What changed in this filing

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Item 1. Financial Statements

2024-05-15 compared with 2023-11-14 · 557 added, 593 removed, 238 unchanged (83% of the section changed)

2 unchanged sentences

Condensed Consolidated Financial Statements

September 30, 2023

March 31, 2024

Splash Beverage Group, Inc.

Condensed Consolidated Balance Sheets

September 30, 2023 and December 31, 2022

September 30,

March 31, 2024 and December 31, 2023

December 31, 2023

8 unchanged sentences

Investment in Salt Tequila USA, LLC

Operating lease right of use asset

Right of use assets

Property and equipment, net

3 unchanged sentences

Accounts payable and accrued expenses

Liability to issue shares

Operating lease liabilities - current

Notes payable, current portion

Due to related party

Shareholder advance

Right of use liability, current portion

Related party notes payable

Notes payable, net of discounts

Shareholder advances

Accrued interest payable

1 unchanged sentence

Long-term liabilities:

Notes payable

Operating lease liabilities - noncurrent

Notes payable, net of discounts

Right of use liability – net of current portion

Total long-term liabilities

2 unchanged sentences

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

Common Stock, $ 0.001 par, 300,000,000 shares authorized, 42,902,185 shares issued, 42,902,185 shares outstanding at September 30, 2023 and 41,085,520 shares issued, 41,085,520 shares outstanding at December 31, 2022

Common Stock, $ 0.001 par, 300,000,000 shares authorized, 46,382,099 shares issued, 44,330,099 shares outstanding at March 31, 2024 and December 31, 2023

Additional paid in capital

4 unchanged sentences

Total stockholders’ equity

( 9,502,688 )

( 5,605,326 )

Total liabilities and stockholders’ equity

The accompanying notes are an integral part

of these condensed consolidated financial statements.

The accompanying notes are an integral part of these

condensed consolidated financial statements.

Splash Beverage Group, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three and Nine Months Ended September 30, 2023 and 2022

Three months ended September 30

Nine months ended September 30,

For the Three Months Ended March 31, 2024 and 2023

Three months ended March 31,

Cost of goods sold

1 unchanged sentence

( 4,061,228 )

( 11,326,298 )

( 8,886,508 )

Operating expenses:

8 unchanged sentences

( 3,454,921 )

( 11,999,801 )

( 16,623,983 )

Other income/(expense):

Amortization of debt discount

Interest Income

Interest expense

Amortization of debt discount

( 1,125,410 )

( 2,500,065 )

Total other expense

( 1,420,600 )

( 3,009,827 )

Provision for income taxes

4 unchanged sentences

$ ( 3,729,299 )

Net loss from discontinued operations, net of tax

Gain on sale of discontinued operations

Income (Loss) from discontinued operations

$ ( 5,670,081 )

$ ( 5,143,801 )

$ ( 15,009,628 )

$ ( 16,897,065 )

Other Comprehensive Income

Foreign currency translation Income

Other comprehensive loss foreign currency translation loss, net of tax

Total comprehensive loss

1 unchanged sentence

( 3,730,908 )

$ ( 14,997,604 )

$ ( 16,897,065 )

Loss per share - continuing operations

Basic and diluted

Basic and dilutive

Weighted average number of common shares outstanding - continuing operations

Basic and diluted

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Basic and dilutive

The accompanying notes are an integral part of these

condensed consolidated financial statements.

Splash Beverage Group, Inc.

Condensed Consolidated

Statement of Changes in Stockholders’ Equity

For the Three and Nine months ended September

30, 2023 and 2022

Accumulated Other

Stockholders'

Comprehensive

Paid-In Capital

Balances at December 31, 2021

Issuance of common stock on convertible instruments

Issuance of warrants and options for services

Issuance of common stock for services

Issuance of common stock and warrants for cash

Balances at March 31, 2022

Issuance of warrants for services

Issuance of common stock for services

Issuance of common stock and warrants for cash

Accumulated Comprehensive Income - Translation

Balances at June 30, 2022

( 102,393,821

Issuance of warrants for services

Issuance of common stock for APA

Issuance of common stock and warrants for cash

Accumulated Comprehensive Income - Translation

Balances at September 30, 2022

( 107,537,622

Condensed Consolidated Statement of Changes

in Stockholders’ Equity

For the Three months ended March 31, 2024 and 2023

Common Shares

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

stockholders’ equity

Balances at December 31, 2022

2 unchanged sentences

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

Issuance of warrants for services

Share based compensation

Accumulated Comprehensive loss – translation, net

4 unchanged sentences

$ ( 116,060,325 )

Issuance of common stock on convertible instruments

Balances at December 31, 2023

$ 127,701,710

$ ( 133,334,783 )

$ ( 5,605,326 )

Issuance of common stock for note extension

Share based compensation

Issuance of common stock for services

Adoption of ASU 2020-06

( 2,191,103 )

Issuance of warrants on convertible instruments

Conversion of notes payable to common stock

Issuance of common stock for services

Accumulated Comprehensive loss – translation, net

1 unchanged sentence

( 4,670,897 )

Balances at June 30, 2023

Balances at March 31, 2024

$ 127,221,573

$ ( 136,746,623 )

Debt discount from convertible instrument

Share based compensation

Issuance of common stock for services

Issuance of warrants on convertible instruments

Accumulated Comprehensive loss – translation, net

Balances at September 30, 2023

$ ( 9,502,688 )

The accompanying notes are an integral part

of these condensed consolidated financial statements.

