What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 110 added, 83 removed, 12 unchanged (94% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statement Regarding Forward-Looking Statements

information in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,

as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking

The information

in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,

and Section 21E of the Securities Exchange Act of 1934, as amended.

These forward-looking statements involve risks and uncertainties,

including statements regarding our capital needs, business strategy and expectations.

Any statements that are not of historical fact

may be deemed to be forward-looking statements.

Any statements that are not of historical

fact may be deemed to be forward-looking statements.

These forward-looking statements involve substantial risks and uncertainties.

cases you can identify forward-looking statements by terminology such as “may,” “will,” “should,”

In some cases you can identify forward-looking statements by terminology such as “may,” “will,” “should,”

“expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,”

“predict,” “potential,” or “continue”, the negative of the terms or other comparable terminology.

Actual events or results may differ materially from the anticipated results or other expectations expressed in the forward-looking statements.

In evaluating these statements, you should consider various factors, including the risks included from time to time in other reports

or registration statements filed with the United States Securities and Exchange Commission.

These factors may cause our actual results

to differ materially from any forward-looking statements.

We disclaim any obligation to publicly update these statements or disclose

any difference between actual results and those reflected in these statements.

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

Actual events or results may differ materially from the anticipated results or other expectations expressed in the forward-looking

In evaluating these statements, you should consider various factors, including the risks included from time to time

in other reports or registration statements filed with the United States Securities and Exchange Commission.

These factors may

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

We disclaim any obligation to publicly update

these statements or disclose any difference between actual results and those reflected in these statements.

Unless the context

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

refer to Splash Beverage Group and its subsidiaries.

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

Financial Statements (unaudited) filed herewith.

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.

On June 30, 2022, Management completed its plan to

divest its CMS business.

CMS was the entity used to execute the reverse merger for Splash to uplist its common stock to NYSE American.

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

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.

The following discussion and analysis should

be read in conjunction with the Condensed Financial Statements (unaudited) and Notes to Condensed Financial Statements (unaudited)

filed herewith.

Business Overview

Splash 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.

Splash was originally incorporated in the State of

Nevada under the name TapouT Beverages, Inc.

for the purpose of acquiring the rights under a license agreement with TapouT, LLC (Authentic

Brands Group) for the right to use the TapouT brand in connection with manufacturing and selling certain beverages.

On March 31, 2020, a wholly-owned subsidiary of a

public entity called Canfield Medical Supply, Inc.

(“CMS”) merged with and into Splash and Splash became a wholly-owned subsidiary

At the time of the merger CMS’s state of incorporation was Colorado.

At the time of the merger CMS’s common

stock was quoted on the OTCQB.

On July 31, 2020, we changed our name from Canfield

Medical Supply, Inc.

to Splash Beverage Group, Inc.

On June 11, 2021, our common stock and warrants to

purchase common stock began trading on the NYSE American under the symbols “SBEV” and SBEV WS,” respectively

On November 8, 2021, we changed our state of incorporation

from Colorado to Nevada.

On June 30, 2022, Management completed its

plan to divest its CMS’s business.

In coordination with uplisting to the NYSE

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

Results of Operations

for the Three and Six Months Ended June 30, 2022 compared to Three and Six Months Ended June 30, 2021.

Net revenues for the three and six months ended June

30, 2022 were higher compared to revenues for the three and six months ended June 30, 2021 due to an increase from our vertically integrated

B2B and B2C e-commerce distribution platform called Qplash (Qplash sells goods on both Amazon and Shopify), increased distribution on

the beverage portfolio and a price increase on CdV.

for the Three and Nine Months Ended September 30, 2022 compared to Three and Nine Months Ended September 30, 2021.

Net revenues for the three and nine months ended September

30, 2022 were higher compared to revenues for the three and nine months ended September 30, 2021 due to an increase from our vertically

integrated B2B and B2C e-commerce distribution platform called Qplash (Qplash sells goods on both Amazon and Shopify), a number of retail

chain authorizations has led to increased distribution on the beverage portfolio and a price increase on CdV.

Cost of Goods Sold

Cost of goods sold for the three and six months ended

June 30, 2022 were higher compared to cost of goods sold for the three and six months ended June 30, 2021.

The increase in cost of goods

sold is primarily due to higher sales at Qplash, incremental volumes in the beverage portfolio and higher supply chain costs on both ingredients

Cost of goods sold for the three and nine months

ended September 30, 2022 were higher compared to cost of goods sold for the three and nine months ended September 30, 2021.

increase in cost of goods sold is primarily due to higher sales at Qplash, incremental volumes in the beverage portfolio and higher

supply chain costs on both ingredients and freight.

Operating Expenses

Operating expenses for the three months ended June

30, 2022 were lower compared to the three months ended June 30, 2021 due to a decrease in share based compensation partially offset by

increases in marketing spend.

Operating expenses for the six months ended June 30, 2022 were higher compared to the six months ended June

30, 2021 driven by an increase in sales and marketing cost partially offset by lower non-cash compensation for services cost

Operating expenses for the three months ended September

30, 2022 were lower compared to the three months ended September 30, 2021 due to a decrease in share based compensation partially offset

by increases in marketing expenses.

Operating expenses for the nine months ended September 30, 2022 were higher compared to the nine months

ended September 30, 2021 driven by an increase in sales and marketing cost partially offset by lower non-cash compensation for services

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.

Interest Expense

Interest expenses for the three and six months ended

June 30, 2022 were lower compared to the three and six months ended June 30, 2021 due to the paydown of notes payable.

The net loss for the three months ended June 30, 2022

was lower compared to the three months ended June 30, 2021.

The decrease in the net loss is due to our lower operating expenses and an

increase in revenues.

The net loss for the six months ended June 30, 2022 was higher compared to the six months ended June 30, 2021.

increase in the net loss is due to our higher cost of goods sold and operating expenses against the increase in revenues.

AND CAPITAL RESOURCES

is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate

on an ongoing basis.

Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable

and accounts payable and capital expenditures.

As of June 30, 2022, we had total cash and cash equivalents

of $4,206,208 as compared with $4,181,383 at December 31, 2021.

Net cash used for operating activities during the

six months ended June 30, 2022 was $7,107,851 as compared to the net cash used by operating activities for the six months ended June

30, 2021 of $7,673,122.

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

incurred in connection with the company’s shelf registration statement on Form S-3.

For the period ended June 30, 2022 and 2021, we did

not use or receive cash relating to investing activities.

Net cash provided by financing activities during the

six months ended June 30, 2022 was $7,132,676 compared to $19,477,363 provided from financing activities for the six months ended June

During the six months ended June 30, 2022, we received $9,203,074 from investors from the Company Shelf Registration Statement

on Form S-3, which was offset by repayments to debt holders of $942,398 and financing fees associated with the Shelf Registration Statement

Royalty Payments:

We have a licensing agreement with ABG TapouT, LLC

Interest expenses for the three and nine months

ended September 30, 2022 were lower compared to the three and nine months ended September 30, 2021 due to the paydown of notes

The net loss for the three months ended September

30, 2022 was lower compared to the three months ended September 30, 2021.

The decrease in the net loss is due to our lower operating

expenses and an increase in revenues.

The net loss for the nine months ended September 30, 2022 was lower compared to the nine

months ended September 30, 2021.

The decrease in the net loss is due to our increase in e-commerce revenue and lower operating

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate

funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis.

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

capital expenditures.

As of September 30, 2022, we had total cash

and cash equivalents of $2,601,270 as compared with $4,181,383 at December 31, 2021.

Net cash used for operating activities during

the nine months ended September 30, 2022 was $10,626,135 as compared to the net cash used by operating activities for the nine

months ended September 30, 2021 of $11,615,297.

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

increases in inventory and costs incurred in connection with the company’s shelf registration statement on Form S-3.

For the nine months ended September 30, 2022, an SUV was

purchased and financed with a loan.

We did not use or receive cash relating to investing activities during the nine months ended September

Net cash provided by financing activities during

the nine months ended September 30, 2022 was $9,091,442 compared to $19,597,565 provided from financing activities for the nine

months ended September 30, 2021.

During the nine months ended September 30, 2022, we received $12,300,000 from investors from the

Company Shelf Registration Statement on Form S-3, which was offset by repayments to debt holders of $1,285,861 and financing fees

associated with the Shelf Registration Statement $1,738,896.

Inventory increased for the three months ended September

in preparation to fulfil orders related to new retail chain authorizations.

CONTRACTUAL OBLIGATIONS

Minimum Royalty Payments:

We have a licensing agreement with ABG TapouT,

LLC (“TapouT”).

Under the licensing agreement, we have minimum royalty payments to TapouT for $653,400 in 2022.

Purchase Commitments :

Sheet Arrangements

Inventory Purchase Commitments :

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements

(as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our

financial condition, revenue or expenses, results of operations, liquidity, and capital expenditures or capital resources.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

required for Smaller Reporting Companies.

(as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect

on our financial condition, revenue or expenses, results of operations, liquidity, and capital expenditures or capital resources.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for Smaller

Reporting Companies.

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 2. Management’s Discussion and Analysis