false --12-31 2023 Q3 0001553788 0001553788 2023-01-01 2023-09-30 0001553788 sbev:CommonStock0.001ValuePerShareMember 2023-01-01 2023-09-30 0001553788 sbev:WarrantsToPurchaseCommonStock0.001ParValuePerShareMember 2023-01-01 2023-09-30 0001553788 2023-11-14 0001553788 2023-09-30 0001553788 2022-12-31 0001553788 2023-07-01 2023-09-30 0001553788 2022-07-01 2022-09-30 0001553788 2022-01-01 2022-09-30 0001553788 us-gaap:CommonStockMember 2021-12-31 0001553788 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001553788 us-gaap:RetainedEarningsMember 2021-12-31 0001553788 2021-12-31 0001553788 us-gaap:CommonStockMember 2022-03-31 0001553788 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001553788 us-gaap:RetainedEarningsMember 2022-03-31 0001553788 2022-03-31 0001553788 us-gaap:CommonStockMember 2022-06-30 0001553788 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-06-30 0001553788 us-gaap:RetainedEarningsMember 2022-06-30 0001553788 2022-06-30 0001553788 us-gaap:CommonStockMember 2022-12-31 0001553788 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31 0001553788 us-gaap:RetainedEarningsMember 2022-12-31 0001553788 us-gaap:CommonStockMember 2023-03-31 0001553788 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-03-31 0001553788 us-gaap:RetainedEarningsMember 2023-03-31 0001553788 2023-03-31 0001553788 us-gaap:CommonStockMember 2023-06-30 0001553788 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-06-30 0001553788 us-gaap:RetainedEarningsMember 2023-06-30 0001553788 2023-06-30 0001553788 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001553788 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-03-31 0001553788 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001553788 2022-01-01 2022-03-31 0001553788 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001553788 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-04-01 2022-06-30 0001553788 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001553788 2022-04-01 2022-06-30 0001553788 us-gaap:CommonStockMember 2022-07-01 2022-09-30 0001553788 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-07-01 2022-09-30 0001553788 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001553788 us-gaap:CommonStockMember 2023-01-01 2023-03-31 0001553788 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-03-31 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-01-01 2023-03-31 0001553788 us-gaap:RetainedEarningsMember 2023-01-01 2023-03-31 0001553788 2023-01-01 2023-03-31 0001553788 us-gaap:CommonStockMember 2023-04-01 2023-06-30 0001553788 us-gaap:AdditionalPaidInCapitalMember 2023-04-01 2023-06-30 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-04-01 2023-06-30 0001553788 us-gaap:RetainedEarningsMember 2023-04-01 2023-06-30 0001553788 2023-04-01 2023-06-30 0001553788 us-gaap:CommonStockMember 2023-07-01 2023-09-30 0001553788 us-gaap:AdditionalPaidInCapitalMember 2023-07-01 2023-09-30 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-07-01 2023-09-30 0001553788 us-gaap:RetainedEarningsMember 2023-07-01 2023-09-30 0001553788 us-gaap:CommonStockMember 2022-09-30 0001553788 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-09-30 0001553788 us-gaap:RetainedEarningsMember 2022-09-30 0001553788 2022-09-30 0001553788 us-gaap:CommonStockMember 2023-09-30 0001553788 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0001553788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-09-30 0001553788 us-gaap:RetainedEarningsMember 2023-09-30 0001553788 srt:MinimumMember 2023-09-30 0001553788 srt:MaximumMember 2023-09-30 0001553788 sbev:AutoMember 2023-09-30 0001553788 sbev:AutoMember 2022-12-31 0001553788 us-gaap:MachineryAndEquipmentMember 2023-09-30 0001553788 us-gaap:MachineryAndEquipmentMember 2022-12-31 0001553788 us-gaap:BuildingMember 2023-09-30 0001553788 us-gaap:BuildingMember 2022-12-31 0001553788 us-gaap:LeaseholdImprovementsMember 2023-09-30 0001553788 us-gaap:LeaseholdImprovementsMember 2022-12-31 0001553788 us-gaap:ComputerEquipmentMember 2023-09-30 0001553788 us-gaap:ComputerEquipmentMember 2022-12-31 0001553788 us-gaap:OfficeEquipmentMember 2023-09-30 0001553788 us-gaap:OfficeEquipmentMember 2022-12-31 0001553788 sbev:NotesPayables1Member 2023-09-30 0001553788 sbev:NotesPayables1Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables1Member 2022-12-31 0001553788 sbev:NotesPayables2Member 2023-09-30 0001553788 sbev:NotesPayables2Member sbev:ThroughNovember2022Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables2Member sbev:ThroughSeptember2025Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables2Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables2Member 2022-12-31 0001553788 sbev:NotesPayables3Member 2023-09-30 0001553788 sbev:NotesPayables3Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables3Member 2022-12-31 0001553788 sbev:NotesPayables4Member 2023-09-30 0001553788 sbev:NotesPayables4Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables4Member 2022-12-31 0001553788 sbev:NotesPayables5Member 2023-09-30 0001553788 sbev:NotesPayables5Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables5Member 2022-12-31 0001553788 sbev:NotesPayables6Member 2023-09-30 0001553788 sbev:NotesPayables6Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables6Member 2022-12-31 0001553788 sbev:NotesPayables7Member 2023-09-30 0001553788 sbev:NotesPayables7Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables7Member 2022-12-31 0001553788 sbev:NotesPayables8Member 2023-09-30 0001553788 sbev:NotesPayables8Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables8Member 2022-12-31 0001553788 sbev:NotesPayables9Member 2023-09-30 0001553788 sbev:NotesPayables9Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables9Member 2022-12-31 0001553788 sbev:NotesPayables10Member 2023-09-30 0001553788 sbev:NotesPayables10Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables10Member 2022-12-31 0001553788 sbev:NotesPayables11Member 2023-09-30 0001553788 sbev:NotesPayables11Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables11Member 2022-12-31 0001553788 sbev:NotesPayables12Member 2023-09-30 0001553788 sbev:NotesPayables12Member 2023-01-01 2023-09-30 0001553788 sbev:NotesPayables12Member 2022-12-31 0001553788 sbev:NotesPayablesMember 2023-07-01 2023-09-30 0001553788 sbev:NotesPayablesMember 2022-07-01 2022-09-30 0001553788 sbev:NotesPayablesMember 2023-01-01 2023-09-30 0001553788 sbev:NotesPayablesMember 2022-01-01 2022-09-30 0001553788 sbev:NotesPayablesMember 2023-09-30 0001553788 sbev:ShareholderMember 2023-02-23 0001553788 sbev:ShareholderMember 2023-02-22 2023-02-23 0001553788 sbev:ShareholderMember 2023-01-01 2023-09-30 0001553788 us-gaap:PrivatePlacementMember 2023-01-01 2023-09-30 0001553788 srt:DirectorMember us-gaap:PrivatePlacementMember 2023-01-01 2023-09-30 0001553788 sbev:StockIncentive2020PlanMember 2023-01-01 2023-01-31 0001553788 sbev:StockIncentive2020PlanMember 2022-01-01 2022-01-31 0001553788 us-gaap:OptionMember 2022-12-31 0001553788 us-gaap:OptionMember 2023-01-01 2023-03-31 0001553788 us-gaap:OptionMember 2023-03-31 0001553788 us-gaap:OptionMember 2023-04-01 2023-06-30 0001553788 us-gaap:OptionMember 2023-06-30 0001553788 us-gaap:OptionMember 2023-07-01 2023-09-30 0001553788 us-gaap:OptionMember 2023-09-30 0001553788 us-gaap:WarrantMember 2022-12-31 0001553788 us-gaap:WarrantMember 2023-01-01 2023-03-31 0001553788 us-gaap:WarrantMember 2023-03-31 0001553788 us-gaap:WarrantMember 2023-04-01 2023-06-30 0001553788 us-gaap:WarrantMember 2023-06-30 0001553788 us-gaap:WarrantMember 2023-07-01 2023-09-30 0001553788 us-gaap:WarrantMember 2023-09-30 0001553788 2023-06-21 2023-06-22 0001553788 srt:ChiefExecutiveOfficerMember 2023-08-30 2023-08-31 0001553788 srt:ChiefExecutiveOfficerMember 2023-01-01 2023-09-30 0001553788 sbev:SALTTequilaUSALLCMember 2023-09-30 0001553788 sbev:SplashBeverageGroupMember 2023-07-01 2023-09-30 0001553788 sbev:SplashBeverageGroupMember 2022-07-01 2022-09-30 0001553788 sbev:SplashBeverageGroupMember 2023-01-01 2023-09-30 0001553788 sbev:SplashBeverageGroupMember 2022-01-01 2022-09-30 0001553788 sbev:ECommerceMember 2023-07-01 2023-09-30 0001553788 sbev:ECommerceMember 2022-07-01 2022-09-30 0001553788 sbev:ECommerceMember 2023-01-01 2023-09-30 0001553788 sbev:ECommerceMember 2022-01-01 2022-09-30 0001553788 sbev:SplashBeverageGroupMember 2023-09-30 0001553788 sbev:SplashBeverageGroupMember 2022-12-31 0001553788 sbev:ECommerceMember 2023-09-30 0001553788 sbev:ECommerceMember 2022-12-31 0001553788 sbev:ConvertibleNotesMember us-gaap:SubsequentEventMember 2023-10-30 2023-10-31 0001553788 us-gaap:SubsequentEventMember sbev:ConvertibleNotesMember 2023-10-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

 
Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _________

 

Commission File No. 001-40471

 

SPLASH BEVERAGE GROUP, INC.

