What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-29 compared with 2023-03-31 · 668 added, 540 removed, 473 unchanged (72% of the section changed)

Financial Statements and Supplementary

Financial Statements

of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets December 31, 2022 and December 31, 2021

Consolidated Statements of Operations For the Years Ended December 31, 2022 and December 31 2021

Consolidated Statements of Changes in Stockholders’ Equity For the years ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows For the Year Ended December 30, 2022 and 2021

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting

and Supplementary Data.

Financial Statements

Report of Independent

Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered

Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets December

31, 2023 and December 31, 2022

Consolidated Statements of Operations

For the Years Ended December 31, 2023 and December 31 2022

Statements of Changes in Stockholders’ Equity For the years ended December 31, 2023 and 2022

Consolidated Statements of Cash

Flows For the Year Ended December 30, 2023 and 2022

Notes to the Consolidated Financial

of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

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Fort Lauderdale, Florida

Opinion on the Financial

We have audited the accompanying

consolidated balance sheets of Splash Beverage Group, Inc.

at December 31, 2022 and 2021, and the related consolidated statements operations,

stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes

(collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of

the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Splash Beverage

(the “Company”) at December 31, 2022, and the related consolidated statements operations, changes in stockholders’

equity and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31,

2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles

generally accepted in the United States of America.

Basis for Opinion

These financial statements are

the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements

based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were

we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an

understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the

Company’s internal control over financial reporting.

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public

accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of

its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over

financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over

financial reporting.

Accordingly, we express no such opinion.

Our audits included performing

procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management,

as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for

Our audit included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated

below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate

opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Intangible Assets Impairment

As described in Notes 2 and

4 to the consolidated financial statements, the Company has intangible assets of approximately $4.9 million at December 31, 2022.

cases, no directly observable market inputs are available to measure the fair value to determine if the asset is impaired.

an estimate is derived indirectly and is based on valuation techniques utilizing undiscounted and discounted after-tax cash flows and

discount rates.

The estimates that management used in calculating the net present values depend on assumptions specific to the nature

of the management service activities with regard to the amount and timing of projected future cash flows;

The critical audit matter communicated below is a matter arising from the

December 31, 2022 audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective,

or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements,

taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit

matter or on the accounts or disclosures to which they relate.

Intangible Assets Impairment Assessments

As described in Note 2 to the consolidated financial statements, the Company

has intangible assets of approximately $4.9 million at December 31, 2022.

In most cases, no directly observable market inputs are available

to measure the fair value to determine if the asset is impaired.

Therefore, an estimate is derived indirectly and is based on valuation

techniques utilizing undiscounted and discounted after-tax cash flows and discount rates.

The estimates that management used in calculating

the net present values depend on assumptions specific to the nature of the management service activities with regard to the amount and

timing of projected future cashflows;

long-term forecasts;

of competitors (competing services), future tax and discount rates.

The principal considerations

for our determination that performing procedures relating to the intangible assets impairment assessment is a critical audit matter are

the significant judgment by management when developing the net present value of the intangible assets.

This in turn led to a high degree

of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related

to the amount and timing of projected future cash flows and the discount rate.

In addition, the audit effort involved the use of professionals

with specialized skill and knowledge.

Addressing the matter involved

performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements

These procedures included testing management’s process for developing the fair value estimate;

evaluating the appropriateness of

the net present value techniques;

testing the completeness and accuracy of underlying data used in the model;

and evaluating the significant

assumptions used by management, including the amount and timing of projected future cash flows and the discount rate.

Evaluating management’s

assumptions related to the amount and timing of projected future cash flows and the discount rate involved evaluating whether the assumptions

used by management reasonable considering the current and past performance of the intangible assets, the consistency with external market

and industry data, and whether these assumptions were consistent with evidence obtained in other areas of the audit.

actions of competitors (competing services), future tax and discount rates.

The principal considerations for our determination that performing procedures

relating to the intangible assets impairment assessment is a critical audit matter are the significant judgment by management when developing

the net present value of the intangible assets.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing

procedures and evaluating management’s significant assumptions related to the amount and timing of projected future cash flows and

the discount rate.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit

evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing management’s

process for developing the fair value estimate;

evaluating the appropriateness of the net present value techniques;

testing the completeness

and accuracy of underlying data used in the model;

and evaluating the significant assumptions used by management, including the amount

and timing of projected future cash flows and the discount rate.

Evaluating management’s assumptions related to the amount and timing

of projected future cash flows and the discount rate involved evaluating whether the assumptions used by management reasonable considering

the current and past performance of the intangible assets, the consistency with external market and industry data, and whether these assumptions

were consistent with evidence obtained in other areas of the audit.

/s/ Daszkal Bolton LLP

Daszkal Bolton LLP

Fort Lauderdale, Florida

March 31, 2023

We served as the Company’s auditor from 2020 to March 2023.

of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Splash Beverage Group, Inc.

Fort Lauderdale, Florida

Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheet of Splash Beverage Group, Inc.

at December 31, 2023, and the related consolidated statements of operations, changes in stockholders’

equity and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of

the Company at December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity

with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated

financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the consolidated

financial statements, the Company has suffered recurring losses from operations and has an accumulated deficit and a working capital

deficiency that raise substantial doubt about its ability to continue as a going concern.

Management’s plans regarding these matters

are also described in Note 3.

The consolidated financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal

control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are

matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the

audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

Rose, Snyder & Jacobs

We have served as the Company’s

auditor since 2023

Fort Lauderdale, Florida

March 29, 2024

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Other receivables

Assets from discontinued operations

Total current assets

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Investment in Salt Tequila USA, LLC

Right of use asset

Right of use assets

Property and equipment, net

Total non-current assets

Liabilities and Stockholders’ Equity

Liabilities and Stockholders’

Current liabilities

Accounts payable and accrued expenses

Right of use liability

Right of use liability, current portion

Related party notes payable

Notes payable

Notes payable, net of discounts

Liability to issue shares

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Accrued interest payable

Liabilities from discontinued operations

Total current liabilities

Long-term Liabilities:

Notes payable

Right of use liability

Notes payable, net of discounts

Right of use liability, net of current portion

Total long-term liabilities

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Stockholders’ equity:

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

Common Stock, $ 0.001 par, 300,000,000 shares authorized, 41,085,520 and 33,596,232 shares issued and outstanding, at December 31, 2022 and December 31, 2021, respectively