The accompanying notes are an integral part of these

condensed consolidated financial statements.

Splash Beverage Group, Inc.

Condensed Consolidated Statement Cash Flows

For the Nine Months Ended September 30, 2023 and 2022

Condensed Consolidated Statement of Cash

For the Three Months Ended March 31, 2024 and 2023

$ ( 4,670,897 )

$ ( 3,729,299 )

Adjustments to reconcile

net loss to net cash used in operating activities:

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

Depreciation and amortization

1 unchanged sentence

ROU assets, net

Loss (gain) from sale

of discontinued operation

Common stock issued for

Non-cash share-based compensation

Changes in working capital

Changes in working capital items:

Accounts receivable, net

Inventory, net

( 1,660,852 )

Prepaid expenses and other

current assets

Accounts payable and accrued

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Accrued interest payable

Net cash used in operating activities - continuing

Net cash used in operating activities

( 1,307,925 )

2 unchanged sentences

Capital expenditures

Net cash used in investing activities - continuing

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance

of common stock

Cash advance from related

Cash advance (repayment) from related party

Cash advance from shareholder

Proceeds from issuance

Principal repayment of

( 1,285,861 )

Proceeds from issuance of debt

Principal repayment of debt

Net cash provided by financing activities

continuing operations

Net cash effect of exchange rate changes on

Net cash effect of exchange rate changes on cash

Net change in cash and cash equivalents

( 2,285,948 )

( 1,580,113 )

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of period

disclosure of cash flow information:

Supplemental disclosure of cash flow information:

Cash paid for Interest

disclosure of non-cash investing and financing activities

Notes payable and accrued

interest converted to common stock (223,596 shares)

Non-cash debt discount

in the form of issuance of equity instruments and beneficial conversion feature in conjunction with convertible notes

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Supplemental disclosure of non-cash investing and financing activities

Notes payable and accrued interest converted to common stock (1,552,000 shares in 2024)

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

The accompanying notes are an integral part of these

condensed consolidated financial statements.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Notes to the Condensed Consolidated Financial Statements

Note 1 – Business Organization and Nature of Operations

1 unchanged sentence

(the “Company”,

“Splash”) seeks to identify, acquire, and build early stage or under-valued beverage brands that have strong growth

potential within its distribution system.

Splash’s distribution system is comprehensive in the US and is now expanding to

select attractive international markets.

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

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

Qplash markets well known beverage brands to customers

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

Summary of Significant Accounting Policies

“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.

Note 2 – Summary

of Significant Accounting Policies

Basis of Accounting

3 unchanged sentences

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

under those rules, certain footnotes or other financial information that are normally required by U.S.

GAAP can be condensed or

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

in conformity with U.S.

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

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

As permitted under

those rules, certain footnotes or other financial information that are normally required by U.S.

GAAP can be condensed or omitted.

they do not include all of the information and footnotes normally included in financial statements prepared in conformity with U.S.

They should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2023 Annual

Report on Form 10-K, filed with the SEC on March 31,2024 (the “Form 10-K”).

The accompanying condensed consolidated financial

1 unchanged sentence

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

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

The results of

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

Basis of Presentation and Consolidation

These consolidated financial statements include

the accounts of Splash and its wholly owned subsidiaries Splash Beverage Holdings LLC (“Holdings”), Splash International

Holdings LLC (“International”), Splash Mex SA de CV (“Splash Mex”) and Copa di Vino Wine Group, Inc.

Canfield Medical Supply, Inc.

(as discontinued operations), was consolidated until September 30, 2022.

All intercompany balances have been eliminated

in consolidation.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Our investment in Salt Tequila USA, LLC is

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

Certain reclassifications have been made to

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

In the three months ended September 30, 2022, the Company reclassified $ 617,553 from cost of goods sold to other general and administrative

cost in the condensed consolidated statement of operations and comprehensive loss, which consisted of $ 176,504 of shipping and

handling and $ 441,049 of Amazon selling fees.

In the nine months ended September 30, 2022, the Company reclassified $ 1,753,208

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

loss, which consisted of $ 602,479 of shipping and handling and $ 1,150,729 of Amazon selling fees.

These reclassifications had no

impact on net loss.

These consolidated financial statements include the

accounts of Splash and its wholly owned subsidiaries Splash Beverage Holdings LLC (“Holdings”), Splash International Holdings

LLC (“International”), Splash Mex SA de CV (“Splash Mex”), and Copa di Vino Wine Group, Inc.

(“Copa di Vino”).

All intercompany balances have been eliminated in consolidation.

Our investment in Salt Tequila USA, LLC is accounted

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

Our accounting and reporting policies confirm to accounting

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

Use of Estimates

The preparation of condensed consolidated financial

statements in conformity with U.S.

GAAP requires our management to make estimates and assumptions that affect the reported amounts

of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial

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

Actual results could differ from those

Cash Equivalents and Concentration

of Cash Balance

The preparation of consolidated financial statements

in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts

of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Cash Equivalents and Concentration of Cash

The Company considers all highly liquid securities

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

The Company had no cash equivalents at September 30,

2023 or December 31, 2022.

