What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-16 · 665 added, 793 removed, 197 unchanged (88% of the section changed)

FINANCIAL STATEMENTS

Beverage Group, Inc.

Splash Beverage Group, Inc.

Condensed Consolidated Financial Statements

June 30, 2021

Beverage Group, Inc.

Consolidated Balance Sheets

30, 2021 and December 31, 2020

June 30, 2021

September 30, 2021

Splash Beverage Group, Inc.

Condensed Consolidated Balance Sheets

September 30, 2021 and December 31, 2020

September 30, 2021

December 31, 2020

and cash equivalents

receivable, net

from discontinued operations

current assets

Accounts Receivable, net

Prepaid Expenses

Inventory, net

Other receivables

Assets from discontinued operations

Total current assets

Non-current assets:

Investment in Salt Tequila USA, LLC

Right of use asset, net

Quart Vin License, net

Property and equipment, net

Total non-current assets

Liabilities and

Stockholders’ Equity (Deficiency)

Current liabilities

Accounts payable and accrued expenses

Right of use liability – current portion

Due to related parties

in Salt Tequila USA, LLC

of use assets, net

and equipment, net

non-current assets

and Stockholders’ Equity (Deficit)

payable and accrued expenses

of use liabilities - current

Sales tax payable

Related party notes payable – current portion

Convertible Loan Payable

Notes payable, current portion

Shareholder advances

Accrued interest payable

Liabilities from discontinued operations

Total current liabilities

to related parties

party notes payable

payable, current portion

interest payable

from discontinued operations

current liabilities

Long-term Liabilities:

Related party notes payable - noncurrent

Notes payable - noncurrent

Liability to issue shares in APA

Right of use liability - noncurrent

Total long-term liabilities

Total liabilities

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

Accumulated deficit

party notes payable - noncurrent

payable - noncurrent

to issue shares in APA

of use liability - noncurrent

long-term liabilities

stock, (mezzanine shares) 12,605,283 shares, contingently convertible to notes payable at December 31, 2020

Stockholders’ equity (deficit):

Common Stock, $ 0.001 par, 150,000,000 shares

authorized, 32,618,735 and 21,157,043 shares

issued and outstanding, at September 30, 2021 and December 31, 2020, respectively

paid in capital

( 84,762,448 )

( 61,589,735 )

Total stockholders’ equity (deficiency)

stockholders’ equity (deficit)

( 9,350,723 )

Total liabilities, mezzanine shares and

stockholders’ equity (deficiency)

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

Total liabilities,

mezzanine shares and (deficit) stockholders’ equity

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Splash Beverage Group, Inc.

Consolidated Statements of Operations

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

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2021 and 2020

months ended September 30,

of goods sold

( 2,007,544 )

( 6,011,755 )

and wages – non-cash share-based compensation

general and administrative

general and administrative – non-cash share-based compensation

and marketing

operating expenses

Contracted services

Salary and wages

Other general and administrative

Sales and marketing

Total operating expenses

Loss from continuing operations

from continuing operations

( 12,072,230 )

1 unchanged sentence

( 22,930,973 )

( 4,300,886 )

income/(expense):

( 1,958,601 )

/( loss) from debt extinguishment

other income/(expense)

Interest income

Interest expense

( 1,873,057 )

Gain from debt extinguishment

Total other income/(expense)

for income taxes

loss from continuing operations, net of tax

( 12,169,894 )

Provision for income taxes

Net loss from continuing operations, net of tax

( 2,152,238 )

1 unchanged sentence

( 6,173,943 )

Net income from discontinued operations, net of tax

income from discontinued operations, net of tax

$ ( 12,191,971 )

2 unchanged sentences

$ ( 6,105,811 )

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.

per share - continuing operations

average number of common shares outstanding - continuing operations

per share - discontinued operations

average number of common shares outstanding - discontinued operations

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Splash Beverage Group, Inc.