Preferred stock, $ 0.001 par value, 5,000,000 shares authorized,

no shares issued

Common Stock, $ 0.001 par, 300,000,000 shares authorized,

44,330,099 and 41,085,520 shares issued and outstanding, at December 31, 2023 and December 31, 2022, respectively

Additional paid in capital

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Total stockholders’ equity

( 5,605,326 )

Total liabilities and stockholders’ equity

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Other income/(expense):

Other Income/expense

Interest income

Interest expense

Gain from debt extinguishment

( 1,856,777 )

Amortization of debt discount

( 3,832,628 )

Total other expense

( 5,717,099 )

Provision for income taxes

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( 21,640,062 )

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

Net (loss) income from discontinued operations, net of

Gain on discontinued operations

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

Net income (loss) from discontinued operations, net of

$ ( 21,003,757 )

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Other comprehensive loss

Foreign Currency Translation loss

Total Comprehensive Income

Foreign currency translation gain (loss)

Total comprehensive loss

( 20,999,868 )

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Splash Beverage Group, Inc.

Statements of Changes in Stockholders ’ Equity

Consolidated Statements of Changes in Stockholders’

For the Years ended December 31, 2023 and 2022

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( 90,640,557 )

( 9,350,723 )

Issuance of common stock on convertible instruments

Issuance of warrants for services

Issuance of warrants on convertible instruments

Issuance of common stock for services

Issuance of common stock and warrants for cash

Mezzanine shares

Accumulated Comprehensive Income - Translation

( 21,690,469 )

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( 112,331,026 )

Issuance of common stock on convertible instruments

Issuance of warrants for services

Issuance of warrants on convertible instruments

Note discount created from issuance of common stock and

warrants on convertible instruments

Share based compensation

Conversion of notes payable to common stock

Issuance of common stock for services

Issuance of common stock and warrants for cash

Accumulated Comprehensive Income - Translation

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( 133,334,783 )

( 5,605,326 )

The accompanying notes are an integral part of these

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Splash Beverage Group, Inc.

Consolidated Statements Cash Flows

Consolidated Statements

For the Year Ended December 30, 2023 and 2022

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$ ( 21,690,469 )

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

and amortization

from debt extinguishment

from sale of discontinued operation

warrant expense

in working capital items:

receivable, net

Adjustments to reconcile net loss to net cash used in

operating activities:

Depreciation and amortization

ROU assets, net

Amortization of debt discount

Gain from sale of discontinued operation

Non-cash share based compensation

Changes in working capital items:

Accounts receivable, net

Inventory, net

( 1,797,828 )

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Accrued Interest payable

Net cash used in operating activities - continuing operations

( 10,189,263 )

expenses and other current assets

payable and accrued expenses

Interest payable

cash used in operating activities - continuing operations

( 14,040,644 )

Net cash used in operating activities - discontinued

Cash Flows from Investing Activities:

Capital Expenditures

Net cash used in investing activities -– continuing

Net cash used in investing activities - discontinued

Cash Flows from Financing Activities:

Proceeds from issuance of Common stock

Cash advance (repayment) from shareholder

Related party cash advance

Proceeds from issuance of debt

Principal repayment of debt

( 1,042,961 )

cash used in operating activities - discontinued operations

Flows from Investing Activities:

cash used in investing activities -– continuing operations

cash used in investing activities - discontinued operations

Flows from Financing Activities:

from issuance of Common stock

advance (repayment) from shareholder

of cash advance

from issuance of debt

repayment of debt

Net cash provided by financing activities - continuing

Net cash provided by financing activities - discontinued

Net cash effect of exchange rate changes on cash

Net Change in Cash and Cash Equivalents

( 4,051,767 )

cash provided by financing activities - continuing operations

cash provided by financing activities - discontinued operations

Change in Cash and Cash Equivalents

and Cash Equivalents, beginning of year

and Cash Equivalents, end of year

Cash and Cash Equivalents, beginning of year

Cash and Cash Equivalents, end of year

Disclosure of Cash Flow Information:

paid for Interest

paid for Taxes

Cash paid for Interest

Disclosure of Non-Cash Investing and Financing Activities

notes payable and accrued interest converted to common stock (377,796 shares)

Convertible notes payable and accrued interest converted

to common stock (377,796 shares)

Convertible notes payable and accrued interest converted

to common stock (452,914 shares)

The accompanying notes are an integral part of these

1 unchanged sentence

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial

Note 1 – Business Organization and Nature of Operations

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and medical supplies to the public, nursing homes, hospitals and other end users.

On December 31, 2019, CMS entered

into an Agreement and Plan of Merger (the “Merger Agreement”) with SBG Acquisition Inc.

(“Merger Sub”), a Nevada

Corporation wholly owned by CMS, and Splash Beverage Group, Inc.

a Nevada corporation (“Splash”) pursuant to which Merger

Sub merged with and into Splash (the “Merger”) with Splash as the surviving company and a wholly-owned subsidiary of CMS.

The Merger was consummated on March 31, 2020.

On December 31, 2019, CMS entered into an Agreement

and Plan of Merger (the “Merger Agreement”) with SBG Acquisition Inc.

(“Merger Sub”), a Nevada Corporation wholly

owned by CMS, and Splash Beverage Group, Inc.

a Nevada corporation (“Splash”) pursuant to which Merger Sub merged with and

into Splash (the “Merger”) with Splash as the surviving company and a wholly-owned subsidiary of CMS.

The Merger was consummated

on March 31, 2020.

As the owners and management of Splash have voting

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been retrospectively presented as outstanding for all periods.

Splash specializes in the manufacturing process, distribution,

and sales & marketing of various beverages across multiple channels.

Splash operates in both the non-alcoholic and alcoholic beverage

Additionally, Splash operates its own vertically integrated B-to-B and B-to-C E-commerce distribution platform called Qplash,

further expanding its distribution abilities and visibility.

Splash specializes in the manufacturing process,

distribution, and sales & marketing of various beverages across multiple channels.

Splash operates in both the non-alcoholic and

alcoholic beverage segments.

Additionally, Splash operates its own vertically integrated B-to-B and B-to-C E-commerce distribution platform

called Qplash, further expanding its distribution abilities and visibility.

In July 2020 the Company filed a Certificate of Amendment

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On December 24, 2020, SBG consummated an Asset Purchase

Agreement (the “Copa APA”) with Copa di Vino Corporation (“CdV”), to purchase certain assets and assume certain

liabilities that comprise the Copa di Vino business for a total purchase price of $ 5,980,000 , payable in the combination of $ 2,000,000

in cash (“Cash Consideration”), $ 2,000,000 convertible promissory note (the “Convertible Note”) to Seller and

a variable number of shares of the Company’s common stock based on a attainment of revenue hurdles.