At September 30, 2023 the Company’s cash

on deposit with financial institutions, at times, had not exceed federally insured limits of $ 250,000 .

The Company had no cash equivalents at March 31, 2024 or December

Our cash in bank deposit accounts, at times, may exceed

federally insured limits of $ 250,000 .

At March 31, 2024 and December 31, 2023, the Company’s cash on deposit with financial institutions,

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

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Note 2 – Summary of Significant

Accounting Policies, continued

Accounts Receivable and Allowance

for Doubtful Accounts

Notes to the Condensed Consolidated Financial

Note 2 – Summary of Significant Accounting

Policies, continued

Accounts Receivable and Allowance for Doubtful

Accounts receivable are carried at their estimated

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

The Company establishes provisions for losses on accounts receivable on the basis of loss experience, known and inherent risk in

the account balance, and current economic conditions.

At September 30, 2023 and December 31, 2022, our accounts receivable amounts

are reflected net of allowances of $ 14,634 and $ 13,683 , respectively.

Inventory is stated at the lower of cost or

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

The inventory balances at September 30, 2023 and December

31, 2022 consisted of raw materials, work-in-process, and finished goods held for distribution.

The cost elements of inventory

consist of purchase of products, transportation, and warehousing.

The Company establish provisions for excess or inventory near

expiration are based on management’s estimates of forecast turnover of inventories on hand and under contract.

A significant

change in the timing or level of demand for certain products as compared to forecast amounts may result in recording additional

provisions for excess or expired inventory in the future.

Provisions for excess inventory are included in cost of goods sold and

have historically been adequate to provide for losses on inventory.

The Company manages inventory levels and purchase commitments

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

The amount of our reserve was $ 253,603 and $ 66,146

at September 30, 2023 and December 31, 2022, respectively.

Company establishes provisions for losses on accounts receivable on the basis of loss experience, known and inherent risk in the account

balance, and current economic conditions.

At March 31, 2024 and December 31, 2023, our accounts receivable amounts are reflected net of

allowances of $ 208,186 and $ 183,089 , respectively.

Inventory is stated at the lower of cost or net realizable

value, accounted for using the weighted average cost method.

The inventory balances at March 31, 2024 and December 31, 2023 consisted

of raw materials, work-in-process, and finished goods held for distribution.

The cost elements of inventory consist of purchase of products,

transportation, and warehousing.

The Company establish provisions for excess or inventory near expiration are based on management’s

estimates of forecast turnover of inventories on hand and under contract.

A significant change in the timing or level of demand for certain

products as compared to forecast amounts may result in recording additional provisions for excess or expired inventory in the future.

Provisions for excess inventory are included in cost of goods sold and have historically been adequate to provide for losses on inventory.

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

The amount of our reserve was $ 253,128 and $ 290,524 at March 31, 2024 and December 31, 2023, respectively.

Property and Equipment

The Company records property and equipment

at cost when purchased.

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

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

Company management reviews the recoverability of all long-lived

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

long-lived asset might not be recoverable.

Depreciation expense totaled $ 38,242 and $ 27,762

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

For the nine months ended September 30, 2023

and September 30, 2022 depreciation expense totaled $ 98,285 and $ 101,991 respectively.

Property and equipment as of September

30, 2023 and December 31, 2022 consisted of the following:

The Company records property and equipment at cost

when purchased.

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

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

Company management reviews the recoverability of all long-lived assets, including

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

be recoverable.

Depreciation expense totaled $ 37,214 and $ 46,701 for

the three months ended March 31, 2024 and March 31, 2023, respectively.

Property and equipment as of March 31, 2024 and December 31, 2023

consisted of the following:

Schedule of property and equipment

7 unchanged sentences

Property, plant & equipment, net

The Company pays alcohol excise taxes based

on product sales to both the Oregon Liquor Control Commission and to the U.S.

Department of the Treasury, Alcohol and Tobacco Tax

and Trade Bureau (TTB).

The Company pays alcohol excise taxes based on product

sales to both the Oregon Liquor Control Commission and to the U.S.

Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau

The company also pays taxes to the State of Florida – Division of Alcoholic Beverages and Tobacco.

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

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.

The Company is liable

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

The federal tax rate is affected by

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

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 2 – Summary of Significant

Accounting Policies, continued

Notes to the Condensed Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”)

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

or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities

(Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value

hierarchy are as follows:

Financial Accounting Standards (“FASB”)

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

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions.

The hierarchy

gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and

the lowest priority to unobservable inputs (Level 3 measurement).

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

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

3 unchanged sentences

Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The liabilities and indebtedness presented

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

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

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Summary of Significant Accounting Policies, continued

The liabilities and indebtedness presented on the

condensed consolidated financial statements approximate fair values at March 31, 2024 and December 31, 2023, consistent with recent negotiations

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

Embedded debt costs

in convertible debt instruments

In August 2020, the FASB issued “ASU 2020-06,

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic

815-40)” (“ ASU 2020-06 ”) which simplifies the accounting for convertible instruments.

The guidance removes certain

accounting models which separate the embedded conversion features from the host contract for convertible instruments.

Either a modified

retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard.

