What changed in this filing

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Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 547 added, 797 removed, 65 unchanged (95% of the section changed)

FINANCIAL STATEMENTS

Splash Beverage Group, Inc.

Beverage Group, Inc.

Condensed Consolidated Financial Statements

September 30, 2021

Splash Beverage Group, Inc.

Condensed Consolidated Balance Sheets

September 30, 2021 and December 31, 2020

September 30, 2021

Beverage Group, Inc .

Consolidated Balance Sheets

31, 2022 and December 31, 2021

March 31, 2022

December 31, 2021

and cash equivalents

receivable, net

from discontinued operations

Current assets:

Non-current assets:

in Salt Tequila USA, LLC

of use assets, net

and equipment, net

Cash and cash equivalents

Accounts Receivable, net

Prepaid Expenses

Inventory, net

Other receivables

Assets from discontinued operations

Total current assets

Non-current assets:

and Stockholders’ Equity (Deficit)

payable and accrued expenses

of use liabilities - current

Sales tax payable

to related parties

party notes payable

payable, current portion

interest payable

from discontinued operations

Intangible assets

Investment in Salt Tequila USA, LLC

Right of use asset, net

Property and equipment, net

Total non-current assets

Liabilities and Stockholders’

Current liabilities

Long-term Liabilities:

party notes payable - noncurrent

payable - noncurrent

to issue shares in APA

of use liability - noncurrent

Accounts payable and accrued expenses

Liability to issue shares

Sales tax payable

Right of use liability - current

Related party notes payable

Notes payable, current portion

Shareholder advances

Accrued interest payable

Liabilities from discontinued operations

Total current liabilities

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 )

stockholders’ equity (deficit)

( 9,350,723 )

Liability to issue shares in APA

Right of use liability - noncurrent

Total long-term liabilities

Total liabilities

mezzanine shares and (deficit) stockholders’ equity

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Common stock, (mezzanine shares) 12,605,283 shares, contingently

convertible to notes payable at December 31, 2020

Deficiency in stockholders’ equity (deficit):

Common Stock, $ 0.001

par, 150,000,000

shares authorized, 36,669,828

and 33,596,232

shares issued 36,669,828

and 33,596,232

outstanding, at March 31, 2022 and December 31, 2021, respectively

Additional paid in capital

Accumulated deficit

Total deficiency in stockholders’ equity

Total liabilities, mezzanine shares and deficiency in stockholders’

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

Splash Beverage Group, Inc.

Condensed Consolidated Statements of Operations

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

months ended September 30,

of goods sold

Consolidated Statements of Operations

the Three Months Ended March 31, 2022 and 2021

Three months ended March 31,

Customer discounts

Cost of goods sold

( 3,094,571 )

( 1,621,504 )

and wages – non-cash share-based compensation

general and administrative

general and administrative – non-cash share-based compensation

and marketing

Operating expenses:

from continuing operations

( 12,072,230 )

( 2,163,354 )

( 22,930,973 )

Contracted services

Salary and wages

Salary and wages - non-cash share-based compensation

Other general and administrative

Other general and administrative - non-cash share-based

Sales and marketing

Total operating expenses

Loss from continuing operations

( 5,683,953 )

income/(expense):

( 4,548,929 )

/( loss) from debt extinguishment

Other income/(expense):

( 1,873,057 )

for income taxes

loss from continuing operations, net of tax

( 12,169,894 )

( 2,152,238 )

( 23,172,713 )

( 6,173,943 )

income from discontinued operations, net of tax

$ ( 12,191,971 )

$ ( 2,084,106 )

$ ( 22,954,303 )

$ ( 6,105,811 )

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 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

Incremental beneficial conversion for preferred A

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 )

( 61,589,735 )

( 31,845,506 )

Incremental beneficial conversion for preferred A

Issuance of warrants on convertible instruments

( 12,169,894 )

( 2,283,683 )

( 23,172,713 )

( 6,103,663 )

Ending balances

( 84,762,448 )

( 39,018,842 )

( 84,762,448 )

( 39,018,842 )

( 12,169,894 )

Interest expense

Gain from debt extinguishment

Total other (expense)

Provision for income taxes

Net loss from continuing operations, net of tax

( 5,769,831 )

( 4,639,707 )

Net loss /income from discontinued operations, net of

$ ( 5,994,408 )

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

$ ( 4,442,219 )

Loss per share - continuing operations

Weighted average number of common shares outstanding - continuing operations

Basic and dilutive

Income/(loss) 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.