CdV is one of the leading producers

of premium wine by the glass in the United States with its primary offices and facilities in The Dalles, Oregon.

Agreement (the “Copa APA”) with Copa DI Vino ® Corporation (“CdV”), to purchase certain assets

and assume certain liabilities that comprise the Copa DI Vino ® business for a total purchase price of $ 5,980,000 , payable

in the combination of $ 2,000,000 in cash (“Cash Consideration”), $ 2,000,000 convertible promissory note (the “Convertible

Note”) to Seller and a variable number of shares of the Company’s common stock based on a attainment of revenue hurdles.

CdV is one of the leading producers of premium wine by the glass in the United States with its primary offices and facilities in The

Dalles, Oregon.

On February 2021, Management initiated a plan to divest its CMS business.

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

All common stock shares stated herein have been adjusted to reflect

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

All common stock shares stated herein have been adjusted to

reflect the split.

Note 2 – Summary of Significant Accounting

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balances have been eliminated in consolidation.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

Our investment in Salt Tequila USA, LLC is accounted

for at cost, as the company does not have the ability to exercise significant influence.

Our accounting and reporting policies conform to accounting

principles generally accepted in the United States of America (GAAP).

Our accounting and reporting policies conform to

accounting principles generally accepted in the United States of America (GAAP).

Certain reclassifications have been made to the prior

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Cash Equivalents and Concentration of Cash

We consider all highly liquid securities with an original

maturity of three months or less to be cash equivalents.

We consider all highly liquid securities with an

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

We had no cash equivalents at December 31, 2023 or December 31, 2022.

1 unchanged sentence

exceed federally insured limits of $ 250,000 .

At December 31, 2022 we had approximately $3.8m over

the federally insured limits.

Our cash in uninsured foreign bank accounts was $ 1,941 at

December 31, 2022.

At December 31, 2023, the Company’s cash on deposit with financial institutions, at

times, had not exceed federally insured limits of $250,000.

The Company had approximately $ 3.8 million over the federally insured limits

Our cash in uninsured foreign bank accounts was $ 0 and $ 1,941 at December 31, 2023 and December 31, 2022, respectively.

Accounts Receivable and Allowance for Doubtful

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of $ 183,089 and $ 13,683 , respectively.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

Inventory is stated at the lower of cost or net realizable

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transportation, and warehousing.

We establish provisions for excess or inventory near expiration are based on management’s estimates

We establish provisions for excess or inventory near expiration based on management’s estimates

of forecast turnover of inventories on hand and under contract.

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useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

Depreciation expense totaled $ 153,908 and $ 182,886

5 unchanged sentences

Leasehold improvements

Computer Software

Office furniture & equipment

Accumulated depreciation

( 1,674,385 )

( 1,552,125 )

Property, plant & equipment, net

5 unchanged sentences

for the taxes upon the removal of product from the Company’s warehouse on a per gallon basis.

The federal tax rate is affected by

a small winery tax credit provision which decreases based upon the number of gallons of wine production in a year rather than the quantity

Employee Retention Credit (“ERC”)

The CARES Act provides an employee retention credit

(“CARES Employee Retention credit”), which is a refundable tax credit against certain employment taxes of up to $ 5,000 per

employee for eligible employers.

The tax credit is equal to 50 % of qualified wages paid to employees during a quarter, capped at $ 10,000

of qualified wages per employee through December 31, 2020.

Additional relief provisions were passed by the United States government, which

extend and slightly expand the qualified wage caps on these credits through December 31, 2021.

Based on these additional provisions, the

tax credit is now equal to 70 % of qualified wages paid to employees during a quarter, and the limit on qualified wages per employee has

been increased to $ 10,000 of qualified wages per quarter.

The Company qualified for the tax credit under the CARES Act.

Copa Di Vino received

$ 211,300 which represents refunds for the quarters ended March, June and September 2021 Form 941 Employer Quarterly Federal Tax Returns.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

The federal tax rate is affected

by a small winery tax credit provision which decreases based upon the number of gallons of wine production in a year rather than the

quantity sold.

Fair Value of Financial Instruments

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The three levels of the fair value hierarchy are as follows:

quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement

Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments

and listed equities.

than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted

prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets

that are not active).

inputs for the asset or liability.

Financial instruments are considered Level 3 when their fair values are determined using pricing

models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

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.

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

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Revenue Recognition

We recognize revenue under ASC 606, Revenue from Contracts

with Customers (Topic 606).

This guidance sets forth a five-step model which depicts the recognition of revenue in an amount that reflects

what we expect to receive in exchange for the transfer of goods or services to customers.

We recognize revenue under ASC 606, Revenue from

Contracts with Customers (Topic 606).

This guidance sets forth a five-step model which depicts the recognition of revenue in an amount

that reflects what we expect to receive in exchange for the transfer of goods or services to customers.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

We recognize revenue when our performance obligations

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to the customer.

Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring goods and is

presented net of provisions for customer returns and allowances.

Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring goods and

is presented net of provisions for customer returns and allowances.

The amount of consideration we receive and revenue we recognize varies

1 unchanged sentence

Sales taxes and other similar taxes are excluded from

Distribution expenses to transport our products, and

warehousing expense after manufacture are accounted for in Other General and Administrative cost.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

Distribution expenses to transport our products,

and warehousing expense after manufacture are accounted for in Other General and Administrative cost.

Cost of Goods Sold

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Other General and Administrative Expenses

Other General and Administrative expenses includes

Other General and Administrative expenses include

Amazon selling fees, royalty cost for selling TapouT, cost of transportation from production site to other 3 rd party warehouses

5 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 option vesting period.

the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period, which is

generally the option vesting period.

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

We early adopted

ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”, which aligns accounting treatment for such awards

to non-employees with the existing guidance on employee share-based compensation in ASC 718.

adopted ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”, which aligns accounting treatment for

such awards to non-employees with the existing guidance on employee share-based compensation in ASC 718.

We measure stock-based awards at the grant-date fair

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

value for employees, directors and consultants and recognize compensation expense on a straight-line basis over the vesting period of

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

value of our common stock, and for stock options and warrants, the expected life of the option and warrant, and expected stock price volatility

and exercise price.

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

volatility and exercise price.

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

The assumptions used in calculating

the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application

of management’s judgment.

As a result, if factors change and management uses different assumptions, stock-based compensation expense

could be materially different for future awards.

The assumptions used in

calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the

application of management’s judgment.

As a result, if factors change and management uses different assumptions, stock-based compensation

expense could be materially different for future awards.

The expected life of stock options/warrants were estimated using the “simplified

9 unchanged sentences

The estimation of the number of awards that will ultimately vest requires judgment,

and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts are recognized as

an adjustment in the period in which estimates are revised.

and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts are recognized

as an adjustment in the period in which estimates are revised.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

We use the liability method of accounting for income

15 unchanged sentences

has determined that there are no material uncertain tax positions at December 31, 2023 and December 31, 2022.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

Net income (loss) per share

5 unchanged sentences

Weighted average number of shares outstanding excludes

anti-dilutive common stock equivalents, including warrants to purchase shares of common stock and warrants granted by our Board but have

not been exercised totaling 14,343,896 .

anti-dilutive common stock equivalents, including warrants to purchase shares of common stock and warrants granted by our Board that

have not been exercised totaling 74,007,680 .

We conduct advertising for the promotion of our products.

8 unchanged sentences

This evaluation is performed at the reporting

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

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

The income approach estimates fair value based

on expected discounted future cash flows, while the market approach uses comparable public companies and transactions to develop metrics

to be applied to historical and expected future operating results.

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

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

The income approach estimates

fair value based on expected discounted future cash flows, while the market approach uses comparable public companies and transactions

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

The gross amounts and accumulated amortization of

the Company’s acquired identifiable intangible assets with finite useful lives, included in other intangible assets, net in the

accompanying consolidated balance sheets, were as follows:

Schedule of identifiable intangible assets

December 31, 2023

Customer Relationships

Total Intangible Assets

Splash Beverage Group, Inc.

2 unchanged sentences

Policies, continued

At the time of acquisition, the Company estimates

the fair value of the acquired identifiable intangible assets based upon the facts and circumstances related to the particular intangible

Inherent in such estimates are judgments and estimates of future revenue, profitability, cash flows and appropriate discount rates

for any present value calculations.

The Company preliminarily estimates the value of the acquired identifiable intangible assets and

then finalizes the estimated fair values during the purchase allocation period, which does not extend beyond 12 months from the date

of acquisition.

The Company’s amortization expense for acquired identifiable intangible assets with finite useful lives was $ 392,068

for fiscal years 2023 and 2022.

Estimated amortization expense for acquired identifiable intangible assets for fiscal year 2024 and the

succeeding years is as follows:

Schedule of future intangible asset amortization expense useful lives

Future Intangible Asset

Amortization Expense

Long-lived assets

8 unchanged sentences

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.

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.

Currency Gain/Losses

Foreign Currency Gain/Losses — foreign subsidiaries’

functional currency is the local currency of operations and the net assets of foreign operations are translated into U.S.

dollars using

current exchange rates.

Gain or losses from these translation adjustments are included in the consolidated statement of operations and

other comprehensive (loss) income 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 Other Comprehensive Losses.

The Company incurred foreign currency translation net loss during the year ended December 31, 2022 of $ 20,472 .

Foreign Currency Gain/Losses

Foreign subsidiaries’ functional currency is

the local currency of operations and the net assets of foreign operations are translated into U.S.

dollars using current exchange rates.

Gain or losses from these translation adjustments are included in the consolidated statement of operations and other comprehensive (loss)

income 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 Other Comprehensive

The Company incurred a foreign currency translation net gain during the year ended December 31, 2023 of $ 3,889 and a foreign

currency translation net loss during the year ended December 31, 2022 of $ 20,472 .

Recent Accounting Pronouncements

Management does not believe that any other recently

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

As new accounting

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

Adoption of FASB ASU 2020-06

In August 2020, the Financial Accounting Standards

Board (FASB) issued ASU No.

2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.”

ASU 2020-06 simplifies the accounting for convertible instruments and contracts by removing certain models that were previously required

to be applied.

The amendments are effective for the fiscal years beginning after December 15, 2023, with early adoption permitted.

Company is currently evaluating the impact this update will have on its consolidated financial Statements.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 3 – Liquidity, Capital Resources

and Going Concern Considerations

During 2022, the Company received approximately $ 12.8

million and $ 4.0

million from the proceeds from the issuance common stock and debt, respectively.

These events served to mitigate the

conditions that previously raised substantial doubt about

the Company’s ability to continue as a going concern.

The Company’s

consolidated financial statements have been prepared on the basis of US GAAP for a going concern, on the premise that Company’s

ability to meet its obligations as they come due in the normal course of business.

The Company sustained a net loss of approximately $ 21.7

million and negative cash flows from operating activities of approximately $ 14.1 million for the year ended December 31, 2022.

date the Company has generated cash flows from issuances of equity and indebtedness.

Management believes

that its current available resources will be sufficient to fund the Company’s planned expenditures over the next 12 months.

management recognizes that it may be required to obtain additional resources via issuances of indebtedness or equity to successfully execute

its business plans.

No assurances can be given that management will be successful in raising additional capital, if needed, or on acceptable

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts

and classification of liabilities that might be necessary should the Company determine it shall be unable to continue as a going concern.

During 2023, the Company received $ 6.6 million from

the issuance of debt.

This event served to mitigate the conditions that previously raised substantial doubt about the Company’s

ability to continue as a going concern.

The Company’s consolidated financial statements

have been prepared on the basis of US GAAP for a going concern, on the premise that the Company is able to meet its obligations as they

come due in the normal course of business.

The Company sustained a net loss of approximately $ 21 .0 million and negative cash flows from

operating activities of approximately $ 10.2 million for the year ended December 31, 2023.

To date the Company has generated cash flows

from issuances of equity and indebtedness.

The accompanying financial statements have been prepared

assuming that the Company will continue as a going concern.

As of March 29, 2024, the Company has incurred significant losses from operations

and has experienced negative cash flows from operating activities.

Additionally, the Company’s current liabilities exceed its current

assets, and it has a working capital deficit.

Management’s plans in regard to these matters

include actions to sustain the Company’s operations, such as seeking additional funding to meet its obligations and implement its

business plan.

However, there is no assurance that the Company will be successful in implementing its plans or in raising additional

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

If the Company is unable to continue as a going concern, adjustments would be

necessary to the carrying values of its assets and liabilities and the reported amounts of revenues and expenses could be materially

Splash Beverage Group, Inc.

5 unchanged sentences

Schedule of notes payable

March 2014, we entered into a short-term loan agreement with an entity in the amount of $ 200,000 .

The note included warrants for

272,584 shares of common stock at $ 0.94 per share.

The warrants expired as unexercised.

The loan matured and remains in default.

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

The loan and interest was paid off

in June 2022.

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

The loan requires payments of 3.75% through

November 2022 and 4.00% through September 2025 of the previous months revenue

April 2021, we entered into a six-month loan with a individual in the amount of $ 84,000 .

The loan matures in October 2021 with principal

and interest due at maturity.

The loan was extended to January 2023

April 2021, we entered into a six-month loan with a individual in the amount of $ 84,000 .

The loan had an original maturity of

October 2021 with principal and interest due at maturity.

The loan was extended to January 2023

May 2021, we entered into a six-month loan with a individual in the amount of $ 50,000 .

The loan had an original maturity of

October 2021 with principal and interest due at maturity.

The loan was extended to January 2023

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

The loan had an original maturity of

October 2021 with principal and interest due at maturity.

The principal and interest was converted into shares of common stock in

February 2022

May 2021, we 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 was extended to January 2023.

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

The loan had an original maturity of

October 2021 with principal and interest due at maturity.

The principal and interest was converted into shares of common stock in

February 2022.

November 2021, we entered into a one-year loan with a individual in the amount of $ 300,000 .

The loan had an original maturity of

November 2021 with principal and interest due at maturity.

The principal and interest was converted to shares of common stock

in April 2022

August 2022, we entered into a 56-months auto loan in the amount of $ 45,420 .

December 2022, we entered into an eighteen-month loan with an individual in the amount of $ 100,000 .

The note included 100% warrant

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

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

The note included 100% warrant

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

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

The note included 100% warrant

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

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

The note included 100% warrant

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

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

The note included 100% warrant

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

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

The note included 100% warrant

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

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

The note included 100% warrant

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

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

The note included 100% warrant

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

notes payable

notes discount

Interest Rate

December 31, 2023

December 31, 2022

In March 2014, the Company entered into a

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

The note included warrants for 272,584 shares of common stock

at $ 0.94 per share.

The warrants expired unexercised on February 28, 2017.

The loan and interest was paid off in February 2023

In December 2020, the Company entered into a 56- month

loan with a company in the amount of $ 1,578,237 .

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 various six-month

loans with individuals totaling in the amount of $ 168,000 .

The loans had an original maturity of October 2021 with principal and

interest due at maturity with conversion price of $ 3.30 per share.

The loans were extended to March 31, 2024.

In May 2021, the Company entered into various six-month

loans with individuals totaling in the amount of $ 60,000 .

The loans had an original maturity of October 2021 with principal and interest

due at maturity with conversion price of $ 3.30 per share.

The loans were extended to March 31, 2024.

In August 2022, we entered into a 56-months auto loan

in the amount of $ 45,420 .

In December 2022, the Company entered into various eighteen-month

loans with individuals totaling in the amount of $ 4,000,000 .

The notes included 100 % warrant coverage.

The loans mature 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 the issuance of 1,500,000 shares of common stock .

The loan matures in February 2024 with conversion price of $ 0.85 per share and is non-interest bearing

In May 2023, the Company entered into various eighteen-month

loans with individuals totaling in the amount of $ 800,000 .

The notes included 50 % warrant coverage.

The loans mature in November

2024 with principal and interest due at maturity with conversion price of $ 1.00 per share.

In June 2023, the Company entered into various

eighteen-month loans with individuals totaling in the amount of $ 350,000 .

The notes included 50 % warrant coverage.

The loans mature

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

In July 2023, the Company entered into a twelve-month

loan with an individual in the amount of $ 750,000 .

The note included 50 % warrant coverage.

The loan matures in July 2024 with principal

and interest due at maturity with conversion price of $ 1.00 per share.

In July 2023, the Company entered into a twelve-month

loan with an individual in the amount of $ 100,000 .

The note included 50 % warrant coverage.

The loan matures in January 2025 with

principal and interest due at maturity with conversion price of $ 1.00 per share.

In August 2023, the Company entered into a twelve-month

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

The convertible note included the issuance of 150,000 shares of common stocks.

The loan matures in August 2024 with principal and interest due at maturity with conversion price of $ 0.85 per share and is non-interest

In October 2023, the Company entered into a three-month

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

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

The loan was extended to March 2024.

In October 2023, the Company entered into a loan with

an individual in the amount of $ 196,725 The loan matures in March 2024.

Note is guaranteed by a related party.

In October 2023, the Company entered into a loan with

an individual in the amount of $ 130,000 .

The loan requires payment of 17 % of daily Shopify sales.

In October 2023, the Company entered into a eighteen-month

loan with individuals totaling in the amount of $ 1,250,000 .

The note included 100 % warrant coverage.

The loan matures in April 2025

with principal and interest due at maturity with conversion price of $ 1.00 per share

In December 2023, we entered into a 2.5-month loan with

an individual in the amount of $ 450,000 .

The loan had a maturity of March 2024 with principal and interest due at maturity.

Total notes payable

Less notes discount

( 2,876,387 )

current portion

( 1,898,265 )

Less current portion

( 7,748,518 )

notes payable

Interest expense on notes payable was $ 217,123 and $ 376,572 for the years

ended December 31, 2022 and 2021, respectively.

Accrued interest was $ 141,591 and $ 171,452 at December 31, 2022 and December 31, 2021,

respectively.

Notes discount of $ 1,898,265 for the year ending December 31, 2022 is related

to the discounted warrants on the December notes.

The year ending December 31, 2021 did not have discounted warrants.

( 1,080,257 )

Long-term notes payable

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 4 – Notes Payable, Related Party

Notes Payable, and Revenue Financing Arrangements, continued

Note 4 – Notes Payable, Shareholder Notes Payable, and Revenue

Financing Arrangements, continued

Interest expense on notes payable was $ 1,836,377

and $ 246,090 for the years ended December 31, 2023 and 2022, respectively.

Accrued interest was $ 1,714,646 and $ 141,591 at December 31,

2023 and December 31, 2022, respectively.

The Company’s effective interest

rate was 60.17 % for the year ended December 31, 2023.

As of December 31, 2023, the Company’s convertible

note balances are convertible into 11,127,500 shares of common stock.

Notes discount of $ 2,876,387 and $ 1,898,265 for the

year ending December 31, 2023 and 2022 respectively is related to the discounted warrants and common shares issued in connection with

Schedule of notes payable

Interest Rate

Related Parties Notes Payable

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

The loan was paid off in June 2022

Notes Payable

In February 2023, we entered into a loan with an individual

in the amount of $ 200,000 .

The annual interest rate is 12 %

Less current portion

2 unchanged sentences

$ 20,400 and $ 5,407 for the years ended December 31, 2023 and 2022, respectively.

Splash Beverage Group, Inc.

Consolidated Financial Statements

Note 5 – Licensing Agreement and Royalty

We have a licensing agreement with ABG TapouT, LLC (“TapouT”),

providing us with licensing rights to the brand “TapouT” on (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..

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

net sales, as defined.

In 2022 and 2021, we are required to make monthly payments of $ 54,450 and $ 49,500 , respectively.

There were no

unpaid royalties at December 31, 2022 and 2021.

We paid the guaranteed minimum royalty payments of $ 653,400

and $ 594,000

for the years ended December 31, 2022 and 2021, which is included in general and administrative expenses.

In connection with the Copa APA, we acquired the license

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

agreements with 1/4 Vin SARL, (1/4 Vin).

1/4 Vin has the right to license certain patents and patent applications relating to inventions,

systems, and methods used in the Company’s manufacturing process.

In exchange for notes payable, 1/4 Vin granted the Company a nonexclusive,

royalty-bearing, non-assignable, nontransferable, terminable license which would continue until the subject equipment is no longer in

service or the patents expire.

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

is being amortized over a 10 -year useful life.

We have a licensing agreement with ABG TapouT, LLC

(“TapouT”), providing us with licensing rights to the brand “TapouT” on (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.

Under the terms of the agreement, we are

required to pay a 6% royalty on net sales, as defined.

In 2023 and 2022, we are required to make monthly payments of $ 55,000 and $ 54,450 ,

respectively.

There were no unpaid royalties at December 31, 2023

We paid the guaranteed minimum royalty payments of $ 660,000 and $ 653,400 for the years ended December 31, 2023 and 2022, which

is included in general and administrative expenses.

In connection with the Copa Asset Purchase Agreement,

we acquired the license to certain patents from 1/4 Vin SARL (“1/4 Vin”) On February 16, 2018, the Copa DI Vino ®

entered into three separate license agreements with 1/4 Vin SARL, (1/4 Vin).

1/4 Vin has the right to license certain patents and

patent applications relating to inventions, systems, and methods used in the Company’s manufacturing process.

In exchange for notes

payable, 1/4 Vin granted the Company a nonexclusive, royalty-bearing, non-assignable, nontransferable, terminable license which would

continue until the subject equipment is no longer in service or the patents expire.

Amortization is approximately $31,000 annually until

the license agreement is fully amortized.

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

Note 6 – Stockholders’ Equity

1 unchanged sentence

we issued 4,596,129 shares of common stock as part of the public offerings, 1,834,404 shares in exchange for services, 380,959 shares

in connection with the purchase of Copa di Vino, 377,796 shares on conversion of convertible instruments, and 300,000 shares for cash.

in connection with the purchase of Copa DI Vino ® , 377,796 shares on conversion of convertible instruments, and 300,000

shares for cash.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’

Equity, continued

Note 6 – Stockholders’ Equity,

Private Placement Memorandum (PPM)

In January 2021, the Board of Directors approved a

private placement offering of 1,212,121 shares of the common stock of the Company, a purchase price of $ 3.30 per share for aggregate gross

proceeds of $4,000,000 (“PPM”).

As part of the PPM, each purchaser received a warrant to purchase one share for every

two shares purchased.

In February 2021, we completed our PPM by issuing a total of 1,212,355 of shares and 606,179 warrants receiving

gross proceeds of approximately $ 4,000,000 .

In July 2022, we issued 100,000

shares of common stock of the Company, at a purchase price of $ 1.10

In December 2022, we issued 200,000

shares of common stock of the Company, at a purchase price of $ 1.00

per share this placement included 100 %

warrant coverage.

In July 2022, we issued 100,000 shares of common

stock of the Company, at a purchase price of $ 1.10 per share.

In December 2022, we issued 200,000 shares of common stock of the Company,

at a purchase price of $ 1.00 per share this placement included 100 % warrant coverage.

In December 2022, we issued Convertible Notes for

3 unchanged sentences

Schedule of stock option plan

Plan Category

of Shares to be Issued Upon Exercise or Vesting of Outstanding Stock Options

Weighted Average Exercise Price of Outstanding Stock Options

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities

Equity compensation plan approved by board of directors

On August 2020, the Board adopted the 2020 Stock

of Shares to be Issued Upon Exercise

or Vesting of Outstanding Stock Options

Weighted Average Exercise Price of

Outstanding Stock Options

Number of Securities Remaining Available

for Future Issuance Under Equity Compensation Plans (Excluding Securities

Equity compensation plan approved by board

In August 2020, the Board adopted the 2020 Stock

Incentive Plan (the “2020 Plan”), which provides for the grant of Options, Restricted Stock Awards, Stock Appreciation Rights,

Performance Units and Performance Bonuses to consultants and eligible recipients.

The 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.

In October 2023, the shareholders voted to increase

the number of shares issuable under the Plan to 7.5%.

At December 31, 2023 the number of shares authorized

under the 2020 plan is 2,846,068 .

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’ Equity, continued

The following is a summary of the Company’s

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December 31, 2022

Balance - beginning of the year

Balance - end of the year

Exercisable – end of year

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 two years.

Number of Options

Weighted Average Exercise Price

Number of Options

Weighted Average Exercise Price

Balance - January

Balance – December

Exercisable –

December 31, 2023

These prices are reflective of the price modification made on April 24, 2023.

In May 2022, we granted 146,000 options to purchase

common stock to employees and consultants, these options vest between one and four years.

The Company determined the grant date fair value of

the options granted using the Black Scholes Method using the following assumptions:

common stock to employees and consultants, these options vest between one and four years and were valued at $ 336,926 on the grant date.

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 % and no dividend.

Following ASC Topic

718 the Company recognized an incremental expense from the modification of the option pricing resulting in an expense of $ 7,348 that

was reflected in the quarter.

The Company determined the grant date fair value

of the options granted using the Black Scholes Method using the following assumptions:

Schedule of stock option assumption

3 unchanged sentences

Exercise price

$ 1.08 – 1.36

Expected life

1 unchanged sentence

Expected dividends

During the year ended December 31, 2022, 397,748

options vested with a weighted average grant date fair value of $ 2.55 Stock compensation expense for the years ended December 31,

2022 and 2021 was $ 1,146,965

and $ 3,971,926 , respectively.

During the year ended December 31, 2023, the fair

value of options granted amounted to $ 1,060,602 .

As of December 31, 2023, the intrinsic value of stock options outstanding and exercisable

Stock compensation expense for the years ended December 31, 2023 and 2022 was $ 840,817 and $ 1,146,965 , respectively.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

At December 31, 2022, there was 418,254

options unvested with an average grant date fair value of $ 2.54 and

unrecognized compensation costs related to stock options which will be recognized over the weighted average remaining years of

Note 6 – Stockholders’ Equity, continued

At December 31, 2023, there was approximately $ 300,000

of unrecognized compensation costs related to stock options which will be recognized over the weighted average remaining years of 0.84 .

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

2 unchanged sentences

December 31, 2022

Number of Warrants

Weighted Average Exercise Price

Number of Warrants

Weighted Average Exercise Price

Balance – beginning of the year

Balance - end of the year

In January 2021 we issued 606,179 warrants to purchase

common stock of the Company in connection with the January 2021 private placement offering of 1,212,121 shares of common stock.

In May 2021 we granted 333,333 warrants to purchase

common stock of the Company to a director.

These warrants vest over two years.

We issued 3,750,000 warrants to purchase common stock

of the Company in connection with the June 2021 underwritten public offering of 3,750,000 shares of common stock, in addition to 150,000

warrants to purchase common stock of the Company to the representative underwriter.

The fair value of warrants recognized in the period

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Expected dividends

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 7 – Related Parties

the normal course of business, we incurred expenses related to services provided by our CEO or Company expenses paid by our CEO, resulting

in related party payables.

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, 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.

During the normal course of business, we incurred

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

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, 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,

(the “Lender”).

The Loan and Security Agreement provided for a revenue-based credit facility

of $ 1,578,237 (the “Gross Amount”) with the Lender (the “Credit Facility”).

There were related party notes payable in the

amount of $ 0.7

million outstanding as of December 31, 2021 and were repaid in 2022.

The Loan and Security Agreement provided for a revenue-based credit facility of $ 1,578,237 (the “Gross

Amount”) with the Lender (the “Credit Facility”).

There was $ 371,693 outstanding and $ 989,702 accrued interest under

this agreement as of December 31, 2023.

Additionally, the Company is subject to $ 757,554 of penalties associated with this agreement

as of December 31, 2023.

The lender has agreed to waive the penalties in the event the Company repays the loan obligation in full prior

The Company intends to pay off the obligation prior to maturity.

On September 29, 2023, the Company also entered into

a Purchase and Sales Future Receivables 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 Knightsbridge Funding LLC (the “Lender”).

The Loan and Security Agreement provided a loan

of $ 165,000 , with the gross and interest amount of $ 241,725 with the Lender (the “Credit Facility”).

There was $ 99,185 outstanding

under this agreement as of December 31, 2023.

There were related party advances from our chief

executive officer in the amount of $ 0.4 million outstanding as of December 31, 2023 and a shareholder note payable outstanding in the

amount of $ 200,000 as of December 31, 2023.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 8 – Investment in Salt Tequila USA,

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This investment is accounted for at cost.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 9 – Lease

We have various operating lease agreements primarily

related to real estate and office.

related to real estate and office space.

Our real estate leases represent a majority of our lease liability.

Our lease payments are mainly fixed.

Any variable lease payments, including utilities, common area maintenance are expensed during the period incurred.

Variable lease costs

were immaterial for the years ended December 31, 2022 and 2021.

A majority of our real estate leases include options to extend the lease.

We review all options to extend at the inception of the lease and account for these options when they are reasonably certain of being

Our lease payments are mainly

Any variable lease payments, including utilities and common area maintenance are expensed during the period incurred.

lease costs were immaterial for the years ended December 31, 2023 and 2022.

A majority of our real estate leases include options to extend

We review 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

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$ 363,890 and $ 315,980 during the years ended December 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:

Maturities of lease liabilities

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, 2023:

of operating lease liabilities

Future Minimum Lease Payments

representing imputed interest

Total operating

lease liability

portion of operating lease liability

lease liability, non-current

Operating Lease

Amount representing imputed interest

Total operating lease liability

Current portion of operating lease liability

Operating lease liability, non-current

The table below presents information for lease costs

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Schedule of lease costs

of leased assets

of lease liabilities

Operating lease cost:

The operating lease cost at December 31, 2022 was

$ 315,980 and at December 31, 2021 was $ 277,525 .

Amortization of leased assets

Interest of lease liabilities

Total operating lease cost

The table below presents lease- related terms and

discount rates at December 31, 2023:

Summary of lease-related terms and discount rates

term on leases

borrowing rate

Schedule of lease- related terms and

discount rates

Remaining term on leases

Incremented borrowing rate

Splash Beverage Group, Inc.

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We have two reportable operating segments:

manufacture and distribution of non-alcoholic and spirits brand beverages, and (2) the retail sale of beverages and groceries online.

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

manufacture and distribution of non-alcoholic and alcoholic beverages, and (2) the retail sale of beverages and groceries online.

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.

Our medical device business was discontinued in 2021.

is evaluated by our chief operating decision maker, which continues to be our chief executive officer.

of segment reporting information

the period ended, December 31,

Beverage Group

Revenues continuing operations

Revenues discontinuing operations

For the Year Ended, December 31,

Splash Beverage Group

Total Revenues continuing operations

Total Revenues discontinuing operations

after Marketing expenses

Beverage Group

Contribution after Marketing expenses continuing operations

share-based compensation

general and administrative

from continuing operations

Splash Beverage Group

$ ( 1,749,163 )

$ ( 2,202,790 )

Beverage Group

Devices – Discontinued

Splash Beverage Group revenue increased for the year ending December 31,

2022 versus December 31, 2021 by $0.3m or 6.7% with largest contribution from TapouT and Pulpoloco.

Contribution after Marketing expenses

declined by $2.4m for the year ending December 31, 2022 versus December 31, 2021 driven by raw material cost increases and faster growth

of lower margin brands affecting the overall mix of sales.

E-Commerce revenue increased for the year ending December 31, 2022 versus

December 31, 2021 by $6.4m driven by expanded territory coverage, new products being sold and increased cart size when customers checking

Contribution after Marketing expenses increased by $2.4m due to increased sales partially offset by cost increases.

Total Contribution after Marketing expenses continuing

Contracted services

Salary and wages

Non-cash share-based compensation

Other general and administrative

Loss from continuing operations

$ ( 15,286,658 )

$ ( 21,394,633 )

December 31, 2023

December 31, 2022

Splash Beverage Group

Splash Beverage Group revenue increased for the year

ending December 31, 2023 versus December 31, 2022 by $0.3 million or 7% with the main contribution from the increase in revenue coming

from TapouT and Pulpoloco.

The contribution after marketing expenses increased by $0.04 million for the year ending December 31, 2023

versus December 31, 2022 due to increased sales partially offset by cost increases.

E-Commerce revenue increased for the year ending

December 31, 2023 versus December 31, 2022 by $0.4 million driven by expanded territory coverage, new products being sold and increased

cart size when customers checking out.

Contribution after Marketing expenses declined by $0.4 million due to increase by cost.

Note 11 – Commitment and Contingencies

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to regulatory actions in the ordinary course of business.

The results of such proceedings cannot be predicted with certainty, but we do

not anticipate that the outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial

The results of such proceedings cannot be predicted with certainty, but we

do not anticipate that the outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial

condition or results of operations.

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(the “Common Stock”) to purchase one share of Common Stock.

Pursuant to the Offering, we sold 2,300,000 shares of Common Stock

for total gross proceeds of approximately $9.2 million.

Pursuant to the Offering, we sold 2,300,000 shares of Common

Stock for total gross proceeds of approximately $9.2 million.

After deducting the underwriting commissions, discounts, and offering expenses

payable by we, we received net proceeds of approximately $7.9 million.

On September 22, 2022, we

entered into an underwriting agreement (“Underwriting Agreement”) relating to an underwritten public offering (the

“Offering”) of common stock, (the “Common Stock”) to purchase one share of Common Stock.

Pursuant to the

Offering, we sold 2,296,129

shares of Common Stock for total gross proceeds of approximately $ 3.6

After deducting the underwriting commissions, discounts, and offering expenses, we received net proceeds of

approximately $ 3.1

On September 22, 2022, we entered into an underwriting

agreement (“Underwriting Agreement”) relating to an underwritten public offering (the “Offering”) of common stock,

(the “Common Stock”) to purchase one share of Common Stock.

Pursuant to the Offering, we sold 2,296,129 shares of Common

Stock for total gross proceeds of approximately $ 3.6 million.

After deducting the underwriting commissions, discounts, and offering expenses,

we received net proceeds of approximately $ 3.1 million.

Representative’s Warrants

On June 15, 2021, pursuant to the Underwriting Agreement,

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

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

The Representative’s

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are more likely than not to be realized in the future.

Due to uncertainty to the Company’s ability to utilize its deferred tax assets,

the Company has recorded a full valuation allowance against its deferred tax assets.

Due to uncertainty about the Company’s ability to utilize its deferred tax

assets, the Company has recorded a full valuation allowance against its deferred tax assets.

At December 31, 2023, the Company’s net operating

loss carryforward for Federal income tax purposes was $ 108,922,763 , which will be available to offset future taxable income.

these carry forwards will begin to expire in 2032, except for the net operating losses generated January 1, 2018 and after, which can

be carried forward indefinitely.

these carry forwards will begin to expire in 2032, except for the net operating losses generated January 1, 2018 and after, which amounted

to $ 90,921,071 , which can be carried forward indefinitely.

There was no income tax expense or benefit for the

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Notes to the Consolidated Financial Statements

Note 13 – Tax Provision, continued

The reconciliation of the income tax benefit is computed

federal statutory rate as follows:

Schedule of Effective Income Tax Rate Reconciliation

Schedule of effective

income tax rate reconciliation

Federal Statutory Tax Rate

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rise to the significant portions of deferred tax assets or liabilities at December 31 are as follows:

Schedule of Deferred Tax Assets and Liabilities

Schedule of deferred

tax assets or liabilities

Deferred Tax Assets:

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Note 14 – Subsequent Events

In February 2023 the $ 200,000

note payable that was in default was settled via payment of $ 302,667

In February 2023 the Company received $ 2.0 million

from a Private Placement issuance of convertible notes.

The notes convert into 3.5 M shares of our common stock.

In February 2023 the Company transferred cash in

bank deposits accounts to the maximum federally insured limits of $ 250,000

to minimize unissued funds.

At March 29, 2023 we had $ 563,498

over the federally insured limits.

We have notes that expire in 2023 that we will extend

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure.

On March 9, 2023, the Company

was advised by Daszkal Bolton, LLP (“Daszkal”), the Company’s independent registered public accounting firm, that Daszkal

completed a business combination agreement with CohnReznick LLP (“CohnReznick”).

As a result of this transaction, Daszkal

will resign as the Company’s independent registered public accounting firm upon the Company filing its annual report on Form 10-K

for the year ended December 31, 2022.

The Company’s current Daszkal audit team is now part of CohnReznick and the Company expects

it will likely engage CohnReznick to serve as the Company’s independent registered public accounting firm for the Company’s

fiscal year ending December 31, 2023, but has not engaged CohnReznick at this time.

Daszkal’s reports on

the Company’s financial statements for the past two years did not contain an adverse opinion or a disclaimer of opinion, and were

not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the years ended December 31, 2021 and 2020, and the subsequent interim periods through November 14, 2022,

there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company

and Daszkal on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which,

if not resolved to Daszkal’s satisfaction, would have caused Daszkal to make reference thereto in its reports on the financial statements

for such years;

and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation

S-K, except that Daszkal advised the Company of material weaknesses in its internal control over financial reporting as of December 31,

2021 and 2020.

In January 2024, the Company entered into a

convertible note with an individual in the amount of $ 250,000 .

The note has an eighteen-month 18 term, accrues interest at 12 %

and is convertible into shares of common stock of the Company at $ 0.50

per share, which also includes 200% warrants at $ 0.25

In January 2024, the Company entered into a commercial

loan in the amount of $ 500,000 .

The total cost of the loan is $ 250,000 and is paid in weekly increments of 6.97 % of the current receivable

In February 2024, the Company entered into a

convertible note with an individual in the amount of $ 150,000 .

The note has an eighteen-month 18 term, accrues interest at 12 %

and is convertible into shares of common stock of the Company at $ 0.40

per share, which also includes 250% warrants at $ 0.25 .

In March 2024, the Company received a $ 109,000 cash

advance from our chief executive officer, resulting in a related party payable.

This note bears 0 % interest.

We have notes that expire in 2024 that we plan to

extend or payoff.

Changes in and Disagreements

with Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data