What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-07-11 compared with 2024-03-29 · 603 added, 547 removed, 594 unchanged (66% of the section changed)

Financial Statements

and Supplementary Data.

Financial Statements and Supplementary

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, 2024 and December 31, 2023

Consolidated Statements of Operations For the Years Ended December 31, 2024 and December 31 2023

Consolidated Statements of Changes in Stockholders’ Equity For the years ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows For the Year Ended December 30, 2024 and 2023

Notes to the Consolidated Financial Statements

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

Public Accounting Firm

To the Board of Directors and Stockholders

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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.

We have audited the accompanying consolidated balance sheets of Splash

Beverage Group, Inc.

at December 31, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’

equity and cash flows for the years ended December 31, 2024 and 2023, and the related notes (collectively referred to as the financial

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

position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December

31, 2024 and 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

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its internal control over financial reporting.

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

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

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Critical Audit Matters

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;

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

March 29, 2024

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.

Evaluation of Intangible Assets for Impairment

Description of the Matter

As discussed in Note 2 to the consolidated financial statements, intangible

assets are tested for impairment at least annually or when events or circumstances indicate the fair value of the asset may be below its

carrying value.

This analysis involves comparing events and circumstances such as general macroeconomic conditions, conditions specific

to the industry and company specific factors.

These fair value estimates are sensitive to significant assumptions and judgments, such

as projections of operating expenditures, discount rates, and future levels of revenue.

The Company has experienced a decline in its reported amounts of Beverage

revenue and the Beverage operating segment has experienced losses from operations for the past several years.

These factors were considered

a triggering event indicative of impairment, which resulted in an impairment assessment by management.

Pursuant to current accounting

guidance, management performed a quantitative analysis and concluded that its intangible assets were impaired and the Company recorded

impairment charges of approximately $4.3 million during the year ended December 31, 2024.

At December 31, 2024, the Company’s intangible

asset balance was $0.

Auditing management’s annual impairment tests was complex because

of the significant judgment required to evaluate management’s assumptions used to determine the fair value of the intangible assets.

How We Addressed the Matter

Our audit procedures related to the evaluation of intangible assets for

impairment included the following, among others:

evaluated managements significant accounting policies related to the impairment of intangible

assets for reasonableness.

evaluated management’s assessment of the grouping of long-lived assets for which separately

identifiable cash flows can be determined.

respect to the Company’s valuation of its intangible assets:

assessed the qualifications and competence of management

evaluated the methodologies used to determine the fair value of the Company’s intangible

reperformed management’s quantitative analysis to assess the impact of intangible asset

assessed the adequacy of the Company’s disclosures regarding impairment assessments

included in Note 2.

Rose, Snyder & Jacobs LLP

We have served as the Company’s auditor since 2023

July 11, 2025

Splash Beverage Group, Inc.

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Total non-current assets

Liabilities and Stockholders’

Liabilities and Stockholders’ Equity

Current liabilities

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Notes payable, net of discounts

Liability to issue shares

Shareholder advances

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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,

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

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

Common Stock, $ 0.001 par, 7,500,000 shares authorized, 1,669,835 and 1,108,253 shares issued and outstanding, at December 31, 2024 and December 31, 2023, respectively

Additional paid in capital

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( 18,634,849 )

( 5,605,326 )

Total liabilities and stockholders’ equity

The share amounts above have been retroactively adjusted to reflect the

1 for 40 reverse stock split that took effect on March 27, 2025.

The accompanying notes are an integral part of these

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( 3,702,611 )

( 1,856,777 )

Legal reserve

Amortization of debt discount

( 3,677,143 )

( 3,832,628 )

Total other expense

( 7,710,315 )

( 5,717,099 )

Provision for income taxes

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( 21,003,757 )

Net (loss) income from discontinued operations, net of

Gain on discontinued operations

Net income (loss) from discontinued operations, net of

$ ( 23,756,551 )

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Basic and Diluted

Income (loss) per share - discontinued operations

Basic and Diluted

Weighted average number of common shares outstanding - discontinued operations

Basic and Diluted

The share amounts above have been retroactively adjusted to reflect the

1 for 40 reverse stock split that took effect on March 27, 2025.

The accompanying notes are an integral part of these

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Splash Beverage Group, Inc.