 
(Exact name of registrant as specified in its charter)

 

Nevada   34-1720075
(State or other jurisdiction of
incorporation or formation)
  (I.R.S. employer
identification number)

 

1314 E Las Olas Blvd. Suite 221
Fort Lauderdale, FL 33301
(Address of principal executive offices) (Zip code)

  

(954) 745-5815
(Registrant’s telephone number, including area code)

 

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol   Name of each exchange on which registered
Common Stock, $0.001 value per share   SBEV   NYSE American LLC
Warrants to purchase common stock, $0.001 par value per share   SBEV-WT   NYSE 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 requirements for the past 90 days.

 

 Yes  No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

 Yes  No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the 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
Non-accelerated filer   Smaller reporting company
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

 Yes  No

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.  Yes  No

 

As of November 14, 2023, there were 43,817,776 shares of Common Stock issued and outstanding.

 

 
 

 

SPLASH BEVERAGE GROUP, INC.
FORM 10-Q
September 30, 2023

 

TABLE OF CONTENTS

 

  Page
PART I: FINANCIAL INFORMATION  
ITEM 1: FINANCIAL STATEMENTS 1
  Condensed Consolidated Balance Sheets 2
  Condensed Consolidated Statements of Operations and Comprehensive Loss 3
  Condensed Consolidated Statement of Changes in Shareholders’ Equity 4
  Condensed Consolidated Statements of Cash Flows 5
  Notes to the Condensed Consolidated Financial Statements 6
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 24
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 28
ITEM 4: CONTROLS AND PROCEDURES 28
PART II: OTHER INFORMATION  
ITEM 1 LEGAL PROCEEDINGS 29
ITEM 1A: RISK FACTORS 29
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 29
ITEM 3: DEFAULTS UPON SENIOR SECURITIES 29
ITEM 4: MINE SAFETY DISCLOSURES 29
ITEM 5: OTHER INFORMATION 29
ITEM 6: EXHIBITS 30
  SIGNATURES 31

 

i
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Splash Beverage Group, Inc. 
Condensed Consolidated Financial Statements

 

September 30, 2023

 

1 

 

 

Splash Beverage Group, Inc.
Condensed Consolidated Balance Sheets
September 30, 2023 and December 31, 2022

 

                 
    September 30,
2023
  December 31, 2022
Assets     (unaudited)          
Current assets:                
Cash and cash equivalents   $ 96,121     $ 4,431,745  
Accounts receivable, net     1,512,693       1,812,110  
Prepaid expenses     225,446       348,036  
Inventory     2,907,461       3,721,307  
Other receivables     376,905       344,376  
Total current assets     5,118,626       10,657,574  
                 
Non-current assets:                
Deposit   $ 49,398     $ 49,290  
Goodwill     256,823       256,823  
Intangible assets, net     4,564,037       4,851,377  
Investment in Salt Tequila USA, LLC     250,000       250,000  
Operating lease right of use asset     619,559       750,042  
Property and equipment, net     385,603       489,597  
Total non-current assets     6,125,420       6,647,129  
                 
Total assets   $ 11,244,046     $ 17,304,703  
                 
Liabilities and Stockholders’ Equity                
                 
Liabilities:                
Current liabilities                
Accounts payable and accrued expenses   $ 4,199,476     $ 3,383,187  
Liability to issue shares           91,800  
Operating lease liabilities - current     259,072       268,749  
Notes payable, current portion     5,548,830       1,080,257  
Due to related party     426,000        
Shareholder advance     200,000         
Accrued interest payable     496,384       141,591  
Total current liabilities     11,129,762       4,965,584  
                 
Long-term liabilities:                
Notes payable     408,801       2,536,319  
Operating lease liabilities - noncurrent     363,313       480,666  
Total long-term liabilities     772,114       3,016,985  
                 
Total liabilities     11,901,876       7,982,569  
                 
Stockholders’ equity:                
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued            
Common Stock, $0.001 par, 300,000,000 shares authorized, 42,902,185 shares issued, 42,902,185 shares outstanding at September 30, 2023 and 41,085,520 shares issued, 41,085,520 shares outstanding at December 31, 2022     42,902       41,086  
Additional paid in capital     126,648,371       121,632,547  
Accumulated other comprehensive loss     (8,448 )     (20,472 )
Accumulated deficit     (127,340,655 )     (112,331,027 )
Total stockholders’ equity     (657,830 )     9,322,134  
                 
Total liabilities and stockholders’ equity   $ 11,244,046     $ 17,304,703  

  

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2 

 

 

Splash Beverage Group, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
For the Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)

 

                     
   Three months ended September 30  Nine months ended September 30,
   2023  2022  2023  2022
Net revenues   5,144,069    4,870,407    16,161,747    13,295,921 
Cost of goods sold   (3,847,202)   (3,101,807)   (11,326,298)   (8,886,508)
Gross profit   1,296,867    1,768,600    4,835,449    4,409,413 
                     
Operating expenses:                    
Contracted services   382,096    438,004    1,094,398    1,196,852 
Salary and wages   1,195,916    1,262,935    3,794,179    3,180,198 
Non-cash share-based compensation   367,244    1,697,201    1,224,101    7,039,695 
Other general and administrative   3,048,779    2,734,377    8,617,013    7,698,231 
Sales and marketing   626,363    746,965    2,105,559    1,918,420 
Total operating expenses   5,620,398    6,879,482    16,835,250    21,033,396 
                     
Loss from continuing operations   (4,323,531)   (5,110,882)   (11,999,801)   (16,623,983)
                     
Other income/(expense):                    
Interest income   348    158    1,668    2,867 
Interest expense   (221,488)   (66,193)   (561,249)   (225,543)
Other Income           49,819     
Amortization of debt discount   (1,125,410)       (2,500,065)    
Total other expense   (1,346,550)   (66,035)   (3,009,827)   (222,676)
                     
Provision for income taxes                
                     
Net loss from continuing operations, net of tax   (5,670,081)   (5,176,917)   (15,009,628)   (16,846,659)
                     
Net loss from discontinued operations, net of tax               (199,154)
                     
Gain on sale of discontinued operations       33,116        148,748 
                     
Income (Loss) from discontinued operations       33,116        (50,406)
                     
Net loss  $(5,670,081)  $(5,143,801)  $(15,009,628)  $(16,897,065)
                     
Other Comprehensive Income                    
Foreign currency translation Income   29,406        12,024     
                     
Total Comprehensive Loss  $(5,640,675)  $(5,143,801)  $(14,997,604)  $(16,897,065)
                     
Loss per share - continuing operations                    
Basic and diluted  $(0.13)  $(0.14)  $(0.36)  $(0.46)
                     
Weighted average number of common shares outstanding - continuing operations                    
Basic and diluted   42,812,058    37,364,031    41,991,259    36,417,222 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3 

 

 

Splash Beverage Group, Inc.