Consolidated Statement of

Changes in Deficiency in Stockholders’ Equity (Deficit)

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

Treasury Stock

Total Stockholders’

Paid-In Capital

Equity (Deficit)

Balances at December 31, 2019

Consolidated Statement

of Changes in Stockholders’ Equity (Deficit)

For the Three and Nine months ended September

30, 2021 and 2020

Three Months Ended September 30,

Nine Months Ended September 30,

Total stockholders equity (deficit), beginning balances

( 1,779,516 )

( 9,350,723 )

( 9,756,083 )

Common stock and additional paid-in capital

Beginning balances

Issuance of common stock for convertible debt

1 unchanged sentence

Issuance of warrants on convertible instruments

Issuance of warrants for services

Issuance of common stock for services

Issuance of common stock for cash

Reclassification of Mezzanine shares

Issuance of common stock for acquisition

Ending balances

Treasury stock

Beginning balances

Issuance of common stock for services

Ending balances

Accumulated deficit

Beginning balances

( 72,592,554 )

( 36,735,159 )

Balances at March 31, 2020

( 61,589,735 )

( 31,845,506 )

Incremental beneficial conversion for preferred A

Issuance of warrants on convertible instruments

Issuance of common stock for cash

Balances at June 30, 2020

( 12,169,894 )

( 2,283,683 )

Balances at December 31, 2020

( 23,172,713 )

( 6,103,663 )

Issuance of warrants for services

Issuance of common stock for services

Issuance of common stock and warrants or cash

Mezzanine shares

Ending balances

( 84,762,448 )

( 39,018,842 )

Balance at March 31, 2021

( 84,762,448 )

Issuance of warrants for services

Issuance of common stock for services

Issuance of common stock and warrants or cash

( 39,018,842 )

( 12,169,894 )

Balance at June 30, 2021

( 2,283,683 )

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

Beverage Group, Inc.

Consolidated Statement Cash Flows

For the Six Months Ended June 30, 2021 and 2020

Six months ended

June 30, 2021

June 30, 2020

( 23,172,713 )

( 6,103,663 )

Total stockholders equity (deficit), ending balances

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Splash Beverage Group, Inc.

Condensed Consolidated Statement Cash Flows

For the Nine Months Ended September 30, 2021 and 2020

Nine months ended

September 30, 2021

September 30, 2020

$ ( 23,172,713 )

$ ( 6,105,811 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

ROU asset, net

ROU assets, net

Gain from debt extinguishment

1 unchanged sentence

Interest expense due to the issuance of warrants

Share-based compensation - warrants

Non-cash warrant expense

Share-based compensation

10 unchanged sentences

( 4,311,170 )

Net cash from operating activities - discontinued operations

Net cash used in operating activities - discontinued operations

Cash Flows from Investing Activities:

3 unchanged sentences

Net cash used in investing activities - continuing operations

Net cash from investing activities - discontinued operations

Net cash used in investing activities - discontinued operations

Cash Flows from Financing Activities:

1 unchanged sentence

Cash advance from shareholder

Funds in escrow

( 1,000,000 )

Repayment of cash advance

4 unchanged sentences

Net cash provided by financing activities - continuing operations

Net cash from financing activities - discontinued operations

Net cash provided by 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

The accompanying notes are an integral

part of these condensed consolidated financial statements.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

1 – Business Organization and Nature of Operations

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.

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

December 31, 2019, CMS entered into an Agreement and Plan of Merger (the Merger Agreement) with SBG Acquisition

(Merger Sub), a Nevada Corporation wholly-owned by CMS, and Splash Beverage Group, Inc.

a Nevada corporation

(Splash) pursuant to which Merger Sub merged with and into Splash (the Merger) with Splash as the

surviving company and a wholly-owned subsidiary of CMS.

The Merger was consummated on March 31, 2020.

the owners and management of Splash have voting and operating control of CMS following the Merger, the Merger transaction was

accounted for as a reverse acquisition (that is with Splash as the acquiring entity), followed by a recapitalization.

part of the recapitalization, previously issued shares of SBG preferred stock have been reflected as shares of common stock that

were received in the Merger.

These common shares have been retrospectively presented as outstanding for all periods.

specializes in the manufacturing, distribution, and sales & marketing of various beverages across multiple channels.

operates in both the non-alcoholic and alcoholic beverage segments.

Additionally, Splash operates its own vertically integrated

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

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

Liability issued for investment in SALT Tequila USA, LLC

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 1 – Business Organization and Nature of Operations

Splash Beverage Group (“SBG”

or “Splash”), 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.

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 users.

On December 31, 2019, CMS entered into an Agreement

and Plan of Merger (the “Merger Agreement”) with SBG Acquisition Inc.

