Item 1. Legal Proceedings
ITEM 1. LEGAL PROCEEDINGS.
From time
to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.
Except for the litigation disclosed below, we are not currently a party to any legal or arbitration proceeding the outcome of which, if
‘determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on
our business, operating results, cash flows, or financial condition.
On August 14, 2024, TapouT, LLC,
a subsidiary of Authentic Brands Group, LLC (“ABG”), filed a Complaint (the “Complaint”) against the Company in
the Supreme Count of New York for New York County (the “Court”). The Complaint pertains to breach of a certain licensing agreement
dated December 8, 2011 (the “Licensing Agreement”), under which the Company became a successor in interest on July 1, 2013,
pursuant to an amendment to the Licensing Agreement.
ABG alleges that as a result of an unpaid invoice they had exercised their
right pursuant to section 22 of the Licensing Agreement to terminate the Licensing Agreement. ABG alleges that as a result of the aforementioned
termination, pursuant to the Licensing Agreement, they are owed all unpaid fees and other amounts payable become immediately due. As a
result, ABG have brought two causes of action, the first being breach of contract for the unpaid invoice and the second for accounts stated
for all unpaid fees and other amounts payable. TapouT, LLC is seeking $1,400,000 for termination of the Licensing
A greement. The Company (Splash Beverage Group) does not view this as a reasonable amount given that
the Company believes TapOut LLC did not fulfill their obligations
pursuant the L icensing A greement.
The Company believes the case will be settled for a lower amount and has booked a legal reserve of $330,000 as the estimate for
the potential liability.
On November
12, 2024, the Company filed a motion to compel mediation that is pending before the Court.
The Company intends to take all necessary steps to continue to vigorously
defend against the action.
ITEM 1A. RISK FACTORS
No new risk factors noted since our Annual Report
on Form 10-K for the year ended December 31, 2023 was filed with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
No disclosure required.
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