 Condensed Consolidated Statement of Changes in Stockholders’ Equity

For the Three and Nine months ended September 30, 2023 and 2022

(Unaudited)

  

                                                 
                        Total
                Accumulated Other       Stockholders'
    Common Stock   Additional   Comprehensive   Accumulated   Equity
    Shares   Amount   Paid-In Capital   Income   Deficit   (Deficit)
                         
Balances at December 31, 2021     33,596,232      $ 33,596     $ 99,480,188           $ (90,640,557 )   $ 8,873,227  
                                                 
Issuance of common stock on convertible instruments     223,596       224       1,206,287                   1,206,511  
Issuance of warrants and options for services                 1,242,697                   1,242,697  
Issuance of common stock for services     550,000       550       1,112,845                   1,113,395  
Issuance of common stock and warrants for cash     2,300,000       2,300       8,065,100                   8,067,400  
Net loss                             (5,994,407 )     (5,994,407 )
                                                 
Balances at March 31, 2022     36,669,828     $ 36,670     $ 111,107,117           $ (96,634,964 )   $ 14,508,822  
                                                 
Issuance of warrants for services      —             1,174,289                   1,174,289  
Issuance of common stock for services     500,000       500       1,429,500                   1,430,000  
Issuance of common stock and warrants for cash     100,000       100       109,900                   110,000  
Accumulated Comprehensive Income - Translation      —                       (6,570 )             (6,570 )
Net loss                               (5,758,857 )     (5,758,857 )
                                                 
Balances at June 30, 2022     37,269,828     $ 37,270     $ 113,820,805     $ (6,570 )   $ (102,393,821 )   $ 11,457,685  
                                                 
Issuance of warrants for services      —             1,036,066                   1,036,066  
Issuance of common stock for APA     380,959       381       (381 )                
Issuance of common stock and warrants for cash     2,000,000       2,000       2,631,500                   2,633,500  
Accumulated Comprehensive Income - Translation      —                       8,795               8,795  
Net loss      —                           (5,143,801 )     (5,143,801 )
                                                 
Balances at September 30, 2022     39,650,787     $ 39,651     $ 117,487,990     $ 2,225     $ (107,537,622 )   $ 9,992,245  

  

                               
Balances at December 31, 2022   41,085,520   $41,086   $121,632,546   $(20,472)  $(112,331,026)  $9,322,134 
                               
Common stock issuable and beneficial conversion feature on convertible 12-month promissory note           1,786,468            1,786,468 
Issuance of warrants for services           215,760            215,760 
Accumulated Comprehensive loss – translation, net               (1,609)       (1,609)
Net loss                   (3,729,299)   (3,729,299)
Balances at March 31, 2023   41,085,520   $41,086   $123,634,774   $(22,081)  $(116,060,325)  $7,593,454 
                               
Issuance of common stock on convertible instruments   1,500,000    1,500    (1,500)            
Share based compensation           509,232            509,232 
Issuance of common stock for services   216,666    216    223,449            223,665 
Issuance of warrants on convertible instruments           1,269,669            1,269,669 
Accumulated Comprehensive loss – translation, net               (15,773)       (15,773)
Net loss                   (5,610,249)   (5,610,249)
                               
Balances at June 30, 2023   42,802,186   $42,802   $125,635,624   $(37,854)  $(121,670,574)  $3,969,998 
                                                 
Debt discount from convertible instrument                 79,817                   79,817  
Share based compensation                 300,912                   300,912  
Issuance of common stock for services     99,999       100       66,232                   66,332  
Issuance of warrants on convertible instruments                 565,786                   565,786  
Accumulated Comprehensive loss – translation, net                       29,406             29,406  
Net loss                             (5,670,081 )     (5,670,081 )
                                                 
Balances at September 30, 2023     42,902,185       $42,902     $ 126,648,371     $ (8,448 )   $ (127,340,655 )   $ (657,830)  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4 

 

 

Splash Beverage Group, Inc.
Condensed Consolidated Statement Cash Flows
For the Nine Months Ended September 30, 2023 and 2022
(Unaudited)

 

           
   2023  2022
Net loss  $(15,009,628)  $(16,897,065)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   403,948    306,900 
Amortization of debt discount   2,500,065     
ROU assets, net   3,453    4,888 
Loss (gain) from sale of discontinued operation       50,407 
Common stock issued for services   289,998     
Non-cash share-based compensation   1,224,101    7,107,684 
Changes in working capital items:          
Accounts receivable, net   299,417    (364,161)
Inventory, net   813,846    (1,660,852)
Prepaid expenses and other current assets   90,061    (398,328)
Deposits   (108)   281,635 
Accounts payable and accrued expenses   526,290    732,139 
Accrued interest payable   354,792    12,101 
Net cash used in operating activities - continuing operations   (8,503,765)   (10,824,652)
           
Cash flows from investing activities:          
Capital expenditures   (12,613)   (45,420)
Net cash used in investing activities - continuing operations   (12,613)   (45,420)
           
Cash flows from financing activities:          
Proceeds from issuance of common stock       10,810,900 
Cash advance from related party   426,000     
Cash advance from shareholder   200,000    (280,500)
Proceeds from issuance of debt   4,300,000    45,420 
Principal repayment of debt   (757,270)   (1,285,861)
Net cash provided by financing activities - continuing operations   4,168,730    9,289,959 
           
Net cash effect of exchange rate changes on cash   12,024     
           
Net change in cash and cash equivalents   (4,335,624)   (1,580,113)
           
Cash and cash equivalents, beginning of year   4,431,745    4,181,383 
           
Cash and cash equivalents, end of period  $96,121   $2,601,270 
           
Supplemental disclosure of cash flow information:          
Cash paid for Interest  $206,456   $164,107 
           
Supplemental disclosure of non-cash investing and financing activities          
Notes payable and accrued interest converted to common stock (223,596 shares)       1,206,511 
           
Non-cash debt discount in the form of issuance of equity instruments and beneficial conversion feature in conjunction with convertible notes   3,099,940     

  

The accompanying notes are an integral part 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 potential within its distribution system. Splash’s distribution system is comprehensive in the US and is now expanding to select attractive international 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 delivery direct to their office, facilities, and or homes.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Accounting

 

The accompanying condensed consolidated financial statements 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 under those 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 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 2022 Annual Report on Form 10-K, filed with the SEC on March 31,2023 (the “Form 10-K”).

 

The accompanying condensed consolidated financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessary for a fair presentation of its condensed financial position and results of operations for the interim periods presented. The results of operations 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 the accounts of Splash and its wholly owned subsidiaries Splash Beverage Holdings LLC (“Holdings”), Splash International Holdings LLC (“International”), Splash Mex SA de CV (“Splash Mex”) and Copa di Vino Wine Group, Inc. (“Copa di Vino”).

 

Canfield Medical Supply, Inc. (“CMS”) (as discontinued operations), was consolidated until September 30, 2022.

 

All intercompany balances have been eliminated in consolidation.

 

6 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Our investment in Salt Tequila USA, LLC is carried at cost less impairment, the investment does not have a readily determinable fair value.

 

Certain reclassifications have been made to the prior period financial statements to conform to the December 31, 2022 audited financial statement and the current period classifications. In the three months ended September 30, 2022, the Company reclassified $617,553 from cost of goods sold to other general and administrative cost in the condensed consolidated statement of operations and comprehensive loss, which consisted of $176,504 of shipping and handling and $441,049 of Amazon selling fees. In the nine months ended September 30, 2022, the Company reclassified $1,753,208 from cost of goods sold to other general and administrative cost in the condensed consolidated statement of operations and comprehensive loss, which consisted of $602,479 of shipping and handling and $1,150,729 of Amazon selling fees. These reclassifications had no impact on net loss.

 

Use of Estimates

 

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash Equivalents and Concentration of Cash Balance

 

The Company considers all highly liquid securities with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at September 30, 2023 or December 31, 2022.

 

At September 30, 2023 the Company’s cash on deposit with financial institutions, at times, had not exceed federally insured limits of $250,000.

 

7 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Note 2 – Summary of Significant Accounting Policies, continued

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are carried at their estimated recoverable amounts and are periodically evaluated for collectability based on past credit history with clients and other factors. The Company establishes provisions for losses on accounts receivable on the basis of loss experience, known and inherent risk in the account balance, and current economic conditions. At September 30, 2023 and December 31, 2022, our accounts receivable amounts are reflected net of allowances of $14,634 and $13,683, respectively.

 

Inventory

 

Inventory is stated at the lower of cost or net realizable value, accounted for using the weighted average cost method. The inventory balances at September 30, 2023 and December 31, 2022 consisted of 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’s estimates of forecast turnover of inventories on hand and under contract. A significant change in the timing or level of demand for certain products 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. The Company 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 $253,603 and $66,146 at September 30, 2023 and December 31, 2022, respectively.