Consolidated Statements of Changes in Stockholders’

Consolidated Statements of Changes in Stockholders’ Equity

For the Years ended December 31, 2024 and 2023

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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 )

Note discount created from issuance of common stock and

warrants on convertible instruments

Share based compensation

Conversion of notes payable to common stock

( 5,605,326 )

Balances at December 31, 2023

( 133,334,783 )

( 5,605,326 )

Adoption of ASU 2020-06

( 2,191,103 )

Stock based compensation

Issuance of common stock for convertible note

Issuance of warrants on convertible instruments

Issuance of common stock for services

Conversion of notes payable to common stock

Accumulated Comprehensive Income - Translation

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Splash Beverage Group, Inc.

Consolidated Statements

Consolidated Statements Cash Flows

For the Year Ended December 30, 2024 and 2023

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$ ( 21,003,757 )

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

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Amortization of debt discount

Gain from sale of discontinued operation

Loss from intangible impairment

Non-cash share based compensation

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Inventory, net

( 1,797,828 )

Prepaid expenses and other current assets

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( 10,189,263 )

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

Net cash used in investing activities -– continuing operations

Cash Flows from Financing Activities:

Proceeds from issuance of Common stock

Cash advance (repayment) from shareholder

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( 2,009,541 )

Net cash provided by financing activities - continuing

Net cash provided by financing activities - discontinued

( 1,042,961 )

Net cash provided by financing activities - continuing operations

Net cash effect of exchange rate changes on cash

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Cash and Cash Equivalents, end of year

Disclosure of Cash Flow Information:

Supplemental Disclosure of Cash Flow Information:

Cash paid for Interest

Disclosure of Non-Cash Investing and Financing Activities

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)

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Convertible notes payable and accrued interest converted to common stock (452,914 shares)

Convertible notes payable and accrued interest converted to common stock (458,500 shares)

The accompanying notes are an integral part of these

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Splash Beverage Group, Inc.

Notes to the Consolidated Financial

Notes to the Consolidated Financial Statements

Note 1 – Business Organization and Nature of Operations

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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 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.

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.

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

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.

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,

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 the split.

All common stock shares stated herein have been adjusted to reflect

Note 2 – Summary of Significant Accounting

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These consolidated financial statements include the

accounts of Splash and its wholly owned subsidiaries, Holdings and Splash Mex, CMS (as discontinued operations), and CdV.

All intercompany

balances have been eliminated in consolidation.

accounts of Splash and its wholly owned subsidiaries, Holdings and Splash Mex, and CdV.

All intercompany balances have been eliminated

in consolidation.

Splash Beverage Group, Inc.

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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, 2024 or December 31, 2023.

Our cash in bank deposit accounts, at times, may

exceed federally insured limits of $ 250,000 .

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.

Our cash in uninsured foreign bank accounts was $ 4,817

and $ 0 at December 31, 2024 and December 31, 2023, respectively.

Accounts Receivable and Allowance for Doubtful

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Accumulated depreciation

( 1,976,522 )

( 1,828,293 )

Property, plant & equipment, net

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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 sold.

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

Fair Value of Financial Instruments

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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.

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).

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.

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

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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.

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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

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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.

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 include

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

or customers, insurance cost, consulting cost, legal and audit fees, investor relations expenses, travel & entertainment expenses,

occupancy cost and other cost.

Other General and Administrative expenses include Amazon selling fees, cost of

transportation from production site to other 3 rd party warehouses or customers, insurance cost, consulting cost, legal and

audit fees, investor relations expenses, travel & entertainment expenses, occupancy cost and other cost.

Stock-Based Compensation

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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.

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 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.

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

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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

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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.

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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 74,007,680 .

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 3,424,996 .

We conduct advertising for the promotion of our products.

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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 identifiable intangible assets

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.

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 2024 and 2023.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

In accordance with ASC 350, Intangibles – Goodwill

and Other, the Company performed an impairment test for its Brand Name, Customer Relationships and license.

Based on this assessment,

the Company determined that the carrying value of the intangible asset exceeded its fair value, resulting in an impairment loss of $ 4.3

The impairment loss of $ 4.3 million was recorded in the statement of operations

within Selling, General, and Administrative Expenses.

This impairment was primarily driven by the decline in the Company’s

sales and was calculated using the present value of future cash flows.

December 31, 2024

Loss on Impairment

Net Carrying Value

Customer Relationships

Total Intangible Assets

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

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

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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

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The Company incurred a foreign currency translation net gain during the year ended December 31, 2024 of $ 97,763 and a foreign

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

currency translation net gain during the year ended December 31, 2023 of $ 3,889 .

