What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-06-06 · 534 added, 463 removed, 285 unchanged (78% of the section changed)

2 unchanged sentences

Condensed Consolidated Financial Statements

March 31, 2023

Splash Beverage Group,

Consolidated Balance Sheets

March 31, 2023 and December 31, 2022

June 30, 2023

Splash Beverage Group, Inc.

Condensed Consolidated Balance Sheets

June 30, 2023 and December 31, 2022

December 31, 2022

Current assets:

and cash equivalents

receivable, net

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses

Other receivables

Total current

Total current assets

Non-current assets:

in Salt Tequila USA, LLC

lease right of use asset

and equipment, net

Total non-current

and Stockholders’ Equity

Intangible assets, net

Investment in Salt Tequila USA, LLC

Operating lease right of use asset

Property and equipment, net

Total non-current assets

Liabilities and Stockholders’ Equity

Current liabilities

payable and accrued expenses

to issue shares

lease liabilities - current

Notes payable,

current portion

Accrued interest

Total current

Accounts payable and accrued expenses

Liability to issue shares

Operating lease liabilities - current

Notes payable, current portion

Shareholder advances

Due to related party

Accrued interest payable

Total current liabilities

Long-term liabilities:

Notes payable

lease liabilities - noncurrent

Total long-term

Operating lease liabilities - noncurrent

Total long-term liabilities

Total liabilities

Stockholders’ equity:

Preferred stock, $ 0.001

par value, 5,000,000

shares authorized, no

shares issued

Common Stock,

par, 300,000,000

shares authorized, 41,085,520

shares issued, 41,085,520

shares outstanding at March 31, 2023 and December

paid in capital

other comprehensive loss

Preferred stock, $ 0.001 par value, 5,000,000 shares authorized, no shares issued

Common Stock, $ 0.001 par, 300,000,000 shares authorized, 42,802,186 shares issued, 42,802,186 shares outstanding at June 30, 2023 and 41,085,520 shares issued, 41,085,520 shares outstanding at December 31, 2022

Additional paid in capital

Accumulated other comprehensive loss

Accumulated deficit

( 121,670,574 )

( 112,331,027 )

Total stockholders’

Total liabilities

and stockholders’ equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part

1 unchanged sentence

Splash Beverage Group, Inc.

Consolidated Statements of Operations and Comprehensive Loss

For the Three Months Ended March 31, 2023 and 2022

Three months ended March 31,

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three and Six Months Ended June 30, 2023 and 2022

Three months ended June 30

Six months ended June 30,

Cost of goods sold

8 unchanged sentences

Other income/(expense):

Amortization of debt discount

Interest income

Interest expense

Total other expense

Other Income/Expense

Amortization of debt discount

Total other income/(expense)

Provision for income taxes

Net loss from continuing operations, net of tax

Net loss from discontinued operations, net of tax

Other comprehensive loss foreign currency translation loss, net of tax

Total comprehensive loss

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

Gain on sale of discontinued operations

Income of discontinued operations

Other Comprehensive Income (Loss)

Foreign currency translation loss

Total Comprehensive Income (Loss)

(Loss) per share - continuing operations

Basic and dilutive

Basic and diluted

Weighted average number of common shares outstanding - continuing operations

Basic and dilutive

Loss per share - discontinued operations

Basic and dilutive

Weighted average number of common shares outstanding - discontinued operations

Basic and dilutive

Basic and diluted

The accompanying notes are an integral part

3 unchanged sentences

Statement of Changes in Stockholders’ Equity

For the three months ended March 31, 2023

Common Shares

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

For the Three and Six months ended June

30, 2023 and 2022

Treasury Stock

Additional Paid-In

Stockholders’ Equity

Balances at December 31, 2021

( 90,640,557 )

Issuance of common stock on convertible instruments

Issuance of warrants and options for services

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 )

Balances at December 31, 2022

$ 121,632,546

Common stock issuable and beneficial conversion feature on convertible 12-month

promissory note

$ ( 112,331,026 )

Common stock issuable and beneficial conversion feature on convertible 12-month promissory note

Share based compensation

Accumulated Comprehensive loss – translation, net

( 3,729,299 )

Balances at March 31, 2023

$ 123,634,774

$ ( 116,060,325 )

Issuance of common stock on convertible instruments

Share based compensation

Issuance of common stock for services

Issuance of warrants on convertible instruments

Accumulated Comprehensive loss – translation, net

( 5,610,249 )

Balances at June 30, 2023

$ 125,635,624

$ ( 121,670,574 )

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Splash Beverage Group,

Condensed Consolidated Statement

For the Three Months Ended March

31, 2023 and 2022

Splash Beverage Group, Inc.

Condensed Consolidated Statement Cash Flows

For the Six Months Ended June 30, 2023 and 2022

$ ( 9,339,548 )

$ ( 11,753,264 )

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

2 unchanged sentences

ROU assets, net

Beneficial conversion

Liability to issue shares

Other noncash changes

Gain from sale of discontinued operation

Common stock issued for services

Non-cash financing service

Non-cash share-based compensation

6 unchanged sentences

Net cash used in operating activities - continuing operations

Net cash provided by operating activities - discontinued operations

( 6,522,091 )

( 7,107,851 )

Cash flows from investing activities:

3 unchanged sentences

Proceeds from issuance of common stock

Cash advance from related party

Cash advance from shareholder

Proceeds from convertible 12-month promissory note and 1,500,000 restricted shares

Proceeds from convertible 12-month promissory note and 1,500,000 restricted shares issuance

Principal repayment of debt

2 unchanged sentences

Net change in cash and cash equivalents

( 3,528,510 )

Cash and cash equivalents, beginning of year

4 unchanged sentences

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

Non-cash debt discount in the form of issuance of shares and beneficial

conversion feature in conjunction with convertible notes

Non-cash debt discount in the form of issuance of shares and beneficial conversion feature in conjunction with convertible notes

The accompanying notes are an integral part

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Note 1 – Business Organization and Nature of Operations

Beverage Group, Inc.