 

Property and Equipment

 

The Company records property and equipment at cost when purchased. Depreciation is recorded for property, equipment, and software using the straight-line method over the estimated economic useful lives of assets, which range from 3-39 years. Company management reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.

 

Depreciation expense totaled $38,242 and $27,762 for the three months ended September 30, 2023 and September 30, 2022, respectively. For the nine months ended September 30, 2023 and September 30, 2022 depreciation expense totaled $98,285 and $101,991 respectively. Property and equipment as of September 30, 2023 and December 31, 2022 consisted of the following:

 

          
   2023  2022
Auto   45,420    45,420 
Machinery & equipment   1,160,578    1,108,870 
Buildings   233,323    282,988 
Leasehold improvements   723,639    713,068 
Computer Software   5,979     
Office furniture & equipment   7,657    13,636 
Total cost   2,176,596    2,163,983 
Accumulated depreciation   (1,790,993)   (1,674,385)
Property, plant & equipment, net   385,603    489,597 

 

Excise taxes

 

The Company pays alcohol excise taxes based on product sales 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 liable for the taxes upon the removal of product from the Company’s warehouse on a per gallon basis. The federal tax rate is affected by a small winery tax credit provision which decreases based upon the number of gallons of wine production in a year rather than the quantity sold.

 

8 

 

 

Splash Beverage Group, Inc. 

Notes to the Condensed Consolidated Financial Statements

 

Note 2 – Summary of Significant Accounting Policies, continued

 

Fair Value of Financial Instruments

 

Financial Accounting Standards Board (“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 hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the 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 the condensed consolidated financial statements approximate fair values at September 30, 2023 and December 31, 2022, consistent with recent negotiations of notes payable and due to the short duration of maturities and market rates of interest.

 

9 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Note 2 – Summary of Significant Accounting Policies, continued

 

Revenue Recognition

 

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (Topic 606). This guidance sets forth a five-step model which depicts the recognition of revenue in an amount that 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’s performance obligations under the terms of a contract with the customer are satisfied. Product sales occur for the Splash Beverage and E-commerce businesses once control of the Company’s products are transferred upon delivery to the customer. Revenue is measured as the amount of consideration that the Company expects to receive in exchange for transferring goods, and revenue is presented net of provisions for customer returns and allowances. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives offered to the Company’s customers and their customers. Sales taxes and other similar taxes are excluded from revenue.

 

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.

 

Other General and Administrative Expenses

 

Other General and Administrative expenses include Amazon selling fees, royalty cost for selling TapouT, cost associated with the outbound shipping and handling of finished goods, insurance cost, consulting cost, legal and audit fees, Investor Relations expenses, travel & entertainment expenses, occupancy cost, shipping and handling cost and other cost.

 

10 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Shipping and Handling Costs

 

The Company includes costs associated with the outbound shipping and handling of finished goods as a component of other general and administrative expenses in the consolidated statements of operations and comprehensive loss. Shipping and handling are not separately billed to the customers and are included in fees charged to the customer and are recorded as revenue when earned.

 

The Company incurred $1,279,189 and $1,268,636 of shipping and handling costs for the three months ending September 30, 2023 and 2022 respectively. The Company incurred $4,016,394 and $3,261,266 of shipping and handling costs for the nine months ending September 30, 2023 and 2022 respectively. These amounts, which primarily relate to shipping, are recorded in other general and administrative expenses.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation in 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 service period, which is generally the award’s vesting period. The Company uses the Black-Scholes option pricing model to determine the fair value of stock-based awards.

 

Income Taxes

 

The Company uses the liability method of accounting for income taxes as set forth in ASC 740, ”Income Taxes”. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. The Company records a valuation allowance when it is not more likely than not that the deferred tax assets will be realized.

 

Company management assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

 

For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. Company management has determined that there are no material uncertain tax positions at September 30, 2023 and December 31, 2022.

 

The Company’s federal, state and local income tax returns prior to fiscal year 2019 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.

 

The Company recognizes interest and penalties associated with tax matters, if any, as part of operating expenses and includes accrued interest and penalties with accrued expenses in the condensed interim balance sheets.

 

11 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Note 2 – Summary of Significant Accounting Policies, continued

 

Net income (loss) per share

 

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company’s convertible debt or preferred stock (if any), are not included in the computation if the effect would be anti-dilutive.

 

Advertising

 

The Company conducts advertising for the promotion of its products. In accordance with ASC 720-35, advertising costs are charged to operations when incurred. For the three months ended September 30, 2023 and September 30, 2022 the Company recorded advertising expenses of $248,512 and $746,965, respectively. The Company recorded advertising expense of $1,075,127 and $1,918,420 for the nine months ended September 30, 2023 and 2022, respectively.

 

Goodwill and Intangibles Assets

 

Goodwill represents the excess of acquisition cost over the fair value of the net assets acquired and is not subject to amortization. The Company reviews goodwill annually in the fourth quarter for impairment or when circumstances indicate carrying value may exceed the fair value. This evaluation is performed at the reporting unit level. If a qualitative assessment indicates that it is more likely than not that the fair value is less than carrying value, a quantitative analysis is completed using either the income or market approach, or a combination of both. The income approach estimates fair value based on expected discounted future cash flows, while the market approach uses comparable public companies and transactions to develop metrics to be applied to historical and expected future operating results.

 

Intangible assets consist of customer lists, brands and license agreements acquired in the acquisition of Copa Di Vino. The Company amortizes intangible assets with finite lives on a straight-line basis over their estimated useful lives of 15 years.

 

12 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Note 2 – Summary of Significant Accounting Policies, continued

 

Long-lived assets

 

The Company evaluates long-lived assets for impairment when events or changes in circumstances may indicate the carrying amount of the asset group, generally an individual warehouse, may not be fully recoverable. For asset groups held and used, including warehouses to be relocated, the carrying value of the asset group is considered recoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceed the respective carrying value. In the event that the carrying value is not considered recoverable, an impairment loss is recognized for the 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 asset groups classified as held-for-sale (disposal group), the carrying value is compared to the disposal group’s fair value less costs to sell. The Company estimates fair value by obtaining market appraisals from third party brokers or using other valuation techniques.

 

Segment reporting

 

The Company discloses a measurement of segment profit or loss that its chief operating decision maker (CODM) uses to assess segment performance and to make decisions about resource allocations for each reportable segment.

 

Recent Accounting Pronouncements

 

On January 1, 2023, the Company adopted FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires the immediate recognition of management’s estimates of current and expected credit losses. Adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements or disclosures.

 

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

 

In October 2021, the FASB issued ASU 2021-08, Business Combinations - Accounting for contract assets and contract liabilities from contracts with customers (Topic 805), which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Revenues from contracts with customers (Topic 606). For public companies, the guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company adopted the guidance during fiscal year 2023. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

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 using current exchange rates. Gains or losses from these translation adjustments are included in the condensed consolidated statement of operations and other comprehensive loss as foreign currency translation gains or losses. Translation gains and losses that arise from the translation of net assets from functional currency to the reporting currency, as well as exchange gains and losses on intercompany balances, are included in foreign currency translation in the condensed consolidated statement of operations and comprehensive loss. The Company incurred foreign currency translation net gain of $13,632 and $4,345 for the three months ended September 30, 2023 and 2022 respectively and net gain of $12,023 and net loss of $2,225 for the nine months ending September 30, 2023 and 2022 respectively.

 

13 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Liquidity and Going Concern Considerations

 

These condensed consolidated financial statements have been prepared assuming the Company will be able to continue as a going concern. The Company historically has incurred significant losses and negative cash flows from operation since inception and had net-loss of approximately $15 million for nine-month period ended September 30, 2023 and accumulated deficit of approximately $127.3 million through September 30, 2023. During the nine-month period ended September 30, 2023, the Company’s net cash used in operating activities totaled approximately $8.5 million.

 

If sales volumes do not meet the Company’s projections, expenses exceed the Company’s expectations, or the Company’s plans change, the Company may be unable to generate enough cash flow from operations to cover our working capital requirements. In such case, the Company may be required to adjust its business plan, by reducing marketing, lower its working capital requirements and reduce other expenses or seek additional financing.