Recent Accounting Pronouncements

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.

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.

The Company adopted

ASU 2020-06 effective January 1, 2024 and has removed the effects of any embedded conversion

features from certain of our convertible instruments as of that date.

Splash Beverage Group, Inc.

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During 2024, the Company received $ 9.5 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.

issuance of debt.

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 $ 22.9

million and negative cash flows from operating activities of approximately $ 0.37

million for the year ended December 31, 2024.

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.

As of July 11, 202 5, 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

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business plan.

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

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

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

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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

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

Splash Beverage Group, Inc.

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Schedule of notes payable

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.

Notes Payable and Convertible Notes Payable

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 7.

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 .

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 April 2025.

In May 2021, the Company entered into a six-month loan with two individuals totaling $ 60,000 .

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

The loan was extended to April 2025.

In August 2022, the Company 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 $ 3,000,000 .

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 .

One note $ 400,000 was converted.

The remaining loans were extended to June 2025 with principal and interest due at maturity with conversion price of $ 1.00 per share.

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

The notes included 100 % warrant coverage.

The loans matured in June 2024 and was in default

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

The loan was extended to May, 2024.

As of June 2024, the loan was fully converted.

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

The loans were extended to May 2025.

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 loans mature in May 2025 with principal and interest due at maturity with conversion price of $ 1.00 per share, one of the loans was converted in December 2024.

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

The loan was fully converted in September 2024.

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

The loan was extended to June 2025.

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 August 2024 with principal due at maturity with conversion price of $ 0.85 per share and is non-interest bearing.

Partial of the note was converted into common stock.

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.

The loan was extended to February 2025

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 .

As of March 2024, the loan was fully paid off.

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 .

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 matures in April 2025 with principal and interest due at maturity with conversion price of $ 1.00 per share.

Partial principal and 1 st year interest were converted in September 2024 and December 2024.

The loan was fully converted in January 2025

In December 2023, the Company 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 February 2025.

The loan was fully converted in Decembre 2024.

In January 2024, the Company 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, the Company 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, the Company 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.

This was extended to July 2025.

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

In April 2024, the Company entered into a commercial financing agreement in the amount of $ 815,000 and will be paid weekly until the loan is paid in full.

The loan was in default.

In May 2024, the Company entered into an eighteen-month loan with individuals totaling in the amount of $ 1,850,000 .

The note included warrant coverage .

The loan matures in November 2026 with principal and interest due at maturity with conversion price of $ 0.40 per share

In June 2024, the Company entered into a revenue purchase agreement in the amount of $ 250,000 .

4 % of revenue will be paid weekly until the loan is paid in full.

Note is guaranteed by a related party

In July 2024, the Company entered into a revenue purchase agreement in the amount of $ 178,250 .

The loan matures in May 2025.

The loan was fully converted in January 2025.

In July 2024, the Company entered into a revenue purchase agreement in the amount of $ 120,750 .

The loan matures in April, 2025.

The loan was fully converted in January 2025

In August 2024, the Company entered into a 5-year loan with individuals totaling in the amount of $ 500,000 .

The loan matures in September 2029 with principal and interest due at maturity with conversion price of $ 0.35 per share

In August 2024, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ 1,500,000 .

The loan matures in February 2026 with principal and interest due at maturity with conversion price of $ 0.38 per share.

In September 2024, we entered into a merchant cash advance agreement in the amount of $ 325,000 to be paid weekly until the loan is paid in full.

In September 2024, the Company entered into an agreement

with individuals totaling in the amount of $ 590,000 , there is no maturity date or interest, convertible into common stock

at 25% discount to VWAP, proceeds to be used for acquisitions

In October 2024, the Company entered into an agreement

with individuals totaling in the amount of $ 950,000 there is no maturity date or interest, convertible into common stock at

25% discount to VWAP, proceeds to be used for acquisitions

In November 2024, we entered into a merchant cash advance agreement in the amount of $ 340,000 to be paid weekly until the loan is paid in full.

In December 2024, we entered into a merchant cash advance agreement in the amount of $ 111,300 to be paid weekly until the loan is paid in full.

Note is guaranteed by a related party

In December 2024, the Company entered into a twelve-month loan with an individual in the amount of $ 500,000 .

The loan matures in December 2025 with principal and interest due at maturity.

Total notes payable

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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

Interest expense on notes payable was $ 3,702,611 and

$ 1,856,777 for the years ended December 31 , 2024

and 2023 , respectively.

Accrued interest was $ 3,610,329 , and $ 1,714,646

at December 31, 2024 and December 31, 2023 , respectively.

The Company’s effective interest rate was 20.53 % for the year ended December 31, 2024.

The Company’s convertible note balances

are convertible into 505,257

and 278,187 shares

of common stock for the years ended December 31, 2024 and 2023.

These amounts are reflective of the 1 for 40 reverse split.

As of December 31, 2024 ,

and December 31, 2023 , the balance of the unamortized debt discount was $ 3,677,143

and 28,474,946

respectively.

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

beneficial conversion feature (BCF) amount to additional paid in capital for $ 2,191,103 ,

reversal of the unamortized debt discount related to the beneficial conversion feature (BCF) for $ 932,047

with the balance being recorded through retained earnings for $ 1,259,056 .

Notes discount of $ 3,251,106 and $ 3,832,628

for the year ending December 31, 2024 and 2023 respectively is related to the discounted warrants and common shares issued

in connection with the notes.

In June 2025, the Company exchanged

approximately $ 12.67

million of outstanding promissory notes for newly issued preferred equity.

The Company is undertaking these transactions to exchange

debt for equity as part of its effort to regain compliance with the shareholder equity requirements of the NYSE American.

By exchanging debt for equity, the Company enhances balance sheet, reduces interest expense, and improves shareholder equity

position in furtherance of its goal of complying with exchange requirements.

The exchange was the result of an agreement between

note holders and the company.

The Company is still assessing the accounting impacts of these exchanges.

Schedule of notes payable

Interest Rate

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 %

Shareholder Notes Payable

In April 2024, revised Feb 2023 shareholder advance in

the amount of $ 200,000 .

The annual interest rate is 12 % with a conversion price of $ 0.35 per share.

The revised note included 571,429 share of warrant coverage.

The loan matures in July 2025 with interest due semiannually.

Less current portion

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$24,000 and $20,400 for the years ended December 31, 2024 and 2023, respectively.

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

note balances are convertible into 553,631 shares of common stock

Splash Beverage Group, Inc.

Notes to the 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),

The Company had 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.

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.

The Company was 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.

The licensing agreement between TapouT LLC and the Company was terminated during

The parties are engaged in active and constructive settlement discussions pursuant to the terms of the agreement’s termination

The Company anticipates that any final settlement will not exceed the amounts already recorded in its legal reserve and accrued

accounts payable.

The Company has accrued guaranteed minimum royalty payments $ 55,000 for the

year ended in December 2024.

The royalty expense $ 55,000 is included in general and administrative expenses.

The licensing agreement between

TapouT LLC and the Company has been terminated.

The parties are engaged in active and constructive settlement discussions pursuant to

the terms of the agreement’s termination provisions.

The Company anticipates that any final settlement will not exceed the amounts

already recorded in its legal reserve and accrued accounts payable.

The Company has reserved $ 330,000 that is included in legal reserve

in the condensed consolidated statement of operations and comprehensive

In connection with the Copa Asset Purchase Agreement,

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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

During the twelve-months ended December 31, 2022,

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.

The Company underwent a 1 for 40 reverse split of

its common stock on March 27, 2025.

All share amounts and per share amounts are retroactively adjusted to reflect the effect of the reverse

On September 29, 2023, the Company entered into a

securities purchase agreement with certain accredited investors.

Pursuant to such agreements, the Company sold:

(i) senior convertible

notes in the aggregate original principal amount of $1,250,000, convertible into up to 36,765 shares of common stock of the Company, par

value $0.001 per share (“Common Stock”), subject to adjustments as provided in the Notes, (ii) 15,625 shares of Common Stock

(the “Commitment Shares”), (ii) warrants to acquire up to an aggregate of 31,250 additional shares of Common Stock (the “Warrants”)

at an exercise price of $34.0 per Warrant Share.

On May 1, 2024, the Company entered into a securities

purchase agreement with certain accredited investors.

Pursuant to such agreements, the Company sold:

(i) senior convertible notes in the

aggregate original principal amount of $1,850,000, convertible into up to 115,625 shares of Common Stock, subject to adjustments as provided

in the Notes, (ii) 23,125 shares of Common Stock (the “Commitment Shares”), (ii) warrants to initially acquire up to an aggregate

of 115,625 additional shares of Common Stock (the “Warrants”) at an exercise price of $34.0 per Warrant Share.

During the year ended December 31, 2024, the Company

granted share-based awards to certain consultants totaling 48,958 shares of common stock at a weighted average price of $9.60, 16,250

shares for extension of note, 466,000 shares on conversion of convertible instruments, 23,125 shares on debt discount and 7,250 shares

for non-cash compensation.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’ Equity,

Private Placement Memorandum (PPM)

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

4,000,000 shares at $ 1.00 per share with warrants to purchase 4,000,000 shares of common stock at $ 0.25 per share.

A convertible promissory note was issued to shareholder on April 15, 2024

for $ 200,000 at 12 % with conversion price of $14.0 per share.

The note included 14,286 share of warrant coverage.

The loan matures in

July 2025 with principal and interest due semi-annually.

Accrued interest of $ 27,370 was paid prior to August 15, 2024.

Preferred Stock

As of the date of this filing, the Company has issued four series of preferred

Series A, A-1, B, and C , each with distinct rights and preferences as outlined below.

Note agreements were amended to be

exchanged for Preferred B and the impact of those amendments is subject to further review.

Series A carries 25,000 votes per share but is limited

solely to voting on the authorization of additional shares.

It has no other voting rights.

Series A is expected to be retired following

the special meeting.

Series A-1 carries 231 votes per share.

Series B and Series C do not carry any voting rights.

Series A does not accrue dividends.

Series A-1 and Series B carry a fixed 12% annual dividend, payable quarterly in arrears, in either cash or payment-in-kind (PIK) at the Company’s discretion.

These dividends are mandatory and take priority over any dividends on common stock, regardless of whether common stock dividends are declared.

Series C does not accrue dividends.

into Common Stock

Series A is not convertible.

Series A-1 is convertible

into common stock at 80% of the VWAP, subject to a floor of $1.25 and a ceiling of $4.00.

A-1 is convertible into a range of 162,500

to 520,000 common shares.

Series B is also convertible

at 80% of the VWAP, with a floor of $1.25 and a ceiling of $6.00, and is convertible into a range of 2,118,333 to 10,168,000 common

Series C is convertible

at a fixed price of $3.00, resulting in the potential issuance of 6,666,667 common shares upon conversion.

Redemption – at the sole discretion of the Company.

Series A is redeemable by the Company after the special

meeting for $1,000.

Series A-1 and Series B

are redeemable by the Company after two years from the date of issuance, for $650,000 and $12,700,000, respectively.

Series C is not redeemable.

Series B is the most senior class (Seniority Level 1).

Series A-1 ranks junior to Series B (Seniority Level 2).

Series C is the most junior class (Seniority Level 3).

Series A is a governance-related instrument and does not participate in liquidation or dividend preferences.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

A summary of the Company’s stock option plan

and changes during the year ended is as follows:

Schedule of stock option plan

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.

Schedule of stock option activity

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

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 42,146 at the time the 2020 plan was adopted as of December 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 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.

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 51,357 and 74,607 shares, respectively.

In October 2023, the shareholders voted to increase

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under the 2020 plan is 44,534 .

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’ Equity, continued

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Schedule of stock option activity

December 31, 2023

December 31, 2022

Number of Options

Weighted Average Exercise Price

Number of Options

Weighted Average Exercise Price

Stock options

Weighted average

Balance – January 01

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 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:

Exercisable - December 31

* These prices are reflective of

the price modification made on April 24, 2023.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

During 2023, the Company granted 84,400 options to

employees and directors at weighted average strike price of $ 45.20 , 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 103,350 options

to $ 44.8 from a weighted average price of $ 102.40 .

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 during 2023.

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

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Expected volatility

227 % - 256 %

Expected dividends

The fair value of stock options granted in 2024 has

been measured at 112,125 shares using the Black-Scholes option pricing model with the following assumptions:

exercise price $ 13.2 to $ 21.60 ,

expected life 5 to 10 years, expected volatility 254 %, expected dividends 0 %, risk free rate 4.64 %.

During the year ended December 31, 2024, the fair

2 unchanged sentences

Stock compensation expense for the years ended December 31, 2024 and 2023 was $ 1,411,883 and $ 840,817 , respectively.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’ Equity, continued

At December 31, 2024, 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

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 and reflects the 1 for 40 reverse split.

Schedule of warrant activity

7 unchanged sentences

Balance - end of the year

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

The fair value of warrants recognized in the period

5 unchanged sentences

Exercise price

$ 10.0 – 34.0

Expected life

2 unchanged sentences

Note 7 – Related Parties

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,

During the normal course of business, the

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

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.

(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 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

The Note Payable to Decathlon with a balance of

at December 31, 2024 and $ 1,361,395

at December 31, 2023.

There were related party advances from our chief executive officer in the amount

of approximately $ 0.4 million outstanding as of December 31, 2024 and approximately $ 0.4 million as of December 31, 2023.

includes a shareholder note payable in the amount of $ 0.2 million outstanding as of December 31, 2024.

The annual interest rate of the

note is 12 % with a conversion price of $ 14.0 per share.

The note includes 14,285 shares of warrant coverage.

Note 8 – Investment in Salt Tequila USA,

1 unchanged sentence

with SALT in Mexico for the manufacturing of our Tequila product line.

The Company has a 22.5 % percentage interest in SALT

Tequila USA, LLC (“SALT”), and has the right to increase its ownership to 37.5 %.

This investment is accounted for at cost.

The Company has a 22.5 % percentage interest in SALT Tequila USA, LLC (“SALT”),

and has the right to increase its ownership to 37.5 %.

This investment is accounted for at cost as the Company does not have the ability

to exercise significant influence over SALT Tequila USA, LLC.

Note 9 – Lease

We have various operating lease agreements primarily

related to real estate and office space.

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

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.

The Company has various operating lease agreements

primarily related to real estate and office space.

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

Lease payments are mainly fixed.

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

period incurred.

Variable lease costs were immaterial for the year ended December 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 our consolidated statement of operations.

Operating lease cost was

$ 363,890 and $ 315,980 during the years ended December 31, 2023 and 2022, respectively.

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 $ 360,409 and $ 363,890 during the twelve-month period ended December 31, 2024 and 2023, respectively.

The following table sets for the maturities of our

1 unchanged sentence

balance sheet at December 31, 2024

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

of operating lease liabilities

Future Minimum Lease Payments

Undiscounted Future Minimum Lease Payments

Operating Lease

15 unchanged sentences

Remaining term on leases

Incremented borrowing rate

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Incremental borrowing rate

Note 10 – Segment Reporting

2 unchanged sentences

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

Segment Reporting

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

Segment Reporting is

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

of segment reporting information

2 unchanged sentences

Splash Beverage Group

Total Revenues continuing operations

Total Revenues discontinuing operations

after Marketing expenses

Total Revenues,

Segment operating loss:

Splash Beverage Group

1 unchanged sentence

$ ( 13,669,371 )

Total Contribution after Marketing expenses continuing

Contracted services

Salary and wages

Non-cash share-based compensation

Other general and administrative

Loss from continuing operations

( 1,303,708 )

( 1,617,287 )

Total segment operating loss

$ ( 16,046,236 )

$ ( 15,286,658 )

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Reconciliation of segment loss to corporate loss:

Other income/expense

Amortization of debt discount

( 3,677,143 )

( 3,832,628 )

Interest income & expense

( 3,700,620 )

( 1,854,143 )

Legal reserve

Loss before income tax

$ ( 23,756,551 )

$ ( 21,003,757 )

December 31, 2024

1 unchanged sentence

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

Splash Beverage Group revenue decreased for the year

ending December 31, 2024 versus December 31, 2023 by $1.6 million or 30% with the main contribution from the decrease 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.

The contribution after marketing expenses increased by $1.2 million for the year ending December 31, 2024 versus

December 31, 2023 due to decreased sales partially offset by cost decreases and marketing expense.

E-Commerce revenue decreased for the year ending December

31, 2024 versus December 31, 2023 by $8.9 million driven by low inventory.

Contribution after Marketing expenses declined by $4.8 million

due to decrease in sales.

Note 11 – Commitment and Contingencies

We are 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 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.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 12 – Registration Statement

Underwriting Agreement

On June 10, 2021, we entered into an underwriting

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

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

Pursuant to the Offering,

we sold 3,750,000 shares of Common Stock and 4,312,500 Warrants, which include 562,500 Warrants sold upon the partial exercise of the

Underwriters’ over-allotment, for total gross proceeds of approximately $15 million.

After deducting the underwriting commissions,

discounts, and offering expenses, we received net proceeds of approximately $13.2 million.

On February 17, 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 2,300,000 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 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 Representative’s Warrants to purchase up to an aggregate of 150,000 shares of Common Stock.

The Representative’s

Warrants may be exercised beginning on December 10, 2021 until June 10, 2026.

The initial exercise price of each Representative Warrant

is $ 4.60 per share, which represents 115% of the Offering Price.

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.

On June 5, 2024, the Company received notification

from the NYSE American LLC (“NYSE American”) indicating that it is not in compliance with the NYSE American’s continued

listing standards under Section 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”), requiring a listed

company to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operations

and/or net losses in its five most recent fiscal years.

The Company is now subject to the procedures and requirements of Section 1009

of the Company Guide.

If the Company is not in compliance with the continued listing standards by April 6, 2025 or if the Company does

not make progress consistent with the Plan during the plan period, the NYSE American may commence delisting procedures.

The licensing agreement between TapouT LLC and the Company was terminated

The parties are engaged in active and constructive settlement discussions pursuant to the terms of the agreement’s termination

Based on the settlement discussions, the Company anticipates that any final settlement will not exceed the amounts already

recorded in its legal reserve and accrued accounts payable.

Note 12 – Tax Provision

29 unchanged sentences

Net Operating Losses

Deferred Rent

Accrued Interest/Interest Expense Limitation

12 unchanged sentences

In January 2025, 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.

convertible promissory note with a loan company in the amount of $163,000.

The note has a six-month 6 term, accrues interest at 12%

and is convertible into shares of common stock of the Company with a discount rate of 35% of Market price.

In January 2025, the Company issued a 10-month promissory

note in the amount of $150,650, that accrues interest at 12% and is convertible into shares of common stock at a 25% discount to the current

market price.

In January 2025, the Company entered into a twelve-month loan with individuals

totaling in the amount of $350,000.

The note included warrant coverage of 35,000 5-year warrants with a $10 exercise price.

The loan matures

in January 2026 with principal and interest due at maturity with conversion price of $10.0 per share

In January 2025, the Company entered into an eighteen-month

loan with individuals totaling $381,000.

The note included warrant coverage of 38,100 5-year warrants with a $10 exercise price.

matures in June 2026 with principal and interest due at maturity with conversion price of $10 per share

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

March 27, 2025, the Company implemented a 1.0 for 40.0 reverse stock split.

All common stock shares, warrants, and conversion prices

stated herein have been adjusted to reflect the split.

The purpose of this reverse split was to maintain the Company’s listing

on the NYSE American.

In April 2025, the Company

issued a 5-year promissory note in the amount of 200,000, it accrues interest at 15%, and is convertible into shares of common stock

The note also received 125,000 5-year warrants exercisable at $2.00, and 83,334 5-year warrants exercisable at $3.00.

May 2025, the Company issued 650 shares of Series A-1 Preferred Stock in exchange for approximately $650,000.

Series A-1 shares are convertible

into common stock, subject to shareholder approval, and further discussed in Note 6.

Investors of A-1 Shares also received 162,500 1-year

A Warrants exercisable into common stock at 80% of 5-day VWAP, and 162,500 5-year B Warrants exercisable into common stock at $4.00.

The accounting treatment of this transaction is subject to further review and may be adjusted in the future.

June 2025, the Company issued 1000 shares of Preferred A Stock.

Preferred A is super voting preferred, not convertible into common stock,

and further discussed in Note 6.

June 2025, the Company issued 126,710 shares of Series B Preferred Stock in exchange for approximately $12.7 million in previously outstanding

convertible notes.

The Series B shares are convertible into common stock, subject to shareholder approval and further discussed in Note

The accounting treatment of this transaction is subject to further review and may be adjusted in the future.

June 2025, the Company acquired certain assets, including all contractual water rights to the aquifer located in Garabito, Puntarenas,

The Company issued 20,000 shares of Series C Preferred Stock as consideration, at an initial stated value of $1000 per share.

Management determined that the transaction is an asset acquisition under ASC 805, as substantially all of the fair value is concentrated

in a single identifiable asset—the water rights—and no substantive processes were acquired.

The preliminary fair value of

the acquired assets has been estimated at approximately $20 million and is subject to revision.

The Series C shares are convertible into

common stock, subject to shareholder approval, and further discussed in Note 6

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