What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-12 · 503 added, 426 removed, 487 unchanged (66% of the section changed)

2 unchanged sentences

Condensed Consolidated Financial Statements

June 30, 2021

Beverage Group, Inc.

1 unchanged sentence

30, 2021 and December 31, 2020

March 31, 2021

June 30, 2021

December 31, 2020

Current assets:

Cash and cash equivalents

Accounts Receivable, net

Prepaid Expenses

Inventory, net

Other receivables

Assets of discontinued operations

Assets from discontinued operations

Total current assets

5 unchanged sentences

Total non-current assets

Liabilities and Deficiency in Stockholders’

Liabilities and

Stockholders’ Equity (Deficiency)

Current liabilities

Accounts payable and accrued expenses

Right of use liability - current

Right of use liability – current portion

Due to related parties

Related party notes payable

Sales tax payable

Related party notes payable – current portion

Convertible Loan Payable

2 unchanged sentences

Accrued interest payable

Liabilities of discontinued operations

Liabilities from discontinued operations

Total current liabilities

6 unchanged sentences

Total liabilities

Common stock, (mezzanine shares) 0 and 12,605,283 shares, contingently convertible to notes payable at March 31, 2021 and December 31, 2020

Stockholders’

Common Stock, $0.001 par, 150,000,000 shares authorized, 80,104,839 and 63,471,129 shares issued and outstanding, at March 31, 2021 and December 31, 2020.

Common stock, (mezzanine shares) 4,201,761 shares, contingently convertible to notes payable at December 31, 2020

Stockholders’ equity (deficiency):

Common Stock, $ 0.001 par, 150,000,000 shares authorized, 30,481,916 and 21,157,043 shares issued 30,481,916 and 21,157,043 outstanding, at June 30, 2021 and December 31, 2020, respectively

Additional paid in capital

2 unchanged sentences

( 61,589,735 )

Total deficiency in stockholders’

Total liabilities, mezzanine shares and deficiency in stockholders’

Total stockholders’ equity (deficiency)

( 9,350,724 )

Total liabilities, mezzanine shares and

stockholders’ equity (deficiency)

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

1 unchanged sentence

Consolidated Statements of Operations

the Three Months Ended March 31, 2021 and March 31, 2020

Three months ended March 31,

For the Three and Six Months Ended June 30, 2021 and June 30, 2020

Three months ended June 30,

Six months ended June 30,

Cost of goods sold

( 2,382,707 )

( 4,004,211 )

Operating expenses:

4 unchanged sentences

Total operating expenses

Loss from operations

Loss from continuing operations

( 6,707,706 )

( 10,856,948 )

( 1,966,772 )

Other income/(expense):

1 unchanged sentence

Interest expense

( 1,935,491 )

Gain from debt extinguishment

Total other income/(expense)

( 1,884,173 )

Provision for income taxes

Net loss from continuing operations

Net loss from continuing operations, net of tax

( 6,761,004 )

( 11,001,024 )

( 3,850,945 )

Net income from discontinued operations, net of tax

1 unchanged sentence

$ ( 373,350 )

Earnings//(Loss)per share (basic diluted)

Continuing operations

Weighted average number of common shares outstanding

$ ( 10,760,538 )

$ ( 3,822,129 )

Loss per share - continuing operations

Weighted average number of common shares outstanding - continuing operations

Earnings per share - discontinued operations

Weighted average number of common shares outstanding - discontinued operations

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

1 unchanged sentence

Consolidated Statement of

Changes in Deficiency in Stockholders’

For the three months

ended March 31, 2021 and 2020

Changes in Deficiency in Stockholders’ Equity (Deficit)

For the three and Six months ended June 30, 2021 and 2020

Treasury Stock

Stockholders’

Total Stockholders’

Paid-In Capital

6 unchanged sentences

Issuance of warrants on convertible instruments

Issuance of options

Issuance of common stock for services

Issuance of common stock for cash

Issuance of common stock for acquisition

( 3,446,630 )

Balances at March 31, 2020

( 36,361,809 )

( 1,626,168 )

Issuance of warrants on convertible instruments

Issuance of options

Issuance of common stock for services

Issuance of common stock for cash

Balances at June 30, 2020

$ ( 36,735,159 )

5 unchanged sentences

Issuance of common stock for services

Issuance of common stock and warrants for cash

Issuance of common stock and warrants or cash

Mezzanine shares

Balances at March 31, 2021

( 4,442,219 )

Balance at March 31, 2021

$ ( 66,031,954 )

Issuance of warrants for services

Issuance of common stock for services

Issuance of common stock and warrants or cash

( 6,560,600 )

Balance at June 30, 2021

$ ( 72,592,554 )

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

1 unchanged sentence

Consolidated Statement Cash Flows

the Three Months Ended March 31, 2021 and 2020

Three months ended March 31,

For the Six Months Ended June 30, 2021 and 2020

Six months ended

June 30, 2021

June 30, 2020

$ ( 11,001,024 )

6 unchanged sentences

Interest expense due to the issuance of warrants

Non-cash warrant expense

Share-based compensation - warrants

Share-based compensation

8 unchanged sentences

Net cash used in operating activities - continuing operations

Net cash used in operating activities - discontinued operations

( 7,664,506 )

( 1,811,823 )

Net cash from operating activities - discontinued operations

Cash Flows from Investing Activities:

Capital Expenditures

Proceeds from the sale of fixed assets

Investment in Salt Tequila USA, LLC

Net cash used in investing activities - continuing operations

Net cash used in investing activities - discontinued operations

Net cash from investing activities - discontinued operations

Cash Flows from Financing Activities:

2 unchanged sentences

Repayment of cash advance

Proceeds from issuance of debt

Principal repayment of debt

( 1,189,832 )

ROU liability, net

Net cash provided by financing activities - continuing operations

Net cash provided by financing activities - discontinued operations

Net cash from financing activities - discontinued operations

Net Change in Cash and Cash Equivalents

4 unchanged sentences

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Notes payable and accrued interest converted to common stock (12,605,283 shares)

Series A & B preferred stock and declared dividends converted to common stock

Liability issued for investment in SALT Tequila USA, LLC

accompanying notes are an integral part of these financial statements.

Notes payable and accrued interest converted to common

The accompanying notes are an integral

part of these condensed consolidated financial statements.

Beverage Group, Inc.

4 unchanged sentences

of Ohio on September 3, 1992, and changed domicile to Colorado on April 18, 2012.

CMS is in the business of home health services,

CMS was in the business of home health services,

primarily the selling of durable medical equipment and medical supplies to the public, nursing homes, hospitals and other end

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B-to-B and B-to-C E-commerce distribution platform called Qplash, further expanding its distribution abilities and visibility.

July 2, 2020, CMS received a Certificate of Good Standing from the State of Colorado.

This certificate allowed us to change our

name from Canfield Medical Supply, Inc.