2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

adoption was permitted no earlier than the fiscal year beginning after December 15, 2020.

The Company has adopted ASU 2020-06 effective

January 1, 2024 and has removed the effects of any embedded conversion features from certain of our convertible instruments.

Revenue Recognition

The Company recognizes 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 the Company expects to receive in exchange for the transfer of goods or services to customers.

The Company recognizes 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 the Company expects to receive in exchange for the transfer of goods or services to customers.

The Company recognizes revenue when the Company’s

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

Product sales occur for the Splash Beverage

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

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

presented net of provisions for customer returns and allowances.

The amount of consideration the Company receives and revenue the

Company recognizes varies with changes in customer incentives offered to the Company’s customers and their customers.

taxes and other similar taxes are excluded from revenue.

Product sales occur for the Splash Beverage and

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

Revenue is measured

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

provisions for customer returns and allowances.

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

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

Sales taxes and other similar taxes

are excluded from revenue.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

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

1 unchanged sentence

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

cost of transportation from production site to other 3 rd party warehouses or customer is included in Other General and Administrative

Other General and Administrative Expenses

Other General and Administrative expenses include

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

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

cost, shipping and handling cost and other cost.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Shipping and Handling Costs

The Company includes costs associated with

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

statements of operations and comprehensive loss.

Shipping and handling are not separately billed to the customers and are included

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

The Company incurred $ 1,279,189 and $ 1,268,636

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

The Company incurred $ 4,016,394

and $ 3,261,266 of shipping and handling costs for the nine months ending September 30, 2023 and 2022 respectively.

These amounts,

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

Other General and Administrative expenses includes

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

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

Stock-Based Compensation

2 unchanged sentences

Under the fair value recognition provisions,

cost is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite

service period, which is generally the award’s vesting period.

The Company uses the Black-Scholes option pricing model to

determine the fair value of stock-based awards.

The Company uses the liability method of accounting

for income taxes as set forth in ASC 740, ” Income Taxes” .

Under the liability method, deferred taxes are

determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax

rates expected to be in effect during the years in which the basis differences reverse.

The Company records a valuation allowance

when it is not more likely than not that the deferred tax assets will be realized.

Company management assesses its income tax

positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and

information available at the reporting date.

In accordance with ASC 740-10, for those tax positions where there is a greater than

50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely

than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those income tax positions where there

is less than 50 % likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements.

Company management has determined that there are no material uncertain tax positions at September 30, 2023 and December 31, 2022.

The Company’s federal, state and local

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

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

The Company recognizes interest and penalties

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

in the condensed interim balance sheets.

cost is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service

period, which is generally the award’s vesting period.

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

fair value of stock-based awards.

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

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.

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

method,” which calculates the expected term as the midpoint between the weighted average time to vesting and the contractual maturity,

we have limited historical information to develop reasonable expectations about future exercise patterns.

The simplified method is based

on the average of the vesting tranches and the contractual life of each grant.

For stock price volatility, we use comparable public companies

as a basis for its expected volatility to calculate the fair value of award.

The risk-free interest rate is based on U.S.

Treasury notes

with a term approximating the expected life of the award.

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.

The Company uses the liability method of accounting for income taxes as set

forth in ASC 740, ” Income Taxes” .

Under the liability method, deferred taxes are determined based on the temporary

differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the

years in which the basis differences reverse.

The Company records a valuation allowance when it is more likely than not that the deferred

tax assets will be realized.

Company management assesses its income tax positions

and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available

at the reporting date.

In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax

benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon

ultimate settlement with a taxing authority that has full knowledge of all relevant information.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Note 2 – Summary of Significant

Accounting Policies, continued

Notes to the Condensed Consolidated Financial

Note 2 – Summary of Significant Accounting

Policies, continued

For those income tax positions where there is less

than 50 % likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements.

Company management

has determined that there are no material uncertain tax positions at March 31, 2024 and December 31, 2023.

Net income (loss) per share

The net income (loss) per share is computed

by dividing the net income (loss) by the weighted average number of shares of common stock outstanding.

Warrants, stock options,

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

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

The net income (loss) per share is computed by dividing

the net income (loss) by the weighted average number of shares of common stock outstanding.

Warrants, stock options, and common stock

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

if the effect would be anti-dilutive.

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 that have

not been exercised totaling 81,014,017 .

The Company conducts advertising for the promotion

1 unchanged sentence

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

For the three months

ended September 30, 2023 and September 30, 2022 the Company recorded advertising expenses of $ 248,512 and $ 746,965 , respectively.

The Company recorded advertising expense of $ 1,075,127 and $ 1,918,420 for the nine months ended September 30, 2023 and 2022, respectively.

The Company recorded advertising

expense of $ 77,627 and $ 195,048 for the three months ended March 31, 2024 and 2023, respectively.

Goodwill and Intangibles Assets

Goodwill represents the excess of acquisition

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

The Company reviews goodwill annually in

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

This evaluation is performed

at the reporting unit level.

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

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

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

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

Intangible assets consist of customer lists,

brands and license agreements acquired in the acquisition of Copa Di Vino.

The Company amortizes intangible assets with finite

lives on a straight-line basis over their estimated useful lives of 15 years.