(the “Company”, “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.

Through its division Qplash, Splash’s distribution reach

includes e-commerce access to both business-to-business (B2B) and business-to-consumer (B2C) customers.

Qplash markets well known beverage

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

Splash Beverage Group, Inc.

(the “Company”,

“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.

Through its division Qplash, Splash’s distribution reach includes e-commerce access

to both business-to-business (B2B) and business-to-consumer (B2C) customers.

Qplash markets well known beverage brands to customers

throughout the US that prefer delivery direct to their office, facilities, and or homes.

Summary of Significant Accounting Policies

of Accounting

accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted

in the United States (“U.S.

GAAP”), and the requirements of the U.S.

Securities and Exchange Commission (the “SEC”)

for interim reporting.

As permitted under those rules, certain footnotes or other financial information that are normally required by

Basis of Accounting

The accompanying condensed consolidated financial statements have been prepared

in accordance with accounting principles generally accepted in the United States (“U.S.

GAAP”), and the requirements of the

Securities and Exchange Commission (the “SEC”) for interim reporting.

As permitted under those rules, certain footnotes

or other financial information that are normally required by U.S.

GAAP can be condensed or omitted.

Accordingly, they do not include all of the information and footnotes normally included in financial

statements prepared in conformity with U.S.

They should be read in conjunction with the consolidated financial statements and notes

thereto included in the Company’s 2022 Annual Report on Form 10-K, filed with the SEC on March 31,2023 (the “Form 10-K”).

accompanying condensed consolidated financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments)

that management considers necessary for a fair presentation of its condensed financial position and results of operations for the interim

periods presented.

The results of operations for the interim periods are not necessarily indicative of the results that may be expected

for the entire year.

Accordingly, they do not include all

the information and footnotes normally included in financial statements prepared in conformity with U.S.

They should be read in

conjunction with the consolidated financial statements and notes thereto included in the Company’s 2022 Annual Report on Form 10-K,

filed with the SEC on March 31,2023 (the “Form 10-K”).

The accompanying condensed consolidated financial

statements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessary

for a fair presentation of its condensed financial position and results of operations for the interim periods presented.

of operations for the interim periods are not necessarily indicative of the results that may be expected for the entire year.

Basis of Presentation and Consolidation

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Holdings LLC (“International”), Splash Mex SA de CV (“Splash Mex”), Canfield Medical Supply, Inc.

(“CMS”) (as discontinued

operations), and Copa di Vino Wine Group, Inc.

(as discontinued operations), and Copa di Vino Wine Group, Inc.

(“Copa di Vino”).

All intercompany balances have been eliminated in

consolidation.

Our investment in Salt Tequila USA, LLC is carried

at cost less impairment, the investment does not have a readily determinable fair value.

Certain reclassifications have been made to the

prior period financial statements to conform to the December 31, 2022 audited financial statement and the current period

classifications.

In the three months ending March 31, 2022 the Company reclassified $ 459,260

from cost of goods sold to other general and administrative cost in the condensed consolidated statement of operations and

comprehensive loss, $ 126,437

of shipping and handling and $ 332,823

of Amazon selling fees.

These reclassifications had no impact on net loss.

All intercompany balances have been

eliminated in consolidation.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Our investment in Salt Tequila USA, LLC is

carried at cost less impairment, the investment does not have a readily determinable fair value.

Certain reclassifications have been made to

the prior period financial statements to conform to the December 31, 2022 audited financial statement and the current period classifications.

In the three months ended June 30, 2022, the Company reclassified $ 676,510 from cost of goods sold to other general and administrative

cost in the condensed consolidated statement of operations and comprehensive loss, which consisted of $ 299,653 of shipping and

handling and $ 376,857 of Amazon selling fees.

In the six months ended June 30, 2022, the Company reclassified $ 1,135,655 from cost

of goods sold to other general and administrative cost in the condensed consolidated statement of operations and comprehensive

loss, which consisted of $ 425,975 of shipping and handling and $ 709,680 of Amazon selling fees.

These reclassifications had no

impact on net loss.

Use of Estimates

1 unchanged sentence

statements in conformity with U.S.

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 condensed consolidated financial statements

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

Actual results could differ from those estimates.

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 condensed consolidated financial

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

Actual results could differ from those

Cash Equivalents and Concentration

of Cash Balance

The Company considers all highly liquid

securities with an original maturity of three months or less to be cash equivalents.

The Company had no

cash equivalents at March 31, 2023 or December 31, 2022.

The Company cash in bank deposit amounts, at times,

may exceed federally insured limits of $250,000.

At March 31, 2023 the Company had $ 271,743 in excess of the federally insured limits.

bank deposit amounts in Mexico, $ 2,051 , are uninsured.

The Company considers all highly liquid securities

with an original maturity of three months or less to be cash equivalents.

The Company had no cash equivalents at June 30, 2023

or December 31, 2022.

The Company’s cash on deposit with financial

institutions, at times, may exceed federally insured limits of $250,000.