(“Merger Sub”), a Nevada Corporation

wholly owned by CMS, and Splash Beverage Group, Inc.

a Nevada corporation (“Splash”) pursuant to which Merger Sub merged

with and into Splash (the “Merger”) with Splash as the surviving company and a wholly-owned subsidiary of CMS.

Merger was consummated on March 31, 2020.

As the owners and management of Splash have

voting and operating control of CMS following the Merger, the Merger transaction was accounted for as a reverse acquisition (that

is with Splash as the acquiring entity), followed by a recapitalization.

As part of the recapitalization, previously

issued shares of SBG preferred stock have been reflected as shares of common stock that were received in the Merger.

shares have been retrospectively presented as outstanding for all periods.

Splash specializes in the manufacturing, distribution,

and sales & marketing of various beverages across multiple channels.

Splash operates in both the non-alcoholic and alcoholic

beverage segments.

Additionally, Splash operates its own vertically integrated B-to-B and B-to-C E-commerce distribution platform

called Qplash, further expanding its distribution abilities and visibility.

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..

On July 31, 2020, we received

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

of Amendment of Articles of Incorporation of CMS with the Secretary of State of the State of Colorado, pursuant to which the Company

changed its name from CMS.

to Splash Beverage Group, Inc.

Our new ticker

symbol is SBEV.

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.

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.

On July 31, 2020, we received approval from FINRA to change the Company’s

name from CMS to Splash Beverage Group, Inc.

Our new ticker symbol is SBEV.

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.

one of the leading producers of premium wine by the glass in the United States with its primary offices and facilities in The Dalles,

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

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.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Summary of Significant Accounting Policies

of Presentation and Consolidation

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.

Basis of Presentation and Consolidation

These condensed consolidated financial statements

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

operations), and Copa.

All intercompany balances have been eliminated in consolidation.

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).

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

1 unchanged sentence

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.

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

ended September 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 September 30, 2021 are not necessarily indicative of the operating results for the full year.

Use of 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

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

Accounts Receivable and Allowance for Doubtful

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 estimates.

Cash Equivalents and Concentration

of Cash Balance

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 September 30, 2021 or December

Our cash in bank deposit accounts, at times,

may exceed federally insured limits of $ 250,000 .

At September 30, 2021 we had $ 7,403,481 over the federally insured limits.

Note 2 – Summary of Significant

Accounting Policies, continued

Accounts Receivable and Allowance

for Doubtful Accounts

Accounts receivable are carried at their estimated

collectible amounts and are periodically evaluated for collectability based on past credit history with clients and other factors.

establish 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 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 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.

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.

for excess inventory are included in cost of goods sold and have historically been adequate to provide for losses on inventory.

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

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

We establish 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, 2021 and December 31, 2020, our accounts receivable amounts are reflected

net of allowances of $ 26,578 and $ 0 , respectively.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

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, 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.

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.

We manage inventory levels and purchase commitments in an effort to maximize

utilization of inventory on hand and under commitments.

The amount of our reserve was $ 351,285 and $ 366,109 at September 30, 2021

and December 31, 2020, respectively.

Property and Equipment

We record 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 $ 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:

We record property and equipment at cost when

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 $ 44,465 and $ 10,750 for

the three months ended September 30, 2021 and September 30, 2020, respectively.

Depreciation expense totaled $ 80,048 and $ 13,045 for the

nine months ended September 30, 2021 and September 30, 2020, respectively.

Property and equipment consisted of the following:

Schedule of property and equipment

June 30, 2021

September 30, 2021

December 31, 2020

3 unchanged sentences

Property and equipment, net

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

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

rather than the quantity sold.

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.

Paycheck Protection Program

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

pays the creditor or the debtor is legally released from being the primary obligor, either judicially or by the creditor.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – Summary of Significant Accounting Policies, continued

Value of Financial Instruments

Accounting Standards (FASB) guidance specifies a hierarchy of valuation techniques based on whether the inputs to

those valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained from independent sources,

while unobservable inputs reflect market assumptions.

The 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:

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.

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).

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.

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.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

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 pays the creditor or the debtor is legally released from being the primary obligor, either judicially or

by the creditor.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 2 – Summary of Significant

Accounting Policies, continued

Fair Value of Financial Instruments

Financial Accounting Standards (“FASB”)

guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable

or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market

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:

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.

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).