Goodwill represents the excess of acquisition cost

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

The Company reviews goodwill annually in the fourth

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

This evaluation is performed at the reporting

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 intangible assets finite useful lives

March 31, 2024

Customer Relationships

Total Intangible Assets

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 $ 98,017 for the three

months ended March 31, 2024 and 2023.

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

and the succeeding years is as follows:

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Note 2 – Summary of Significant

Accounting Policies, continued

Notes to the Condensed Consolidated Financial

Note 2 – Summary of Significant Accounting

Policies, continued

Schedule of estimated amortization expense

Future Intangible Asset

Amortization Expense

2024 (9 months)

Long-lived assets

The Company evaluates long-lived assets for

impairment when events or changes in circumstances may indicate the carrying amount of the asset group, generally an individual

warehouse, may not be fully recoverable.

For asset groups held and used, including warehouses to be relocated, the carrying value

of the asset group is considered recoverable when the estimated future undiscounted cash flows generated from the use and eventual

disposition of the asset group exceed the respective carrying value.

In the event that the carrying value is not considered recoverable,

an impairment loss is recognized for the asset group to be held and used equal to the excess of the carrying value above the estimated

fair value of the asset group.

For asset groups classified as held-for-sale (disposal group), the carrying value is compared to

the disposal group’s fair value less costs to sell.

The Company estimates fair value by obtaining market appraisals from

third party brokers or using other valuation techniques.

Segment reporting

The Company discloses a measurement of segment

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

allocations for each reportable segment.

Recent Accounting Pronouncements

On January 1, 2023, the Company adopted FASB

issued ASU No.

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

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

Adoption of this standard did not

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

Management does not believe that any recently

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

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

In October 2021, the FASB issued ASU 2021-08, Business Combinations

- Accounting for contract assets and contract liabilities from contracts with customers (Topic 805), which requires contract assets

and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date

in accordance with Revenues from contracts with customers (Topic 606).

For public companies, the guidance is effective for fiscal

years beginning after December 15, 2022, and interim periods within those fiscal years.

The Company adopted the guidance during

fiscal year 2023.

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

The Company evaluates long-lived assets for impairment

when events or changes in circumstances may indicate the carrying amount of the asset group, generally an individual warehouse, may not

be fully recoverable.

For asset groups held and used, including warehouses to be relocated, the carrying value of the asset group is considered

recoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceed

the respective carrying value.

In the event that the carrying value is not considered recoverable, an impairment loss is recognized for

the asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group.

groups classified as held-for-sale (disposal group), the carrying value is compared to the disposal group’s fair value less costs

The Company estimates fair value by obtaining market appraisals from third party brokers or using other valuation techniques.

Foreign Currency Gains/Losses

Foreign Currency Gains/Losses — foreign

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

dollars using current exchange rates.

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

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

Translation gains

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

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

operations and comprehensive loss.

The Company incurred foreign currency translation net gain of $ 13,632

for the three months ended September 30, 2023 and 2022 respectively and net gain of $ 12,023

and net loss of $2,225 ( 2,225 )

for the nine months ending September 30, 2023 and 2022 respectively.

Foreign Currency Gains/Losses — foreign subsidiaries’

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

dollars using

current exchange rates.

Gains or losses from these translation adjustments are included in the condensed consolidated statement of operations

and other comprehensive loss as foreign currency translation gains or losses.

Translation gains and losses that arise from the translation

of net assets from functional currency to the reporting currency, as well as exchange gains and losses on intercompany balances, are included

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

The Company incurred foreign

currency translation net loss of $ 7,437 and $ 1,609 for the three months ending March 31, 2024 and 2023 respectively.

Liquidity, Capital Resources and Going Concern Considerations

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 historically has incurred significant losses and negative cash flows from operation

since inception and had net-loss of approximately $ 4.7

million for three-month period ended March 31, 2024 and accumulated deficit of approximately $136.7 million 136,746,623

through March 31, 2024.

During the three-month period ended March 31, 2024, the Company’s net cash used in operating activities

totaled approximately $ 1.3 million.

Additionally, the Company’s current liabilities exceed its current assets, and it has a working capital deficit.

During the year ended December 31, 2023, the Company sustained a net loss of approximately

$ 21 .0 million and used cash in operating activities of $ 10.2 million, which excludes non-cash charges and financing activities.

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

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Liquidity and Going Concern Considerations

These condensed consolidated financial statements

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

The Company historically has incurred significant

losses and negative cash flows from operation since inception and had net-loss of approximately $15 million for nine-month period

ended September 30, 2023 and accumulated deficit of approximately $127.3 million through September 30, 2023.

During the nine-month

period ended September 30, 2023, the Company’s net cash used in operating activities totaled approximately $8.5 million.

If sales volumes do not meet the Company’s

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

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

In such case, the Company may be required

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

In order to have sufficient cash to fund our

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

There can be no assurance that additional funds will

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

The Company will

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

Future financings

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

Also, the terms of securities the Company may issue

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

Newly issued securities may include preferences, superior

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

incentive plans, which may have additional dilutive effects.

Further, the Company may incur substantial costs in pursuing future

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

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

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

Our ability to obtain needed

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

or cost of future financings.

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

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

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

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

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

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

available to be issued.