At June 30, 2023 the Company had $ 56,836 in excess of

the federally insured limits.

The Company bank deposit amounts in Mexico of $ 2,168 , are uninsured.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated

Financial Statements

Notes to the Condensed

Consolidated Financial Statements

Note 2 – Summary of Significant

4 unchanged sentences

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

Company establishes 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, 2023 and December 31, 2022, our accounts receivable amounts are reflected net

of allowances of $ 13,797

and $ 13,683 ,

respectively.

Inventory is stated at the lower of cost or net realizable value, accounted

for using the weighted average cost method.

The inventory balances at March 31, 2023 and December 31, 2022 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.

The Company 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.

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

amount of our reserve was $ 0 and $ 66,146 at March 31, 2023 and December

31, 2022, respectively.

The Company establishes 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, 2023 and December 31, 2022, our accounts receivable amounts are

reflected net of allowances of $ 24,045 and $ 13,683 , respectively.

Inventory is stated at the lower of cost or

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

The inventory balances at June 30, 2023 and December

31, 2022 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.

The Company 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.

The Company manages inventory levels and purchase commitments

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

The amount of our reserve was $ 0 and $ 66,146 at

June 30, 2023 and December 31, 2022, respectively.

Property and Equipment

The Company 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.

The Company records property and equipment

at cost when purchased.

Depreciation is recorded for property, equipment, and software using the straight-line method over the

estimated economic useful lives of assets, which range from 3 - 39 years.

Company management reviews the recoverability of all long-lived

assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a

long-lived asset might not be recoverable.

Depreciation expense totaled $ 31,665 and $ 43,534

for the three months ended March 31, 2023 and March 31, 2022, respectively.

Property and equipment as of March 31, 2023 and December

for the three months ended June 30, 2023 and June 30, 2022, respectively.

For the six months ended June 30, 2023 and June 30,

2022 depreciation expense totaled $ 78,366 and $ 74,229 respectively.

Property and equipment as of June 30, 2023 and December 31,

2022 consisted of the following:

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Fair Value of Financial Instruments

Financial Accounting Standards (“FASB”)

Financial Accounting Standards Board (“FASB”)

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

5 unchanged sentences

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

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

Unobservable inputs for the asset or

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.

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 March 31, 2023 and December 31, 2022, consistent

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

on the condensed consolidated financial statements approximate fair values at June 30, 2023 and December 31, 2022, 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 Statements

Notes to the Condensed

Consolidated Financial Statements

Summary of Significant Accounting Policies, continued

4 unchanged sentences

revenue in an amount that reflects what the Company expects to receive in exchange for the transfer of goods or services to customers.

The Company recognizes revenue when the Company’s performance

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

Product sales occur for the Splash Beverage and E-commerce

businesses once control of the Company’s products are transferred upon delivery to the customer.

Revenue is measured as the amount

of consideration that the Company expects to receive in exchange for transferring goods, and revenue is presented net of provisions for

customer returns and allowances.

The amount of consideration the Company receives and revenue the Company recognizes varies with changes

in customer incentives offered to the Company’s customers and their customers.

Sales taxes and other similar taxes are excluded

from revenue.

Shipping and Handling —The Company

includes costs associated with the outbound shipping and handling of finished goods as a component of other general and administrative

expenses in the consolidated statements of operations and comprehensive loss.

Shipping and handling are not separately billed to

the customers and are included in fees charged to the customer and are recorded as revenue when earned.

The Company recognizes revenue when the Company’s

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

Product sales occur for the Splash Beverage and

E-commerce businesses once control of the Company’s products are transferred upon delivery to the customer.

Revenue is measured

as the amount of consideration that the Company expects to receive in exchange for transferring goods, and revenue is presented net of

provisions for customer returns and allowances.

The amount of consideration the Company receives and revenue the Company recognizes varies

with changes in customer incentives offered to the Company’s 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.

In the three months ending March 31, 2022 the Company reclassified $ 459,260 from cost of goods sold to

other general and administrative cost in the condensed consolidated statement of operations and comprehensive loss, $ 126,437

of shipping and handling and $ 332,823

of Amazon selling fees.

Cost of goods sold include the costs of products,

packaging, transportation, warehousing, and costs associated with valuation allowances for expired, damaged or impaired inventory.

Other General and Administrative Expenses

Other General and Administrative expenses includes

Amazon selling fees, royalty cost for selling TapouT, cost associated with the outbound shipping and handling of finished goods,

insurance cost, consulting cost, legal and audit fees, Investor Relations expenses, travel & entertainment expenses, occupancy

cost and other cost.

Company incurred $ 1,374,328

and $ 803,318

of shipping and handling costs for the three

months ending March 31, 2023 and 2022 respectively.

These amounts, which primarily relate to shipping, are recorded in other general

and administrative expenses.

Other General and Administrative expenses include

Amazon selling fees, royalty cost for selling TapouT, cost associated with the outbound shipping and handling of finished goods, insurance

cost, consulting cost, legal and audit fees, Investor Relations expenses, travel & entertainment expenses, occupancy cost, shipping

and handling cost and other cost.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

and Handling Costs

The Company includes costs associated with the outbound

shipping and handling of finished goods as a component of other general and administrative expenses in the consolidated statements of

operations and comprehensive loss.

Shipping and handling are not separately billed to the customers and are included in fees charged to

the customer and are recorded as revenue when earned.

The Company incurred $ 1,338,770 and $ 1,129,705

of shipping and handling costs for the three months ending June 30, 2023 and 2022 respectively.