 

In order to have sufficient cash to fund our operations, the Company will need to raise additional equity or debt capital. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. The Company will be required to pursue sources of additional capital through various means, including debt or equity financings. Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities the Company may issue in future capital transactions may be more favorable for new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other derivative securities, and the issuances of incentive awards under equity employee incentive plans, which may have additional dilutive effects. Further, the Company may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. The Company may also be required to recognize non-cash expenses in connection with certain securities the Company may issue, such as convertible notes and warrants, which will adversely impact our financial condition. Our ability to obtain needed financing may be impaired by such factors as the capital markets and our history of losses, which could impact the availability or cost of future financings. If the amount of capital the Company is able to raise from financing activities together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that the Company reduce our operations accordingly, the Company may be required to curtail or cease operations. As a result, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern for at least twelve months from the date of the consolidated financial statements being available to be issued.

 

14 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Note 3 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable and Revenue Financing Arrangements

 

Notes payable are generally non-recourse and secured by all Company owned assets.

 

         
   Interest
Rate
  September 30,
2023
  December 31,
2022
Notes Payable and Convertible Notes Payable         
          
In March 2014, the Company entered into a short-term loan agreement with an entity in the amount of $200,000. The note included warrants for 272,584 shares of common stock at $0.94 per share. The warrants expired unexercised on February 28, 2017. The loan and interest was paid off in February 2023   8%       200,000 
                
In December 2020, the Company entered into a 56- month loan with a company in the amount of $1,578,237. The loan requires payments of 3.75% through November 2022 and 4.00% through September 2025 of the previous month’s revenue. Note is due September 2025. Note is guaranteed by a related party see note 6.   17%   494,204    1,044,445 
                
In April 2021, the Company entered into various six-month loans with individuals totaling in the amount of $168,000. The loans had an original maturity of October 2021 with principal and interest due at maturity with conversion price of $3.30 per share. The loans were extended to March 31, 2024.   7%   168,000    168,000 
                
In May 2021, the Company entered into various six-month loans with individuals totaling in the amount of $60,000. The loans had an original maturity of October 2021 with principal and interest due at maturity with conversion price of $3.30 per share. The loans were extended to March 31, 2024.   7%   60,000    60,000 

 

 

15 

 

 

Splash Beverage Group, Inc. 

 Notes to the Condensed Consolidated Financial Statements

 

In August 2022, the Company entered into a 56-months auto loan in the amount of $45,420.   2.35%   35,367    42,396 
                
In December 2022, the Company entered into various eighteen-month loans with individuals totaling in the amount of $4,000,000. The notes included 100% warrant coverage. The loans mature in June 2024 with principal and interest due at maturity with conversion price of $1.00 per share.   12%   4,000,000    4,000,000 
                
In February 2023, the Company entered into a twelve-month loan with an entity in the amount of $2,000,000. The convertible note included the issuance of 1,500,000 shares of common stock . The loan matures in February 2024 with conversion price of $0.85 per share and is non-interest bearing       2,000,000     
                
In May 2023, the Company entered into various eighteen-month loans with individuals totaling in the amount of $800,000. The notes included 50% warrant coverage. The loans mature in November 2024 with principal and interest due at maturity with conversion price of $1.00 per share.   12%   800,000     

 

16 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

In June 2023, the Company entered into various eighteen-month loans with individuals totaling in the amount of $350,000. The notes included 50% warrant coverage. The loans mature in December 2024 with principal and interest due at maturity with conversion price of $1.00 per share.   12%   350,000     
                
In July 2023, the Company entered into a twelve-month loan with an individual in the amount of $750,000. The note included 100% warrant coverage. The loan matures in July 2024 with principal and interest due at maturity with conversion price of $1.00 per share.   12%   750,000     
                
In July 2023, the Company entered into a twelve-month loan with an individual in the amount of $100,000. The note included 100% warrant coverage. The loan matures in January 2025 with principal and interest due at maturity with conversion price of $1.00 per share.   12%   100,000     
                
In August 2023, the Company entered into a twelve-month loan with an individual in the amount of $300,000. The convertible note included the issuance of 150,000 shares of common stocks. The loan matures in August 2024 with principal and interest due at maturity with conversion price of $0.85 per share and is non-interest bearing.     -   300,000     
                
Total notes payable       $9,057,571   $5,514,841 
                
Less notes discount        (3,099,940)   (1,898,265)
Less current portion        (5,548,830)   (1,080,257)
                
Long-term notes payable       $408,801   $2,536,319 

 

Interest expense on notes payable was $207,087 and $65,007 for the three months ended September 30, 2023 and 2022, respectively. Interest expense on notes payable was $546,849 and $217,123 for the nine months ended September 30, 2023 and 2022, respectively. Accrued interest was $496,384 as of September 30, 2023. The Company’s effective interest rate was 41.07% for the nine months ended September 30, 2023.

 

As of September 30, 2023, the Company’s convertible note balances are convertible into 9,222,251 shares of common stock.

 

Shareholder Advances

 

As of February 23, 2023, the Company received a shareholder advance for $200,000 with a 12% interest rate and interest expense was $14,400 for the nine months ended September 30, 2023.

 

17 

 

 

Splash Beverage Group, Inc. 

 Notes to the Condensed Consolidated Financial Statements

 

Note 4 – Licensing Agreement and Royalty Payable

 

The Company has a licensing agreement with ABG TapouT, LLC (“TapouT”), providing the Company with licensing rights to the brand “TapouT” (i)energy drinks, (ii) energy bars, (iii) coconut water, (iv) electrolyte gum/chews, (v) energy shakes, (vi) powdered drink mix, (viii) water (including enhanced water), (vii) energy shots, (viii) teas, and (ix) sports drinks sold in the North America (including US Territories and Military Bases), United Kingdom, Brazil, South Africa, Australia, Scandinavia, Peru, Colombia, Chile and Guatemala. The Company is required to pay a 6% royalty on net sales, as defined, and are required to make minimum monthly payments of $55,000 in 2023 and $54,450 in 2022.

 

There were no unpaid royalties at September 30, 2023. The Company paid the guaranteed minimum royalty payments of $165,000 and $163,350 for the three months ended September 30, 2023 and 2022 respectively and $495,000 and $490,050 for the nine months ending September 30, 2023 and 2022 respectively, which is included in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss.

 

In connection with the Copa di Vino APA, the Company acquired the license to certain patents from 1/4 Vin SARL (“1/4 Vin”). On February 16, 2018, Copa di Vino entered into three separate 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 in service or the patents expire. Amortization is approximately $31,000 annually until the license agreement is fully amortized in 2027. The asset is being amortized over a 10-year useful life.

 

Note 5– Stockholders’ Equity

 

Common Stock

 

During the period ended September 30, 2023, the Company entered into a private placement offering to purchase convertible instruments that convert into the Company’s common stock up to an aggregate of $8,500,000. The Company received gross proceeds of $4,300,000 from the issuance of convertible instruments with 3,725,000 shares and 1,000,000 warrants.

 

In the three months and nine months ended September 30, 2023, the Company granted share-based awards to certain consultants totaling 99,999 and 316,666 shares of common stock, respectively, at a weighted average price of $0.66 and $0.91, respectively, recognized share-based compensation of $66,332 and $289,998, respectively. In the nine months ended September 30, 2023, the Company issued 100,000 shares in satisfaction of a $91,800 liability to issue shares recorded in December 2022.

 

18 

 

 

Splash Beverage Group, Inc. 

Notes to the Consolidated Financial Statements

 

Note 5 – Stockholders’ Equity, continued

 

Stock Plans

 

2020 Plan

 

In July 2020, the Board adopted the 2020 Stock Incentive Plan (the “2020 Plan”), which provides for the grant of Options, Restricted Stock Awards, Stock Appreciation Rights, Performance Units and Performance Bonuses to consultants and eligible recipients.

 

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 issued and outstanding common shares at year end, unless otherwise adjusted by the Board of Directors. At January 1, 2023 and 2022, the number of shares issuable under the 2020 plan increased by 2,054,276 and 1,679,812 shares, respectively.

 

In October 2023, the shareholders voted to increase the number of shares issuable under the Plan to 7.5%.

 

The following is a summary of the Company’s stock option activity during the period ended September 30, 2023:

  

                       
        Stock options   Weighted average exercise price of outstanding stock
options
     Weighted average remaining life (Yrs)  
Balance January 01, 2023 *     1,151,000     $ 1.12          
Granted     65,000       1.08          
Exercises                    
Cancelled                    
Balance March 31, 2023     1,216,000     $ 1.12          
                         
Granted     3,376,008       1.13          
Exercises                    
Cancelled                    
                         
Balance - June 30, 2023     4,592,008     $ 1.13      
                         
                         
Exercisable - June 30, 2023     3,608,923     $ 1.12      
                         
Granted                    
Exercises                    
Cancelled                    
                         
Balance - September 30, 2023     4,592,008     $ 1.13     $ 6.41  
                         
Exercisable - September 30, 2023     3,608,923     $ 1.12     $ 5.68  

  

* These prices are reflective of the price modification made on April 24, 2023.