In July 2020 the Company filed a Certificate

of Amendment of Articles of Incorporation of Canfield Medical Supply, Inc.

with the Secretary of State of the State of Colorado, pursuant

to which the Company changed its name from Canfield Medical Supply, Inc.

to Splash Beverage Group, Inc..

a Colorado company.

On July 31, 2020, we received approval

from FINRA to change the Companys name from Canfield Medical Supply, Inc.

On July 31, 2020, we received

approval from FINRA to change the Company’s name from Canfield Medical Supply, Inc.

to Splash Beverage Group, Inc.

2 unchanged sentences

On December 24, 2020, SBG consummated an Asset Purchase

Agreement (the “Copa APA”) with Copa di Vino Corporation (“CdV”), to purchase certain assets and assume certain

liabilities that comprise the Copa di Vino business for a total purchase price of $ 5,980,000 , payable in the combination of $ 2,000,000

in cash (“Cash Consideration”), $2,000,000 convertible promissory note (the “Convertible Note”) to Seller and

a variable number of shares of the Company’s common stock based on a attainment of revenue hurdles.

in cash (“Cash Consideration”), $ 2,000,000 convertible promissory note (the “Convertible Note”) to Seller and

a variable number of shares of the Company’s common stock based on a attainment of revenue hurdles.

CdV is one of the leading producers

of premium wine by the glass in the United States with its primary offices and facilities in The Dalles, Oregon.

On February 2021, Management initiated a plan to divest its CMS business.

As a result, the assets and operations of CMS are reflected as discontinued operations.

On February 2021, Management initiated

a plan to divest its CMS business.

As a result, the assets and operations of CMS have been retrospectively reflected as discontinued operations.

In coordination with uplisting to

the NYSE on June 11, 2021 the Company consummated a 1.0 for 3.0 reverse stock split.

All common stock shares stated herein have

been adjusted to reflect the split.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – Summary of Significant Accounting Policies

of Presentation and Consolidation

These consolidated financial

statements include the accounts of Splash Beverage Group and its wholly owned subsidiaries, Holdings and Splash Mex, CMS (as

discontinued operations), and Copa.

These condensed consolidated

financial statements include the accounts of Splash Beverage Group and its wholly owned subsidiaries, Holdings and Splash Mex, CMS

(as discontinued operations), and Copa.

All intercompany balances have been eliminated in consolidation.

accounting and reporting policies conform to accounting principles generally accepted in the United States of America (GAAP).

accompanying financial statements have been prepared by us without audit.

In the opinion of management, all adjustments (which

include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash

flows for the three months ended March 31, 2021 and 2020 have been made.

Certain information and footnote disclosures normally

included in consolidated financial statements prepared in GAAP have been condensed or omitted.

The results of operations for the period

ended March 31, 2021 are not necessarily indicative of the operating results for the full year.

Our investment in Salt Tequila USA, LLC is accounted

for at cost, as the company does not have the ability to exercise significant influence.

Our accounting and reporting policies conform to accounting

principles generally accepted in the United States of America (GAAP).

The accompanying condensed consolidated financial

statements have been prepared by us without audit.

In the opinion of management, all adjustments (which include only normal recurring

adjustments) necessary to present fairly the financial position, results of operations and cash flows for the three and six months ended

June 30, 2021 and 2020 have been made.

Certain information and footnote disclosures normally included in consolidated

financial statements prepared in GAAP have been condensed or omitted.

The results of operations for the period ended June 30, 2021 are

not necessarily indicative of the operating results for the full year.

Use of Estimates

The preparation of consolidated financial statements in conformity with

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 consolidated financial statements and the reported amounts of revenues and expenses

during the reporting period.

Actual results could differ from those estimates.

The preparation of condensed consolidated

financial statements in conformity with 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 consolidated financial

statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those

Equivalents and Concentration of Cash Balance

consider all highly liquid securities with an original maturity of three months or less to be cash equivalents.

We had no cash

equivalents at March 31, 2021 or December 31, 2020.

Our cash in bank deposit accounts, at times, may exceed

federally insured limits of $250,000.

At March 31, 2021 we had $511,146 over the federally insured limits.

Our bank deposit accounts in

Mexico $2,447 are uninsured.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

We consider all highly liquid securities with an original

maturity of three months or less to be cash equivalents.

We had no cash equivalents at June 30, 2021 or December 31, 2020.

Our cash in bank deposit accounts, at times, may

exceed federally insured limits of $250,000.

At June 30, 2021 we had $ 11,115,182

over the federally insured limits.

2 – Summary of Significant Accounting Policies, continued

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and current economic conditions.

At March 31, 2021 and December 31, 2020, our accounts receivable amounts are reflected net of allowances

of $6,507 and $0, respectively.

At June 30, 2021 and December 31, 2020, our accounts receivable amounts are reflected net of allowances

and $ 484,858 , respectively.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

Inventory is stated at the lower of cost or net realizable

value, accounted for using the weighted average cost method.

The inventory balances at March 31, 2021 and December 31, 2020 consisted

of raw materials, work-in-process, and finished goods held for distribution.

The inventory balances at June 30, 2021 and December 31, 2020 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.

We establish provisions for excess or inventory near expiration are based on management’s estimates

of forecast turnover of inventories on hand and under contract.

3 unchanged sentences

manage inventory levels and purchase commitments in an effort to maximize utilization of inventory on hand and under commitments.

amount of our reserve was $355,780 and $366,109 at March 31, 2021 and December 31, 2020, respectively.

amount of our reserve was $ 319,622 and $ 366,109 at June 30, 2021 and December 31, 2020, respectively.

Property and Equipment

4 unchanged sentences

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 $43,487 and $2,294 for

the three months ended March 31, 2021 and March 31, 2020, respectively.

Property and equipment as of March 31, 2021 and December 31, 2020

consisted of the following:

March 31, 2021

Depreciation expense totaled $ 44,465 and $ 10,750 for the three months ended

June 30, 2021 and June 30, 2020, respectively.

Depreciation expense totaled $ 80,048 and $ 13,045 for the six months ended June 30, 2021

and June 30, 2020, respectively.

Property and equipment as of June 30, 2021 and December 31, 2020 consisted of the following:

Schedule of Property and equipment

June 30, 2021

December 31, 2020

1 unchanged sentence

Accumulated depreciation

( 1,569,585 )

Property and equipment, net

2 unchanged sentences

Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau

The Company is liable for the taxes upon the removal of product from the Company’s warehouse on a per gallon basis.

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

1 unchanged sentence

Paycheck Protection Program

The Company records Paycheck Protection Program (“PPP”) loan

proceeds in accordance with Accounting Standards Codification (“ASC”) 470, Debt.

The Company records Paycheck Protection Program (“PPP”) loan

proceeds in accordance with Accounting Standards Codification (“ASC”) 470, Debt.