Beverage Group, Inc.

Consolidated Statement of Changes in Stockholders’ Equity

the three months ended March 31, 2022 and 2021

stockholders’ equity, beginning balances

stock and additional paid-in capital

of common stock upon conversion of

convertible instruments

of warrants for services

of common stock for services

of common stock for cash

Reclassification

of Mezzanine shares

stockholders’ equity, ending balances

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

Beverage Group, Inc.

Consolidated Statement Cash Flows

the Three Months Ended March 31, 2022 and 2021

$ ( 5,994,407 )

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

Depreciation and amortization

ROU assets, net

Gain from debt extinguishment

Interest on notes payable converted to common stock

Interest expense due to the issuance of warrants

Non-cash warrant expense

Share-based compensation

Other noncash changes

Changes in working capital items:

Accounts receivable, net

Inventory, net

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Royalty payable

Accrued interest payable

Net cash used in operating activities - continuing operations

$ ( 4,442,219 )

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

and amortization

( 1,128,000 )

Net cash used in operating activities - discontinued operations

Cash Flows from Investing Activities:

Capital Expenditures

Proceeds from the sale of fixed assets

Investment in Salt Tequila USA, LLC

Net cash used in investing activities - continuing operations

Net cash used in investing activities - discontinued operations

Cash Flows from Financing Activities:

Proceeds from issuance of common stock

Cash advance from shareholder

Funds in escrow

warrant expense

noncash changes

in working capital items:

receivable, net

expenses and other current assets

payable and accrued expenses

Interest payable

cash used in operating activities - continuing operations

( 4,675,886 )

Repayment of cash advance

Proceeds from issuance of debt

Principal repayment of debt

( 3,620,039 )

ROU liability, net

Net cash provided by financing activities - continuing operations

Net cash provided by financing activities - discontinued operations

Net Change in Cash and Cash Equivalents

Cash and Cash Equivalents, beginning of year

Cash and Cash Equivalents, end of year

Supplemental Disclosure of Cash Flow Information:

Cash paid for Interest

Supplemental Disclosure of Non-Cash Investing and Financing Activities

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 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.

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.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

cash used in operating activities - discontinued operations

Flows from Investing Activities:

in Salt Tequila USA, LLC

used for Copa acquisition

cash acquired in Canfield merger

cash used in investing activities - continuing operations

cash used in investing activities - discontinued operations

Flows from Financing Activities:

from issuance of Common stock

advance from shareholder

of cash advance

from issuance of debt

repayment of debt

cash provided by financing activities - continuing operations

cash provided by financing activities - discontinued operations

Change in Cash and Cash Equivalents

and Cash Equivalents, beginning of year

and Cash Equivalents, end of year

Disclosure of Cash Flow Information:

paid for Interest

Disclosure of Non-Cash Investing and Financing Activities

payable and accrued interest converted to common stock ( 223,596

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

Splash seeks to identify, acquire, and build early

stage or under-valued beverage brands that have strong growth potential within its distribution system.

Splash’s distribution system

is comprehensive in the US and is now expanding to select attractive international markets.

The Splash brand portfolio is growing and

diverse, covering multiple categories that are exhibiting strong growth in both the non-alcohol and alcohol sectors.

Through its wholly

owned subsidiary Qplash, Splash’s distribution reach includes e-commerce access to both B-to-B and B-to-C customers.

Q-plash markets

well known beverage brands to customers throughout the US that prefer delivery direct to their office, facilities and or homes.

February 2021, Management initiated a plan to divest its Canfied Medical Supply, Inc.

(“CMS”) business.

As a result, the assets and operations of CMS have been retrospectively

reflected as discontinued operations.

On November 12, 2021 the Company changed its state of Domicile from Colorado to Nevada.

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 on a retrospective basis to reflect the split.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – Summary of Significant Accounting Policies

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.

of Presentation and Consolidation

condensed consolidated financial statements include the accounts of Splash Beverage Group and its wholly owned subsidiaries, Holdings, Copa di Vino, Inc.(‘CdV”) and Splash Mexico., CMS is reflected as discontinued operations.

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).

The accompanying condensed consolidated financial

statements have been prepared by us without audit.

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

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

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

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

accompanying condensed financial statements have been prepared by us without audit.

In the opinion of management, all adjustments (which

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

the three months ended March 31, 2022 and 2021 have been made.

information and footnote disclosures normally included in consolidated financial statements prepared in GAAP have been condensed or omitted.

The results of operations for the period ended March 31, 2022 are not necessarily indicative of the operating results for the full year.

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.

Equivalents and Concentration of Cash Balance

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

cash equivalents at March 31, 2022 or December

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

federally insured limits of $250,000.

At March 31, 2022 we had $ 7,632,587

in excess of the federally insured limits.

Our bank deposit amounts in Mexico $ 2,169

are uninsured.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – Summary of Significant Accounting Policies, continued

Receivable and Allowance for Doubtful Accounts

receivable are carried at their estimated recoverable amounts and are periodically evaluated for collectability based on past credit

history with clients and other factors.

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 March 31, 2022 and December 31, 2021, our accounts receivable

amounts are reflected net of allowances of $ 13,949

and $ 45,203 ,

respectively.

is stated at the lower of cost or net realizable value, accounted for using the weighted average cost method.

The inventory balances

at March 31, 2022 and December 31, 2021 consisted of raw materials, work-in-process, and finished goods held for distribution.

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.

1 unchanged sentence

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

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

September 30, 2021

December 31, 2020

Property and equipment, at cost

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 $ 253,703

and $ 223,223

at March 31, 2022 and December 31, 2021, respectively.

and Equipment

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

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.

expense totaled $ 30,695

for the three months ended March 31, 2022 and

March 31, 2021, respectively.

Property and equipment as of March 31, 2022 and December 31, 2021 consisted of the following:

of Property and equipment

Machinery & equipment

Leasehold improvements

Office furniture & equipment

Accumulated depreciation

( 1,582,820 )

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 (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.

( 1,552,125 )

Property, plant & equipment, net

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 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.

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

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – Summary of Significant Accounting Policies, continued

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

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

period of the award.

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

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

and expected stock price volatility and exercise price.

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

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.

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.

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.

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

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 condensed consolidated financial statements approximate fair values at March 31, 2022 and

December 31, 2021, consistent with recent negotiations of notes payable and due to the short duration of maturities and market rates

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – 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.

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 finished goods products, where applicable, and warehousing expense are accounted for within operating expenses.

Distribution expense is capitalized as part of inventory as the materials are received by our distillery, co-packer or internal/external

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.

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 award’s vesting period.

We use the Black-Scholes option pricing model to determine the fair value of stock-based

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” .

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.

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

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 March 31, 2022 and December 31, 2021.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – Summary of Significant Accounting Policies, continued

income (loss) per share

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.

average number of shares outstanding for awards granted from 2021 to 2022 excludes anti-dilutive common stock equivalents, including

warrants to purchase 3

million shares of common stock for nominal consideration.

conduct advertising for the promotion of our products.

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

We recorded advertising expense of $ 87,590

for the three-months ended March 31, 2022 and

2021, respectively.

and Intangibles Assets

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

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

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

Intangible assets consist of customer lists, brands

and license agreements acquired in the acquisition of CdV.

The Company amortizes intangible assets with finite lives on a straight-line

basis over their estimated useful lives of 15 years.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

2 – Summary of Significant Accounting Policies, continued

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 value.

In the event that the carrying value is not considered recoverable, an impairment loss is recognized for the asset group

to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group.

For asset groups

classified as held-for-sale (disposal group), the carrying value is compared to the disposal group’s fair value less costs

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.

For asset groups classified

as held-for-sale (disposal group), the carrying value is compared to the disposal group’s fair value less costs to sell.

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

Accounting Pronouncements

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 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.

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

September 30, 2021

December 31, 2020

Reclassifications

Certain prior period amounts have been reclassified

to conform with the current year presentation.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

3 – 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 Notes payable

Notes Payable and Convertible

Notes Payable

In February 2014, we entered into a 12-month term loan agreement with an individual in the amount of $ 200,000 .

The note included warrants for 66,146 shares of common stock at $ 0.73 per share.

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

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 .

The note included warrants for 272,584 shares of common stock at $ 0.94 per share.

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

In March 2014, we entered into

a short-term loan agreement with an entity in the amount of $ 200,000 .

The note included warrants for 272,584

shares of common stock at $ 0.94

The warrants expired unexercised on February

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 .

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.

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 May 2021.

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

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.

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.

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.

Note is due September 2025

In April 2021, we entered into a six-month

convertible loan with an individual in the amount of $ 84,000 .

The loan had an original maturity of October 2021 with principal and interest due at maturity.

The loan was extended to August 2022.

In April 2021, we entered into a six-month

convertible loan with an individual in the amount of $ 84,000 .

The loan had an original maturity of October 2021 with principal and interest due at maturity.

The loan was extended to August 2022.

In May 2021, we entered into a six-month

convertible loan with an individual in the amount of $ 50,000 .

The loan had an original maturity of October 2021 with principal and interest due at maturity.

The loan was extended to August 2022.

In May 2021, we entered into a six-month

convertible loan with an individual in the amount of $ 500,000 .

The loan had an original maturity of October 2021 with principal and interest due at maturity.

The principal and interest was converted

into shares of common stock in February 2022.

In May 2021, we entered into a six-month

convertible loan with an individual in the amount of $ 10,000 .

The loan had an original maturity of October 2021 with principal and interest due at maturity.

The loan was extended to August 2022.

In May 2021, we entered into a six-month

convertible loan with an individual in the amount of $ 200,000 .

The loan had an original maturity of October 2021 with principal and interest due at maturity.

The principal and interest was converted

into shares of common stock in February 2022.

In November 2021, we entered into a one-year

convertible loan with an individual in the amount of $ 300,000 .

The loan expires November 2022 with the principal and interest due at maturity.

notes payable

and convertible notes payable

current portion

( 2,171,068 )

Interest expense on notes payable was $ 82,871

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

( 2,967,812 )

notes payable

and convertible notes payable

expense on notes payable was $ 81,700

for the three months ended March 31, 2022 and

2021, respectively.

Accrued interest was $ 154,209

at March 31, 2022.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

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

Bridge Loan Payable, continued

Schedule of Related Party Notes Payable

Interest Rate

September 30, 2021

December 31, 2020

March 31, 2022

Related Parties Notes Payable

2 unchanged sentences

Less current portion

( 1,333,333 )

Long-term notes payable

Interest expense on related party notes payable

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

September 30, 2021

December 31, 2020

Convertible Bridge Loans Payable

In May 2015, we entered into a 3-month term loan agreement with an individual in the amount of $ 100,000 .

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

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

against the Company for a promissory note in default.

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

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

expense on related party notes payable was $ 2,602

for the three months ended March 31, 2022 and

2021, respectively.

Accrued interest was $ 0

as of March 31, 2022.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

4 – 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 and Mexico.

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

We are required to make minimum monthly payments

in 2022 and $ 49,500

were no unpaid royalties at March 31, 2022.

We paid the guaranteed minimum royalty payments of $ 163,350

and $ 148,500

for the three-months ended March 31, 2022 and

2021, which is included in general and administrative expenses.

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 CdV 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 our manufacturing

In exchange for notes payable, 1/4 Vin granted us 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

5– Stockholders’ Equity

March 31, 2021, we issued 168,333 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 $ 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

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 .

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

[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

Concurrently with the consummation of the Merger, these warrants were exchanged for warrants to purchase 454,064 of Splash

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

of common stock in exchange for services provided to us.

At December 31, 2021, we issued 977,497 shares

of common stock in exchange for services provided to us.

At March 31, 2022, we issued 550,000 shares

of common stock in exchange for services, and 2,300,000 as part of our S3 drawdown and convertible instruments.

three-month-ended March 31, 2022 the shares were valued at a fair market value stock price based on the agreement date.

recognized share-based compensation expense for the three-months ended March 31, 2022 of $ 2,355,542 ,

which is classified within the other general and administrative line on our Condensed Consolidated Statements of

Placement Memorandum (PPM)

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 purchased.

In February 2021, we completed our PPM by issuing

a total of 1,212,355

of shares and 606,178

warrants receiving gross proceeds of approximately

$ 4,000,000 .

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 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

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

These warrants vest over three years

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

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

These warrants vest over two - three years

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

to purchase common stock of the Company to a director.

These warrants vest, equally, over three years

[J] We issued 3,750,000 warrants to purchase

common stock of the Company in connection with the June 2021 underwritten public offering of 3,750,000 shares of common stock,

in addition to 150,000 warrants to purchase common stock of the Company to the representative underwriter.

[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.