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 consolidated financial statements approximate fair values at September 30, 2021 and December 31, 2020, consistent with recent

negotiations of notes payable and due to the short duration of maturities.

Revenue Recognition

We recognize 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 we expect to receive in exchange for the transfer of goods or services to customers.

We recognize revenue when our performance obligations

under the terms of a contract with the customer are satisfied.

Product sales occur once control of our products is transferred

upon delivery to the customer.

Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring

goods and is presented net of provisions for customer returns and allowances.

The amount of consideration we receive and revenue

we recognize varies with changes in customer incentives we offer to our customers and their customers.

Sales taxes and other similar

taxes are excluded from revenue.

Distribution expenses to transport our products,

where applicable, and warehousing expense after manufacture are accounted for within operating expenses.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Summary of Significant Accounting Policies, continued

recognize 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 we expect to receive in exchange for the transfer of

goods or services to customers.

recognize revenue when our performance obligations under the terms of a contract with the customer are satisfied.

Product sales

occur once control of our products is transferred upon delivery to the customer.

Revenue is measured as the amount of consideration

that we expect to receive in exchange for transferring goods and is presented net of provisions for customer returns and allowances.

The amount of consideration we receive and revenue we recognize varies with changes in customer incentives we offer to our customers

and their customers.

Sales taxes and other similar taxes are excluded from revenue.

expenses to transport our products, where applicable, and warehousing expense after manufacture are accounted for within operating

of Goods Sold

of goods sold include the costs of products, packaging, transportation, warehousing, and costs associated with valuation allowances

for expired, damaged or impaired inventory.

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.

We measure stock-based awards at the grant-date

2 unchanged sentences

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.

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

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 .

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 option vesting period.

We use the Black-Scholes

option pricing model to determine the fair value of stock options.

We early adopted ASU 2018-07, Improvements

to Nonemployee Share-Based Payment Accounting, which aligns accounting treatment for such awards to non-employees with

the existing guidance on employee share-based compensation in ASC 718.

use the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes .

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.

record a valuation allowance when it is not more likely than not that the deferred tax assets will be realized.

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.

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

June 30, 2021 and December 31, 2020.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – Summary of Significant Accounting Policies, continued

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.

Stock-Based Compensation

We account 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 option vesting period.

We use the Black-Scholes option pricing model to determine the fair

value of stock options.

We early adopted ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”,

which aligns accounting treatment for such awards to non-employees with the existing guidance on employee share-based compensation

We use 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.

We record 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, 2021 and December 31, 2020.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

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 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.

Schedule of Earnings Per Share, Basic and Diluted

Net loss from continuing applicable to common shareholders

$ ( 11,001,024 )

$ ( 402,166 )

Net loss from discontinued applicable to common shareholders

Weighted average number of common shares outstanding

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.

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.

The net income (loss) per share is computed

by dividing the net income (loss) by the weighted average number of shares of common 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.

Weighted average number of shares outstanding

excludes anti-dilutive common stock equivalents, including warrants to purchase 3 million shares of common stock for nominal consideration.

The weighted average number of common shares calculation excludes 11,163,834 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 $ 249,831 and $ 23,962 for the three-months ended September 30, 2021 and 2020, respectively.

We recorded advertising

expense of $ 465,608 and $ 46,768 for the nine-months ended September 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

changes in circumstances may indicate the carrying amount of the asset group, generally an individual warehouse, may not be fully

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

groups fair value less costs to sell.

The Company estimates fair value by obtaining market appraisals from third party

brokers or using other valuation techniques.

Accounting Pronouncements

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

and other commitments to extend credit held by a reporting entity at each reporting date.

is currently assessing the new standard but does not believe that it would have a material effect.

does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the

accompanying financial statements.

As new accounting pronouncements are issued, we will adopt those that are applicable under

the circumstances.

3 – Liquidity, Capital Resources and Going Concern Considerations

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.

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

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Long-lived assets

The Company evaluates long-lived assets for

impairment on an annual basis, when relocating or closing a facility, or 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

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

The Company estimates fair value by obtaining market appraisals from third party brokers or using other valuation techniques.

Recent Accounting Pronouncements

Management does not believe that any other

recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements.

As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

Note 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

During the nine-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

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

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.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 4 – Notes Payable, Related

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

Notes payable are generally nonrecourse and

secured by all Company owned assets.