Debt is extinguished when either the debtor

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pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

liabilities and indebtedness presented on the consolidated financial statements approximate fair values at March 31, 2021 and

liabilities and indebtedness presented on the consolidated financial statements approximate fair values at June 30, 2021 and

December 31, 2020, consistent with recent negotiations of notes payable and due to the short duration of maturities.

18 unchanged sentences

for expired, damaged or impaired inventory.

We measure stock-based awards at the grant-date

fair value for employees, directors and consultants and recognizes compensation expense on a straight-line basis over the vesting

period of the award.

Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions,

including the fair value of our common stock, and for stock options and warrants, the expected life of the option and warrant, and

expected stock price volatility and exercise price.

We used the Black-Scholes option pricing model to value its stock-based awards.

The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve

inherent uncertainties and the application of management’s judgment.

As a result, if factors change and management uses

different assumptions, stock-based compensation expense could be materially different for future awards.

The expected life of stock

options/warrants were estimated using the “simplified method,” which calculates the expected term as the midpoint

between the weighted average time to vesting and the contractual maturity, we have limited historical information to develop

reasonable expectations about future exercise patterns.

The simplified method is based on the average of the vesting tranches and

the contractual life of each grant.

For stock price volatility, we use comparable public companies as a basis for its expected

volatility to calculate the fair value of award.

The risk-free interest rate is based on U.S.

Treasury notes with a term

approximating the expected life of the award.

The estimation of the number of awards that will ultimately vest requires judgment,

and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts are recognized

as an adjustment in the period in which estimates are revised.

account for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation .

19 unchanged sentences

Company management has determined that there are no material uncertain tax positions at

March 31, 2021 and December 31, 2020.

June 30, 2021 and December 31, 2020.

Beverage Group, Inc.

5 unchanged sentences

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.

Schedule of Earnings Per Share, Basic and Diluted

Net loss from continuing applicable to common shareholders

1 unchanged sentence

$ ( 402,166 )

Earnings from discontinued applicable to common shareholders

Net loss from discontinued applicable to common shareholders

Weighted average number of common shares outstanding

Net loss per share from continuing operations (basic diluted)

Net income per share from discontinued operations (basic diluted)

Net loss per share from continuing operations

Net income per share from discontinued operations

average number of shares outstanding excludes anti-dilutive common stock equivalents, including warrants to purchase 3 million

shares of common stock for nominal consideration.

conduct advertising for the promotion of our products.

In accordance with ASC 720-35, advertising costs are charged to operations

when incurred.

We recorded advertising expense of $47,785 and $23,012 for the three-months ended March 31, 2021 and 2020, respectively.

represents the excess of acquisition cost over the fair value of the net assets acquired and is not subject to amortization.

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.

During 2020, the company recorded an impairment charge associated with the CMS acquisition.

The weighted average number of common

shares calculation excludes 10,068,836 warrants which have been granted by our Board but have not been exercised.

We conduct advertising for the promotion of our products.

In accordance

with ASC 720-35, advertising costs are charged to operations when incurred.

We recorded advertising expense of $ 150,753 and $ 23,962 .11

for the three-months ended June 30, 2021 and 2020, respectively.

We recorded advertising expense of $ 198,538 and $ 46,768 .45 for the six-months

ended June 30, 2021 and 2020, respectively.

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.

At December 31, 2020, our management determined

that an impairment charge of approximately $9.5 million, was necessary to reduce the goodwill relating to our Medical Device Segment.

The impairment charge was primarily related to the net cash flow projection of that business unit.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

Company evaluates long-lived assets for impairment on an annual basis, when relocating or closing a facility, or when events or

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Accounting Pronouncements

June 2016, that FASB issued ASU 2016-13, Financial Instruments –

Credit Losses (Topic 326).

June 2016, that FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326).

provides financial statement users with more decision-useful information about the expected credit losses on financial instruments

5 unchanged sentences

the circumstances.

Going Concern

The accompanying condensed consolidated financial statements have been prepared

on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Our business operations have not yet generated significant revenues, and we have sustained net losses of approximately $4.4 million

during the three months ended March 31, 2021 and have an accumulated deficit of approximately $66.0 million at March 31, 2021.

we have current liabilities in excess of current assets of approximately $1.9 million at March 31, 2021.

Further, we are in default on

approximately $0.9 million of indebtedness, including accrued interest.

ability to continue as a going concern in the foreseeable future is dependent upon our ability to generate revenues and obtain

sufficient long-term financing to meet current and future obligations and deploy such to produce profitable operating results.

Management has evaluated these conditions and plans to raise capital as needed and to generate revenues to satisfy our capital

No assurance can be given that we will be successful in these efforts.

factors, among others, raise substantial doubt about our ability to continue as a going concern for a reasonable period of time.

These condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset

amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

3 – Liquidity, Capital Resources and Going Concern Considerations

At December 31, 2020, the Company had liabilities

in excess of assets in the amount of approximately $9.4 million.

During the six month period of 2021, the Company received approximately

$19.6 million from the proceeds from the issuance common stock.

These events served to mitigate the conditions that historically raised

substantial doubt about the Company’s ability to continue as a going concern.

Based on this analysis the Company concluded it has

the ability to continue as a going concern for at least the next 12 months.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

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

4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable

payable are generally nonrecourse and secured by all Company owned assets.

Schedule of debt

Interest Rate

March 31, 2021

June 30, 2021

December 31, 2020

3 unchanged sentences

The warrants expired on February 28, 2017 and none were exercised at that date.

The note matured and remains in default.

The note was paid all in Q2 2021.

In March 2014, we entered into a short-term loan agreement with an entity in the amount of $ 200,000 .

2 unchanged sentences

The loan matured and remains in default.

In May 2020, we entered into a two year loan with the SBA under the Paycheck Protection Program established by the CARES Act in the amount of $94,833.

In May 2020, we entered into a two year loan with the

SBA under the Paycheck Protection Program established by the CARES Act in the amount of $ 94,833 .

The note requires monthly payments of principal and interest starting in December 2020 and maturing in May 2021.

We received 100%

forgiveness in Q2 2021.

In June 2020, we entered into a six-month loan with an individual in the amount of $ 100,000 .

2 unchanged sentences

The loan requires 9 amortized payments of principal and interest in the amount of $ 12,246 with the final payment due September 2020.

Notes payable for license agreements due in 36 monthly payments of $10,000, interest imputed at 10%, maturing in January 2021.

Notes payable for license agreements due in 36 monthly payments of $ 10,000 , interest imputed at 10%, maturing in July 2021.

In December 2020, we entered into a 56 month loan with a company in the amount of $ 1,578,237 .

The loan requires payments of 3.75% of the previous months revenue.

In April 2021, we entered into a six-month loan with an individual in the amount of $ 84,000 .

The loan matures in October 2021 with principal and interest due at maturity.

In April 2021, we entered into a six-month loan with a individual in the amount of $ 84,000 .

The loan matures in October 2021 with principal and interest due at maturity.