 

The Company recognized $300,912 and $1,025,903 of share-based compensation during the three months and nine months ended September 30, 2023.

 

19 

 

 

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

 

The following is a summary of the Company’s Warrant activity.

 

               
    Warrants  Weighted average exercise
price of outstanding
warrants
   Weighted average
remaining term (Yrs)
 
Balance December 31, 2022   14,343,896   $1.85      
Granted              
Balance March 31, 2023   14,343,896   $1.85      
                
Granted   575,000    0.25      
Exercises   68,146    2.19      
Cancelled   2,345,677    2.32      
                
Balance - June 30, 2023   12,505,073   $1.68    3.19 
                
Granted   425,000    0.25      
Exercises             
Cancelled             
                
Balance - September 30, 2023   12,930,073   $1.63    2.93 

  

Note 6 – Related Parties

 

During the normal course of business, the Company incurs expenses related to services provided by the CEO for Company expenses paid by the CEO. In conjunction with the acquisition of Copa di Vino, the Company also entered into a Revenue Loan and Security Agreement (the “Loan and Security Agreement”) by and among the Company, Robert Nistico, was an additional Guarantor and each of the subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and, collectively, the “Guarantors”), and Decathlon Alpha IV, L.P. (the “Lender”). The Note Payable had a balance outstanding of $494,204 at September 30,2023.

 

On June 22, 2023, the Company received an interest free short-term loan from the CEO for $250,000. In August and September 2023, the Company received an interest free short-term loan from the CEO for $165,000 and expense payable of $11,000. The loan is expected to be repaid within the current year.

 

Note 7 – Investment in Salt Tequila USA, LLC

 

The Company has a marketing and distribution agreement with SALT Tequila USA, LLC (“SALT”) for the manufacturing of our Tequila product line in Mexico.

 

The Company has a 22.5% percentage ownership interest in SALT, this investment is carried at cost less impairment, the investment does not have a readily determinable fair value. The Company has the right to increase our ownership to 37.5%.

 

20 

 

 

Splash Beverage Group, Inc.

 Notes to the Condensed Consolidated Financial Statements

 

Note 8 –Leases

 

The Company has various operating lease agreements primarily related to real estate and office space. The Company’s real estate leases represent a majority of the lease liability. Lease payments 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 three months and nine-month period ended September 30, 2023 and 2022. A majority of the real estate leases include options to extend the lease. Management reviews all options to extend at the inception of the lease and account for these options when they are reasonably certain of being exercised.

 

Operating lease expense is recognized on a straight-line basis over the lease term and is included in the Company’s condensed consolidated statement of operations and comprehensive loss. Operating lease cost was $273,631 and $263,159 during the nine-month period ended September 30, 2023 and 2022, respectively.

 

The following table sets forth the maturities of our operating lease liabilities and reconciles the respective undiscounted payments to the operating lease liabilities in the consolidated balance sheet at September 30, 2023:

 

     
Undiscounted Future Minimum Lease Payments  Operating Lease
      
2023 (Three months remaining)   71,416 
2024   286,168 
2025   287,193 
2026   17,856 
Total   662,633 
Amount representing imputed interest   (40,248)
Total operating lease liability   622,385 
Current portion of operating lease liability   259,072 
Operating lease liability, non-current  $363,313 

 

The table below presents lease-related terms and discount rates at September 30, 2023:

 

     
Remaining term on leases   1 to 33 months 
Incremental borrowing rate   5.0 to 9.0 % 

  

21 

 

 

Splash Beverage Group, Inc. 

Notes to the Condensed Consolidated Financial Statements

 

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 operating segments are managed respectively, and each segment’s major customers have different characteristics. Segment Reporting is evaluated by our Chief Executive Officer and Chief Financial Officer.

 

                    
   Three Months Ended September 30  Nine Months Ended September 30
Revenue  2023  2022  2023  2022
Splash Beverage Group  $1,104,878   $1,147,248   $4,130,817   $3,980,794 
E-Commerce   4,039,191    3,723,159    12,030,930    9,315,127 
                     
Net revenues, continuing operations   5,144,069    4,870,407    16,161,747    13,295,921 
                     
Contribution after Marketing                    
Splash Beverage Group   (652,727)   (430,049)   (1,468,563)   (1,278,987)
E-Commerce   1,323,231    1,451,684    4,198,453    3,769,980 
Total contribution after marketing   670,504    1,021,635    2,729,890    2,490,993 
                     
Contracted services   382,096    438,004    1,094,398    1,196,852 
Salary and wages   1,195,916    1,262,935    3,794,179    3,180,198 
Non-cash share-based compensation   367,244    1,697,201    1,224,101    7,039,695 
Other general and administrative   3,048,779    2,734,377    8,617,013    7,963,231 
 Loss from continuing operations  $(4,323,531)  $(5,110,882)  $(11,999,801)  $(16,623,983)

 

Total assets  September 30, 2023  December 31, 2022
Splash Beverage Group  $9,599,010   $14,723,553 
E-Commerce   1,645,036    2,581,150 
           
Total assets  $11,244,046   $17,304,703 

 

22 

 

 

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 are subject 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 its business, financial condition or results of operations.

 

Note 11 – Subsequent Events

 

In October, 2023, the Company received approximately $1.9 million from the issuance of senior secured convertible notes, a convertible promissory note and a merchant agreement. The senior convertible notes have an eighteen-month term, accrue interest at 12% and are convertible into shares of common stock of the Company at $0.85 per share and include 100% warrant coverage. The convertible promissory note has a two-and-a-half-month term and accrues interest at a fixed amount of $50,000.

 

The notes that matured in October 2023 were extended by the note holders to March 31, 2024.

 

The maturity dates of the related party notes were extended to March 31, 2024.

 

23 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Cautionary Statement Regarding Forward-Looking Statements

 

The information in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements that are not of historical fact may be deemed to be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties. In some cases you can identify forward-looking statements 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 from the anticipated results or other expectations expressed in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks included from time to time in other reports or registration statements filed with the United States 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 reflected in these statements.

 

Unless the context otherwise requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer to Splash Beverage Group and its subsidiaries.

 

The following discussion and analysis should be read in 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 potential within its distribution system. Splash’s distribution system is comprehensive in the US and is now expanding to select attractive international 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 delivery direct to their office, facilities, and or homes.

 

Results of Operations for the Three Months and Nine Months Ended September 30, 2023 compared to Three Months and Nine Months Ended September 30, 2022.

 

Net Revenue

 

Three months ended September 30, 2023:

 

Revenue increased by 5.6%, over same quarter last year $5,144,069 compared to $4,870,407. The increase of $273,662 was due to:

 

·An increase from our e-commerce distribution platform called Qplash.

 

·Increase in the Energy and Salt brands

 

·Offset by a partial decline in sales in the Hydration, Copa and Pulpoloco brands

 

Nine months ended September 30, 2023:

 

Revenue increased by 21.6%, over same period last year $16,161,747 compared to $13,295,921. The increase of $2,865,826 was due to:

 

·An increase from our e-commerce distribution platform called Qplash.

 

·Increase in the Energy, Salt and Copa brands.

 

·Offset by a partial decline in sales in the Hydration and Pulpoloco brands.

 

24 

 

 

 Cost of Goods Sold

 

Three months ended September 30, 2023:

 

Cost of goods sold increased by 24%, over the same quarter last year $3,847,202compared to $3,101,807. The increase of $745,395 was due to:

 

·Increase in sales

 

·Higher production costs in the Hydration brand

 

·Increase in cost associated with valuation allowances for expired, damaged, or impaired inventory.

 

Nine months ended September 30, 2023:

 

·Cost of goods sold increased by 27.5%, over the same nine months last year $11,326,298 compared to $8,886,508. The increase of $2,439,790 was due to:

 

·Increase in sales

 

·Higher production costs in the Hydration brand

 

·Increase in cost associated with valuation allowances for expired, damaged, or impaired inventory.