There are related party notes payable of $ 1.0

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

to the Consolidated Financial Statements

5 – Stockholders’ Equity, continued

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 at the time the 2020 plan was adopted

The 2020 Plan has an “EVERGREEN” feature,

which provides for the annual increase in the number of shares issuable under the plan by an amount equal to 5% of the number of issued

and outstanding common shares at year end, unless otherwise adjusted by the board.

At January 1, 2021 AND 2022, the number of shares issuable

under the 2020 plan increased by 1,057,852 and 1,679,812 shares, respectively.

During the three-month period ended March 31, 2022,

the company granted 773,596 shares under the 2020 plan.

At March 31, 2022, the total number of awards that may be issued under the 2020

plan was 2,123,703 .

The fair value of stock options recognized in the

period has been estimated using the Black-Scholes option pricing model.

The company did not grant any new options, warrants,

or shares in Q1 2022 that would fall under the 2020 plan.

Advances and Liability to Issue Stock and Warrants

We have various agreements

with consultants in the amount of 0.5 million shares to be issued by in Q2 2022.

The stock price will be valued using

the 10-day average price of the company’s stock from the issuance date.

As part of our private placement memoranda, we owe an investor

33,333 shares at $3.30 of the Company’s common stock which will be issued in Q2 2022.

6 – Related Parties

are related party notes payable of $ 0.3

million outstanding as of March 31, 2022 and

December 31,2021, respectively.

7 – Investment in Salt Tequila USA, LLC

We have a marketing and distribution agreement with

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

percentage ownership interest in SALT, have the right to increase our ownership to 37.5 %.

This investment is accounted for at cost, due to our inability to exercise significant influence over the assets and operations .

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

8 – Operating Lease Obligations

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

The lease term commenced July

1, 2018 and is scheduled to expire

months, on June

We renewed the lease under the same terms.

Effective November 2019, we entered into a

lease with Interport Logistics, LLC.

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

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.

Effective January 2021, we entered into a lease

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

The lease term commenced January 18, 2021 and is scheduled

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

Effective January 2021, we entered into a lease

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

In July 2021, we executed

a two-year renewal at the same monthly amount.

November 2019, we entered into a new lease with Interport Logistics, LLC.

The lease term commenced on November

11, 2019 and is scheduled to expire

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

The lease commenced May

1, 2019 and is scheduled to expire

after 24 months, on April 1, 2021.

year lease agreement is renewed annually.

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

The lease term commenced January

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

Undiscounted Future Minimum Lease Payments

18, 2021 and is scheduled to expire

months, on July

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

The lease term commenced

1, 2021 and is scheduled to expire

months, on December

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

as financial lease liabilities on the condensed consolidated balance sheet at March 31, 2022:

Schedule of maturities

of lease liabilities

Future Minimum Lease Payments

Operating Lease

2021 (three months remaining)

2022 (Nine months remaining)

Amount representing imputed interest

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:

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 March 31, 2022:

of lease costs

Operating lease cost:

2 unchanged sentences

Total operating lease cost

The table below presents lease- related terms

and discount rates at September 30, 2021:

of lease- related terms and discount rates

table below presents lease-related terms and discount rates at March 31, 2022:

Summary 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.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

9 – Business Combination

consummated the acquisition of CdV on December 24, 2020.

The purchase price consideration was comprised of $1.5 million in debt, $0.5

million in cash and $2.0 million in contingent shares, and a note payable for $2.0 million (see note 4) for total consideration of approximately

$6.0 million.

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

Schedule of purchase

price for the acquisition

Preliminary Purchase Accounting

Final Purchase Accounting

Accounts receivable, net

Other current assets

Inventory, net

Property and equipment, net

License agreement, net

Customer lists

Total indentifiable assets

Accounts payable and accrued expenses

Total liabilities and equity

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

10 – 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 Officer.

The CdV business is included in our Splash Beverage Group segment.

Schedule of Segment Reporting Information

Three-Months Ending

Nine-Months Ending

Splash Beverage Group

Total Revenues continuing operations

Total Revenues discontinued operations

Total Revenues discontinuing operations

Splash Beverage Group

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.

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

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

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

approximately $ 15 million.

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

the Company received net proceeds of approximately $ 13.2 million.

Representative’s Warrants

On June 15, 2021, pursuant to the Underwriting

Agreement, the Company issued the Representative’s Warrants to purchase up to an aggregate of 150,000 shares of Common Stock.

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

The initial exercise price

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

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.

Total assets discontinued operations

11 – 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.

12 – Subsequent Events

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