Interest Rate

June 30, 2021

September 30, 2021

December 31, 2020

3 unchanged sentences

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

The note was paid all in Q2 2021.

The note was paid off 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 .

The loan matures in December 2020 with principal and interest due at maturity.

We received 100% forgiveness in Q2 2021.

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

The loan matured in December 2020 with principal and interest due at maturity.

The note remains in default.

In August 2020, we entered into a nine-month loan with a company in the amount of $ 112,000 .

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 July 2021.

The loan requires 9 amortized payments of principal and interest in the amount of $ 12,246 with the final payment due May 2021.

In September 2021, we entered into a twelve-month loan with a company in the amount of $ 208,000 .

The loan requires 12 amortized payments with the final payment due August 2022.

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

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

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

The note matured in October 2021.

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

The note matured in October 2021.

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

The note matured in October 2021.

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

The note matured in October 2021.

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

The note matured in October 2021.

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

The note matured in October 2021.

( 1,638,754 )

Long-term notes payable

Interest expense on notes payable was $ 82,871

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.

to the Condensed Consolidated Financial Statements

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

Loan Payable, continued

and $ 13,337 for the three months ended September 30, 2021 and 2020, respectively.

Interest expense on notes payable was $ 340,653

and $ 73,236 for the nine months ended September 30, 2021 and 2020, respectively.

Accrued interest was $ 145,445 at September 30,

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 4 – Notes Payable, Related

Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued

Schedule of debt

Interest Rate

June 30, 2021

September 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 .

In December 2020, we entered into an 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.

1 unchanged sentence

( 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.

to the Condensed Consolidated Financial Statements

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

Loan Payable, continued

was $ 5,995 and $ 0 for the three months ended September 30, 2021 and 2020, respectively.

Interest expense on related party notes

payable was $ 21,833 and $ 37,967 for the nine months ended September 30, 2021 and 2020, respectively.

Accrued interest was $ 0 as of

September 30, 2021.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 4 – Notes Payable, Related

Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued

Schedule of debt

Interest Rate

June 30, 2021

September 30, 2021

December 31, 2020

2 unchanged sentences

The annual interest rate for this bridge loan was 32% for the first 90 days, and 4 % thereafter, compounded monthly.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

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

Loan Payable, continued

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.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 4 – Notes Payable, Related

Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued

Interest expense on the convertible bridge

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

Interest expense on the

convertible bridge loans payable was $ 24,000 and $ 109,785 for the nine months ended September 30, 2021 and 2020, respectively.

Accrued interest was $ 195,215 at September 30, 2021.

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

1 unchanged sentence

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

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

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

military bases and Mexico.

the terms of the agreement, we are required to pay a 6% royalty on net sales, as defined.

In 2021 and 2020, we are required to make monthly

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

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,

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.

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

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 $ 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

In September 2021 a summary judgement was initiated against the Company in the amount of $ 263,215 .

As of October 2021, the Company has negotiated and paid $ 217,500

to the plaintiff.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 5 – Licensing Agreement and

Royalty Payable

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

military bases

Under the terms of the agreement, we are required to pay a 6% royalty on net sales, as defined.

In 2021 and 2020, we

are required to make monthly payments of $ 49,500 and $ 45,000 , respectively.

There were no unpaid royalties at September

We paid the guaranteed minimum royalty payments of $ 445,500 and $ 405,000 for the nine-months ended September 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, 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.

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

Note 6 – Stockholders’ Equity

At March 31, 2020, we issued 272,584 shares

of common stock in exchange for services provided to us.

The shares were valued at $ 2.19 per share.

We recognized share-based compensation

expense of $ 600,000 , which is classified within the other general and administrative line on the Statement of Operations.

31, 2021, we issued 168,333 shares of common stock in exchange for services provided to us.

At September 30, 2021, we issued 2,136,819

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.

to the Condensed Consolidated Financial Statements

6 – Deficiency in Stockholders Equity, continued

Placement Memorandum (PPM)

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 shares were valued at a fair market value stock price based

on the agreement date.

We recognized share-based compensation expense of $ 6,111,911 , which is classified within the other general

and administrative line on the Condensed Consolidated Statement of Operations.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 6 – Deficiency in Stockholders’

Equity, continued

Private Placement Memorandum (PPM)

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 .

In 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 (“PPM”).