 

Operating Expenses

 

Three months ended September 30:

 

Operating expenses for the three months ended September 30, 2023, was $ 5,620,398 compared to $6,879,482 for the three months ended September 30, 2022, a decrease of $1,259,084. The decrease in operating expenses was primarily due to a decrease in consulting fees.

 

Nine months ended September 30:

 

Operating expenses for the nine months ended September 30, 2023, was $ 16,835,250 compared to $21,033,396 for the nine months ended September 30, 2022, a decrease of $4,198,146. The decrease in operating expenses was primarily due to:

 

·Decrease in consulting fees.

 

·Offset by increase in Employee cost due to new hires

 

·Offset by increase in e-commerce shipping and handling directly attributive to increase in e-commerce sales

 

25 

 

 

Net Other Income and Expense

 

Interest expense for the three and nine months ended September 30, 2023 was $221,488 and $561,249 respectively. For the three and nine months ended September 30, 2022 the interest expenses was $66,193 and $225,543 respectively due to additional convertible notes issued in December 2022.

 

Included in Other Income for the three months ended September 30, 2023 was an insurance settlement of $57,429. For the three and nine months ended September 30, 2022 the other income / expense $0.

 

Amortization of debt discount for the three months and nine months ended September 30, 2023 was $1,125,409 and $2,500,065 respectively. For the three and nine months ended September 30, 2022 the amortization of debt discount was $0.

 

LIQUIDITY, GOING CONCERN CONSIDERATIONS AND CAPITAL RESOURCES

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditure.

 

As of September 30, 2023, the Company had total cash and cash equivalents of $96,121, as compared with $4,431,745 at December 31, 2022.

 

Net cash used for operating activities during the nine months ended September 30, 2023 was $8,503,765 as compared to the net cash used by operating activities for the nine months ended September 30, 2022 of $10,824,651. The driver for the change in net cash used is due to a reduction of inventory in 2023 and an increase of inventory to support sales commitments in 2022.

 

26 

 

 

Net cash provided by financing activities during the nine months ended September 30, 2023 was $4,168,730. During the nine months ended September 30, 2023, the Company received $4,500,000 for convertible notes and a $460,000 loan from a related party, which was offset by repayments to debt holders of $757,270.

 

In order to have sufficient cash to fund operations, the Company will need to raise additional equity or debt capital. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to the Company. The Company will be required to pursue sources of additional capital through various means, including debt or equity financings. Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of new securities the Company may issue in future capital transactions may be more favorable for new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other derivative securities, and the issuance of incentive awards under equity incentive plans, which may have additional dilutive effects. Further, the Company may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. The Company may also be required to recognize non-cash expenses in connection with certain securities the Company may issue, such as convertible notes and warrants, which will adversely impact financial condition. The Company’s ability to obtain needed financing may be impaired by such factors as the capital markets and its history of losses, which could impact the availability or cost of future financings. If the amount of capital the Company are able to raise from financing activities together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that the Company reduce our operations accordingly, the Company may be required to curtail or cease operations. As a result, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern for at least twelve months from the date of the consolidated financial statements being available to be issued.

 

CONTRACTUAL OBLIGATIONS

 

Share obligation:

 

None.

 

Minimum Royalty Payments:

 

The Company has a licensing agreement with ABG TapouT, LLC (“TapouT”). Under the licensing agreement, the Company has minimum royalty payments to TapouT of $165,000 for the three months remaining in 2023.

 

Inventory Purchase Commitments:

 

None.

 

Off-Balance Sheet Arrangements

 

The Company does 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 our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Critical Accounting Estimates

 

None.

 

Recently Issued Accounting Pronouncements

 

None.

 

27 

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for Smaller Reporting Companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of the principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a – 15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, as amended, or Exchange Act, as of the end of the period covered by this Report. Our disclosure controls and procedures are designed to provide reasonable, not absolute, 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. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, because of certain material weaknesses in our internal controls over financial reporting, our disclosure controls and procedures were not effective as of September 30, 2023. The material weaknesses relate to a lack of segregation of duties between accounting and other functions and the absence of sufficient depth of in-house accounting personnel with the ability to properly account for complex transactions.

 

The Company plans to implement additional internal controls or enhance existing internal controls to strengthen its control environment. Subsequent to the quarter ended September 30, 2023, the Company is reviewing a plan to engage additional internal staff, external staff, or an advisory firm to provide support on technical issues related to U.S. GAAP as related to the maintenance of our accounting books and records and the preparation of our financial statements.

 

Changes in Internal Control Over Financial Reporting

 

Except as noted there were no additional changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

28 

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

None.

 

ITEM 1A. RISK FACTORS

 

There can be no assurances that the common stock will not be subject to potential delisting if the Company do not continue to maintain the listing requirements of the NYSE American.

 

Since June 11, 2021, the common stock has been listed on the NYSE American, under the symbol “SBEV”. The NYSE American has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing (i.e., being de-listed from the NYSE American), would make it more difficult for shareholders to sell our common stock and more difficult to obtain accurate price quotations on our common stock. This could have an adverse effect on the price of common stock. The ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing the Company may need in the future, may also be materially and adversely affected if common stock is not traded on a national securities exchange.

 

As of September 30, 2023, we have a negative stockholders’ equity. If we are unable to raise additional capital, or otherwise become unable to satisfy our obligations as they become due, we may become insolvent and face the risk of bankruptcy.

 

Since our inception and throughout most of our history, we have incurred net losses, including but not limited to, a net loss of $16,897,065 incurred in Fiscal 2022. As of December 31, 2022, we also reported positive stockholders’ equity of $9,322,134 and a gross loss of $$112,331,027. However, as of September 30, 2023, our current shareholders’ equity is ($657,830). We incur substantial expenditures related to manufacturing products in the United States, sales and marketing, general and administrative and research and development purposes. Our ability to achieve profitability in the future will primarily depend on our ability to increase sales of our products. Stockholders’ equity improvement will also be dependent on our ability to increase sales which will increase the value of our assets and decrease our liabilities. Future profitability is dependent on our ability to reduce manufacturing costs. However, some manufacturing costs are fixed and cannot be reduced.

 

Upon the occurrence of a breach relating to our outstanding notes, the lender may seek to remedy.

 

We may have breached terms on certain of our outstanding loans by violating certain covenants. Although we have not been informed by any of our lenders that we are in default, such lenders could do so, and at such time the lenders may seek to remedy. It is possible that the occurrence of such an event could place us in breach of other outstanding agreements as well. At this time we are current on all of our outstanding payments with respect to all of our outstanding agreements.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

In the nine months ended September 30, 2023, the Company issued 1,150,000 shares in connection with convertible instruments. On May 10, 2023, the Company received $800,000 for the sale of convertible notes with 12.0% interest and eighteen-month term to four individual investors totaling 800,000 shares with an exercise price of $1.00 per share, the notes included 400,000 warrants with an exercise price of $0.25 per warrant. On June 28, 2023, the Company received $350,000 for the sale of convertible notes with 12.0% interest and eighteen-month term to two individual investors totaling 350,000 shares with an exercise price of $1.00 per share, the notes included 175,000 warrants with an exercise price of $0.25 per warrant. On August 10, 2023, the Company received $1,100,000 for the sale of a convertible note. The note has a twelve -month term, is non-interest bearing and is convertible into shares of common stock of the Company at $1.00 per share, the note includes 500 shares for every $1,000 purchased in the note. These notes were issued to fund acquisitions, equipment purchases and working capital.

 

In the three months and nine months ended September 30, 2023, the Company issued 99,999 and 316,665 shares of common stock to consultants in exchange for services and recognized non-cash compensation on our Condensed Consolidated Statement of Operation in the amount of $289,998.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

No disclosure required.

 

ITEM 5. OTHER INFORMATION

 

None.

 

29 

 

 

ITEM 6. EXHIBITS

 

(a) Exhibits required by Item 601 of Regulation S-K.

 

Exhibits  Description
 4.1   Form of Warrant (Previously filed as exhibit 4.1 to the Company’s Current Report on Form 8-K with the SEC on August 16, 2023)
 4.2   Form of Warrant (Previously filed as exhibit 4.1 to the Company’s Current Report on Form 8-K with the SEC on October 5, 2023)
 10.1   Form of the SPA (Previously filed as exhibit 10.1 to the Company’s Current Report on Form 8-K with the SEC on August 16, 2023)
 10.2   Form of Investor Note (Previously filed as exhibit 10.2 to the Company’s Current Report on Form 8-K with the SEC on August 16, 2023)
 10.3   Form of Second Investor Note (Previously filed as exhibit 10.3 to the Company’s Current Report on Form 8-K with the SEC on August 16, 2023)
 10.4   Amendment dated August 10, 2023 (Previously filed as exhibit 10.4 to the Company’s Current Report on Form 8-K with the SEC on August 16, 2023)
 10.5   Form of the Purchase Agreement (Previously filed as exhibit 10.5 to the Company’s Current Report on Form 8-K with the SEC on August 16, 2023)
 10.6   Form of the Purchase Agreement (Previously filed as exhibit 10.1 to the Company’s Current Report on Form 8-K with the SEC on October 5, 2023)
 10.7   Form of the Note (Previously filed as exhibit 10.2 to the Company’s Current Report on Form 8-K with the SEC on October 5, 2023)
 10.8   Form of Registration Rights Agreement (Previously filed as exhibit 10.3 to the Company’s Current Report on Form 8-K with the SEC on August 16, 2023)
 31.1   Certification of CEO and Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)*
 31.2   Certification of CFO and Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)*
 32.1   Certification of CEO and Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically**
 32.2   Certification of CFO and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically**
 101   XBRL Exhibits
 104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith

 

** Furnished herewith

 

30 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  SPLASH BEVERAGE GROUP, INC.
     
Date: November 14, 2023 By: /s/ Robert Nistico
    Robert Nistico, Chairman and CEO
    (Principal Executive Officer)
     
Date: November 14, 2023 By: /s/ Fatima Dhalla
    Fatima Dhalla, Interim CFO
    (Principal Accounting Officer and Principal Financial Officer) 

 

31

 

 

 

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Robert Nistico, certify that:

 

1.        I have reviewed this quarterly report on Form 10-Q of Splash Beverage Group Inc.;

 

2.        Based on my knowledge, this report 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 financial statements, 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 other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 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 controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within the registrant, particularly during the period in which this report is being prepared;

 

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

(c)       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.        The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect 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: November 14, 2023  
   
/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 ACT OF 2002

 

I, Fatima Dhalla, certify that:

 

1.         I have reviewed this quarterly report on Form 10-Q of Splash Beverage Group Inc.;

 

2.         Based on my knowledge, this report 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 financial statements, 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 other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 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 controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within the registrant, particularly during the period in which this report is being prepared;

 

(b)        Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.         The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)        All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect 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: November 14, 2023  
   
/s/ Fatima Dhalla  
Fatima Dhalla  
Interim 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-Q of Splash Beverage Group Inc., a company duly formed under the laws of Nevada (the “Company”), for the quarter ended June 30, 2023, 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 of his knowledge, that:

 

(1)          The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  

Date: November 14, 2023 /s/ Robert Nistico
  Robert Nistico, Chief Executive Officer
(Principal Executive Officer) 

 

This certification accompanies this Report pursuant to 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 deemed filed 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-Q of Splash Beverage Group, Inc., a company duly formed under the laws of Nevada (the “Company”), for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Fatima Dhalla, Interim Chief Financial 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 with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)            The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 14, 2023 /s/ Fatima Dhalla
  Fatima Dhalla
Interim Chief Financial Officer
(Principal Accounting Officer and Principal Financial Officer) 

 

This certification accompanies this Report pursuant to 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 deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

 

 

v3.23.3
Cover - shares
9 Months Ended
Sep. 30, 2023
Nov. 14, 2023
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2023  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 001-40471  
Entity Registrant Name SPLASH BEVERAGE GROUP, INC.  
Entity Central Index Key 0001553788  
Entity Tax Identification Number 34-1720075  
Entity Incorporation, State or Country Code NV  
Entity Address, Address Line One 1314 E Las Olas Blvd  
Entity Address, Address Line Two Suite 221  
Entity Address, City or Town Fort Lauderdale  
Entity Address, State or Province FL  
Entity Address, Postal Zip Code 33301  
City Area Code (954)  
Local Phone Number 745-5815  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   43,817,776
Common Stock, $0.001 value per share    
Title of 12(b) Security Common Stock, $0.001 value per share  
Trading Symbol SBEV  
Security Exchange Name NYSE  
Warrants to purchase common stock, $0.001 par value per share    
Title of 12(b) Security Warrants to purchase common stock, $0.001 par value per share  
Trading Symbol SBEV-WT  
Security Exchange Name NYSE  
v3.23.3
Condensed Consolidated Balance Sheets - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current assets:    
Cash and cash equivalents $ 96,121 $ 4,431,745
Accounts receivable, net 1,512,693 1,812,110
Prepaid expenses 225,446 348,036
Inventory 2,907,461 3,721,307
Other receivables 376,905 344,376
Total current assets 5,118,626 10,657,574
Non-current assets:    
Deposit 49,398 49,290
Goodwill 256,823 256,823
Intangible assets, net 4,564,037 4,851,377
Investment in Salt Tequila USA, LLC 250,000 250,000
Operating lease right of use asset 619,559 750,042
Property and equipment, net 385,603 489,597
Total non-current assets 6,125,420 6,647,129
Total assets 11,244,046 17,304,703
Current liabilities    
Accounts payable and accrued expenses 4,199,476 3,383,187
Liability to issue shares 0 91,800
Operating lease liabilities - current 259,072 268,749
Notes payable, current portion 5,548,830 1,080,257
Due to related party 426,000 0
Shareholder advance 200,000 0
Accrued interest payable 496,384 141,591
Total current liabilities 11,129,762 4,965,584
Long-term liabilities:    
Notes payable 408,801 2,536,319
Operating lease liabilities - noncurrent 363,313 480,666
Total long-term liabilities 772,114 3,016,985
Total liabilities 11,901,876 7,982,569
Stockholders’ equity:    
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued 0 0
Common Stock, $0.001 par, 300,000,000 shares authorized, 42,902,185 shares issued, 42,902,185 shares outstanding at September 30, 2023 and 41,085,520 shares issued, 41,085,520 shares outstanding at December 31, 2022 42,902 41,086
Additional paid in capital 126,648,371 121,632,547
Accumulated other comprehensive loss (8,448) (20,472)
Accumulated deficit (127,340,655) (112,331,027)
Total stockholders’ equity (657,830) 9,322,134
Total liabilities and stockholders’ equity $ 11,244,046 $ 17,304,703
v3.23.3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock shares issued 0 0
Common stock par value $ 0.001 $ 0.001
Common stock shares authorized 300,000,000 300,000,000
Common stock shares issued 42,902,185 41,085,520
Common stock shares outstanding 42,902,185 41,085,520
v3.23.3
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Income Statement [Abstract]        
Net revenues $ 5,144,069 $ 4,870,407 $ 16,161,747 $ 13,295,921
Cost of goods sold (3,847,202) (3,101,807) (11,326,298) (8,886,508)
Gross profit 1,296,867 1,768,600 4,835,449 4,409,413
Operating expenses:        
Contracted services 382,096 438,004 1,094,398 1,196,852
Salary and wages 1,195,916 1,262,935 3,794,179 3,180,198
Non-cash share-based compensation 367,244 1,697,201 1,224,101 7,039,695
Other general and administrative 3,048,779 2,734,377 8,617,013 7,698,231
Sales and marketing 626,363 746,965 2,105,559 1,918,420
Total operating expenses 5,620,398 6,879,482 16,835,250 21,033,396
Loss from continuing operations (4,323,531) (5,110,882) (11,999,801) (16,623,983)
Other income/(expense):        
Interest income 348 158 1,668 2,867
Interest expense (221,488) (66,193) (561,249) (225,543)
Other Income 0 0 49,819 0
Amortization of debt discount (1,125,410) 0 (2,500,065) 0
Total other expense (1,346,550) (66,035) (3,009,827) (222,676)
Provision for income taxes 0 0 0 0
Net loss from continuing operations, net of tax (5,670,081) (5,176,917) (15,009,628) (16,846,659)
Net loss from discontinued operations, net of tax 0 0 0 (199,154)
Gain on sale of discontinued operations 0 33,116 0 148,748
Income (Loss) from discontinued operations 0 33,116 0 (50,406)
Net loss (5,670,081) (5,143,801) (15,009,628) (16,897,065)
Other Comprehensive Income        
Foreign currency translation Income 29,406 0 12,024 0
Total Comprehensive Loss $ (5,640,675) $ (5,143,801) $ (14,997,604) $ (16,897,065)