What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 481 added, 420 removed, 152 unchanged (86% of the section changed)

1 unchanged sentence

Splash Beverage Group, Inc.

Condensed Consolidated Financial Statements

June 30, 2022

Beverage Group, Inc.

Consolidated Balance Sheets

30, 2022 and December 31, 2021

Current assets:

Condensed Consolidated Balance Sheets

September 30, 2022 and December 31, 2021

and cash equivalents

2 unchanged sentences

current assets

Non-current assets:

Intangible, net

intangible assets, net

in Salt Tequila USA, LLC

1 unchanged sentence

non-current assets

and Stockholders’ Equity

and Stockholders’ Equity (Deficit)

payable and accrued expenses

of use liability - current

to related parties

party notes payable

payable, current portion

Liability to issue common stock

to issue shares

interest payable

1 unchanged sentence

current liabilities

Long-term Liabilities:

payable - noncurrent

2 unchanged sentences

Stockholders’

Stock, $ 0.001 par, 150,000,000 shares authorized, 37,269,828 and 33,596,232 shares issued 37,269,828 and 33,596,232 outstanding,

at June 30, 2022 and December 31, 2021, respectively

Stock, $ 0.001

par, 150,000,000

shares authorized, 39,650,787

and 33,596,232

shares issued 39,650,787

and 33,596,232

outstanding, at September 30, 2022 and December

31, 2021, respectively

paid in capital

4 unchanged sentences

liabilities and stockholders’ equity

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

Beverage Group, Inc.

Consolidated Statements of Operations

the Three and Six Months Ended June 30, 2022 and June 30, 2021

Three months ended June 30,

Six months ended June 30,

Customer discount

Cost of goods sold

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

Splash Beverage Group, Inc.

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2022 and September 30, 2021

months ended September 30,

of goods sold

share based compensation

general and administrative

and marketing

operating expenses

Contracted services

Salary and wages

Non-cash share-based compensation

Other general and administrative

Sales and marketing

Total operating expenses

Loss from continuing operations

( 5,829,148 )

from continuing operations

income/(expense):

from debt extinguishment

other income/(expense)

Interest income

Interest expense

Gain from debt extinguishment

Total other income/(expense)

Provision for income taxes

Net loss from continuing operations, net of tax

Net income (loss) from discontinued operations, net of tax

Gain on sale of discontinued operations

Income of discontinued operations

(Loss) per share - continuing operations

Basic and dilutive

Weighted average number of common shares outstanding - continuing operations

Income/(Loss) per share - discontinuing operations

Basic and dilutive

Weighted average number of common shares outstanding - discontinuing operations

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

Beverage Group, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

the Three and Six months ended June 30, 2022 and 2021

for income taxes

loss from continuing operations, net of tax

income (loss) from discontinued operations, net of tax

on sale of discontinued operations

(loss) from discontinued operations, net of tax

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 financial statements.

Splash Beverage Group, Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

For the Three and Nine months ended September, 2022 and 2021

Treasury Stock

Additional Paid-In

Stockholders’ Equity

Stockholders'

Paid-In Capital

Equity (Deficit)

Balances at December 31, 2020

3 unchanged sentences

Issuance of common stock for services

Issuance of common stock and warrants for cash

Issuance of common stock and warrants or cash

Mezzanine shares

5 unchanged sentences

Issuance of common stock for services

Issuance of common stock and warrants for cash

Issuance of common stock and warrants or cash

( 6,560,600 )

2 unchanged sentences

$ ( 72,592,554 )

Issuance of warrants for services

Issuance of common stock for services

( 12,169,894 )

Balances at September 30, 2021

$ ( 84,762,448 )

Treasury Stock

Stockholders'

at December 31, 2021

of common stock on convertible instruments

of warrants for services

of common stock for services

of common stock and warrants for cash

at March 31, 2022

of warrants for services

of common stock for services

of common stock and warrants for cash

Comprehensive Income - Translation

at June 30, 2022

Paid-In Capital

Equity (Deficit)

Balances at December 31, 2021

( 90,640,557 )

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

Beverage Group, Inc.