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 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

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

The total number of shares that may be

issued under the 2020 plan was 2,313,133 .

At September 30, 2021, all awards have been

granted under the 2020 Plan.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Warrants/Options

The total amount of outstanding warrants/options

are summarized below:

Schedule of Warrants Activity

Warrant Issuance-Series A Convertible Preferred Stock

[A] Warrant Issuance-Series A Convertible

Preferred Stock

As an incentive to convert their Series A preferred

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

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

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 September 30, 2021.

These warrants have a 3 -year term and expire

[B] 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

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

have a 5 -year term and at September 30, 2021, there are 124,162 warrants outstanding.

[C] Warrant Issuance-GMA Bridge Holdings,

LLC Consulting Services

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.

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 September 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

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

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

1 unchanged sentence

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.

[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.

[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.

[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.

[K] In September 2021 we granted 1,065,000

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

These options vest over three years.

[L] In September 2021 we granted 29,998 warrants

to purchase common stock of the Company to consultants.

These warrants vest over three years.

Shareholder Advances and Liability to

Issue Stock and Warrants

We have multiple agreements with consultants in the

amount of $ 834,500 to be paid by the issuance of the common stock of the company.

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.

expenses related to services provided by our CEO or Company expenses paid by our CEO, resulting in related party payables.

There are related party notes payable of $ 1.0

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

8 – Investment in Salt Tequila USA, LLC

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.

to the Condensed Consolidated Financial Statements

9 – Operating Lease Obligations

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

million outstanding as of September 30, 2021.

Note 8 – Investment in Salt Tequila

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 %.

This investment is accounted for at cost.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 9 – Operating Lease Obligations

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 30, 2021 .

We renewed the lease under the same terms.

Effective November 2019, we entered into a lease

with Interport Logistics, LLC.

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 .

Effective May 2019, we entered into a lease in

Effective May 2019, we entered into a lease

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.

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

The lease term commenced January 18, 2021 and is scheduled

to expire after 18 months, on July 31, 2022 .

Effective January 2021, we entered into a lease

1 unchanged sentence

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

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

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 September 30, 2021:

Maturities of lease liabilities

1 unchanged sentence

Operating Lease

2021 (six months)

2021 (three months remaining)

Amount representing imputed interest

Total operating lease liability

Current portion of operating lease liability

Operating lease liability, non-current

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

Total operating lease liabilities

Current portion of operating lease

Operating lease liabilities,

The table below presents information for lease

costs related to our operating leases at September 30, 2021:

Operating lease cost:

2 unchanged sentences

Total operating lease cost

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

Summary of lease-related terms and discount rates

term on leases

borrowing rate

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

10 – Line of Credit

December 31, 2020 SBG owed $ 68,000 to a financial institution under a revolving line of credit.

The line of credit is secured

by the assets of SBG is due on demand, and bears interest at variable rates approximately 6.1 % at December 31, 2020.

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

of coronavirus originating in Wuhan, China (the COVID-19 outbreak) and the risks to the international community

as the virus spreads globally beyond the point of origin.

On March 20, 2020, the WHO classified the COVID-19 outbreak as a pandemic,

based on the rapid increase in exposure globally.

response to the COVID-19 outbreak in the United States, the CARES Act (the Act) was passed by Congress and signed

into law on March 27, 2020.

In connection with the CARES Act, the Company and its subsidiary applied for and received loans with

an original aggregate principal balance of approximately $ 158,00 0.

These loans and interest will be forgiven as long as the funds

are used for qualifying expenditures as outlined in the Act.

The loans bear interest at 1 %, with an 18 month term, and has a 6-month

initial payment deferral.

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

Company evaluates segment reporting in accordance with the FASB Accounting Standards Codification Topic 280, Segment Reporting,

each reporting period, including evaluating the reporting package reviewed by the Chief Executive Officer and Chief Financial

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

Three-Months Ended

Six-Months Ended

The table below presents lease- related terms

and discount rates at September 30, 2021:

of lease- related terms and discount rates

Remaining term on leases

11 to months 51

Incremented borrowing rate

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 10 – Line of Credit

At December 31, 2020 SBG owed $ 68,000 to a

financial institution under a revolving line of credit.

The line of credit is secured by the assets of SBG is due on demand, and

bears interest at variable rates approximately 6.1 % at December 31, 2020.

As part of the acquisition of Copa di Vino the LOC was

Note 11 – PPP Loan

On January 30, 2020, the World Health Organization

(“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the

“COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond the point of

On March 20, 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

In response to the COVID-19 outbreak in the

United States, the CARES Act (the “Act”) was passed by Congress and signed into law on March 27, 2020.

In connection

with the CARES Act, the Company and its subsidiary applied for and received loans with an original aggregate principal balance

of approximately $ 158,000 .

These loans and interest will be forgiven as long as the funds are used for qualifying expenditures

as outlined in the Act.

The loans bear interest at 1 %, with an 18 -month term and has a 6-month initial payment deferral.

In April 2021, we received notification of

forgiveness for the entire outstanding balance.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 12 – Segment Reporting

The Company evaluates segment reporting in

accordance with the FASB Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating

the reporting package reviewed by the Chief Executive Officer and Chief Financial Officer.

The Copa di Vino business is included

in our Splash Beverage Group segment.

Schedule of Segment Reporting Information

Three-Months Ending

Nine-Months Ending

Splash Beverage Group

2 unchanged sentences

Splash Beverage Group

Medical Devices - Discontinued

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

13 – Commitment and Contingencies

are 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 we do 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.

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.

February 2021, we successfully raised the $9 million required.

Price Guarantee

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

Medical Devices - discontinued operations

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 13 – Commitment and Contingencies

We are 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

we do 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.

Capital Raise

In 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.

In February 2021, we successfully raised the

$ 9 million required.

Stock Price Guarantee

We have a commitment to issue additional shares

associated with specific stock price guarantee granted to an investor.

The stock price guarantee expired March 2021.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

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.

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

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,

1 unchanged sentence

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.

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

Statement Regarding Forward-Looking Statements

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

These factors may cause our actual results to differ materially from any forward-looking statements.

We disclaim any

obligation to publicly update these statements or disclose any difference between actual results and those reflected in these

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 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.

December 31, 2019, CMS entered into an Agreement and Plan of Merger (the Merger Agreement) with SBG Acquisition

(Merger Sub), a Nevada Corporation wholly-owned by CMS, and Splash Beverage Group, Inc.

a Nevada corporation

(Splash) pursuant to which Merger Sub merged with and into Splash (the Merger) with Splash as the

surviving company and a wholly-owned subsidiary of CMS.

The Merger was consummated on March 31, 2020.

Prior to the Merger, 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 users and the Company

continues to operate the home health supply business as a separate division.

the owners and management of Splash have voting and operating control of CMS following the Merger, the Merger transaction was

accounted for as a reverse acquisition (that is with Splash as the acquiring entity), followed by a recapitalization.

part of the recapitalization, previously issued shares of SBG preferred stock have been reflected as shares of common stock that

were received in the Merger.

These common shares have been retrospectively presented as outstanding for all periods.

specializes in the manufacturing, distribution, and sales & marketing of various beverages across multiple channels.

operates in both the non-alcoholic and alcoholic beverage segments.

Additionally, Splash operates its own vertically integrated

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

In July, 2020, the Company changes its name from

Canfield Medical Supply, Inc.

to Splash Beverage Group, Inc.

Our new ticker symbol is SBEV.

December 24, 2020, SBG consummated an Asset Purchase Agreement(the 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 Companys 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.

Results of Operations

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

an increase within our vertically integrated B2B and B2C e-commerce distribution platform called Qplash ($1,430,558).

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 ($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

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 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

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 expenditures.

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

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.

The primary reasons for the change in net cash used is due to losses sustained and increases in inventory, offset

by non-cash expenses relating to warrant expense ($2,010,615) and share-based compensation ($2,100,953).

Net cash used for investing activities during the

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 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.

2021 $594,000

2022 $653,400

Purchase Commitments :

Sheet Arrangements

do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely

to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity,

capital expenditures or capital resources.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

required for Smaller Reporting Companies.

The initial exercise price

of each Representative Warrant is $ 4.60 per share, which represents 115% of the Offering Price.

Note 15 – Subsequent Events

On October 11, 2021, the Company called to

order a special meeting with shareholders on record as of August 16, 2021.

The Company sought approval to re-incorporate from Colorado

The recommendation was approved.

In October 2021, the Company settled their

lawsuit with an investor.

In October 2021, the matured notes listed in Note 4 have been extended.

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