Notes to the Condensed Consolidated Financial

Note 2 – Summary of Significant Accounting

Policies, continued

The Company received approximately $ 1.5

million from the issuance of debt for the three months ending March 31, 2024.

This event served to mitigate the conditions that

previously raised substantial doubt about the Company’s ability to continue as a going concern.

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 funds.

If the Company is unable to raise additional funding to meet its working capital needs in the future, it may be forced to delay, reduce,

or cease its operations.

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 affected.

Recent Accounting Pronouncements

In August 2020, the FASB issued “ASU 2020-06,

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic

815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments.

The guidance removes certain accounting

models which separate the embedded conversion features from the host contract for convertible instruments.

Either a modified retrospective

method of transition or a fully retrospective method of transition was permissible for the adoption of this standard.

2020-06 is effective for fiscal years beginning

after December 15, 2021, including interim periods within those fiscal years.

Early adoption was permitted no earlier than the fiscal

year beginning after December 15, 2020.

The Company has adopted ASU 2020-06 effective January 1, 2024, the Company recorded approximately

$ 2.2 million as a reduction to the additional paid in capital and added approximately $ 1.3 million to the opening retained earnings in

accordance with the authoritative guidance under ASU 2020-06.

All other newly issued but not yet effective accounting

pronouncements have been deemed to be not applicable or immaterial to the Company.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Note 3 – Notes Payable, Related

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

Notes payable are generally non-recourse and

secured by all Company owned assets.

Schedule of notes payable

September 30,

Notes to the Condensed Consolidated Financial

Note 3 – Notes Payable, Related Party

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

Notes payable are generally nonrecourse and secured

by all Company owned assets.

Schedule of notes payable and convertible

notes payable

Notes Payable and Convertible Notes Payable

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 .

2 unchanged sentences

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.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

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

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

The loan was extended to October 31, 2024.

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

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

The loan was extended to October 31, 2024.

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

2 unchanged sentences

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

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

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.

The loan was extended to May, 2024.

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 .

7 unchanged sentences

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 .

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 bearing.

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 bearing.

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 June 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.

The loan was extended to June 2024.

In January 2024, we entered into a loan in the amount of $ 500,000 .

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

It was paid off with a new loan in April 2024

In January 2024, we entered into a 18-month loan with an individual in the amount of $ 250,000 .

The note included 100 % warrant coverage.

The loan had a maturity of July 2025 with principal and interest due at maturity with conversion price of $ 0.50 per share.

In February 2024, we entered into a 18-month loan with an individual in the amount of $ 150,000 .

The note included 100 % warrant coverage.

The loan had a maturity of August 2025 with principal and interest due at maturity with conversion price of $ 0.40 per share.

In February 2024, we entered into a 6-month loan with an individual in the amount of $ 315,000 .

The note included 60 % warrant coverage.

The loan had a maturity of August 2024 with principal and interest due at maturity with conversion price of $ 0.38 per share

In February 2024, the Company entered into a 18-month loan with an entity in the amount of $ 250,000 .

The note included 100 % warrant coverage.

The loan matures in August 2025 with principal and interest due at maturity with conversion price of $ 0.46 per share

Total notes payable

6 unchanged sentences

Long-term notes payable

expense on notes payable was $ 207,087 and

the three months ended September 30, 2023 and 2022, respectively.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

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

Bridge Loan Payable, continued

Interest expense on notes payable was $ 533,578 and

$ 217,123 for

the nine months ended September 30, 2023 and 2022, respectively.

Accrued interest was $ 496,384 as

of September 30, 2023.

$ 167,121 for the three months ended March 31, 2024 and 2023, respectively.

Accrued interest was $ 501,752 for the three months ended March 31, 2024.

The Company recognized approximately $ 886,838 and

approximately $ 247,661 of

interest expense attributable to the amortization of the debt discount during the three months ended March 31,

2024 and 2023, respectively.

As of March 31, 2024, and Dece mber 31,

2023, the balance of the unamortized debt discount was $ 1,825,848 and $ 1,944,348 respectively.

The Company adopted ASU 2020-06 on January 1, 2024, which resulted in the reversal of the original bifurcated derivative

(BCF) amount to additional paid in capital for $ 2,191,103 , reversal of the unamortized debt discount related to the bifurcated derivative (BCF) for $ 932,047 with the balance being recorded through retained earnings for $ 1,259,056 .

Schedule of notes payable

Interest Rate

Shareholder 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

Long-term notes payable

Interest expense on related party notes payable was

$ 6,000 and $ 0 for the three months ended March 31, 2024 and 2023, respectively.

The Company’s effective interest rate was 21.85 %

for the nine months ended September 30, 2023.

As of September 30, 2023, the Company’s

convertible note balances are convertible into 9,222,251 shares of common stock.

Shareholder Advances

As of February 23, 2023, the Company received

a shareholder advance for $ 200,000 with a 12 % interest rate and interest expense was $ 14,400 for the nine months ended September 30, 2023.

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

Note 4 – Licensing Agreement and

Royalty Payable

The Company has a licensing agreement with

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

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

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

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

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

and $ 54,450 in 2022.

There were no unpaid royalties at September

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

30, 2023 and 2022 respectively and $ 495,000 and $ 490,050 for the nine months ending September 30, 2023 and 2022 respectively, which

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

In connection with the Copa di Vino APA, the

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

On February 16, 2018, Copa di Vino entered

into three separate license agreements with 1/4 Vin.

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

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

In exchange for notes payable, 1/4 Vin granted

the Company a nonexclusive, royalty-bearing, non-assignable, nontransferable, terminable license which would continue until the

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

Amortization is approximately $31,000 annually until the license

agreement is fully amortized in 2027.

for the three months ended March 31, 2024.

As of March 31, 2024, the Company’s convertible

note balances are convertible into 14,615,036 shares of common stock

Note 4 – Licensing Agreement and Royalty

The Company has a licensing agreement with ABG TapouT,

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

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

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

Kingdom, Brazil, South Africa, Australia, Scandinavia, Peru, Colombia, Chile and Guatemala.

The Company is required to pay a 6% royalty

on net sales, as defined, and are required to make minimum monthly payments of $ 55,000 in 2024 and 2023.

There were no unpaid royalties at March 31, 2024.

The Company paid the guaranteed minimum royalty payments of $ 165,000 for the three months ended March 31, 2024 and 2023 respectively,

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

In connection with the Copa di Vino APA, the Company

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

separate license agreements with 1/4 Vin.

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

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

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

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

service or the patents expire.

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

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

Note 5– Stockholders’ Equity

During the period ended September 30, 2023,

the Company entered into a private placement offering to purchase convertible instruments that convert into the Company’s

common stock up to an aggregate of $ 8,500,000 .

The Company received gross proceeds of $ 4,300,000 from the issuance of convertible

instruments with 3,725,000 shares and 1,000,000 warrants.

In the three months and nine months ended September

30, 2023, the Company granted share-based awards to certain consultants totaling 99,999 and 316,666 shares of common stock, respectively,

at a weighted average price of $0.66 and $0.91, respectively, recognized share-based compensation of $ 66,332 and $ 289,998 , respectively.

In the nine months ended September 30, 2023, the Company issued 100,000 shares in satisfaction of a $ 91,800 liability to issue

shares recorded in December 2022.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Notes to the Condensed Consolidated Financial

Note 5– Stockholders’ Equity

In July 2020, the Board adopted the 2020 Stock

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

Rights, Performance Units and Performance Bonuses to consultants and eligible recipients.

The 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%.

In February 2023, the Board of Directors approved

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

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

As part of the SPA, each purchaser received additional

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

During the three-months ended March 31, 2024, we issued

300,000 shares in exchange for services, 200,000 shares for extension of note, 1,552,000 shares on conversion of convertible instruments,

and 300,000 shares for service.

In July 2020, the Board adopted the 2020 Stock Incentive

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

Units and Performance Bonuses to consultants and eligible recipients.

The total number of shares that may be issued under the 2020 plan

was 2,313,133 at the time the 2020 plan was adopted as of March 31, 2024.

The 2020 Plan has an “evergreen” feature,

which provides for the annual increase in the number of shares issuable under the plan by an amount equal to 5% of the number of issued

and outstanding common shares at year end, unless otherwise adjusted by the board.

At January 1, 2023 and 2024, the number of shares issuable

under the 2020 plan increased by 2,054,276 and 2,984,276 shares, respectively.

In October 2023, the shareholders voted to increase

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

The following is a summary of the Company’s

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

stock option activity:

Schedule of stock option activity

Stock options

Weighted average exercise price of outstanding stock

Weighted average remaining life (Yrs)

January 01, 2023 *

March 31, 2024

Balance - June 30, 2023

Exercisable - June 30, 2023

Balance - September 30, 2023

Exercisable - September 30, 2023

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

The Company recognized $ 300,912 and $ 1,025,903

of share-based compensation during the three months and nine months ended September 30, 2023.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

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

Schedule of warrant activity

Weighted average exercise

price of outstanding

Weighted average

remaining term (Yrs)

Balance December 31, 2022

March 31, 2023

Number of Options

Weighted Average Exercise Price

Number of Options

Weighted Average Exercise Price

Balance - January 1*

Balance – March 31,

Balance - June 30, 2023

Balance - September 30, 2023

Exercisable – March 31,

During the three-month period ended March 31, 2024

and March 31, 2023, the company granted 630,000 and 65,000 options to new employees under the 2020 plan.

The fair value of stock options granted in the period

has been measured at $ 272,263 using the Black-Scholes option pricing model with the following assumptions:

exercise price $ 0.59 , expected

life 10 years, expected volatility 82.28 %, expected dividends 0 %, risk free rate 4.0 %.

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 5 – Stockholders’ Equity, continued

Common Stock Issuable, Liability to Issue Stock

and Shareholder Advances

Outstanding balance for shareholder advances on March

31, 2024 and 2023 was $ 200,000 .

Note 6 – Related Parties

During the normal course of business, the Company

incurs expenses related to services provided by the CEO for Company expenses paid by the CEO.

In conjunction with the acquisition

of Copa di Vino, the Company also entered into a Revenue Loan and Security Agreement (the “Loan and Security Agreement”)

by and among the Company, Robert Nistico, was an additional Guarantor and each of the subsidiary guarantors from time-to-time party

thereto (each a “Guarantor”, and, collectively, the “Guarantors”), and Decathlon Alpha IV, L.P.

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

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

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

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

(the “Lender”).

The Note Payable had a balance outstanding of $ 494,204 at September 30,2023.

On June 22, 2023, the Company received an interest

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

In August and September 2023, the Company received an interest free short-term

loan from the CEO for $ 165,000 and expense payable of $ 11,000 .

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

Note 7 – Investment in Salt Tequila

The Company has a marketing and distribution

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

The Company has a 22.5 % percentage ownership

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

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

Splash Beverage Group, Inc.

Notes to the Condensed

Consolidated Financial Statements

The Note Payable with a balance of $ 294,779 at March 31, 2024 and $ 371,693 at March 31,2023.

There were related party advances from our chief

executive officer in the amount of approximately $ 0.4 million

outstanding as of March 31, 2024 and approximately $ 0.4

million as of December 31, 2023.

A shareholder note payable outstanding in the amount of $ 200,000

as of March 31, 2024.

Note 7 – Investment in Salt Tequila USA,

The Company has a marketing and distribution agreement

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

The Company has a 22.5 % percentage ownership interest

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

has the right to increase our ownership to 37.5 %.

Note 8 – Leases

The Company has various operating lease agreements

primarily related to real estate and office space.

primarily related to real estate and office.

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

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 three months and nine-month period ended September 30, 2023 and

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

Management reviews all options to extend at the

inception of the lease and account for these options when they are reasonably certain of being exercised.

Operating lease expense is recognized on a

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

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 quarter ended March 31, 2024 and 2023.

A majority of the real estate leases include options

to extend the lease.

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

reasonably certain of being exercised.

Operating lease expense is recognized on a straight-line

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

comprehensive loss.

Operating lease cost was $ 273,631 and $ 263,159 during the nine-month period ended September 30, 2023 and 2022,

respectively.

The following table sets forth the maturities

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

consolidated balance sheet at September 30, 2023:

Schedule of operating lease liability

Operating lease cost was $ 97,953 and $ 93,328 during the period ended March 31, 2024 and 2023, 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

Schedule of maturities of operating lease liabilities

Undiscounted Future Minimum Lease Payments

Operating Lease

2023 (Three months remaining)

2024 (Nine months remaining)

Amount representing imputed interest

2 unchanged sentences

Operating lease liability, non-current

The table below presents lease-related terms

and discount rates at September 30, 2023:

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 8 –Leases, continued

The table below presents lease-related terms and discount

rates at March 31, 2024:

Schedule of lease-related terms and discount

2 unchanged sentences

Incremental borrowing rate

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Note 9 – Segment Reporting

1 unchanged sentence

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

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

Reporting is evaluated by our Chief Executive Officer and Chief Financial Officer.

These operating

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

Segment Reporting is evaluated

by our Chief Executive Officer and Chief Financial Officer.

The Copa di Vino business is included in our

Splash Beverage Group segment.

Schedule of segment reporting information

Three Months Ended September 30

Nine Months Ended September 30

March 31, 2024

March 31, 2023

Splash Beverage Group

Net revenues, continuing operations

Total revenues, net, continuing operations

Contribution after Marketing

March 31, 2024

March 31, 2023

Splash Beverage Group

( 1,468,563 )

( 1,278,987 )

Total contribution after marketing

6 unchanged sentences

$ ( 3,454,921 )

$ ( 11,999,801 )

$ ( 16,623,983 )

September 30, 2023

March 31, 2024

December 31, 2023

1 unchanged sentence

Splash Beverage Group, Inc.

Notes to the Condensed Consolidated Financial

Notes to the Condensed Consolidated Financial Statements

Note 10 – Commitment and Contingencies

The Company is a party to asserted claims and

are subject to regulatory actions in the ordinary course of business.

The results of such proceedings cannot be predicted with

certainty, but the Company does not anticipate that the outcome, if any, arising out of any such matter will have a material adverse

effect on its business, financial condition or results of operations.

The Company is a party to asserted claims and are subject to regulatory actions

in the ordinary course of business.

The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate

that the outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial condition or results

of operations.

Note 11 – Subsequent Events

In October, 2023, the Company received

approximately $ 1.9 million

from the issuance of senior secured convertible notes, a convertible promissory note and a merchant agreement.

convertible notes have an eighteen-month term, accrue interest at 12% and are convertible into shares of common stock of the Company

at $0.85 per share and include 100% warrant coverage.

The convertible promissory note has a two-and-a-half-month term and accrues

interest at a fixed amount of $ 50,000 .

notes that matured in October 2023 were extended by the note holders to March 31, 2024.

maturity dates of the related party notes were extended to March 31, 2024.

In April 2024, one of the initial notes was paid off

and extended to a higher amount of financing.

This transaction involved the complete repayment of our original loan and the acquisition

of a new loan to the amount of $ 815,000 .

In May 2024, the Company received approximately $ 1.9

million from the issuance of senior secured convertible notes, a convertible promissory note and a merchant agreement.

The senior convertible

notes have an eighteen-month term, accrue interest at 12 % and are convertible into shares of common stock of the Company at $ 0.85 per

share and include 100 % warrant coverage.

The loan matures in November 2026 with principal and interest due at maturity with conversion

price of $ 0.40 per share.

The Company granted 75,000

shares in April to one of the Board directors under the 2020 plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements