What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-14 · 98 added, 85 removed, 56 unchanged (77% of the section changed)

28 unchanged sentences

(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”) 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.

Results of Operations

for the Three Months and Six Months Ended June 30, 2023 compared to Three Months and Six Months Ended June 30, 2022.

Net Revenues for the three months ended June 30, 2023 was $5,194,951 compared to revenues of $4,498,940 for the three

months ended June 30, 2022.

The $696,011 increase in sales is due to an increase from our vertically integrated B2B and B2C e-commerce

distribution platform called Qplash which increased $924,428 offset by a decline in sales in the beverage business of $228,417 driven

by phasing of purchases of Salt Tequila and Copa di Vino from our distributors.

Revenue for the six months ended June 30, 2023 was $11,017,678 compared to revenues

of $8,425,514 for the six months ended June 30, 2022.

The $2,592,164 increase in sales is driven by increases in both the e-commerce and

beverage businesses which increased $2,399,772 and $192,392 respectively.

Qplash increased revenue was based on expanded territory coverage,

new products being sold and increased cart size for customers.

The beverage business largest contributors to the increase in revenues

were TapouT and Pulpoloco.

Cost of Goods Sold

Cost of goods sold for the three months ended June

30, 2023 was $3,417,868 compared to cost of goods sold for the three months ended June 30, 2022 of $3,149,275.

The $268,593 increase in

cost of goods sold for the three-month period ended June 30, 2023 is driven by increased sales and product mix shifting to lower margin

items in e-commerce business.

Cost of goods sold for the six months ended June 30,

2023 was $7,479,096 compared to cost of goods sold for the six months ended June 30, 2022 of $5,784,701.

The $1,694,395 increase in cost

of goods sold for the six-month period ended June 30, 2023 is driven by increased sales in both the e-commerce and beverage business.

Improvement in cost of goods sold compared to net

revenue for the three month and six-month period ended June 30, 2023 versus June 30, 2022 is driven by higher margin products sold.

for the Three Months and Nine Months Ended September 30, 2023 compared to Three Months and Nine Months Ended September 30, 2022.

Three months ended September 30, 2023:

Revenue increased by 5.6%, over same quarter

last year $5,144,069 compared to $4,870,407.

The increase of $273,662 was due to:

· An increase from our e-commerce distribution platform called Qplash.

· Increase in the Energy and Salt brands

· Offset by a partial decline in sales in the Hydration, Copa and Pulpoloco brands

Nine months ended September 30, 2023:

Revenue increased by 21.6%, over same period

last year $16,161,747 compared to $13,295,921.

The increase of $2,865,826 was due to:

· An increase from our e-commerce distribution platform called Qplash.

· Increase in the Energy, Salt and Copa brands.

· Offset by a partial decline in sales in the Hydration and Pulpoloco brands.

Cost of Goods

Three months ended September 30, 2023:

Cost of goods sold increased by 24%, over the same quarter last year $3,847,202compared

to $3,101,807.

The increase of $745,395 was due to:

· Increase in sales

· Higher production costs in the Hydration brand

· Increase in cost associated with valuation allowances for expired, damaged, or impaired inventory.

Nine months ended September 30, 2023:

· Cost of goods sold increased by 27.5%, over the same nine months last year $11,326,298 compared

to $8,886,508.

The increase of $2,439,790 was due to:

· Increase in sales

· Higher production costs in the Hydration brand

· Increase in cost associated with valuation allowances for expired, damaged, or impaired inventory.

Operating Expenses

Operating expenses for the three months ended June 30, 2023 was $5,998,432 compared

to $7,178,813 for the three months ended June 30, 2022 a decrease of $1,180,381.

The decrease in operating expenses was primarily due

to non-cash expenses partially offset by increases for the incorporation of new staff, benefit cost, freight cost and Amazon selling fees.

Operating expenses for the six months ended June 30, 2023 was $11,214,852 compared

to $14,153,913 for the six months ended June 30, 2022 a decrease of $2,939,061.

Three months ended September 30:

Operating expenses for the three months ended

September 30, 2023, was $ 5,620,398 compared to $6,879,482 for the three months ended September 30, 2022, a decrease of $1,259,084.

The decrease in operating expenses was primarily due to a decrease in consulting fees.

Nine months ended September 30:

Operating expenses for the nine months ended

September 30, 2023, was $ 16,835,250 compared to $21,033,396 for the nine months ended September 30, 2022, a decrease of $4,198,146.

The decrease in operating expenses was primarily due to:

non-cash expenses partially offset by increases for the incorporation of new staff, benefit cost, marketing expense, freight cost and

Amazon selling fees.

· Decrease in consulting fees.

· Offset by increase in Employee cost due to new hires

· Offset by increase in e-commerce shipping and handling directly attributive to increase in e-commerce

Net Other Income and Expense

Interest expense for the three and six months ended

June 30, 2023 was $172,641 and $339,762 respectively.

For the three and six months ended June 30, 2022 the interest expenses was $73,472

and $159,350 respectively due to additional convertible notes issued in December 2022.

Included in Other Income for the three months ended June 30, 2023 was an insurance settlement of $57,429.

three and six months ended June 30, 2022 the other income / expense $0.

Amortization of debt discount for the three months and six months ended June 30, 2023

was $1,126,994 and $1,374,655 respectively.

For the three and six months ended June 30, 2022 the amortization of debt discount was $0.

Interest expense for the three and nine months

ended September 30, 2023 was $221,488 and $561,249 respectively.

For the three and nine months ended September 30, 2022 the interest

expenses was $66,193 and $225,543 respectively due to additional convertible notes issued in December 2022.

Included in Other Income for the three months

ended September 30, 2023 was an insurance settlement of $57,429.

For the three and nine months ended September 30, 2022 the other

income / expense $0.

Amortization of debt discount for the three

months and nine months ended September 30, 2023 was $1,125,409 and $2,500,065 respectively.

For the three and nine months ended

September 30, 2022 the amortization of debt discount was $0.

LIQUIDITY, GOING CONCERN CONSIDERATIONS

3 unchanged sentences

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, 2023, the Company had total

capital expenditure.

As of September 30, 2023, the Company had total

cash and cash equivalents of $96,121, as compared with $4,431,745 at December 31, 2022.

Net cash used for operating activities during the six months ended June 30,

2023 was $6,522,091 as compared to the net cash used by operating activities for the six months ended June 30, 2022 of $7,107,851.

driver for the change in net cash used is due to a reduction of inventory in 2023 and an increase of inventory to support sales commitments

Net cash provided by financing activities during the six months ended June

30, 2023 was $3,023,576.

During the six months ended June 30, 2023, the Company received $3,150,000 for convertible notes, $200,000 from

a shareholder advance and a $250,000 loan from a related party, which was offset by repayments to debt holders

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 the Company.

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 new 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 issuance of incentive awards under equity 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 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

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.

Net cash used for operating activities during

the nine months ended September 30, 2023 was $8,503,765 as compared to the net cash used by operating activities for the nine months

ended September 30, 2022 of $10,824,651.

The driver for the change in net cash used is due to a reduction of inventory in 2023

and an increase of inventory to support sales commitments in 2022.

Net cash provided by financing activities during

the nine months ended September 30, 2023 was $4,168,730.

During the nine months ended September 30, 2023, the Company received

$4,500,000 for convertible notes and a $460,000 loan from a related party, which was offset by repayments to debt holders of $757,270.

In order to have sufficient cash to fund 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 the Company.

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 new 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 issuance of incentive awards under equity

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 financial condition.

The Company’s ability

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

the availability or cost of future financings.

If the amount of capital the Company are 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.

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.

CONTRACTUAL OBLIGATIONS

4 unchanged sentences

Under the licensing agreement, the Company has minimum royalty payments to TapouT of $165,000

for the six months remaining in 2023.

for the three months remaining in 2023.

Inventory Purchase Commitments :

9 unchanged sentences

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