
| Cashpaid for Interest | $ | $ | ||||||
| Supplementaldisclosure of non-cash investing and financing activities | ||||||||
| Notespayable and accrued interest converted to common stock (224,541 shares in 2025 & 38,800 shares in 2024,) | ||||||||
| Non-cashdebt discount in the form of issuance of equity instruments in conjunction with convertible notes | ||||||||
Shares and per share amounts are reflective of the1 for 40 reverse split that occurred on March 27, 2025.
The accompanying notes are an integralpart of these condensed consolidated financial statements.
5
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 1 – Business Organization and Nature of Operations
Splash Beverage Group, Inc. (the “Company”,“Splash”) seeks to identify, acquire, and build early stage or under-valued beverage brands that have strong growth potentialwithin its distribution system. Splash’s distribution system is comprehensive in the US and is now expanding to select attractiveinternational markets. Through its division Qplash, Splash’s distribution reach includes e-commerce access to both business-to-business(B2B) and business-to-consumer (B2C) customers. Qplash markets well known beverage brands to customers throughout the US that prefer deliverydirect to their office, facilities, and or homes.
On March 27, 2025, the Company implemented a 1.0 for40.0 reverse stock split. All common stock shares stated herein have been adjusted to reflect the split. The purpose of this reverse splitwas to maintain the company’s listing on the NYSE American.
Note 2 –Summary of Significant Accounting Policies
Basis of Accounting
The accompanying condensed consolidated financialstatements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”),and the requirements of the U.S. Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted underthose rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. Accordingly,they do not include all of the information and footnotes normally included in financial statements prepared in conformity with U.S. GAAP.They should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2024 AnnualReport on Form 10-K, filed with the SEC on July 11, 2025 (the “Form 10-K”).
The accompanying condensed consolidated financialstatements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessaryfor a fair presentation of its condensed financial position and results of operations for the interim periods presented. The results ofoperations for the interim periods are not necessarily indicative of the results that may be expected for the entire year.
Basis of Presentation and Consolidation
These consolidated financial statements include theaccounts of Splash and its wholly owned subsidiaries Splash Beverage Holdings LLC (“Holdings”), Splash International HoldingsLLC (“International”), Splash Mex SA de CV (“Splash Mex”), and Copa di Vino Wine Group, Inc. (“Copa di Vino”).All intercompany balances have been eliminated in consolidation.
Our investment in Salt Tequila USA, LLC is accountedfor at cost, as the company does not have the ability to exercise significant influence.
Our accounting and reporting policies confirm to accountingprinciples generally accepted in the United States of America (GAAP).
Use of Estimates
The preparation of consolidated financial statementsin conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilitiesand disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amountsof revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash Equivalents and Concentration of CashBalance
The Company considers all highly liquid securitieswith an original maturity of three months or less to be cash equivalents. The Company had
Our cash in bank deposit accounts, at times, may exceedfederally insured limits of $
6
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 2 – Summary of Significant AccountingPolicies, continued
Accounts Receivable and Allowance for DoubtfulAccounts
Accounts receivable are carried at their estimatedrecoverable amounts and are periodically evaluated for collectability based on past credit history with clients and other factors. TheCompany establishes provisions for losses on accounts receivable on the basis of loss experience, known and inherent risk in the accountbalance, and current economic conditions.
Inventory
Inventory is stated at the lower of cost or net realizablevalue, accounted for using the weighted average cost method. The inventory balances at March 31, 2025 and December 31, 2024 consistedof raw materials, work-in-process, and finished goods held for distribution. The cost elements of inventory consist of purchase of products,transportation, and warehousing. The Company establish provisions for excess or inventory near expiration are based on management’sestimates of forecast turnover of inventories on hand and under contract. A significant change in the timing or level of demand for certainproducts as compared to forecast amounts may result in recording additional provisions for excess or expired inventory in the future.Provisions for excess inventory are included in cost of goods sold and have historically been adequate to provide for losses on inventory. TheCompany manages inventory levels and purchase commitments in an effort to maximize utilization of inventory on hand and under commitments.The amount of our reserve was $
Property and Equipment
The Company records property and equipment at costwhen purchased. Depreciation is recorded for property, equipment, and software using the straight-line method over the estimated economicuseful lives of assets, which range from 3-39 years. Company management reviews the recoverability of all long-lived assets, includingthe related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might notbe recoverable.
Depreciation expense totaled $
| 2025 | 2024 | |||||||
| Auto | ||||||||
| Machinery & equipment | ||||||||
| Buildings | ||||||||
| Leasehold improvements | ||||||||
| Computer Software | ||||||||
| Office furniture & equipment | ||||||||
| Total cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant & equipment, net | ||||||||
Excise taxes
The Company pays alcohol excise taxes based on productsales to both the Oregon Liquor Control Commission and to the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau(TTB). The company also pays taxes to the State of Florida – Division of Alcoholic Beverages and Tobacco. The Company is liablefor the taxes upon the removal of product from the Company’s warehouse on a per gallon basis. The federal tax rate is affected bya small winery tax credit provision which decreases based upon the number of gallons of wine production in a year rather than the quantitysold.
7
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 2 – Summary of Significant AccountingPolicies, continued
Fair Value of Financial Instruments
Financial Accounting Standards (“FASB”)guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchygives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) andthe lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:
| Level 1 - | Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. | |
| Level 2 - | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). | |
| Level 3 - | Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. |
The liabilities and indebtedness presented on thecondensed consolidated financial statements approximate fair values at March 31, 2025 and December 31, 2024, consistent with recent negotiationsof notes payable and due to the short duration of maturities and market rates of interest.
Embedded debt costsin convertible debt instruments
In August 2020, the FASB issued “ASU 2020-06,Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certainaccounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modifiedretrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. UpdateNo. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Earlyadoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The Company has adopted ASU 2020-06 effectiveJanuary 1, 2024 and has removed the effects of any embedded conversion features from certain of our convertible instruments.
Revenue Recognition
The Company recognizes revenue under ASC 606, Revenuefrom Contracts with Customers (Topic 606). This guidance sets forth a five-step model which depicts the recognition of revenue in an amountthat reflects what the Company expects to receive in exchange for the transfer of goods or services to customers.
The Company recognizes revenue when the Company’sperformance obligations under the terms of a contract with the customer are satisfied. Product sales occur for the Splash Beverage andE-commerce businesses once control of the Company’s products are transferred upon delivery to the customer. Revenue is measuredas the amount of consideration that the Company expects to receive in exchange for transferring goods, and revenue is presented net ofprovisions for customer returns and allowances. The amount of consideration the Company receives and revenue the Company recognizes varieswith changes in customer incentives offered to the Company’s customers and their customers. Sales taxes and other similar taxesare excluded from revenue.
8
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 2 – Summary of Significant AccountingPolicies, continued
Distribution expenses to transport our products, andwarehousing expense after manufacture are accounted for in Other General and Administrative cost.
Cost of Goods Sold
Cost of goods sold include the costs of products,packaging, transportation, warehousing, and costs associated with valuation allowances for expired, damaged or impaired inventory. Thecost of transportation from production site to other 3rd party warehouses or customer is included in Other General and Administrativecost.
Other General and Administrative Expenses
Other General and Administrative expenses includesAmazon selling fees, cost associated with the outbound shipping and handling of finished goods, insurance cost, consulting cost, legaland audit fees, Investor Relations expenses, travel & entertainment expenses, occupancy cost and other cost.
Stock-Based Compensation
The Company accounts for stock-based compensationin accordance with ASC 718, ”Compensation - Stock Compensation”. Under the fair value recognition provisions,cost is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite serviceperiod, which is generally the award’s vesting period. The Company uses the Black-Scholes option pricing model to determine thefair value of stock-based awards.
We measure stock-based awards at the grant-date fairvalue for employees, directors and consultants and recognize compensation expense on a straight-line basis over the vesting period ofthe award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fairvalue of our common stock, and for stock options and warrants, the expected life of the option and warrant, and expected stock price volatilityand exercise price. We used the Black-Scholes option pricing model to value its stock-based awards. The assumptions used in calculatingthe fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the applicationof management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expensecould be materially different for future awards. The expected life of stock options/warrants were estimated using the “simplifiedmethod,” which calculates the expected term as the midpoint between the weighted average time to vesting and the contractual maturity,we have limited historical information to develop reasonable expectations about future exercise patterns. The simplified method is basedon the average of the vesting tranches and the contractual life of each grant. For stock price volatility, we use comparable public companiesas a basis for its expected volatility to calculate the fair value of award. The risk-free interest rate is based on U.S. Treasury noteswith a term approximating the expected life of the award. The estimation of the number of awards that will ultimately vest requires judgment,and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts are recognized asan adjustment in the period in which estimates are revised.
Income Taxes
The Company uses the liability method of accountingfor income taxes as set forth in ASC 740, ”Income Taxes”. Under the liability method, deferred taxes are determinedbased on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected tobe in effect during the years in which the basis differences reverse. The Company records a valuation allowance when it is more likelythan not that the deferred tax assets will be realized.
Company management assesses its income tax positionsand records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information availableat the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than
9
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 2 – Summary of Significant Accounting Policies, continued
For those income tax positions where there is lessthan 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. Company managementhas determined that there are no material uncertain tax positions at March 31, 2025 and December 31, 2024.
The net income (loss) per share is computed by dividingthe net income (loss) by the weighted average number of shares of common stock outstanding. Warrants, stock options, and common stockissuable upon the conversion of the Company’s convertible debt or preferred stock (if any), are not included in the computationif the effect would be anti-dilutive.
Weighted average number of shares outstanding excludesanti-dilutive common stock equivalents, including stock options, warrants to purchase shares of common stock and shares issuable uponthe conversion of notes payable.
Advertising
The Company conducts advertising for the promotionof its products. In accordance with ASC 720-35, advertising costs are charged to operations when incurred. The Company recorded advertisingexpense of $
Goodwill and Intangibles Assets
Goodwill represents the excess of acquisition costover the fair value of the net assets acquired and is not subject to amortization. The Company reviews goodwill annually in the fourthquarter for impairment or when circumstances indicate carrying value may exceed the fair value. This evaluation is performed at the reportingunit level. If a qualitative assessment indicates that it is more likely than not that the fair value is less than carrying value, a quantitativeanalysis is completed using either the income or market approach, or a combination of both. The income approach estimates fair value basedon expected discounted future cash flows, while the market approach uses comparable public companies and transactions to develop metricsto be applied to historical and expected future operating results. The Company’sgoodwill and intangible assets were impaired to $0 at 12/31/24.
At the time of acquisition, the Company estimatesthe fair value of the acquired identifiable intangible assets based upon the facts and circumstances related to the particular intangibleasset. Inherent in such estimates are judgments and estimates of future revenue, profitability, cash flows and appropriate discount ratesfor any present value calculations. The Company preliminarily estimates the value of the acquired identifiable intangible assets and thenfinalizes the estimated fair values during the purchase allocation period, which does not extend beyond
10
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 2 – Summary of Significant AccountingPolicies, continued
Long-lived assets
The Company evaluates long-lived assets for impairmentwhen events or changes in circumstances may indicate the carrying amount of the asset group, generally an individual warehouse, may notbe fully recoverable. For asset groups held and used, including warehouses to be relocated, the carrying value of the asset group is consideredrecoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceedthe respective carrying value. In the event that the carrying value is not considered recoverable, an impairment loss is recognized forthe asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group. For assetgroups classified as held-for-sale (disposal group), the carrying value is compared to the disposal group’s fair value less coststo sell. The Company estimates fair value by obtaining market appraisals from third party brokers or using other valuation techniques.
Foreign Currency Gains/Losses
Foreign Currency Gains/Losses — foreign subsidiaries’functional currency is the local currency of operations and the net assets of foreign operations are translated into U.S. dollars usingcurrent exchange rates. Gains or losses from these translation adjustments are included in the condensed consolidated statement of operationsand other comprehensive loss as foreign currency translation gains or losses. Translation gains and losses that arise from the translationof net assets from functional currency to the reporting currency, as well as exchange gains and losses on intercompany balances, are includedin foreign currency translation in the condensed consolidated statement of operations and comprehensive loss. The Company incurred foreigncurrency translation net gain of$
Liquidity, Capital Resources and Going Concern Considerations
The Company’s consolidated financial statementshave been prepared on the basis of US GAAP for a going concern, on the premise that the Company is able to meet its obligations as theycome due in the normal course of business. The Company historically has incurred significant losses and negative cash flows from operationsince inception and had net-loss of approximately $3.6 million for three-month period ended March 31, 2025 and accumulated deficit ofapproximately $159.4 million through March 31, 2025. During the three-month period ended March 31, 2025, the Company’s net cashused in operating activities totaled approximately $
11
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 2 – Summary of Significant AccountingPolicies, continued
The Company received approximately $
Management’s plans in regard to these mattersinclude actions to sustain the Company’s operations, such as seeking additional funding to meet its obligations and implement itsbusiness plan. The Company has issued preferred stock as part of its strategy to regain compliance with the NYSE American listing standardsand reduce debt. These preferred shares, specifically Series B 12% convertible preferred stock, were issued in exchange for promissorynotes. The preferred stock offers a 12% cumulative dividend and potential conversion to common stock, subject to shareholder approvaland an increase in authorized common stock. In June 2025, the company exchanged approximately $12.67 million outstanding promissorynotes and accrued interest for 126,710 shares of Series B Preferred Stock. By converting debt into equity, the Company enhances its balancesheet, reduces interest expense, and improves its shareholder equity position in furtherance of its goal of complying with exchange requirements.
The financial statements do not include any adjustmentsthat might result from the outcome of this uncertainty. If the Company is unable to continue as a going concern, adjustments would benecessary to the carrying values of its assets and liabilities and the reported amounts of revenues and expenses could be materially affected.
Recent Accounting Pronouncements
In August 2020, the FASB issued “ASU 2020-06,Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certain accountingmodels which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospectivemethod of transition or a fully retrospective method of transition was permissible for the adoption of this standard.
Update No. 2020-06 is effective for fiscal years beginningafter December 15, 2021, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscalyear beginning after December 15, 2020. The Company has adopted ASU 2020-06 effective January 1, 2024, the Company recorded approximately$2.2 million as a reduction to the additional paid in capital and added approximately $1.3 million to the opening retained earnings inaccordance with the authoritative guidance under ASU 2020-06.
All other newly issued but not yet effective accountingpronouncements have been deemed to be not applicable or immaterial to the Company.
12
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 3 – Notes Payable, Related PartyNotes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable
Notes payable are generally nonrecourse and securedby all Company owned assets.
| Interest Rate | March 31, 2025 | December 31, 2024 | ||||||||||
| Notes Payable and Convertible Notes Payable | ||||||||||||
| In December 2020, the Company entered into a 56- month loan with a company in the amount of $ | % | |||||||||||
| In April 2021, the Company entered into a six-month loan with an individual in the amount of $ | % | |||||||||||
| In May 2021, the Company entered into a six-month loan with an individual in the amount of $ | % | |||||||||||
| In May 2021, the Company entered into a six-month loan with an individual in the amount of $ | % | |||||||||||
| In August 2022, the Company entered into a 56-months auto loan in the amount of $ | % | |||||||||||
| In December 2022, the Company entered into various eighteen-month loans with individuals totaling in the amount of $ | % | |||||||||||
| In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ | % | $ | ||||||||||
| In May 2023, the Company entered into various eighteen-month loans with individuals totaling in the amount of $ | % | |||||||||||
| In June 2023, the Company entered into various eighteen-month loans with individuals totaling in the amount of $ | % | |||||||||||
| In July 2023, the Company entered into a twelve-month loan with an individual in the amount of $ | % | |||||||||||
| In August 2023, the Company entered into a twelve-month loan with an individual in the amount of $ | % | |||||||||||
| In October 2023, the Company entered into a three-month loan with an individual in the amount of $ | % | |||||||||||
| In October 2023, the Company entered into a loan with an individual in the amount of $ | % | |||||||||||
| In October 2023, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ | % | |||||||||||
13
| In January 2024, the Company entered into a 18-month loan with an individual in the amount of $ | % | |||||||||||
| In February 2024, the Company entered into a 18-month loan with an individual in the amount of $ | % | |||||||||||
| In February 2024, the Company entered into a 6-month loan with an individual in the amount of $ | % | |||||||||||
| In February 2024, the Company entered into a 18-month loan with an entity in the amount of $ | % | |||||||||||
| In April 2024, the Company entered into a commercial financing agreement in the amount of $ | % | |||||||||||
| In May 2024, the Company entered into an eighteen-month loan with individuals totaling in the amount of $ | % | |||||||||||
| In June 2024, the Company entered into a revenue purchase agreement in the amount of $ | % | |||||||||||
| In July 2024, the Company entered into a revenue purchase agreement in the amount of $ | % | |||||||||||
| In July 2024, the Company entered into a revenue purchase agreement in the amount of $ | % | |||||||||||
| In August 2024, the Company entered into a 5-year loan with individuals totaling in the amount of $ | % | |||||||||||
| In August 2024, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ | % | |||||||||||
| In August 2024, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ | % | |||||||||||
| In September 2024, the Company entered into a merchant cash advance agreement in the amount of $ | % | |||||||||||
| In September 2024, the Company entered into an agreement with individuals totaling in the amount of $ | % | |||||||||||
| In October 2024, the Company entered into an agreement with individuals totaling in the amount of $ | % | |||||||||||
| In November 2024, the Company entered into a merchant cash advance agreement in the amount of $ | % | |||||||||||
| In December 2024, the Company entered into a merchant cash advance agreement in the amount of $ | % | |||||||||||
| In December 2024, the Company entered into a twelve-month loan with an individual in the amount of $ | % | |||||||||||
| In January 2025, the Company entered into a 12-month loan with individuals in the amount of $ | % | $ | ||||||||||
| In January 2025, the Company entered into a 18-month loan with individuals in the amount of $ | % | $ | ||||||||||
| In January 2025, the Company entered into a convertible promissory note in the amount of $ | % | |||||||||||
| In January 2025, the Company entered into a promissory note in the amount of $ | % | |||||||||||
| Total notes payable | $ | $ | ||||||||||
| Less notes discount | ( | ) | ( | ) | ||||||||
| Less current portion | ( | ) | ( | ) | ||||||||
| Long-term notes payable | $ | $ |
14
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 3 – Notes Payable, Related Party Notes Payable, ConvertibleBridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued
Interest expense on notes payable was $
The Company recognized approximately $
As of March 31, 2025, and December 31, 2024, thebalance of the unamortized debt discount was $
| Interest Rate | March 31, 2025 | March 31, 2024 | ||||||||||
| Shareholder Notes Payable | ||||||||||||
| In February 2023, we entered into a loan with an individual in the amount of $ | % | |||||||||||
| Less current portion | ( | ) | ( | ) | ||||||||
| Long-term notes payable | $ | $ | ||||||||||
Interest expense on related party notes payable was$6,000 for the three months ended March 31, 2025 and 2024, respectively. The Company’s effective interest rate was 21.80% for thethree months ended March 31, 2025.
As of March 31, 2025, the Company’s convertiblenote balances are convertible into shares of common stock
Note 4 – Licensing Agreement and RoyaltyPayable
The licensing agreement between TapouT LLC and the Company was terminatedin Q1 2024. The parties are engaged in active and constructive settlement discussions pursuant to the terms of the agreement’s terminationprovisions. Based on the settlement discussions, the Company anticipates that any final settlement will not exceed the amounts alreadyrecorded in its legal reserve and accrued accounts payable. The Company has reserved $
In connection with the Copa di Vino APA, the Companyacquired the license to certain patents from 1/4 Vin SARL (“1/4 Vin”) On February 16, 2018, Copa di Vino entered into threeseparate license agreements with 1/4 Vin. 1/4 Vin has the right to license certain patents and patent applications relating to inventions,systems, and methods used in the Company’s manufacturing process. In exchange for notes payable, 1/4 Vin granted the Company a nonexclusive,royalty-bearing, non-assignable, nontransferable, terminable license which would continue until the subject equipment is no longer inservice or the patents expire. Amortization is approximately $
15
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 5– Stockholders’ Equity
Common Stock
On March 27, 2025, the Company implemented a 1.0 for40.0 reverse stock split. The reverse stock split was authorized by the Company’s Board of Directors on March 14, 2025. All commonstock shares stated herein have been adjusted to reflect the split. The purpose of this reverse split was to ensure that the Company canmeet the per share price requirements of the NYSE American.
During the three-months ended March 31, 2025, weissued shares valued at $
Preferred Stock
As of the date of this filing, the Company has issued four series of preferredstock: Series A, A-1, B, and C, each with distinct rights and preferences as outlined below. Note agreements were amended to beexchanged for Preferred B and the impact of those amendments is subject to further review.
Voting Rights
| ● | Series A carries 25,000 votes per share but is limited solely to voting on the authorization of additional shares. It has no other voting rights. Series A is expected to be retired following the special meeting. | |
| ● | Series A-1 carries 231 votes per share. | |
| ● | Series B and Series C do not carry any voting rights. |
Dividends
| ● | Series A does not accrue dividends. | |
| ● | Series A-1 and Series B carry a fixed 12% annual dividend, payable quarterly in arrears, in either cash or payment-in-kind (PIK) at the Company’s discretion. These dividends are mandatory and take priority over any dividends on common stock, regardless of whether common stock dividends are declared. | |
| ● | Series C does not accrue dividends. |
Conversion into Common Stock
| ● | Series A is not convertible. | |
| ● | Series A-1 is convertible into common stock at 80% of the VWAP, subject to a floor of $1.25 and a ceiling of $4.00. A-1 is convertible into a range of 162,500 to 520,000 common shares. | |
| ● | Series B is also convertible at 80% of the VWAP, with a floor of $1.25 and a ceiling of $6.00, and is convertible into a range of 2,118,333 to 10,168,000 common shares. | |
| ● | Series C is convertible at a fixed price of $3.00, resulting in the potential issuance of 6,666,667 common shares upon conversion. |
Redemption – at the sole discretion of the Company.
| ● | Series A is redeemable by the Company after the special meeting for $1,000. | |
| ● | Series A-1 and Series B are redeemable by the Company after two years from the date of issuance, for $650,000 and $12,700,000, respectively. | |
| ● | Series C is not redeemable. |
16
Seniority
| ● | Series B is the most senior class (Seniority Level 1). | |
| ● | Series A-1 ranks junior to Series B (Seniority Level 2). | |
| ● | Series C is the most junior class (Seniority Level 3). | |
| ● | Series A is a governance-related instrument and does not participate in liquidation or dividend preferences. |
Stock Plan
2020 Plan adjusted for the 1 for 40 reverse split.
In July 2020, the Board adopted the 2020 Stock IncentivePlan (the “2020 Plan”), which provides for the grant of Options, Restricted Stock Awards, Stock Appreciation Rights, PerformanceUnits and Performance Bonuses to consultants and eligible recipients. The total number of shares that may be issued under the 2020 planwas as of March 31, 2025.
The 2020 Plan has an “evergreen” feature,which provides for the annual increase in the number of shares issuable under the plan by an amount equal to 5% of the number of issuedand outstanding common shares at year end, unless otherwise adjusted by the board. In October 2023, the shareholders voted to increasethe number of shares issuable under the Plan to 7.5%. At January 1, 2024 and 2025, the number of shares issuable under the 2020 plan increasedby and shares, respectively.
The following is a summary of the Company’sstock option activity:
| Options | March 31, 2025 | March 31, 2024 | |||||||||||||||
| Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | ||||||||||||||
| Balance - January 1* | $ | $ | |||||||||||||||
| Granted | |||||||||||||||||
| Exercises | |||||||||||||||||
| Cancelled | |||||||||||||||||
| Balance – March 31, | $ | $ | |||||||||||||||
| Exercisable – March 31, | $ | $ | |||||||||||||||
During the three-month period ended March 31, 2025and March 31, 2024, the company granted and options to new employees under the 2020 plan.
The fair value of stock options granted in the periodhas been measured at $ using the Black-Scholes option pricing model with the following assumptions: exercise price $, expectedlife years, expected volatility %, expected dividends%, risk free rate %.
17
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 5 – Stockholders’ Equity, continued
Common Stock Issuable, Liability to Issue Stockand Shareholder Advances
Outstanding balance for shareholder advances on March31, 2025 and 2024 was $.
Note 6 – Related Parties
During the normal course of business, the Companyincurred expenses related to services provided by the CEO or Company expenses paid by the CEO, resulting in related party payables. Inconjunction with the acquisition of Copa di Vino, the Company also entered into a Revenue Loan and Security Agreement (the “Loanand Security Agreement”) by and among the Company, Robert Nistico, additional Guarantor and each of the subsidiary guarantors fromtime-to-time party thereto (each a “Guarantor”, and, collectively, the “Guarantors”), and Decathlon Alpha IV,L.P. (the “Lender”). The Note Payable to Decathlon with a balance of $
On April 2024, the Company also entered into a MerchantCash Advance Agreement (the “Loan and Security Agreement”) by and among the Company, Robert Nistico, additional Guarantorand each of the subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and, collectively, the “Guarantors”),and Cobalt Funding Solutions (the “Lender”). The Loan and Security Agreement provided a loan of $815,000, with the gross andinterest amount of $326,028 with the Lender (the “Credit Facility”). There was $377,334 outstanding under this agreement asof March 31, 2025.
On September 2024 and November 2024 the Company alsoentered into a Merchant Cash Advance Agreement (the “Loan and Security Agreement”) by and among the Company, Robert Nistico,additional Guarantor and each of the subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and, collectively,the “Guarantors”), and with Timeless Funding LLC (the “Lender”). The Loan and Security Agreement provided a loanof $
There were related party advances from our chief executiveofficer in the amount of approximately $
Note 7 – Investment in Salt Tequila USA,LLC
The Company has a marketing and distribution agreementwith SALT Tequila USA, LLC (“SALT”) for the manufacturing of our Tequila product line in Mexico.
The Company has a
Note 8 –Leases
The Company has various operating lease agreementsprimarily related to real estate and office. The Company’s real estate leases represent a majority of the lease liability. Leasepayments are mainly fixed. Any variable lease payments, including utilities, common area maintenance are expensed during the period incurred.Variable lease costs were immaterial for the quarter ended March 31, 2025 and 2024. A majority of the real estate leases include optionsto extend the lease. Management reviews all options to extend at the inception of the lease and account for these options when they arereasonably certain of being exercised.
Operating lease expense is recognized on a straight-linebasis over the lease term and is included in operating expense on the Company’s condensed consolidated statement of operations andcomprehensive loss. Operating lease cost was $
The following table sets for the maturities of ouroperating lease liabilities and reconciles the respective undiscounted payments to the operating lease liabilities in the consolidatedbalance sheet at March 31, 2025
| Undiscounted Future Minimum Lease Payments | Operating Lease | |||
| 2025 (Nine months remaining) | ||||
| 2026 | ||||
| 2027 | ||||
| Total | ||||
| Amount representing imputed interest | ( | ) | ||
| Total operating lease liability | ||||
| Current portion of operating lease liability | ||||
| Operating lease liability, non-current | $ | |||
18
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated FinancialStatements
Note 8 –Leases, continued
The table below presents lease-related terms and discountrates at March 31, 2025:
| Remaining term on leases | 1 to | |||
| Incremental borrowing rate | % |
Note 9 – Segment Reporting
The Company has two reportable operating segments:(1) the manufacture and distribution of non-alcoholic and alcoholic brand beverages, and (2) the e-commerce sale of beverages. These operatingsegments are managed separately and each segment’s major customers have different characteristics. Segment Reporting is evaluatedby our Chief Executive Officer and Chief Financial Officer.
Note: The Copa di Vino business is included in ourSplash Beverage Group segment.
| Revenue, net | March 31, 2025 | March 31, 2024 | ||||||
| Splash Beverage Group | ||||||||
| E-Commerce | ||||||||
| Total revenues, net, continuing operations | $ | $ | ||||||
| Segment operating loss: | March 31, 2025 | March 31, 2024 | ||||||
| Splash Beverage Group | ( | ) | ( | ) | ||||
| E-Commerce | ( | ) | ( | ) | ||||
| Total contribution after marketing | $ | ( | ) | $ | ( | ) | ||
| Reconciliation of segment loss to corporate loss: | March 31, 2025 | March 31, 2024 | ||||||
| Other income/expense | ( | ) | ( | ) | ||||
| Amortization of debt discount | ( | ) | ( | ) | ||||
| Interest income and expenses | ( | ) | ( | ) | ||||
| Loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Total assets | March 31, 2025 | December 31, 2024 | ||||||
| Splash Beverage Group | ||||||||
| E-Commerce | ||||||||
| Total assets | $ | $ | ||||||
19
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 10 – Commitment and Contingencies
The Company is a party to asserted claims and aresubject to regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty,but the Company does not anticipate that the outcome, if any, arising out of any such matter will have a material adverse effect on itsbusiness, financial condition or results of operations.
On June 5, 2024, the Company received notificationfrom the NYSE American LLC (“NYSE American”) indicating that it is not in compliance with the NYSE American’s continuedlisting standards under Section 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”), requiring a listedcompany to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operationsand/or net losses in its five most recent fiscal years. The Company is now subject to the procedures and requirements of Section 1009of the Company Guide. If the Company is not in compliance with the continued listing standards by April 6, 2025 or if the Company doesnot make progress consistent with the Plan during the plan period, the NYSE American may commence delisting procedures.
The licensing agreement between TapouT LLC and theCompany was terminated in Q1 2024. The parties are engaged in active and constructive settlement discussions pursuant to the terms ofthe agreement’s termination provisions. Based on the settlement discussions, the Company anticipates that any final settlement willnot exceed the amounts already recorded in its legal reserve and accrued accounts payable.
Note 11 – Subsequent Events
In April 2025, the Company issued a 5-year promissorynote in the amount of $200,000, it accrues interest at 15%, and is convertible into shares of common stock at $1.25. The note also received125,000 5-year warrants exercisable at $2.00, and 83,334 5-year warrants exercisable into common stock at $3.00.
In May 2025, the Company issued 650 shares of Series A-1 Preferred Stockin exchange for approximately $650,000. Series A-1 shares are convertible into common stock, subject to shareholder approval, and furtherdiscussed in Note 5. Investors of A-1 Shares also received 162,500 1-year A Warrants exercisable into common stock at 80% of 5-day VWAP,and 162,500 5-year B Warrants exercisable into common stock at $4.00. The accounting treatment of this transaction is subject to furtherreview and may be adjusted in the future.
In June 2025, the Company issued 1000 shares of Preferred A Stock. PreferredA is super voting preferred, not convertible into common stock, and further discussed in Note 5.
In June 2025, the Company issued 126,710 shares of Series B Preferred Stockin exchange for approximately $12.7 million in previously outstanding convertible notes. The Series B shares are convertible into commonstock, subject to shareholder approval and further discussed in Note 5. The accounting treatment of this transaction is subject to furtherreview and may be adjusted in the future.
In June 2025, the Company acquired certain assets, including all contractualwater rights to the aquifer located in Garabito, Puntarenas, Costa Rica. The Company issued 20,000 shares of Series C Preferred Stockas consideration, at an initial stated value of $1000 per share. Management determined that the transaction is an asset acquisition underASC 805, as substantially all of the fair value is concentrated in a single identifiable asset—the water rights—and no substantiveprocesses were acquired. The fair value of the acquired assets has been preliminarily estimated at $20 million and is subject to furtherevaluation and assessment. The Series C shares are convertible into common stock, subject to shareholder approval, and further discussedin Note 5.
Pro Forma Adjustments from Subsequent Events
The accounting treatment of these transaction is subject to further reviewand may be adjusted in the future.
During the second quarter of 2025, Splash Beverage Group, Inc. undertookseveral strategic financing initiatives. The unaudited pro forma balance sheet reflects the estimated accounting impact of these transactionsas if they had occurred on March 31, 2025. Each adjustment column corresponds to a discrete event, as described below:
20
Preferred Stock A-1
Splash issued 650 shares of Preferred Stock A-1 for cash proceeds of $650,000.The net impact of this transaction is a $650,000 increase in stockholders’ equity, reflecting the cash received. See Note 5 foradditional details of Preferred Stock A-1.
Preferred Stock B – Debt Exchange
The Company exchanged previously issued convertible notes for 126,710 sharesof Preferred Stock B, eliminating $7,699,596 of current liabilities and $2,070,712 of long-term liabilities. These liabilities were previouslycarried net of unamortized discounts. The exchange was a non-cash transaction and resulted in a $9,770,307 increase in stockholders’equity. Debt agreements were amended to be exchanged for Preferred B and the impact of those amendments is subject to further review.See Note 5 for additional details of Preferred Stock B.
Preferred Stock C – Asset Acquisition
Splash issued 20,000 shares of Preferred Stock C in exchange for non-currentassets largely consisting of water rights located in Garabito, Puntarenas, Costa Rica. The asset was recorded at $20,000,000, with a correspondingincrease to stockholders’ equity. This non-cash transaction supports the Company’s business strategy. See Note 5 for additionaldetails of Preferred Stock C.
Senior Convertible Note
Splash issued a $200,000 senior convertible note witha $30,000 original issuance discount, and warrant coverage that resulted in the recognition of a note discount in the amount of $153,924.
| ForThe Period Ended M arch 31, 2025 | ||||||||||||||||||||||||
| Debtexchange | Senior | Proforma | ||||||||||||||||||||||
| AsReported | PreferredStock A-1 | PreferredStock B | PreferredStock C | ConvertibleNote | AsAdjusted | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Currentassets: | ||||||||||||||||||||||||
| Cashand cash equivalents | $ | $ | $ | $ | ||||||||||||||||||||
| Othercurrent assets | ||||||||||||||||||||||||
| Totalcurrent assets | ||||||||||||||||||||||||
| Non-currentassets: | ||||||||||||||||||||||||
| Deposit | $ | $ | ||||||||||||||||||||||
| Investment in Garabito, Puntarenas, Costa Rica Water Rights | ||||||||||||||||||||||||
| Investment in Salt Tequila USA, LLC | ||||||||||||||||||||||||
| Rightof use asset | ||||||||||||||||||||||||
| Propertyand equipment, net | ||||||||||||||||||||||||
| Totalnon-current assets | ||||||||||||||||||||||||
| Totalassets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Liabilitiesand Stockholders' Equity (Deficit) | ||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||
| Currentliabilities | ||||||||||||||||||||||||
| Accountspayable and accrued expenses | $ | |||||||||||||||||||||||
| Rightof use liability - current | ||||||||||||||||||||||||
| Relatedparty notes payable | | | | | ||||||||||||||||||||
| Notespayable, net of discounts | ( | ) | ||||||||||||||||||||||
| Shareholderadvances | | ( | ) | | | |||||||||||||||||||
| Accruedinterest payable | ||||||||||||||||||||||||
| Totalcurrent liabilities | ( | ) | ||||||||||||||||||||||
| Long-termLiabilities: | ||||||||||||||||||||||||
| Relatedparty notes payable - noncurrent | ||||||||||||||||||||||||
| Notespayable - net of discounts | ( | ) | ||||||||||||||||||||||
| Rightof use liability - net of current portion | ||||||||||||||||||||||||
| Totallong-term liabilities | ( | ) | ||||||||||||||||||||||
| Totalliabilities | ( | ) | ||||||||||||||||||||||
| Stockholders'equity: | ||||||||||||||||||||||||
| Preferredstock, Series A-1 $0.001 par value, 1,500 shares authorized, 650 sharesissued and outstanding | ||||||||||||||||||||||||
| Preferredstock Series B, $0.001 par value, 12% cumulative, 150,000 shares authorized, 126,200 shares issued and outstanding | ||||||||||||||||||||||||
| Preferredstock Series C, $0.001 par value, 500,000 shares authorized, 20,000 sharesissued and outstanding | ||||||||||||||||||||||||
| Common Stock, $0.001 par, 7,500,000 shares authorized,1,899,876 and 1,669,835 shares issued and outstanding, at March 31, 2025 andDec 31, 2024, respectively | ||||||||||||||||||||||||
| Additionalpaid in capital | | |||||||||||||||||||||||
| Accumulated Comprehensive Income - Translation | ||||||||||||||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||||||||||||||||
| Totalstockholders' equity | ( | ) | ||||||||||||||||||||||
| Totalliabilities and deficiency in stockholders' equity | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||
21
ITEM 2. MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-LookingStatements
The information in thisdiscussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statementsregarding our capital needs, business strategy and expectations. Any statements that are not of historical fact may be deemed to be forward-lookingstatements. These forward-looking statements involve substantial risks and uncertainties. In some cases you can identify forward-lookingstatements by terminology such as “may,” “will,” “should,” “expect,” “plan,”“intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,”or “continue”, the negative of the terms or other comparable terminology. Actual events or results may differ materially fromthe anticipated results or other expectations expressed in the forward-looking statements. In evaluating these statements, you shouldconsider various factors, including the risks included from time to time in other reports or registration statements filed with the UnitedStates Securities and Exchange Commission. These factors may cause our actual results to differ materially from any forward-looking statements.The Company disclaim any obligation to publicly update these statements or disclose any difference between actual results and those reflectedin these statements.
Unless the context otherwiserequires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer toSplash Beverage Group and its subsidiaries.
The following discussion and analysis should be readin conjunction with the Condensed Financial Statements (unaudited) and Notes to Condensed Financial Statements (unaudited) filed herewith.
Business Overview
Splash Beverage Group, Inc. (the “Company”,“Splash”) seeks to identify, acquire, and build early stage or under-valued beverage brands that have strong growth potentialwithin its distribution system. Splash’s distribution system is comprehensive in the US and is now expanding to select attractiveinternational markets. Through its division Qplash, Splash’s distribution reach includes e-commerce access to both business-to-business(B2B) and business-to-consumer (B2C) customers. Qplash markets well known beverage brands to customers throughout the US that prefer deliverydirect to their office, facilities; and or homes.
Results of Operationsfor the Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024.
Revenue
Revenues for the three months ended March 31, 2025were approximately $0.4 million compared to revenues of approximately $1.5 million for the three months ended March 31, 2024. The $1.1million decrease in sales is due to a decrease in our beverage sales of $0.8 million. Our revenues from our vertically integrated B2Band B2C e-commerce distribution platform called Qplash decreased approximately $0.3 million due to low inventory. Total sales declineddue to limited liquidity to procure inventory to drive third-party sales.
Cost of Goods Sold
Cost of goods sold for the three months ended March31, 2025 were $0.5 million compared to cost of goods sold for the three months ended March 31, 2024 of approximately $1.4 million. The$0.9 million decrease in cost of goods sold for the three-month period ended March 31, 2025 is primarily due to our decreased sales.
22
Operating Expenses
Operating expenses for the three months ended March31, 2025 were $2.0 million compared to $3.4 million for the three months ended March 31, 2024 a decrease of $1.4 million. The decreasein our operating expenses was primarily due to non-cash expenses, new staff, benefit cost, freight cost and Amazon selling fees. The netloss for the three months ended March 31, 2025 was $3.5 million as compared to a net loss of approximately $4.7 million for the threemonths ended March 31, 2024. The decrease in net loss is due to lower operating expenses.
During the quarter ended March 31, 2025, the Companydid not meet its payroll obligations for the months of February and March. As a result, employees were not paid for services renderedduring that period. The unpaid wages have been fully accrued as liabilities in the accompanying financial statements.
Net Other Income and Expense
Interest expenses for the three months ended March31, 2025 was $0.6 million compared to $0.5 million for the three months ended March 31, 2024. The $0.1 million increase in interest expenseis due to new loans with a principal of $9.0 million.
Other income was $0 and $0.1 million for the threemonths ended March 31, 2025 and March 31, 2024 respectively.
Amortization of debt discount for the three monthsended March 31, 2025 was approximately $1.0 million compared to $0.9 million for three months ended March 31, 2024.
LIQUIDITY, GOING CONCERN CONSIDERATIONS AND CAPITALRESOURCES
Liquidity is the ability of a company to generatefunds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factorsin the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
As of March 31, 2025, the Company had total cash andcash equivalents of $0 as compared with $15,346 at December 31, 2024.
Net cash used for operating activities during thethree months ended March 31, 2025 was $0.7 million as compared to the net cash used by operating activities for the three months endedMarch 31, 2024 of $1.3 million. The primary reasons for the change in net cash used are decreases in inventory, accrued expenses and accountsreceivable partially offset by increases in account payable.
For the period ending March 31, 2025 and March 31,2024, there were no capital asset transactions.
Net cash provided by financing activities during thethree months ended March 31, 2025 was $0.8 million compared to $1.0 million provided from financing activities for the three months endedMarch 31, 2024. During the three months ended March 31, 2025, the Company received $0.9 million for convertible note, which was offsetby repayments to debt holders of $0.1 million.
CONTRACTUAL OBLIGATIONS
Minimum Royalty Payments:
None
Inventory Purchase Commitments:
None.
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Off-Balance Sheet Arrangements
The Company do not have any off-balance sheet arrangements(as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on ourfinancial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Estimates
The preparation of our consolidatedfinancial statements in conformity with accounting principles generally accepted in the United States of America requires management tomake estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as the disclosureof contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that arebelieved to be reasonable under the circumstances. Actual results could differ from those estimates.
Revenue
The Companyfaces significant judgment in revenue recognition due to the complexities of the beverage industry’s competitive landscape and diversedistribution channels. Determining the timing of revenue recognition involves assessing factors such as control transfer, returns, allowances,trade promotions, and distributor sell-through data. Historical analysis, market trends assessment, and contractual term evaluations informrevenue recognition judgments. However, inherent uncertainties persist, underscoring the critical nature of revenue recognition as itsignificantly impacts financial statements and performance evaluation.
Allowance for Doubtful Accounts
The allowance for doubtfulaccounts is established based on historical experience, current economic conditions, and specific customer collection issues. Managementevaluates the collectability of accounts receivable on an ongoing basis and adjusts the allowance as necessary. Changes in economic conditionsor customer creditworthiness could result in adjustments to the allowance for doubtful accounts, impacting our reported financial results.
Inventory Valuation
We value inventory at thelower of cost or net realizable value. Estimating the net realizable value of inventory involves significant judgment, particularly whenmarket conditions change rapidly or when excess or obsolete inventory exists. Management regularly assesses inventory quantities on hand,future demand forecasts, and market conditions to determine whether write-downs to inventory are necessary.
Fair Value Measurements
We measure certain financial assets and liabilities at fair value on arecurring basis. Fair value measurements involve significant judgment and estimation, particularly when observable inputs are limitedor not available. Management utilizes valuation techniques such as discounted cash flow models, market comparable, and third-party appraisalsto determine fair values.
ITEM 3. QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for SmallerReporting Companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with theparticipation of the principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls andprocedures, as defined in Rules 13a – 15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, as amended, or ExchangeAct, as of the end of the period covered by this Report. Our disclosure controls and procedures are designed to provide reasonable, notabsolute, assurance that the objectives of our disclosure control system are met. Because of inherent limitations in all control systems,no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Basedon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, because of certain material weaknessesin our internal controls over financial reporting, our disclosure controls and procedures were not effective as of March 31, 2025. Thematerial weaknesses relate to a lack of segregation of duties between accounting and other functions and the absence of sufficient depthof in-house accounting personnel with the ability to properly account for complex transactions.
Changes in Internal ControlOver Financial Reporting
Except with respect to theabove, during the quarter ended March 31, 2025, there were no additional changes in our internal control over financial reporting thathave materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS
The Company has included in Item 1A of Part 1 of its Annual Report on Form10-K for the year ended December 31, 2024 (“Form 10-K”), a description of certain risks and uncertainties that could affectthe Company’s business, future performance or financial condition (the “Risk Factors”). There have been no materialchanges to the Risk Factors we previously disclosed in our Form 10-K filed with the SEC, except as described below. Our operations couldalso be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIESAND USE OF PROCEEDS
The Company granted 600,000 shares in March to new CFO under the 2020 plan
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
No disclosure required.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangement
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ITEM 6. EXHIBITS
(a) Exhibits required by Item 601of Regulation S-K.
* Filed herewith
** Furnished herewith
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SIGNATURES
Pursuant to the requirements ofthe Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
| SPLASH BEVERAE GROUP, INC. | ||
| Date: July 11, 2025 | By: | /s/ Robert Nistico |
| Robert Nistico, Chairman and CEO | ||
| (Principal Executive Officer) | ||
| Date: July 11, 2025 | By: | /s/ William Devereux |
| William Devereux, CFO | ||
| (Principal Accounting Officer and Principal Financial Officer) | ||
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EXHIBIT 3.2
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACTOF 2002
I, Robert Nistico, certify that:
1. I have reviewed this quarterlyreport on Form 10-Q of Splash Beverage Group Inc.;
2. Based on my knowledge, thisreport does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financialstatements, and other financial information included in this report, fairly present in all material respects the financial condition,results of operations and cash flows of the of the registrant as of, and for, the periods presented in this report;
4. The registrant’s othercertifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)for the registrant and have:
(a) Designed such disclosure controlsand procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material informationrelating to the registrant is made known to us by others within the registrant, particularly during the period in which this report isbeing prepared;
(b) Designed such internal controlover financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;
(c) Evaluated the effectivenessof the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report anychange in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s othercertifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’sauditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficienciesand material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adverselyaffect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material,that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 11, 2025 | |
| /s/ Robert Nistico | |
| Robert Nistico | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACTOF 2002
I, William Devereux, certify that:
1. I have reviewed this quarterlyreport on Form 10-Q of Splash Beverage Group Inc.;
2. Based on my knowledge, thisreport does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financialstatements, and other financial information included in this annual report, fairly present in all material respects the financial condition,results of operations and cash flows of the of the registrant as of, and for, the periods presented in this report;
4. The registrant’s othercertifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)for the registrant and have:
(a) Designed such disclosure controlsand procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material informationrelating to the registrant is made known to us by others within the registrant, particularly during the period in which this report isbeing prepared;
(b) Designed such internal controlover financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;
(c) Evaluated the effectivenessof the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report anychange in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s othercertifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’sauditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficienciesand material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adverselyaffect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material,that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 11, 2025 | |
| /s/ William Devereux | |
| William Devereux | |
| Chief Financial Officer | |
| (Principal Accounting Officer and Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Form 10-Qof Splash Beverage Group Inc., a company duly formed under the laws of Nevada (the “Company”), for the quarter endedMarch 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert Nistico, President(Chief Executive Officer) of the Company, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best ofhis knowledge, that:
(1) The Report fully complies withthe requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained inthe Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: July 11, 2025 | /s/ Robert Nistico |
| Robert Nistico, Chief Executive Officer (Principal Executive Officer) |
This certification accompanies this Report pursuantto Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemedfiled by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Form 10-Qof Splash Beverage Group, Inc., a company duly formed under the laws of Nevada (the “Company”), for the quarter ended March31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), William Devereux, ChiefFinancial Officer of the Company, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of her knowledge,that:
(1) The Report fully complies withthe requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained inthe Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: July 11, 2025 | /s/ William Devereux |
| William Devereux Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer) |
This certification accompanies this Report pursuantto Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemedfiled by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.