In May 2021, we entered into a six-month loan with a individual in the amount of $ 50,000 .

The loan matures in October 2021 with principal and interest due at maturity.

In May 2021, we entered into a six-month loan with a individual in the amount of $ 500,000 .

The loan matures in October 2021 with principal and interest due at maturity.

In May 2021, we entered into a six-month loan with a individual in the amount of $ 10,000 .

The loan matures in October 2021 with principal and interest due at maturity.

In May 2021, we entered into a six-month loan with a individual in the amount of $ 200,000 .

The loan matures in October 2021 with principal and interest due at maturity.

Total notes payable

Less current portion

( 1,438,000 )

Long-term notes payable

expense on notes payable was $9,625 and $49,430 for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest

was $273,880 at March 31, 2021.

Interest expense on notes payable was $ 133,702

and $ 10,429 for the three months ended June 30, 2021 and 2020, respectively.

Interest expense on notes payable was $ 203,236 and $ 59,859

for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest was $ 125,205 at June 30, 2021

Beverage Group, Inc.

2 unchanged sentences

Loan Payable, continued

Parties Notes Payable

December 2020, we entered into a 18 month loan with an individual in the amount of $2,000,000.

The loan requires 18 monthly amortized

payments of principal and interest in the amount of $144,444 with the final payment due June 2022.

current portion

notes payable

expense on related party notes payable was $0 and $37,967 for the three months ended March 31, 2021 and 2020, respectively.

interest was $0 as of March 31, 2021.

Schedule of debt

Interest Rate

June 30, 2021

December 31, 2020

Related Parties Notes Payable

In December 2020, we entered into a 18 month loan with an individual in the amount of $ 2,000,000 .

The loan requires 18 monthly amortized payments of principal and interest in the amount of $ 114,444 with the final payment due June 2022.

Less current portion

( 1,329,175 )

( 1,333,333 )

Long-term notes payable

Interest expense on related party notes payable

was $ 7,804 and $ 0 for the three months ended June 30, 2021 and 2020, respectively.

Interest expense on related party notes payable was $ 15,839

and $ 0 for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest was $ 0 as of June 30, 2021.

Beverage Group, Inc.

2 unchanged sentences

Loan Payable, continued

Schedule of debt

Interest Rate

June 30, 2021

December 31, 2020

Convertible Bridge Loans Payable

5 unchanged sentences

Loan Payable, continued

expense on the convertible bridge loans payable was $32,000 and $93,785 for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest was $179,215 at March 31, 2021.

April 24, 2017, a note holder filed a complaint against the Company for a promissory note in default.

The note holder is requesting

summary judgment in the amount of $279,215.

Interest expense on the convertible bridge loans payable

was $ 8,000 and $ 8,000 for the three months ended June 30, 2021 and 2020, respectively.

Interest expense on the convertible bridge loans

payable was $ 16,000 and $ 101,785 for the three months ended June 30, 2021 and 2020, respectively.

Accrued interest was $ 187,215 at June 30, 2021.

On April 24, 2017, a note holder filed a complaint

against the Company for a promissory note in default.

The note holder is requesting summary judgment in the amount of $ 287,215 .

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

Note 5 –

Licensing Agreement and Royalty

Note 5 – Licensing Agreement and Royalty

We have a licensing agreement with ABG TapouT, LLC

(“TapouT”), providing us with licensing rights to the brand “TapouT”

on energy drinks, energy shots, water, teas

(“TapouT”), providing us with licensing rights to the brand “TapouT” on energy drinks, energy shots, water, teas

and sports drinks for beverages sold in the United States of America, its territories, possessions, U.S.

3 unchanged sentences

payments of $ 49,500 and $ 45,000 , respectively.

There were no unpaid royalties at March 31, 2021.

We paid the guaranteed minimum royalty payments of $148,500 and $135,000 for the three-months ended March 31, 2021 and 2020, which is

included in general and administrative expenses.

There were no unpaid royalties at June 30, 2021.

We paid the guaranteed minimum royalty payments of $ 297,000 and $ 270,000 for the six-months ended June 30, 2021 and 2020, which is included

in general and administrative expenses.

In connection with the Copa APA, we acquired the license

to certain patents from 1/4 Vin SARL (“1/4 Vin”) On February 16, 2018, the Copa di Vino entered into three separate license

agreements with 1/4 Vin SARL, (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,

1 unchanged sentence

service or the patents expire.

Amortization will be approximately $31,000 annually until the license agreement is fully amortized.

Amortization is approximately $31,000 annually until the license agreement is fully amortized.

asset is being amortized over a 10 -year useful life.

Note 6 –

Deficiency in Stockholders’

At March 31, 2020, we issued 817,753 shares of common

stock in exchange for services provided to us.

The shares were valued at $0.73 per share.

We recognized share-based compensation expense

of $600,000, which is classified within the contracted services line on the Statement of Operations.

Note 6 – Stockholders’

Equity (Deficiency)

At March 31, 2020, we issued 272,584

shares of common stock in exchange for services provided to us.

The shares were valued at a fair market value stock price based on the

agreement date.

We recognized share-based compensation expense of $731,035, which is classified within the contracted services line on

the Statement of Operations.

The shares were valued at $ 2.19

We recognized share-based compensation expense of $ 600,000 ,

which is classified within the other general and administrative line on the Statement of Operations.

At March 31, 2021, we issued 168,333

shares of common stock in exchange for services provided to us.

The shares were valued at a fair market value stock price based on

the agreement date.

We recognized share-based compensation expense of $ 2,100,953 ,

which is classified within the other general and administrative line on the Statement of Operations.

Beverage Group, Inc.

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Placement Memorandum (PPM)

Our Board of Directors has determined that it is

in the best interests of the Corporation and its stockholders to obtain working capital by conducting a private placement offering of

3,636,364 shares of the common stock of the Company, $0.001 value per share at a purchase price of $1.10 per share for aggregate gross

proceeds of $4,000,000.

As part of the PPM, each purchaser received a warrant to purchase one share for every two shares purchased.

In February 2021, we completed our PPM by issuing a total of 3,637,065 of shares and warrants with gross proceeds of $4,000,771.

its inception, we have repurchased shares from our shareholders.

To date, we have repurchased 1,226,630 shares, of which 817,753

have been retired.

connection with a 2018 consulting agreement, we are committed to issue the 408,877 shares held in treasury upon the occurrence

of certain events or milestones.

We issued 136,292 shares in July 2018, 136,292 shares in July 2019 and 136,292 shares at March

Issuance-Series A Convertible Preferred Stock

In July 2020, the Board of Directors

has determined that it is in the best interests of the Corporation and its stockholders to obtain working capital by conducting a private

placement offering of 930,303 shares of the common stock and 650,000 warrants to purchase common stock of the Company, $0.001 par value

per share at a purchase price of $3.30 per share for aggregate gross proceeds of $ 3,070,000 .