The Company incurred $ 2,737,205

and $ 1,992,630 of shipping and handling costs for the six months ending June 30, 2023 and 2022 respectively.

These amounts, which

primarily relate to shipping, are recorded in other general and administrative expenses.

Stock-Based Compensation

2 unchanged sentences

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.

The Company uses the Black-Scholes option pricing model to determine the

fair value of stock-based awards.

The Company 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

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.

The Company uses the Black-Scholes option pricing model to

determine the fair value of stock-based awards.

The Company uses 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.

The Company records a valuation allowance when it is not more likely

than not that the deferred tax assets will be realized.

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.

The Company records 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

4 unchanged sentences

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

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, 2023 and December 31, 2022.

The Company’s

federal, state and local income tax returns prior to fiscal year 2019 are closed and management continually evaluates expiring

statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.

The Company recognizes interest and penalties associated

with tax matters, if any, as part of operating expenses and includes accrued interest and penalties with accrued expenses in the condensed

interim balance sheets.

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 June 30, 2023 and December 31, 2022.

The Company’s federal, state and local

income tax returns prior to fiscal year 2019 are closed and management continually evaluates expiring statutes of limitations,

audits, proposed settlements, changes in tax law and new authoritative rulings.

The Company recognizes interest and penalties

associated with tax matters, if any, as part of operating expenses and includes accrued interest and penalties with accrued expenses

in the condensed interim balance sheets.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated

Financial Statements

Notes to the Condensed

Consolidated Financial Statements

Note 2 – Summary of Significant

6 unchanged sentences

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

The Company conducts advertising for the

promotion of its products.

The Company conducts advertising for the promotion

of its products.

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

recorded advertising expense of $ 195,048

for the three months ended March 31, 2023 and 2022, respectively.

For the three months

ended June 30, 2023 and June 30, 2022 the Company recorded advertising expenses of $ 194,415 and $ 131,327 , respectively.

recorded advertising expense of $ 389,462 and $ 218,917 for the six months ended June 30, 2023 and 2022, respectively.

Goodwill and Intangibles Assets

14 unchanged sentences

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated

Financial Statements

Notes to the Condensed

Consolidated Financial Statements

Note 2 – Summary of Significant

1 unchanged sentence

Long-lived assets

The Company evaluates long-lived assets for impairment

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.

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.

The Company discloses a measurement of segment profit

or loss that its chief operating decision maker (CODM) uses to assess segment performance and to make decisions about resource allocations

for each reportable segment.

The Company evaluates long-lived assets for

impairment 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 to sell.

The Company estimates fair value by obtaining market appraisals from

third party brokers or using other valuation techniques.

Segment reporting

The Company discloses a measurement of segment

profit or loss that its chief operating decision maker (CODM) uses to assess segment performance and to make decisions about resource

allocations for each reportable segment.

Recent Accounting Pronouncements

On January 1, 2023, the Company adopted FASB issued

2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires the immediate recognition

of management’s estimates of current and expected credit losses.

Adoption of this standard did not have a material impact on the

Company’s condensed consolidated financial statements or disclosures.

Management does not believe that any recently issued,

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

As new accounting pronouncements

are issued, the Company will adopt those that are applicable under the circumstances.

Foreign Currency Gains/Losses

On January 1, 2023, the Company adopted FASB

issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires the

immediate recognition of management’s estimates of current and expected credit losses.

Adoption of this standard did not

have a material impact on the Company’s condensed consolidated financial statements or disclosures.

Management does not believe that any recently

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

accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

Foreign Currency Gains/Losses

foreign subsidiaries’ functional currency is the local currency of operations and the net assets of foreign operations

are translated into U.S.

Foreign Currency Gains/Losses — foreign

subsidiaries’ functional currency is the local currency of operations and the net assets of foreign operations are translated

dollars using current exchange rates.

Gains or losses from these translation adjustments are

included in the condensed consolidated statement of operations and other comprehensive loss as foreign currency translation

gains or losses.

Translation gains and losses that arise from the translation of net assets from functional currency to the

reporting currency, as well as exchange gains and losses on intercompany balances, are included in foreign currency

translation in the condensed consolidated statement of operations and comprehensive loss.

The Company incurred foreign

currency translation net loss of $ 1,609 and

the three months ending March 31, 2023 and 2022 respectively.

and Going Concern Considerations

These condensed consolidated financial statements have been prepared assuming

the Company will be able to continue as a going concern.

The Company historically has incurred significant losses and negative cash flows

from operation since inception and had net-loss of approximately $3.7 million for three-month period ended March 31, 2023 and accumulated

deficit of approximately $116.1 million through March 31, 2023.

During the three-month period ended March 31, 2023, the Company’s

net cash used in operating activities totaled approximately $4.1 million.

If sales volumes do not meet the Company’s projections, expenses

exceed the Company’s expectations, or the Company’s plans change, the Company may be unable to generate enough cash flow from

operations to cover our working capital requirements.

In such case, the Company may be required to adjust its business plan, by reducing

marketing, lower its working capital requirements and reduce other expenses or seek additional financing.

In order to have sufficient cash to fund our operations, the Company will

need to raise additional equity or debt capital.

There can be no assurance that additional funds will be available when needed from any

source or, if available, will be available on terms that are acceptable to us.

The Company will be required to pursue sources of additional

capital through various means, including debt or equity financings.

Future financings through equity investments are likely to be dilutive

to existing stockholders.

Also, the terms of securities the Company may issue in future capital transactions may be more favorable for

new investors.

Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other derivative securities,

and the issuances of incentive awards under equity employee incentive plans, which may have additional dilutive effects.

Company may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting

fees, printing and distribution expenses and other costs.

The Company may also be required to recognize non-cash expenses in connection

with certain securities the Company may issue, such as convertible notes and warrants, which will adversely impact our financial condition.

Our ability to obtain needed financing may be impaired by such factors as the capital markets and our history of losses, which could impact

the availability or cost of future financings.

If the amount of capital the Company is able to raise from financing activities together

with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that the Company reduce our operations

Gains or losses from these translation adjustments are included in the condensed

consolidated statement of operations and other comprehensive loss as foreign currency translation gains or losses.

gains and losses that arise from the translation of net assets from functional currency to the reporting currency, as well as exchange

gains and losses on intercompany balances, are included in foreign currency translation in the condensed consolidated statement

of operations and comprehensive loss.

The Company incurred foreign currency translation net loss of $ 15,773 and $ 6,570 for the

three months ended June 30, 2023 and 2022 respectively and net loss of $ 17,382 and $ 6,570 for the six months ending June 30, 2023

and 2022 respectively.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Liquidity and Going Concern Considerations

These condensed consolidated financial statements

have been prepared assuming the Company will be able to continue as a going concern.

The Company historically has incurred significant

losses and negative cash flows from operation since inception and had net-loss of approximately $9.3 million for six-month period

ended June 30, 2023 and accumulated deficit of approximately $121.7 million through June 30, 2023.

During the six-month period

ended June 30, 2023, the Company’s net cash used in operating activities totaled approximately $6.5 million.

If sales volumes do not meet the Company’s

projections, expenses exceed the Company’s expectations, or the Company’s plans change, the Company may be unable to

generate enough cash flow from operations to cover our working capital requirements.

In such case, the Company may be required

to adjust its business plan, by reducing marketing, lower its working capital requirements and reduce other expenses or seek additional

In order to have sufficient cash to fund our

operations, the Company will need to raise additional equity or debt capital.

There can be no assurance that additional funds will

be available when needed from any source or, if available, will be available on terms that are acceptable to us.

The Company will

be required to pursue sources of additional capital through various means, including debt or equity financings.

Future financings

through equity investments are likely to be dilutive to existing stockholders.

Also, the terms of securities the Company may issue

in future capital transactions may be more favorable for new investors.

Newly issued securities may include preferences, superior

voting rights, the issuance of warrants or other derivative securities, and the issuances of incentive awards under equity employee

incentive plans, which may have additional dilutive effects.

Further, the Company may incur substantial costs in pursuing future

capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and

The Company may also be required to recognize non-cash expenses in connection with certain securities the Company

may issue, such as convertible notes and warrants, which will adversely impact our financial condition.

Our ability to obtain needed

financing may be impaired by such factors as the capital markets and our history of losses, which could impact the availability

or cost of future financings.

If the amount of capital the Company is able to raise from financing activities together with our

revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that the Company reduce our operations

accordingly, the Company may be required to curtail or cease operations.

As a result, there is uncertainty regarding the Company’s ability

to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability

to continue as a going concern for at least twelve months from the date of the consolidated financial

statements being available to be issued.

As a result, there is uncertainty regarding the Company’s

ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s

ability to continue as a going concern for at least twelve months from the date of the consolidated financial statements being

available to be issued.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated

Financial Statements

Note 3 – Notes Payable, Related

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

Notes payable are generally nonrecourse and

Notes to the Condensed

Consolidated Financial Statements

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

Notes payable are generally non-recourse and

secured by all Company owned assets.

6 unchanged sentences

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

loan requires payments of 3.75% through November 2022 and 4.00% through September 2025 of the previous month’s revenue.

is due September 2025.

The loan requires payments of 3.75 % through November 2022 and 4.00 % through September 2025 of the previous month’s revenue.

Note is due September 2025.

Note is guaranteed by a related party see note 6.

In April 2021, the Company entered into a six-month 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 had an original maturity of October 2021 with principal and interest due at maturity with conversion price of $ 3.30 per share.

The loan was extended to October 2023.

In April 2021, the Company entered into a six-month 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 had an original maturity of October 2021 with principal and interest due at maturity with conversion price of $ 3.30 per share.

The loan was extended to October 2023.

In May 2021, the Company entered into a six-month 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 had an original maturity of October 2021 with principal and interest due at maturity with conversion price of $ 3.30 per share.

The loan was extended to October 2023.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

In May 2021, the Company entered into a six-month 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 had an original maturity of October 2021 with principal and interest due at maturity with conversion price of $ 3.30 per share.

The loan was extended to October 2023.

2 unchanged sentences

The note included 100 % warrant coverage.

The loan matures in June 2024 with principal and interest due at maturity.

The loan matures in June 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share .

In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ 250,000 .

The note included 100 % warrant coverage.

The loan matures in June 2024 with principal and interest due at maturity.

The loan matures in June 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share.

In In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ 1,000,000 .

The note included 100 % warrant coverage.

The loan matures in June 2024 with principal and interest due at maturity.

The loan matures in June 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share.

In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ 250,000 .

The note included 100 % warrant coverage.

The loan matures in June 2024 with principal and interest due at maturity.

The loan matures in June 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share .

In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ 250,000 .

The note included 100 % warrant coverage.

The loan matures in June 2024 with principal and interest due at maturity.

The loan matures in June 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share.

In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ 250,000 .

The note included 100 % warrant coverage.

The loan matures in June 2024 with principal and interest due at maturity.

The loan matures in June 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share .

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ 400,000 .

The note included 100 % warrant coverage.

The loan matures in June 2024 with principal and interest due at maturity.

The loan matures in June 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share.

In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ 1,500,000 .

The note included 100 % warrant coverage.

The loan matures in June 2024 with principal and interest due at maturity.

In February 2023, the Company entered into a twelve-month loan with an entity in

the amount of $ 2,000,000 .

The convertible note included 750 additional shares for each $ 1,000

The loan matures in February 2024.

The loan matures in June 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share.

In February 2023, the Company entered into a twelve-month loan with an entity in the amount of $ 2,000,000 .

The convertible note included 750 additional shares for each $ 1,000 purchased.

The loan matures in February 2024 with conversion price of $ 1.00 per share.

In May 2023, the Company entered into an eighteen-month loan with an individual in the amount of $ 100,000 .

The note included 50 % warrant coverage.

The loan matures in November 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share .

In May 2023, the Company entered into an eighteen-month loan with an individual in the amount of $ 400,000 .

The note included 50 % warrant coverage.

The loan matures in November 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share.

In May 2023, the Company entered into an eighteen-month loan with an individual in the amount of $ 200,000 .

The note included 50 % warrant coverage.

The loan matures in November 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share .

In May 2023, the Company entered into an eighteen-month loan with an individual in the amount of $ 100,000 .

The note included 50 % warrant coverage.

The loan matures in November 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share .

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

In June 2023, the Company entered into an eighteen-month loan with an individual in the amount of $ 250,000 .

The note included 50 % warrant coverage.

The loan matures in December 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share .

In June 2023, the Company entered into an eighteen-month loan with an individual in the amount of $ 100,000 .

The note included 50 % warrant coverage.

The loan matures in December 2024 with principal and interest due at maturity with conversion price of $ 1.00 per share .

Total notes payable

Less notes discount

( 3,437,072 )

( 1,898,265 )

Less current portion

( 1,275,540 )

( 1,080,257 )

Long-term notes payable

Interest expense on notes payable was $ 170,078

and $ 81,700 for the three months ended March 31, 2023 and 2022, respectively.

Accrued interest was $ 123,990 at March 31, 2023.

for the three months ended June 30, 2023 and 2022, respectively.

Interest expense on notes payable was $ 333,985

and $ 150,715

for the six months ended June 30, 2023 and 2022, respectively.

Accrued interest was $ 137,743 and $ 300,658

for the three months and six months ended June 30, 2023.

The Company’s effective interest rate was 33 % for the six months

ended June 30, 2023.

As of June 30, 2023, the Company’s

convertible note balances are convertible into 7,697,968

shares of common stock.

Shareholder Advances

As of February 23, 2023, the Company received

a shareholder advance for $ 200,000 with a 12 % interest rate and is repayable on February 24, 2024.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated

Financial Statements

Notes to the Condensed

Consolidated Financial Statements

Note 4 – Licensing Agreement and

Royalty Payable

The Company has a licensing agreement with ABG TapouT, LLC (“TapouT”),

providing the Company with licensing rights to the brand “TapouT” (i)energy drinks, (ii) energy bars, (iii) coconut water,

(iv) electrolyte gum/chews, (v) energy shakes, (vi) powdered drink mix, (viii) water (including enhanced water), (vii) energy shots, (viii)

teas, and (ix) sports drinks sold in the North America (including US Territories and Military Bases), United Kingdom, Brazil, South Africa,

Australia, Scandinavia, Peru, Colombia, Chile and Guatemala.

The Company is required to pay a 6% royalty on net sales, as defined, and

are required to make minimum monthly payments of $ 55,000 in 2023 and $ 54,450 in 2022.

There were no unpaid royalties at March 31, 2023.

The Company paid the guaranteed minimum royalty payments of $ 165,000

and $ 163,350

for the three months ended March 31, 2023 and 2022 respectively, which is included in general and administrative expenses

in the condensed consolidated statement of operations and comprehensive loss.

In connection with the Copa di Vino APA, the Company acquired the license

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

with 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

Amortization is approximately $31,000 annually until the license agreement is fully amortized in 2027.

The Company has a licensing agreement with

ABG TapouT, LLC (“TapouT”), providing the Company with licensing rights to the brand “TapouT” (i)energy

drinks, (ii) energy bars, (iii) coconut water, (iv) electrolyte gum/chews, (v) energy shakes, (vi) powdered drink mix, (viii) water

(including enhanced water), (vii) energy shots, (viii) teas, and (ix) sports drinks sold in the North America (including US Territories

and Military Bases), United Kingdom, Brazil, South Africa, Australia, Scandinavia, Peru, Colombia, Chile and Guatemala.

is required to pay a 6% royalty on net sales, as defined, and are required to make minimum monthly payments of $ 55,000 in 2023

and $ 54,450 in 2022.

There were no unpaid royalties at June 30,

The Company paid the guaranteed minimum royalty payments of $ 165,000 and $ 163,350 for the three months ended June 30, 2023

and 2022 respectively and $ 330,000 and $ 326,700 for the six months ending June 30, 2023 and 2022 respectively, which is included

in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss.

In connection with the Copa di Vino APA, the

Company acquired the license to certain patents from 1/4 Vin SARL (“1/4 Vin”).

On February 16, 2018, Copa di Vino entered

into three separate license agreements with 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 in 2027.

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

Note 5– Stockholders’ Equity

In February 2023, the Board of Directors approved

a private placement offering of 2,000,000 shares of the common stock of the Company, $0.001 value per share at a purchase price of $1.00

per share for aggregate gross proceeds of $2,000,000 (“SPA”).

As part of the SPA, each purchaser received additional

restricted shares equal to 750 units for every $1,000 purchased.

During the period ended June 30, 2023, the

Company entered into a private placement offering to

purchase convertible instruments that convert into the Company’s common stock up to an aggregate of $ 8,500,000 .

received gross proceeds of $ 1,150,000 from the issuance of convertible instruments with 1,150,000 shares and 575,000 warrants.

In the three months and six months ended June

30, 2023 the Company granted share-based awards to certain consultants totaling 116,666 shares of common stock at a weighted average

price of $1.10 and recognized share based compensation of $ 127,999 .

In the three months and six months ended June 30, 2023 the Company issued

100,000 shares in satisfaction of a $ 91,800 liability to issue shares recorded in December 2022.

Splash Beverage Group, Inc.

1 unchanged sentence

Note 5 – Stockholders’ Equity,

In July 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, 2022 and 2023,

the number of shares issuable under the 2020 plan increased by 1,679,812 and 2,054,276 shares, respectively.

In July 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 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 of Directors.

At January 1, 2023 and 2022, the number

of shares issuable under the 2020 plan increased by 2,054,276 and 1,679,812

shares, respectively.

The following is a summary of the Company’s

stock option activity during the quarter ended March 31, 2023:

Schedule of stock option activity

exercise price of outstanding stock options

stock option activity during the period ended June 30, 2023:

stock option activity

Stock options

Weighted average exercise

price of outstanding stock

average remaining life (Yrs)

Balance January 01, 2023 *

Balance March 31, 2023

Balance - June 30, 2023

Exercisable - June 30, 2023

These prices are reflective of the price modification made

on April 24, 2023.

In the three months ending June 30, 2023, the Company

granted 3,376,008

options to employees and directors at weighted average strike price of $ 1.13 ,

weighted average expected life of 6.0

years, weighted average volatility of 264.3 %,

weighted average risk-free rate of 3.6 %

and no dividend.

On April 24, 2023, the Company modified the price of 4,134,008

options to $ 1.12

from a weighted average price of $ 2.56 .

The options have a weighted average expected life of 6.3

years, weighted average volatility of 266.7 %,

weighted average risk-free rate of 3.6 %

Following ASC Topic 718 the Company recognized an incremental expense from the modification of the option pricing resulted

in an expense of $ 7,348

that was reflected in the quarter.

The grant date fair value of options granted during the six months ended June 30, 2023 was

$ 1,049,585 .

The Company recognized $ 724,991 of share-based compensation during the six months ended June 30, 2023.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

The following is a summary of the Company’s Warrant activity.

Schedule of warrant activity

Weighted average exercise

price of outstanding

remaining term (Yrs)

Balance December 31, 2022

Balance March 31, 2023

Exercisable –

March 31, 2023

During the three-month period ended March 31,

2023, the company granted 65,000 options to new employees under the 2020 plan.

The fair value of stock options granted in the

period has been measured at $ 149,999 using the Black-Scholes option pricing model with the following assumptions:

exercise price

expected life 10

years, expected volatility 228 %, expected dividends 0 %,

risk free rate 3.7 %.

Stock Issuable, Liability to Issue Stock and Shareholder Advances

On February 28, 2023, the Company entered into a securities

purchase agreement (the “Securities Purchase Agreement” or “SPA”) with an investor.

Pursuant to the Securities

Purchase Agreement, the Company issued a non-interest bearing, convertible 12-month promissory note (the “Note”) convertible

for up to 2,000,000 shares of the Company’s common stock and received aggregate gross proceeds of $ 2,000,000 .

The note has a Conversion

Price of $ 1 per share, subject to adjustments as provided in the Note.

Pursuant to the terms of the SPA, the Company is obligated to issue

1,500,000 restricted shares of restricted common stock to the investor at the time of funding of the note, which was not issued by March 31, 2023.

The per share value of the restricted shares at the

date of the SPA was $ 1.36 , the Company’s quoted stock price at that date, representing a total value of $ 2,000,000 .

The restricted

shares have been accounted for as a debt discount.

The debt discount was recorded at $ 1,786,468 , the amount of cash received from the

investor for the Note.

The discount is being amortized as an other expense over the 12 -month term of the Note.

also has an obligation to issue 100,000 shares

of common stock for legal and consulting services provided in connection with a potential acquisition.

These shares were

valued at $ 0.918 per

share, the quoted stock price at the date services were provided.

Outstanding balance for shareholder advances on

March 31, 2023 was $ 200,000 .

Balance - June 30, 2023

Note 6 – Related Parties

During the normal course of business, the Company

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

conjunction with the acquisition of Copa di Vino, the Company also entered into a Revenue Loan and Security Agreement (the “Loan

and Security Agreement”) by and among the Company, Robert Nistico, additional Guarantor and each of the subsidiary guarantors from

time-to-time party thereto (each a “Guarantor”, and, collectively, the “Guarantors”), and Decathlon Alpha IV,

During the normal course of business, the Company incurs expenses related to

services provided by the CEO for Company expenses paid by the CEO.

In conjunction with the acquisition of Copa di Vino, the Company also

entered into a Revenue Loan and Security Agreement (the “Loan and Security Agreement”) by and among the Company, Robert Nistico,

was an additional Guarantor and each of the subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and,

collectively, the “Guarantors”), and Decathlon Alpha IV, L.P.

(the “Lender”).

The Note Payable with a balance of $ 876,836

at March 31,2023.

The Note Payable had a balance outstanding

of $ 672,695 at June 30,2023.

On June 22, 2023, the Company received an interest

free short-term loan from the CEO for $ 250,000 .

The loan is expected to be repaid within the current year.

Note 7 – Investment in Salt Tequila

The Company has a marketing and distribution agreement

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

The Company has a 22.5 %

percentage ownership interest in SALT, this investment is carried at cost less impairment, the investment

does not have a readily determinable fair value.

The Company has a marketing and distribution

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

The Company has a 22.5 % percentage ownership

interest in SALT, this investment is carried at cost less impairment, the investment does not have a readily determinable fair

The Company has the right to increase our ownership to 37.5 %.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated

Financial Statements

Notes to the Condensed

Consolidated Financial Statements

Note 8 – Leases

The Company has various operating lease agreements primarily related to

real estate and office.

The Company has various operating lease agreements primarily related to real

estate and office space.

The Company’s real estate leases represent a majority of the lease liability.

2 unchanged sentences

Variable lease

costs were immaterial for the quarter ended March 31, 2023 and 2022.

A majority of the real estate leases include options to extend the

Management reviews all options to extend at the inception of the lease and account for these options when they are reasonably certain

of being exercised.

Operating lease expense is recognized on a straight-line basis over the

lease term and is included in operating expense on the Company’s condensed consolidated statement of operations and comprehensive

Operating lease cost was $ 93,328

and $ 92,788 during the period ended March 31, 2023 and 2022, respectively.

The following table sets for the maturities of our operating lease

liabilities and reconciles the respective undiscounted payments to the operating lease liabilities in the consolidated balance

sheet at December 31, 2022

costs were immaterial for the three months and six month period ended June 30, 2023 and 2022.

A majority of the real estate leases include

options to extend the lease.

Management reviews all options to extend at the inception of the lease and account for these options when

they are reasonably certain of being exercised.

Operating lease expense is recognized on a

straight-line basis over the lease term and is included in the Company’s condensed consolidated statement of operations and

comprehensive loss.

Operating lease cost was $ 182,658 and $ 175,734 during the six-month period ended June 30, 2023 and 2022, respectively.

The following table sets forth the maturities

of our operating lease liabilities and reconciles the respective undiscounted payments to the operating lease liabilities in the

consolidated balance sheet at June 30, 2023:

Schedule of operating lease liability

1 unchanged sentence

Operating Lease

2023 (Nine months remaining)

2023 (Six months remaining)

Amount representing imputed interest

3 unchanged sentences

The table below presents lease-related terms

and discount rates at March 31, 2023:

and discount rates at June 30, 2023:

Summary of lease related terms and discount rates

6 unchanged sentences

The Company has two reportable operating segments:

(1) the manufacture and distribution of non-alcoholic and alcoholic brand beverages, and (2) the e-commerce sale of beverages.

These operating

segments are managed separately and each segment’s major customers have different characteristics.

Segment Reporting is evaluated

by our Chief Executive Officer and Chief Financial Officer.

The Copa di Vino business is included

in our Splash Beverage Group segment.

(1) the manufacture and

distribution of non-alcoholic and alcoholic brand beverages, and (2) the e-commerce sale of beverages.

These operating segments are managed

respectively and each segment’s major customers have different characteristics.

Segment Reporting is evaluated by our Chief Executive

Officer and Chief Financial Officer.

Schedule of segment reporting information

March 31, 2023

March 31, 2022

Three Months Ended June 30

Six Months Ended June 30

Splash Beverage Group

Total revenues, net, continuing operations

Total revenues, net, discontinuing operations

Net revenues, continuing operations

Contribution after Marketing

March 31, 2023

March 31, 2022

Splash Beverage Group

$ ( 286,929 )

$ ( 459,775 )

Total contribution after marketing

6 unchanged sentences

$ ( 5,829,148 )

$ ( 7,676,270 )

$ ( 11,513,100 )

June 30, 2023

December 31, 2022

Splash Beverage Group

2 unchanged sentences

Note 10 – Commitment and Contingencies

The Company is 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

the Company 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.

The Company is 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 the Company does 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 11 – Subsequent Events

On May 2, 2023 the Company issued 1,500,000 shares

of common stock to the purchaser of the convertible promissory note issued on February 28, 2023.

The Company granted 375,000

options in April to Board Directors and 125,000

options in May to the new Board Director under the 2020 plan.

In May 2023 the Company received

approximately $ 0.8

In July 2023, the Company received approximately

$ 0.85 million from a Private Placement issuance of convertible notes.

The notes have an eighteen-month term, accrue interest at

12.0% are convertible into shares of common stock of the Company at $1.00 per share, and include and 50% warrant coverage.

These notes are part

of a Securities Purchase Agreement to raise up to $ 8.0

million to fund acquisitions, equipment purchases and working capital.

The notes have a twelve to eighteen-month term, accrue interest

at 12.0% and are convertible into shares of common stock of the Company at $1.00 per share, and include 50% warrant coverage.

In August 2023, the Company received approximately $ 1.1 million

from a Private Placement issuance of a convertible note.

The note has a twelve -month term, is non-interest bearing and is convertible

into shares of common stock of the Company at $ 1.00 per share, the note includes 500 shares for every $ 1,000 purchased in the note.

These notes are part of a Securities Purchase Agreement to raise up to $ 8.5 million to fund acquisitions, equipment purchases

and working capital.

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