Consolidated Statements of Cash Flows

the Six -Months Ended June 30, 2022 and 2021

Issuance of common stock on convertible instruments

Issuance of warrants for services

Issuance of common stock for services

Issuance of common stock and warrants for cash

( 5,994,407 )

Balances at March 31, 2022

( 96,634,964 )

Issuance of warrants for services

Issuance of common stock for services

Issuance of common stock and warrants for cash

Accumulated Comprehensive Income - Translation

( 5,758,857 )

Balances at June 30, 2022

( 102,400,391 )

Issuance of warrants for services

Issuance of common stock for APA

Issuance of common stock and warrants for cash

Accumulated Comprehensive Income - Translation

( 5,143,801 )

Balances at September 30, 2022

( 107,535,397 )

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, 2022 and 2021

Nine months ended

September 30,

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

12 unchanged sentences

Cash Flows from Investing Activities:

Capital Expenditures

Net cash used in investing activities - continuing operations

Net cash used in investing activities - discontinued operations

Cash Flows from Financing Activities:

4 unchanged sentences

Principal repayment of debt

ROU liability

Net cash provided by financing activities - continuing operations

3 unchanged sentences

Cash and Cash Equivalents, end of year

Supplemental Disclosure of Cash Flow Informati on:

Supplemental Disclosure of Cash Flow Information:

Cash paid for Interest

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Supplemental Disclosure

of Non-Cash Investing and Financing Activities:

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

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

seeks to identify, acquire, and build early stage or under-valued beverage brands that have strong growth potential within its distribution

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.

Liability issued for investment in SALT Tequila USA, LLC

The accompanying notes are an integral part of these consolidated financial

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 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 B2B and B2C customers.

Q-plash markets well known beverage brands to customers throughout the US that prefer delivery direct to their office, facilities

and or homes.

On 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.

June 30, 2022, the Company entered into a Business Transfer and Indemnity Agreement (“Agreement”).

Pursuant to the

Agreement, the Company transferred and assigned the assets and liabilities from the CMS business.

Pursuant to the Agreement the

Company was paid $ 31,000 and recorded

a gain of $ 115,632

for the three months ended June 30, 2022.

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

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

On June 30, 2022, the Company entered into

a Business Transfer and Indemnity Agreement (“Agreement”).

Pursuant to the Agreement, the Company transferred and assigned

the assets and liabilities from the CMS business.

Pursuant to the Agreement the Company was paid $ 31,000 and recorded a gain of

$ 148,747 for the nine months ended September 30, 2022.

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

on a retrospective basis to reflect the split.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Summary of Significant Accounting Policies

of Presentation and Consolidation

Basis of Presentation and Consolidation

These condensed consolidated financial statements

include the accounts of Splash Beverage Group and its wholly owned subsidiaries, Splash International Holdings LLC, Splash Beverage Group

Holding LLC, Splash Beverage Group II, Inc., Copa di Vino Wine Group, Inc.

include the accounts of Splash Beverage Group and its wholly owned subsidiaries, Splash International Holdings LLC, Splash Beverage

Group Holding LLC, Splash Beverage Group II, Inc., Copa di Vino Wine Group, Inc.

(“CdV”) and Splash Mexico SA de CV.

CMS is reflected

as discontinued operations until its disposal on June 30, 2022.

All intercompany balances have been eliminated in consolidation.

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

CMS is reflected as discontinued operations until its disposal on June 30, 2022.

All intercompany balances have been eliminated

in consolidation.

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, 2022 and 2021 have been made.

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

ended September 30, 2022 and 2021 have been made.

Certain information and footnote disclosures

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

of operations for the period ended June 30, 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.

We had no cash equivalents

at June 30, 2022 or December 31, 2021.

cash in bank deposit amounts, at times, may exceed federally insured limits of $250,000.

At June 30, 2022 we had $ 3,405,814

of operations for the period ended September 30, 2022 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, 2022 or December

Our cash in bank deposit amounts, at times, may

exceed federally insured limits of $250,000.

At September 30, 2022 we had $ 2,210,567

in excess of the federally insured limits.

Our bank deposit amounts in Mexico of $ 2,000 are

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 June 30, 2022 and December 31, 2021, our accounts receivable

amounts are reflected net of allowances of $ 13,855 and $ 45,203 , respectively.

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

The inventory

balances at June 30, 2022 and December 31, 2021 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.

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 $ 68,349

and $ 223,223

at June 30, 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.

Furniture and computer equipment of $ 60,626

were written off as of June 30, 2022

expense totaled $ 43,534 and $ 36,561 for the three months ended June 30, 2022 and June 30, 2021, respectively.

expense totaled $ 74,229 and

the six months ended June 30, 2022 and June 30, 2021, respectively.

Property and equipment as of June 30, 2022

Our bank deposit amounts in Mexico of $ 1,940

are uninsured.

At December 31, 2021 we had $ 3,643,474 over the federally insured limits.

Our cash in uninsured foreign bank accounts

was $ 10,749 at December 31, 2021.

Splash Beverage Group,

Notes to the Condensed Consolidated Financial

Note 2 – Summary of Significant

Accounting Policies, continued

Accounts Receivable and Allowance

for Doubtful Accounts

Accounts receivable are carried at their estimated

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

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, 2022 and December 31, 2021, our accounts receivable amounts are reflected

net of allowances of $ 13,827 and $ 45,203 , respectively.

Inventory is stated at the lower of cost or

net realizable value and accounted for using the weighted average cost method.

The inventory balances at September 30, 2022 and

December 31, 2021 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 $ 67,170 and $ 223,223 at September 30, 2022

and December 31, 2021, 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.

Furniture and computer equipment of $ 60,626 was no longer in use and written off as of September 30, 2022.

Depreciation expense totaled $ 27,762 and $ 44,465

for the three months ended September 30, 2022 and September 30, 2021, respectively.

Depreciation expense totaled $ 101,991 and $ 80,048

for the nine months ended September 30, 2022 and September 30, 2021, respectively.

Property and equipment as of September 30, 2022

and December 31, 2021 consisted of the following:

Schedule of Property and equipment

June 30, 2022

September 30, 2022

December 31, 2021

7 unchanged sentences

Property and 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.

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:

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

condensed consolidated financial statements approximate fair values at June 30, 2022 and December 31, 2021, consistent with recent negotiations

of notes payable and due to the short duration of maturities and market rates of interest.

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, 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 awards.

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 more likely than not that the deferred tax assets will not 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 June 30, 2022 and

December 31, 2021.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

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 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.

Splash Beverage Group,

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 condensed consolidated financial statements approximate fair values at September 30, 2022 and December 31, 2021, consistent

with recent negotiations of notes payable and due to the short duration of maturities and market rates of interest.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

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 stock

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.

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 $ 131,327

and $ 150,753 for

the three-months ended June 30, 2022 and 2021, respectively.

We recorded advertising expense of $ 218,917 and $ 198,538 for the six

months ended June 30, 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

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.

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.

Distribution expenses to transport our finished

goods, where applicable, and warehousing expense are accounted for within cost of goods.

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 award’s vesting period.

We use the Black-Scholes option pricing model to determine

the fair value of stock-based awards.

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 more likely

than not that the deferred tax assets will not 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, 2022 and December 31, 2021.

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 stock outstanding.

Warrants, stock options,

and common stock issuable upon the conversion of the Company’s convertible debt or preferred stock (if any), are not included

in the computation if the effect would be anti-dilutive.

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

and marketing expense of $ 746,965 and $ 249,100 for the three-months ended September 30, 2022 and 2021, respectively.

advertising and marketing expense of $ 1,918,420 and $ 465,705 for the nine months ended September 30, 2022 and 2021, respectively.

Goodwill and Intangibles Assets

Goodwill represents the excess of acquisition

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

The Company reviews goodwill annually in

the fourth quarter for impairment or when circumstances indicate carrying value may exceed the fair value.

This evaluation is performed

at the reporting unit level.

If a qualitative assessment indicates that it is more likely than not that the fair value is less

than carrying value, a quantitative analysis is completed using either the income or market approach, or a combination of both.

The income approach estimates fair value based on expected discounted future cash flows, while the market approach uses comparable

public companies and transactions to develop metrics to be applied to historical and expected future operating results.

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.

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.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 2 – Summary of Significant

Accounting Policies, continued

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 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.

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.

Reclassifications

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 and Related Party Notes Payable

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

Certain prior period amounts have been reclassified

to conform with the current year presentation.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 3 – Notes Payable and Related

Party Notes Payable

Notes payable are generally nonrecourse and

secured by all Company owned assets.

Interest Rate

September 30, 2022

December 31, 2021

Notes Payable and Convertible Notes Payable

3 unchanged sentences

The loan matured and remains in default.

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 principal and interest was paid off in June 2022

4 unchanged sentences

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

The loan was extended to August 2022.

The loan was extended to January 2023.

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.

The loan was extended to January 2023

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.

The loan was extended to January 2023.

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

3 unchanged sentences

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

The loan was extended to August 2022.

The loan was extended to January 2023

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

3 unchanged sentences

The principal and interest was converted to shares of common stock in April 2022.

In August 2022, we entered into an 56-month auto loan in the amount of $ 45,420 .

Total notes payable

3 unchanged sentences

and convertible notes payable

expense on notes payable was $ 69,015

and $ 133,702 for

the three months ended June 30, 2022 and 2021, respectively.

Interest expense on notes payable was $ 150,715 and $ 203,236 for

the six months ended June 30, 2022 and 2021, respectively.

Accrued interest was $ 167,449 at

June 30, 2022.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

3– Notes Payable and Related Party Notes Payable

Interest expense on notes payable was $ 65,007

and $ 82,871 for the three months ended September 30, 2022 and 2021, respectively.

Interest expense on notes payable was $ 217,123

and $ 340,653

for the nine months ended September 30, 2022 and 2021 respectively.

Accrued interest was $ 183,553 at September 30, 2022.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 3– Notes Payable and Related

Party Notes Payable

Schedule of related party notes payable

Interest Rate

June 30, 2022

Parties Notes Payable

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

September 30, 2022

December 31, 2021

Related Parties Notes Payable

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

The loan was paid off in June 2022.

current portion

notes payable

expense on related party notes payable was $ 2,805 and

the three months ended June 30, 2022 and 2021, respectively.

Interest expense on related party notes payable was $ 5,407 and

$ 15,839 for the six months ended June 30, 2022 and 2021, respectively.

Less current portion

Long-term notes payable

Interest expense on related party notes payable

was $ 0 and $ 5,995 for the three months ended September 30, 2022 and 2021, respectively.

Interest expense on related party notes

payable was $ 5,407 and $ 21,833 for the nine months ended September 30, 2022 and 2021, respectively.

Accrued interest was $ 0 as

of June 30, 2022.

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

4 – Licensing Agreement and Royalty Payable

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.

Under the terms of the agreement, we are required to pay a 6%

royalty on net sales, as defined.

We are required to make minimum royalty monthly payments of $ 54,450 in

2022 and $ 49,500 in

were no unpaid royalties at June 30, 2022.

Royalty payments including the minimum totaling $ 381,150

and $ 346,500

were made for the six months ended June 30, 2022 and 2021, respectively, these costs are included in general and administrative

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 process.

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.

of September 30, 2022.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 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

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

We are required to

make minimum royalty monthly payments of $ 54,450 in 2022 and $ 49,500 in 2021.

There were no unpaid royalties at September

Royalty payments including the minimum totaling $ 490,050 and $ 445,500 were made for the nine months ended September 30,

2022 and 2021, respectively, these costs are 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 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 process.

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 a 10 -year useful life.

5– Stockholders’ Equity

Note 5– Stockholders’ Equity

During the three-months ended September 30, 2022,

the Company issued 2,000,000 shares of common stock as part of the public offering and 380,959 shares in settlement of litigation.

During the nine-months ended September 30, 2022, the

Company issued 4,300,000 shares of common stock as part of the public offerings, 1,050,000 shares in exchange for services, 380,959 shares

in settlement of litigation, 223,596 shares on convertible instruments, and 100,000 shares for cash.

Private Placement Memorandum (PPM)

January 2021, the Board of Directors approved a Private Placement Memorandum (PPM) 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, the Company issued a total of 1,212,355

shares and 606,178

warrants and received the gross proceeds of approximately $ 4,000,000 .

During the quarter, the Company granted share-based awards to certain officers

and consultants to purchase 146,000 shares of common stock at an exercise price of $ 2.31 .

The options were valued at $ 337,260 .

Beverage Group, Inc.

to the Consolidated Financial Statements

6 – Related Parties

outstanding balance as of June 30, 2022 and $ 653,081

was outstanding as of December 31,2021.

7 – Investment in Salt Tequila USA, LLC

have a marketing and distribution agreement with SALT Tequila USA, LLC (“SALT”) for the manufacturing of our Tequila product

line in Mexico.

have a 22.5 %

percentage ownership interest in SALT and 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

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 after 36 months, on June 30, 2021 .

In January 2021, the Board of Directors approved

a Private Placement Memorandum (PPM) 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, the Company issued a total of 1,212,355 shares

and 606,178 warrants and received the gross proceeds of approximately $ 4,000,000 .

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Related Parties

There is a $ 75,000 balance due to a related party as of September 30, 2022 and $ 653,081 was

outstanding as of December 31, 2021.

Note 7 – Investment in Salt Tequila

We have a marketing and distribution agreement

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

We have a 22.5 % percentage ownership interest

in SALT and 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.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 8 – 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 .

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 on November 11, 2022 .

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

The lease commenced May

1, 2019 and was renewed on

April 1, 2022 for one year.

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

A three-year lease was signed

in September 2022.

Effective 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 on November 11,

2022 , at which point it became month-to-month.

Effective May 2019, we entered into a new lease

The lease commenced May 1, 2019 and was renewed on April 1, 2022 for one year.

Effective January 2021, we entered into a lease

agreement for the right to use and occupy office space.

The lease term commenced January

18, 2021 and was extended

for 1 one year to

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

The lease term commenced

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

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

as financial lease liabilities on the condensed consolidated balance sheet at June 30, 2022:

Schedule of maturities of lease liabilities

18, 2021 and was extended for 1

18 months to July

Effective January 2021, we entered into a lease

agreement for the right to use and occupy office and manufacturing space.

The lease term commenced January 1, 2021 and is scheduled

to expire after 60 months, on December 31, 2025 .

The 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 September 30, 2022:

Undiscounted Future Minimum Lease Payments

2022 (six months)

Amount representing

imputed interest

Total Operating Lease

Current portion operating

lease liability

Operating lease liability,

The table below presents

information for lease costs related to our operating leases at June 30, 2022

Operating Lease

2022 (three months)

Amount representing imputed interest

Total Operating Lease Liability

Current portion operating lease liability

Operating lease liability, non-current

The table below presents information for lease

costs related to our operating leases at September 30, 2022

Schedule of lease costs

Operating lease cost:

Amortization of leased assets

1 unchanged sentence

Total operating lease cost

The table below presents

lease-related terms and discount rates at June 30, 2022

The table below presents lease-related terms

and discount rates at September 30, 2022

Summary of lease-related terms and discount rates

Summary of lease-related

terms and discount rates

Summary of lease-related terms and discount rates

Remaining term on leases

borrowing rate

Beverage Group, Inc.

to the Condensed Consolidated Financial Statements

9 – 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.

1 to 39 months

Incremented borrowing rate

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 9 – 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 CdV business is included in our Splash

Beverage Group segment.

Schedule of Segment Reporting Information

Three-Months Ended

Six-Months Ended

Nine-Months Ended

Splash Beverage Group

Total Revenues continuing operations

Total Revenues discontinued operations

Beverage Group

Total net revenues continuing operations

Total net revenues discontinued operations

September 30,

Splash Beverage Group

Medical Devices - Discontinued

10 – Commitment and Contingencies

The Company signed an agreement to acquire 80%

of Pulpoloco Sangria in a transaction that will give Splash control over the manufacturing and distribution of Pulpoloco across the US

while adding international markets and capturing the additional margin and revenue.

June 10, 2022, Copa Di Vino Corporation (“Copa”) filed a lawsuit against the

Company in Broward County, Florida.

The complaint alleges that the Company still owes part

of the final payment under the December 24, 2020 Asset Purchase Agreement (“APA”)

between Copa and the Company.

Specifically, Copa maintains that 380,959 shares are owed.

The parties are actively discussing amicable resolution on a framework both sides appear

to be agreeable to.

The Company will vigorously defend the case if a settlement is not reached.

Litigation is uncertain, however, and no particular result can be assured.

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.

11– Subsequent Events

to June 30, 2022 the Company's Board approved the issuance of 250,000 shares as a performance

bonus pursuant to a consulting agreement.

– Liability to Issue Shares

The Company has obligations to issue shares of its

common stock at September 30, 2022 arising from the following transactions:

· 154,200 shares in connection with the conversion of indebtedness in the

amount of $ 308,400

· Shares equal to $ 150,000 in connection with consulting services provided

· 250,000 shares in connection with consulting services provided

· 5,000 shares in connection with consulting services provided

· 10,000 shares in connection with consulting services provided

Note 11 – 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.

Note 12– Subsequent Events

Subsequent to September 30, 2022 the

Company’s Board approved the issuance of 225,000 shares associated with a 3 year contract and 18,519 shares for services.

The Company issued 296,129 shares

upon exercise of the underwriters’ over-allotment that generated gross amount of $459,000.

We have extended a licensing

agreement with ABG TapouT, LLC (“TapouT”) through 2028.

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