January 2021, the Board of Directors approved a private placement offering of 1,212,121 shares

of the common stock of the Company, $ 0.001 value

per share at a purchase price of $ 3.30 per

share for aggregate gross proceeds of $ 4,000,000

As part of the PPM, each purchaser received a warrant to purchase one share for every two shares

In February 2021, we completed our PPM by issuing a total of 1,212,355 of

shares and 606,179 warrants receiving gross proceeds of $ 4,000,771 .

On May 2012, the Board adopted

the 2012 Stock Incentive Plan (the “2012 Plan”), which provided for the grant of Incentive Stock Options, Non-Qualified Stock

Options, Restricted Stock Awards, Restricted Stock Units and Stock Appreciation Rights to eligible recipients.

The total number of shares

that may be issued under the 2012 plan was 1,362,920 .

The Board previously granted

options to purchase 885,897 shares of common stock, which were exercised prior to 2019.

In December, 2019, the Board granted options to

purchase 374,804 shares to certain employees and consultants at an exercise price of $2.20.

Concurrently with the consummation

of the Merger, the outstanding options to purchase 374,803 shares were cancelled and replaced with warrants to purchase 374,804 shares

at an exercise price of $ 2.20 , and the 2012 Plan was retired.

On August 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 total number of shares that may be issued

under the 2020 plan was 2,313,133 .

No awards have been granted under the 2020 Plan.

The total amount of outstanding warrants are summarized

Schedule of Warrants Activity

Warrant Issuance-Series A Convertible Preferred Stock

As an incentive to convert their Series A preferred

stock we issued 1,000,000 new warrants to the holders of our Series A preferred stock to purchase shares of SBG common stock at $0.18

Concurrently with the consummation of the Merger, these warrants were exchanged for warrants to purchase 1,362,922 of Splash

Beverage Group, Inc.

shares all of which were outstanding as of March 31, 2021.

These warrants have a 3-year term.

Issuance-Series B Convertible Preferred Stock

part of the sale and issuance of 5,333,675 shares of our Series B Convertible Preferred Stock, we issued 2,666,839 warrants to

purchase shares our common stock at a price of $1.10 per share.

The warrants have a 5-year term.

At March 31, 2021, there are

565,819 warrants outstanding.

stock, in March 2020, we issued 333,333

new warrants to the holders of our Series A preferred stock to purchase shares of SBG common stock.

Concurrently with the consummation

of the Merger, these warrants were exchanged for warrants to purchase 454,064

of Splash Beverage Group, Inc.

shares all of which were outstanding as of June 30, 2021.

These warrants have a 3 -year

term and expire March 2023.

Warrant Issuance-Series B Convertible Preferred Stock

As part of the sale and issuance of 1,777,892

shares of our Series B Convertible Preferred Stock, we issued 888,946 warrants to purchase shares our common stock.

have a 5 -year

term and at June 30, 2021, there are 124,162 warrants

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

Share-Based Payments

Issuance-GMA Consulting Services

issued 1,362,922 warrants to purchase shares of our common stock at $0.007 per share as part of our consulting agreement with

GMA, at December 31, 2019.

warrants entitle the holder to purchase one share per warrant of the Companys common stock at a price of $0.01 per share

during the five-year period commencing on October 2, 2018, or, if greater, the number of common shares with a market value equivalent

to two percent of the enterprise value of the Company at an exercise price of $0.008 per share.

an incentive for GMA to convert their debt and accrued interest into shares of common stock, we retired the original 1,362,922

warrants and issued 2,725,844 pre-merger new warrants to purchase shares of our common stock at $0.18 per share.

These warrants

have a 3-year term and remain outstanding as of March 31, 2021.

We have adopted the 2012 Stock Incentive Plan for

SBG (the “Plan”), which provides for the grant of common stock and stock options to employees.

We have reserved 4,088,765

shares for issuance under the Plan.

The option exercise price generally may not be less than the underlying stock’s fair market

value at the date of the grant and generally have a term of ten years.

On December 7, 2019, our Board of Directors granted 1,124,410

options to certain employees and consultants.

None of these options were exercised at March 31, 2021.

As of March 31, 2021, the total

number of options available for grant is 306,657 under this plan.

measure employee stock-based awards at the grant-date fair value and recognizes employee compensation expense on a straight-line

basis over the vesting period of the award.

Determining the appropriate fair value of stock-based awards requires the input of

subjective assumptions, including the fair value of our common stock, and for stock options, the expected life of the option,

and expected stock price volatility and exercise price.

We used the Black-Scholes option pricing model to value its stock option

The assumptions used in calculating the fair value of stock- based awards represent managements best estimates

and involve inherent uncertainties and the application of managements judgment.

As a result, if factors change and management

uses different assumptions, stock-based compensation expense could be materially different for future awards.

The expected life

of stock options was estimated using the simplified method, which calculates the expected term as the midpoint between

the weighted average time to vesting and the contractual maturity, we have limited historical information to develop reasonable

expectations about future exercise patterns and employment duration for its stock options grants.

The simplified method is based

on the average of the vesting tranches and the contractual life of each grant.

For stock price volatility, we use comparable public

companies as a basis for its expected volatility to calculate the fair value of options granted.

The risk-free interest rate is

based on U.S.

Treasury notes with a term approximating the expected life of the option.

The estimation of the number of stock

awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Companys

current estimates, such amounts are recognized as an adjustment in the period in which estimates are revised.

with the consummation of the Merger, options to purchase 825,000 SBG shares were converted to options to purchase 1,124,410 Splash

Beverage Group, Inc.

Weighted Average

Exercise Price

Outstanding - Beginning of 2021

Cancelled/forfeited

Outstanding - March 31, 2021

Exercisable at March, 31 2021

Weighted average grant date fair value of options during year

Weighted average duration to expiration of outstanding options at March 31, 2021

Warrant Issuance-GMA Bridge Holdings, LLC Consulting

We issued 454,307

warrants to purchase shares of our common stock as part of our consulting agreement with GMA Bridge

Holdings, LLC (“GMA) , at December 31, 2019.

These warrants subsequently were exchanged for 908,615 warrants in March

2020 as an incentive for GMA to convert indebtedness and accrued interest into shares of our common stock.

At June 30, 2021 all 908,615

warrants remain outstanding.

[D] We issued 650,000

warrants to purchase common stock of the Company in connection with the July 2020 private placement

offering of 930,303 shares of common stock

[E] We issued

606,179 warrants to purchase common stock of the Company in connection with the January 2021

private placement offering of 1,212,121 shares of common stock.

[F] We issued 374,803 warrants to purchase common stock, as a replacement

of cancelled outstanding options concurrent with the March 2020 Merger

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

August 2020, we adopted a new incentive plan.

The 2020 Long-Term Incentive Compensation Plan (the Plan) is established

by Splash Beverage Group, Inc., a Colorado corporation (the Company), to create incentives which are designed to

motivate Participants to put forth maximum effort toward the success and growth of the Company and to enable the Company to attract

and retain experienced individuals who by their position, ability and diligence are able to make important contributions to the

Companys success.

Toward these objectives, the Plan provides for the grant of Options, Restricted Stock Awards, Stock Appreciation

Rights (SARs), Performance Units and Performance Bonuses to Eligible Employees and the grant of Nonqualified Stock

Options, Restricted Stock Awards, SARs and Performance Units to Consultants and Eligible Directors, subject to the conditions

set forth in the Plan.

At December 31, 2020, the board approved the granting of 2,634,500 warrants were issued under this new

These warrants expire in 5 years.

Related Parties

the normal course of business, we incurred expenses related to services provided by our CEO or Company expenses paid by our CEO,

resulting in related party payables, net of $252,904 at March 31, 2021.

The related party payable to the CEO bears no interest

payable and is due on demand.

We also assumed a $50,000 note for the President of WesBev who is the majority shareholder of SBG.

are related party notes payable of $1.6 million outstanding as of March 31, 2021 as discussed in Note 4.

[G] In December 2020 we granted 1,884,833 warrants

to purchase common stock of the Company to employees, consultants and directors.

These warrants vest over three years

[H] In December 2020 we granted 833,333 warrants to

purchase common stock of the Company to our board of directors.

These warrants vest over two - three years

[I] In May 2021 we granted 333,333 warrants to purchase

common stock of the Company to a director.

These warrants vest, equally, over three years

[J] We issued 3,750,000 warrants to purchase common stock of the Company

in connection with the June 2021 underwritten public offering of 3,750,000 shares of common stock, in addition to 150,000 warrants to

purchase common stock of the Company to the representative underwriter.

Advances and Liability to Issue Stock and Warrants

During the first quarter of

2021, we entered into a marketing agreement with a consultant, to be paid by issuance of 150,000 shares of common stock of the company.

The liability was measured at $ 214,500 , the value of the Company’s common stock at the date of the agreement.

During the first quarter of

2021, the Company received $ 245,000 pursuant to subscription agreements for the issuance of 81,667 shares of common stock and warrants

to purchase 40,833 shares of common stock.

We have an agreement with a consultant, to be paid by the issuance of 3,333

shares of common stock of the company.

The liability was measured at $ 10,000 , the value of the company’s common stock at the date

we became obligated to issue the shares.

Note 7 – Related Parties

During the normal course of business, we incurred

expenses related to services provided by our CEO or Company expenses paid by our CEO, resulting in related party payables, net of $ 0 at

June 30, 2021.

The related party payable to the CEO bears no interest payable and is due on demand.

We also assumed a $50,000 note for

the President of WesBev, who is the majority shareholder of SBG.

There are related party notes payable of $ 1.3

million outstanding as of June 30, 2021 as discussed in Note 4.

8 – Investment in Salt Tequila USA, LLC

On December 9, 2013, we entered into a marketing

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

The agreement

was for a one-year term with an additional two-year renewal.

On December 28, 2015, the agreement was extended through 2020.

In the December

9, 2013 agreement, we received a 5% ownership interest in SALT, 12 months after the date of the agreement we received an additional 5%

ownership interest in SALT, and 24 months after the date of the agreement we received an additional 5% interest, resulting in a total

interest of 15% in SALT.

also has sold product to an unrelated international alcohol distributor, American Spirits Exchange, for preliminary market testing

in 9 of 16 states that they distribute to, that are government-controlled alcohol resellers.

In 2019 we had no sales for SALT

On December 31, 2018, we created a Mexican subsidiary, Splash MEX SA DE CV (Splash Mex) for the exporting

of SALT Tequila from Mexico to the USA, South and Central Americas.

Splash Mex will also act as the manufacturing and distribution

agent of TapouT in Central and South Americas.

Applications for the appropriate licenses required for import and wholesale of

alcohol in the USA have been completed for at the Federal and State levels.

These licenses will permit direct alcohol sales to

distributors and wholesalers thereby limiting the use of agents for importing SALT Tequila to the USA for distribution.

On March 26, 2020, we entered into a new amended

stock sale and purchase agreement.

The agreement is for $1,000,000 to be paid in 4 tranches of $250,000 and entitles us to receive additional

equity interest in Salt Tequila USA, LLC as follows:

all tranches are paid-out we will have a total equity stake of 37.5% of Salt Tequila USA, LLC.

2020, we paid the first tranche of $250,000 resulting in a total interest of 22.5%.

The Company has a marketing

and distribution agreement with SALT in Mexico for the manufacturing of our Tequila product line.

The Company has a 22.5 % percentage interest in SALT

Tequila USA, LLC (“SALT”), and has the right to increase its ownership to 37.5 %.

Beverage Group, Inc.

1 unchanged sentence

9 – Operating Lease Obligations

July 2018, we entered into a lease agreement for the right to use and occupy office space.

The lease term commenced July 1, 2018

and is scheduled to expire after 36 months, on June 30, 2021.

November 2019, we entered into a 6-month lease agreement for our NY affiliate which expired on April 30, 2020.

Effective November 2019, we entered into a new

lease with Interport Logistics, LLC.

Effective July 2018, we entered into a lease agreement

for the right to use and occupy office space.

The lease term commenced July 1, 2018 and is scheduled to expire after 36 months, on June

We renewed the lease under the same terms.

Effective November 2019, we entered into a lease

with Interport Logistics, LLC.

The lease term commenced on November 11, 2019 and is scheduled to expire on November 11, 2022 .

May 2019, we entered into a new lease in Mexico.

The lease commenced May 1, 2019 and is scheduled to expire after 24 months, on

April 1, 2021.

We are in the process of negotiating a new lease for our Mexican warehouse.

January 2021, we entered into a lease agreement for the right to use and occupy office space.

Effective May 2019, we entered into a lease in

The lease commenced May 1, 2019 and is scheduled to expire after 24 months, on April 1, 2021 .

We have negotiated a one year lease

term for our Mexican warehouse.

Effective January 2021, we entered into a lease

agreement for the right to use and occupy office space in Sarasota Florida .

The lease term commenced January

18, 2021 and is scheduled to expire after 18 months, on July 31, 2022.

January 2021, we entered into a lease agreement for the right to use and occupy office and manufacturing space.

The lease term

commenced January 1, 2021 and is scheduled to expire after 60 months, on December 31, 2025.

following table presents the discounted present value of minimum lease payments for our office and warehouses to the amounts reported

as financial lease liabilities on the consolidated balance sheet at March 31, 2021:

18, 2021 and is scheduled to expire after 18

months, on July

Effective January 2021, we entered into a lease

agreement for the right to use and occupy office and manufacturing space located in Miami Florida .

The lease term commenced January

1, 2021 and is scheduled to expire after 60

months, on December

The following table presents the discounted present value of minimum lease

payments for our office and warehouses to the amounts reported as operating lease liabilities on the consolidated balance sheet at June

Maturities of lease liabilities

Undiscounted Future Minimum Lease Payments

Operating Lease

2021 (nine months)

2021 (six months)

Amount representing imputed interest

2 unchanged sentences

Operating lease liability, non-current

table below presents information for lease costs related to our operating leases at March 31, 2021:

table below presents information for lease costs related to our operating leases at June 30, 2021:

Operating lease cost:

2 unchanged sentences

Total operating lease cost

table below presents lease-related terms and discount rates at March 31, 2021:

table below presents lease-related terms and discount rates at June 30, 2021:

Summary of lease-related terms and discount rates

term on leases

7 unchanged sentences

the acquisition of Copa di Vino the LOC was paid off.

11 – PPP Loan

January 30, 2020, the World Health Organization (WHO) announced a global health emergency because of a new strain

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initial payment deferral.

As of March 31, 2021, we have a balance of $94,833.

In April 2021, we received notification of forgiveness for the entire outstanding balance.

Business Combinations

stated in Note 1, we consummated the merger of CMS on March 31, 2020 which was accounted for as a reverse merger.

value of our merger was approximately $9.2 million based on the valuation of the CMS equity on the date of consummation.

following summarizes our allocation of the purchase price for the acquisition:

Cash and cash equivalents

Accounts receivable

Property and equipment

Accounts payable, accrued expenses and other liabilities

Purchase price

2020, the goodwill associated with the CMS merger was impaired.

stated in Note 1, we consummated the acquisition of Copa di Vino Company on December 24, 2020.

The purchase price consideration

was comprised of $1.5 million in debt, $0.5 million in cash and $2.0 million in contingent shares, for total consideration of

approximately $6.0 million.

following summarizes our allocation of the purchase price for the acquisition:

Accounts receivable, net

Other current assets

Property and equipment, net

License agreement, net

Total identifiable assets

Accounts payable and accrued expenses

Total liabilities and equity

In April 2021, we received notification of forgiveness

for the entire outstanding balance.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

12 – Segment Reporting

2 unchanged sentences

The Copa di Vino business is included in our Splash Beverage Group segment.

Three-Months Ended

Six-Months Ended

Splash Beverage Group

Medical Devices - Discontinued

Total Revenues

Total Revenues continuing operations

Total Revenues discontinued operations

Splash Beverage Group

Medical Devices - Discontinued

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

13 – Commitment and Contingencies

3 unchanged sentences

a material adverse effect on its business, financial condition or results of operations.

connection with the merger we are committed to our previous preferred stock and debt holders to raise $9 million in a secondary

connection with the CMS merger we were committed to our previous preferred stock and debt holders to raise $9 million in a secondary

IPO or debt, as defined in the agreements.

2 unchanged sentences

have a commitment to issue additional shares associated with specific stock price guarantee granted to an investor.

accordance with ASC 350, Intangibles—Goodwill and Other, we test goodwill for impairment for each reporting unit on an annual

basis, or when events or circumstances indicate the fair value of a reporting unit is below its carrying value.

goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations.

The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected

Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred.

Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the

business climate, and unforeseen competition.

have the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for

impairment is necessary.

The option of whether or not to perform a qualitative assessment is made annually and may vary by reporting

Factors we consider in the qualitative assessment include general macroeconomic conditions, industry and market conditions,

cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount

of the net assets of its reporting units, sustained decrease in its share price, and other relevant entity specific events.

the management determines on the basis of qualitative factors that the fair value of the reporting unit is more likely than not

less than the carrying value, then we perform a quantitative test for that reporting unit.

The fair value of each reporting unit

is compared to the reporting units carrying value, including goodwill.

Subsequent to the adoption on January 1, 2017 of

Accounting Standards Update (ASU) No.

2017-04, Intangibles—Goodwill and Other:

Simplifying the Test for Goodwill

Impairment, if the fair value of a reporting unit is less than its carrying value, we recognize an impairment equal to the excess

carrying value, not to exceed the total amount of goodwill allocated to that reporting unit.

December 31, 2020, our management determined that an impairment charge of approximately $9.5 million, was necessary to reduce

the goodwill relating to our Medical Device Segment the impairment charge was primarily related to the net cash flow projection

of that business unit.

Subsequent Events

In April 2021, SBG received notification

that its PPP loan has been forgiven in full .

In April 2021 we filed a registration statement on

Form S-1 for the sale of up to $60 million of common stock.

In May 2021, our board of directors approved the Company to increase the

amount of authorized shares from 150,000,000 to 250,000,000.

In addition, the board has approved the Company the right to affect a reverse

stock split with a range from 1 to 1.5 up to 1 to 10.

The Company’s Articles of Incorporation have not yet been amended with

respect to either of the a above-referenced actions.

In May 2021, we received $718,000 in convertible notes which has an annual

interest rate of 7%.

All notes mature October 2021.

The stock price guarantee expired March 2021.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

Note 14 – Registration Statement

Underwriting Agreement

On June 10, 2021,

the Company entered into an underwriting agreement ( “Underwriting Agreement”) relating to an underwritten public offering

(the “Offering”) of common stock, no par value per share (the “Common Stock”) and warrants to purchase one share

of Common Stock (the “Warrants”).

Pursuant to the Offering, the Company sold 3,750,000 shares of Common Stock and 4,312,500

Warrants, which include 562,500 Warrants sold upon the partial exercise of the Underwriters’ over-allotment, for total gross proceeds

of approximately $15 million.

After deducting the underwriting commissions, discounts, and offering expenses payable by the Company,

the Company received net proceeds of approximately $13.2 million.

Representative’s Warrants

On June 15, 2021, pursuant to the Underwriting Agreement,

the Company issued the Representative’s Warrants to purchase up to an aggregate of 150,000

shares of Common Stock.

The Representative’s Warrants may be exercised beginning on December 10, 2021 until June 10, 2026.

The initial exercise price of each Representative Warrant is $ 4.60

per share, which represents 115% of the Offering Price.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Unless the context

otherwise requires, references in this Form 10-Q to “we,”

“us,”

“our,”

or the “Company”

otherwise requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company”

refer to Splash Beverage Group and its subsidiaries.

following discussion and analysis should be read in conjunction with the Condensed Financial Statements (unaudited) and Notes

to Condensed Financial Statements (unaudited) filed herewith.

Splash Beverage Group (“SBG”), f/k/a

The following discussion and analysis should be

read in conjunction with the Condensed Consolidated Financial Statements (unaudited) and Related Notes herewith.

Splash Beverage Group (“SBG”), f/k/a

Canfield Medical Supply, Inc.

(the “CMS”), was incorporated in the State of Ohio on September 3, 1992, and changed domicile

to Colorado on April 18, 2012.

29 unchanged sentences

Results of Operations

for the Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020.

Revenues for the three months ended March 31, 2021

were $2,417,701 compared to revenues of $112,003 for the three months ended March 31, 2020.

for the Three Months Ended June 30, 2021 compared to Three Months Ended June 30,

Revenues for the three months ended June 30, 2021

were $3,287,760 compared to revenues of $412,729 for the three months ended June 30, 2020.

The $2,875,031 increase in sales is due to

2 unchanged sentences

goods on both Amazon and Shopify.

In addition, we had increased sales from our single-serve wine business ($742,355).

Cost of goods sold

for the three months ended March 31, 2021 were $1,742,875 compared to cost of goods sold for the three months ended March 31, 2020 of

The $1,635,661 increase in cost of goods sold for the three-month period ended March 31, 2021 is primarily due to our increased

sales, and as our sales increased, our cost of sales for those sales correspondingly increased.

In addition, we had increased sales from Copa di Vino Wine Group, Inc., our single-serve wine and Pulpoloco

Sangria businesses ($1,462,000).

Cost of goods sold for the three months ended June 30, 2021 were $2,382,707 compared to cost of goods

sold for the three months ended June 30, 2020 of $218,751.

The $2,163,956 increase in cost of goods sold for the three-month period ended

June 30, 2021 is primarily due to our increased sales, and as our sales increased, our cost of sales for those sales correspondingly increased.

Operating Expenses

Operating expenses for the three months ended March

31, 2021 were $5,066,349 compared to $1,553,933 for the three months ended March 31, 2020.

The $3,512,416 increase in our operating expenses

was primarily a result of recording the warrants issued pursuant to certain private placements conducted by the Company, increased headcount

from the Copa acquisition and the addition of new sales reps, professional fees ($1,100,000) and shipping costs ($325,160).

for the three months ended March 31, 2021 was $4,442,219 as compared to a net loss of $3,446,630 for the three months ended March 31,

The decrease in net loss is due to our increase in operating expenses offset by our increase in revenues.

Operating expenses for the three months ended

June 30, 2021 were $7,612,759 compared to $609,457 for the three months ended June 30, 2020.

The $7,003,302 increase in our operating

expenses was primarily a result of recording the warrants issued pursuant to certain private placements conducted by the Company, increased

headcount from the Copa acquisition and the addition of new sales reps, professional fees ($1,446,946) and shipping costs ($557,815).

The net loss for the three months ended June 30, 2021 was $6,761,004 as compared to a net loss of $402,166 for the three months ended

June 30, 2020.

The increase in net loss is due to our increase in operating expenses offset by our increase in revenues.

Interest Expense

Interest expenses for the three

months ended March 31, 2021 were $ 92,211 compared to $1 ,913,637 for

the three months ended March 31, 2020.

The $1,821,426 decrease in our interest expenses was primarily a result of recording a

finance charge of $1,821,426 associated with

warrants issued to one of our note holders in Q1 2020.

LIQUIDITY AND CAPITAL RESOURCES

Interest expenses for the three months ended June 30, 2021 were $149,376

compared to $21,854 for the three months ended June 30, 2020.

The $127,522 increase in our interest expenses was primarily a result of

additional debt taken on in Q2 2021.

of Operations for the Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020.

Revenues for the six months ended June 30, 2021 were

$5,426,684 compared to revenues of $524,732 for the six months ended June 30, 2020.

The $4,901,952 increase in sales is due to an increase

within our vertically integrated B2B and B2C e-commerce distribution platform called Qplash ($2,631,737).

This platform sells goods on

both Amazon and Shopify.

In addition, we had increased sales from Copa di Vino Wine Group, Inc., our single-serve wine and Pulpoloco Sangria

businesses ($2,212,300).

Cost of goods sold for the six months ended June 30, 2021 were $4,000,211 compared to cost of goods sold for

the six months ended June 30, 2020 of $325,965.

The $3,674,246 increase in cost of goods sold for the six-month period ended June 30,

2021 is primarily due to our increased sales, and as our sales increased, our cost of sales for those sales correspondingly increased.

Operating Expenses

Operating expenses for the six months ended June 30, 2021 were $12,279,421

compared to $2,165,539 for the six months ended June 30, 2020.

The $10,113,882 increase in our operating expenses was primarily a result

of recording the warrants issued pursuant to certain private placements conducted by the Company, increased headcount from the Copa acquisition

and the addition of new sales reps, professional fees ($6,666,141) and shipping costs ($882,795).

The net loss for the six months ended

June 30, 2021 was $11,241,510 as compared to a net loss of $3,850,945 for the six months ended June 30, 2020.

The decrease in net loss

is due to our increase in operating expenses offset by our increase in revenues.

Interest Expense

Interest expenses for the six months ended June 30, 2021 were $241,587

compared to $1,935,491 for the six months ended June 30, 2020.

The $1,693,904 decrease in our interest expenses was primarily a result

of recording a finance charge of $1,821,426 associated with warrants issued to one of our note holders in Q1 2020 offset by interest expense

recorded in the period.

LIQUIDITY AND CAPITAL

Liquidity is the ability of a company to generate

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in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

As of March 31, 2021, we had total cash and cash equivalents

of $1,225,406, as compared with $380,000 at December 31, 2020.

The increase is primarily due to cash received from private placements

conducted by us.

As of June 30, 2021, we had total cash and cash equivalents of $11,943,753,

as compared with $380,000 at December 31, 2020.

The increase is primarily due to cash received from private placements conducted by us

and our S1/A registration statement where we raised $15,000,000.

Net cash used for operating activities during the

three months ended March 31, 2021 was $3,581,308 as compared to the net cash used by operating activities for the three months ended March

six months ended June 30, 2021 was $7,664,506 as compared to the net cash used by operating activities for the six months ended June 30,

2020 of $1,783,007.

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Net cash used for investing activities during the

three months ended March 31, 2021 was $0 as compared to the net cash used by operating activities for the three months ended March 31,

2020 of $152,419.

six months ended June 30, 2021 was $0 as compared to the net cash used by operating activities for the six months ended June 30, 2020

The net cash used in the first quarter of 2020 was primarily due to the $150,000 payment made to SALT Tequila USA.

Net cash provided by financing activities during the three months ended

March 31, 2021 was $4,466,796 compared to $1,582,212 provided from financing activities for the three months ended March 31, 2020.

the three months ended March 31, 2021, we received $4,946,825 from investors, which was offset by repayments to shareholders and debt

holders of $441,299.

Net cash provided by financing activities during the six months ended June

30, 2021 was $19,468,746 compared to $1,941,018 provided from financing activities for the six months ended June 30, 2020.

six months ended June 30, 2021, we received $21,028,065 from investors, which was offset by repayments to shareholders and debt holders

of $1,159,319.

Royalty Payments:

We have a licensing agreement with ABG TapouT,

LLC (“TapouT”).

Under the licensing agreement, we have minimum royalty payments to TapouT for the next two years.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements