Item 1. Business
Item 1. Business.
Company Overview
Splash is a portfolio company managing
multiple brands across several growth segments within the consumer beverage industry. Splash has built organizational capabilities and
an infrastructure enabling it to incubate and/or acquire brands with the intention of efficiently accelerating them to higher volume and
sales revenue. The management team has proven capabilities in building consumer franchises and marketing and distributing multiple brands
of beverages within the non-alcoholic and alcoholic segments. Manufacturing is typically outsourced to third party co-packers and distillers,
or in select cases for a brand such as Copa DI Vino ® wines, performed within our own facility in Oregon.
We believe the distribution landscape
in the beverage industry is changing rapidly as tech-enabled e-commerce business models are thriving. Direct to consumer, office or home
solutions are projected to continue to gain traction in the future. Recognizing this opportunity Splash continues to shape its operating
model to be vertically integrated with our e-commerce platform, Qplash, which purchases local and regional brands for developing a direct
line of sales to boutique retail stores and consumers.
Splash’s wholly owned subsidiary, Splash Beverage Group II, Inc. was originally
incorporated in the State of Nevada under the name TapouT Beverages, Inc. for the purpose of acquiring the rights under a license agreement
with TapouT, LLC (Authentic Brands Group). In Q1 2024 the relationship between TapouT LLC and the Company was terminated.
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In December 2020, Splash Beverage
Group Inc. purchased the key assets of the Copa DI Vino ® single serve wine company. The operations and IP for Copa DI Vino ®
are wholly owned by Splash and incorporated in the state of Nevada under the name Copa DI Vino ® Wine Group Inc.
In addition, Splash has a joint
venture with SALT Naturally Flavored Tequila and Pulpoloco sangria that comes in a biodegradable can.
The Company’s leadership
understands the importance of infusing beverage brands with strong popular culture and lifestyle elements that drive trial, belief and,
most importantly, repeat purchases.
Our management team led by Robert
Nistico has over 28 years of experience in all levels of the three-tier distribution system used in the beverage industry working with
brands such as Red Bull and companies such as Gallo Winery and Republic National Distributing Company (RNDC Texas). Our President &
CMO, Bill Meissner, has led major beverage brands including Sparkling Ice, Fuze, Sweet Leaf Tea and Jones Soda. Our CFO, William Devereux,
has over 15 years of experience in finance, with an emphasis on investing, fundraising, corporate strategy, and mergers and acquisitions.
Our Senior Vice President of Sales, James Allred, has over 25 years’ experience in the beverage industry, predominately with Anheuser-Busch.
Our Strategy
Our strategy is to combine the
traditional approach of manufacturing, distributing, and marketing of beverages, with early-stage brands that have a reasonable level
of pre-existing brand awareness and market presence, or have attributes that we believe to be purely innovative. We believe this allows
us to break through the clutter of numerous brand introductions and dilute risk. We apply this philosophy regardless of whether the brand
is 100% owned or a joint venture.
For acquisition or joint venture
consideration, we prefer to work with brands that already have one or more of the following in place:
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Some level of preexisting brand awareness.
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Regional presence that can be expanded.
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Licensing an existing brand name.
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Add to an underdeveloped and/or growing category capitalizing on consumer trends.
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Innovation to an existing attractive category (such as flavored tequila).
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A near term clear path to profitability.
We believe this platform model
provides us with two paths to success: one, developing our wholly owned core brands and two, the ability to tap into high growth, early-stage
brands ready to scale. This platform allows us to limit risk, and significantly reduce development expenses while simultaneously increasing
efficiencies for all brands in our portfolio.
Our management team has over 80
years of combined experience in the beverage industry, including decades of successful brand introductions by our management team (Gallo,
Red Bull, Bacardi, Diageo, Sparkling Ice, Coca-Cola, FUZE Beverage, NOS Energy, PepsiCo, SoBe Beverages, AB InBev, Muscle Milk, Marley
Beverages), we believe our ability to break through the distribution and retail bottlenecks makes us an attractive joint venture partner
to many new brand owners.
Splash has the ability to fully
own a brand or be flexible to engage in business ventures structured with a revenue split, or an equity position.
The benefit to Splash in these
shared brand ownerships is the ability to avoid the development costs for new products. This model spreads our risk over several brands,
contributes to our economies of scale, improves our relationship with distributors and reduces the overall cost of infrastructure.
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The Company also believes the distribution
landscape in the beverage category is changing rapidly. Tech-enabled business models are thriving and direct to consumer, office and home
solutions are projected to continue to gain traction as beverage alcohol regulations evolve. A core strategy for us is to optimize the
early success we’re seeing with the Qplash online platform, our consumer-packaged goods retail division and our first entry point
into the growing e-commerce channel.
Products
During fiscal year 2024 we produced, distributed and marketed SALT Naturally Flavored
Tequila (“SALT”), a 100% agave 80 proof line of flavored tequilas, Copa DI Vino ® single serve wine by the glass,
and also import Pulpoloco Sangria in 3 flavors.
The following is a description
of these products.
SALT Flavored Tequila
We oversee production, distribute,
and market the following flavors under the brand name SALT Naturally Flavored Tequila:
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Citrus flavor
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Berry flavor
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Chocolate flavor
Vodka, rum, and brown spirits have
experienced significant growth when flavors are introduced, and we expect this growth of flavors to continue, as the tequila category
continues to rapidly expand.
SALT is currently being distributed
by various Anheuser-Busch & Miller-Coors distributorships, and other distributors in multiple U.S. states. Additionally, SALT is for
sale in Mexico. SALT has also launched in Guatemala and Japan and efforts continue to grow the brand’s international presence.
SALT is a business venture between
the Company and SALT USA, LLC. All aspects of manufacturing, logistics, distribution and marketing are our responsibility.
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TapouT License Agreement
We have the rights under a License
Agreement with ABG TapouT (the “License Agreement”) to produce, market, sell and distribute TapouT sports beverages in North
America (including US Territories and Military Bases), United Kingdom, Brazil, South Africa, Australia, Scandinavia, Peru, Colombia, Chile
and Guatemala. The beverages covered by the License Agreement include sports drinks, energy drinks, energy shots, electrolyte chews, energy
bars, water, protein, and teas.
We pay a 6% royalty of net sales
or a guaranteed minimum annual royalty of $660,000, whichever is greater. The License Agreement will expire on December 31, 2025, with
a renewal option through December 31, 2028 at which time it will be reviewed and renegotiated if necessary.
We have the right to use the TapouT brand to market, advertise and promote
for sale our TapouT beverages and branded products. As part of the alliance, Splash commits to investing 2% of sales in marketing to the
TapouT Performance Brand. TapouT provides marketing collateral for advertising and promotion and has influential relationships with select
celebrities and athletic talent. TapouT agrees to use reasonable efforts to request its retained celebrities and/or athletes be present
at autograph signings, tradeshows and other similar events. In Q1 2024 the relationship between TapouT LLC and the Company
was terminated.
Copa DI Vino ® Wine Group, Inc. (CdV)
and Related Financing
On December 24, 2020, the Company
entered into an Asset Purchase Agreement with CdV, pursuant to which the Company purchased certain assets and assumed certain liabilities
that comprise the CdV business for a total purchase price of $5,980,000, payable in the combination of $2,000,000 in cash, a $2,000,000
convertible promissory note to CdV and a variable number of shares of the Company’s common stock based on an attainment of revenue
hurdles.
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In conjunction with the acquisition,
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”).
Copa DI Vino ® Wine Group, Inc.
Copa DI Vino ® is
the leading producer of premium wine by the glass in the United States. The Copa DI Vino ® product line is highly innovative
as a ready to drink wine glass capable of going anywhere without the need for a bottle, corkscrew or glass. The company also has a growing
keg wine business for on-premises restaurants and bars.
Through our acquisition of Copa
DI Vino ® Corporation, we are now able to offer nine varietals of wine: Pinot Grigio, Riesling, Merlot, Chardonnay, White
Zinfandel, Moscato, Red Blend, Sauvignon Blanc and Cabernet Sauvignon. In addition to its wine varietals, Copa DI Vino ®
also procures Pulpoloco, a sangria which is encased in an eco-friendly fiber based can from Spain. The rights to utilize this packaging
for multiple categories were conveyed to SBG in conjunction with the distribution rights.
E-commerce
“Qplash” is a wholly
owned division of Splash. It is our first entry point into the growing e-commerce channel. The division sells beverages online through
www.qplash.com , and third-party storefronts such as Amazon.com. Inside of the division, there are two primary customer groups:
business to business retailers, which in turn offer the products to their customers, and business to consumer, selling direct to end users.
The business-to-business program allows businesses to control inventory, order with payment terms, and offer the convenience of delivery
directly to each store.
During fiscal year 2024, Qplash
offered over 1,500 listings and has warehouses that ship from both California and Pennsylvania.
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Our Competitive Strengths
We believe the following competitive strengths
contribute to the Company’s success and differentiate us from our competitors:
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An established distribution network through global sales channels;
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A hybrid distribution model that leverages multiple routes to market, including national chains, independent local markets, regional chains, and specialty food and C-Stores
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Long-term relationships with retailers and the establishment of chains;
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Premium customer service;
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Dynamic and sustainable product offerings of natural quality and freshness with health benefits;
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A highly experienced management team;
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Strategically selected, dedicated sales professionals;
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Qplash, our e-commerce platform, which provides us an integrated distribution platform for our non-alcoholic brands;
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Ability to execute and distribute across many geographies on behalf of our licensed brand portfolio;
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Strong brand awareness through partnerships and acquisitions of brands with pre-existing brand awareness, or viewed as truly innovative; and
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Celebrity and professional athlete endorsement of our brands.
Manufacturing and Co-packing
We are responsible for the manufacturing
of Copa DI Vino ® and SALT. The Copa DI Vino ® product line is bottled at our manufacturing facility in The
Dalles, Oregon. Pulpoloco is imported from Spain as a finished product.
Although we are responsible for
manufacturing SALT, we do not directly manufacture these products, but instead outsource such manufacturing to third party bottlers and
contract packers and distillers.
SALT products are manufactured
in Mexico, under separate arrangements. Our co-packaging arrangements are terminable upon request and do not obligate us to produce any
minimum quantities of products within specified periods.
We purchase concentrates, flavors,
dietary ingredients, cans, bottles, caps, labels, and other components and ingredients for our beverage products from our suppliers, which
are delivered to our manufacturing operations and various third-party bottlers and co-packers. In some cases, certain common supplies
may be purchased by our various third-party bottlers and co-packers. Depending on the product, the third-party bottlers or packers add
filtered water and/or other ingredients (including dietary ingredients) for the manufacture and packaging of the finished products into
our approved containers in accordance with our formulas.
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Distribution
For our beverage-alcohol products,
we operate within what is referred to as a “Three Tier Distribution System” where manufacturers are not permitted to sell
directly to retailers, but instead contract for local and regional distribution with independent distributors. These distributors typically
have geographic rights to distribute major beverage brands and call on every store in a given area such as major cities or regions. Our
management team has extensive experience working within this channel and believes that we will be successful in building a strong network
of these distributors.
In addition to working with these
independent distributors, we also have distribution arrangements with national retail accounts to distribute some of our products directly
through their warehouse operations. Most notably, SBG executed a distribution agreement with AB-InBev, for distribution with their own
operations, AB ONE. This provides SBG very effective distribution capabilities.
Intellectual Property
During the fiscal year ended December 31, 2023, we
were granted a trademark for Copa DI Vino ® . The United States Patent and Trademark Office issued the trademark on March
12, 2024, providing our company exclusive rights to use the trademark in connection with the product categories specified in this Form
10-K.
Employees
We have 21 full-time employees,
including non-officer employees and our executive officers. None of our employees are represented by a labor union. We have not experienced
any work stoppages and consider our relations with our employees to be good.
Listing on the NYSE American
Our common stock and warrants are
listed on the NYSE American exchange under the ticker symbols “SBEV” and “SBEV WT,” respectively.
Recent Developments
On February 7, 2025, Julius Ivancsits
resigned as Chief Financial Officer of the Company. Mr. Ivancsits’s resignation as Chief Financial Officer was not because of any
disagreement with the Company on any matter relating to the Company’s operations, policies, or practices, including accounting principles
and practices . Mr. Ivancsits effective date was February 18, 2025 and the Company thanks
Mr. Ivancsits for his service.
Simultaneously, on February 7,
2025, Dr. John Paglia also notified the Board of his intention to resign as an independent director of the Company and as a member of
each committee of the Board on which he served, effective as of March 7, 2025. Dr. Paglia’s resignation was not the result of any
dispute or disagreement with the Company or the Company’s Board of Directors on any matter relating to the operations, policies
or practices of the Company. Dr. Paglia will be assisting the Company with its search for a new Audit Chair. The Company is grateful for
his service and his assistance in the search for his replacement.
On
March 20, 2025, the Board of Directors of the Company appointed Mr. William Devereux to serve as Chief Financial Officer of the Company,
effective as of the same date.
Simultaneously, the Board of Directors
of the Company appointed Mr. Thomas Fore to serve as a Director of the Company, effective March 20, 2025.
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Effective March 27, 2025, the Board
of Directors of the Company approved a reverse stock split of the Company’s authorized and issued and outstanding shares of Common
Stock at a ratio of 1-for-40 (the “Reverse Stock Split”). The Company filed a Certificate of Change pursuant to Nevada Revised
Statutes Section 78.209 with the Secretary of State of the State of Nevada on March 26, 2025, to be effective March 27, 2025.
On April 7, 2025, NYSE American
LLC (“NYSE American”) publicly announced and provided a notice to the Company that NYSE Regulation has determined to commence
proceedings to delist the Company’s Common Stock and publicly trading Warrants to purchase one share of Common Stock, from NYSE
American. NYSE Regulation has determined that the Company is no longer suitable for listing pursuant to Section 1009(a) of the NYSE American
Company Guide (the “Company Guide”) as the Company was unable to demonstrate that it had regained compliance with Sections
1003(a)(i), (ii), and (iii) of the Company Guide by the end of the maximum 18-month compliance plan period, which expired on April 6,
2025.
On April 16, 2025, the Company, received
an official notice of noncompliance (the “NYSE American Notice”) from NYSE Regulation stating that the Company is not in compliance
with NYSE American continued listing standards (the “Filing Delinquency Notification”) due to the failure to timely file the
Company’s Form 10-K for the year ended December 31, 2024 (the “Delinquent Report”) by the filing due date of April 15,
2025 (the “Filing Delinquency”).
On June 9, 2025, the Company filed
a Certificate of Designation (the “Certificate of Designation” and, collectively with the Subscription Agreement, the “Issuance
Documents”) classifying and designating the Series A Preferred Shares with the Secretary of State of Nevada, which Certificate of
Designation became effective on June 9, 2025.
On June 10, 2025, the Company entered
into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with Robert Nistico, the Company’s
Chief Executive Officer (the “Purchaser”), pursuant to which the Company agreed to issue and sell one thousand (1,000) Series
A Preferred Shares, par value $0.001 per share (the “Series A Preferred Shares”), to the Purchaser for an aggregate purchase
price of $1,000 (the “Purchase Price”). The sale closed on June 10, 2025.
Effective June 25, 2025, Splash
Beverage Group, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with
accredited investors pursuant to which the Company sold and issued a total of 650 shares of newly designated Series A-1 Convertible Redeemable
Preferred Stock (the “Series A-1”), together with one-year Class A Warrants to purchase a total of 162,500 shares of common
stock (the “A Warrants”) and five-year Class B Warrants to purchase a total of 162,500 shares of common stock (the “B
Warrants” and together with the A Warrants, the “Warrants”) for total gross proceeds of $650,000. The Company intends
to use the proceeds for working capital and general corporate purposes.
Effective June 25, 2025, the Company
entered into Securities Exchange Letter Agreements (the “Exchange Agreements”) with certain holders of promissory notes issued
by the Company pursuant to which such holders agreed to exchange a total of $12,671,434 of outstanding balance of such notes in exchange
for a total of 126,710 shares of the Company’s newly designated Series B Convertible Redeemable Preferred Stock (the “Series
B”). The Company is engaging in the transactions contemplated by the Exchange Agreement in order to exchange debt for equity in
an effort to regain compliance with the shareholder equity requirements of the NYSE American. This debt exchange is one key step in meeting
the NYSE American continued listing requirements. The other key step is filing its tardy Form 10-K for the year ended December 31, 2024
and Form 10-Q for the three months ended March 31 2025.
On June 26, 2025, the Company entered
into an Asset Purchase Agreement (the “Acquisition Agreement”) with Utopia Holdings Inc. as seller pursuant to which the Company
agreed to purchase exclusive water rights and related assets to an underground network of aquifers located in Costa Rica (the “Assets”)
in exchange for 20,000 shares of a newly designated Series C Convertible Preferred Stock (the “Series C”). On June 26, 2025,
the Company issued such shares of Series C to the seller. Under the Acquisition Agreement, the seller agreed to deliver the Assets to
the Company, or $20 million in lieu thereof (the “Alternative Consideration”), and if the seller fails to deliver the Assets
or Alternative Consideration by December 31, 2025, the issuance of the Series C to the seller shall be cancelled.
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Corporate Information
Splash was originally incorporated in the State of Nevada under the name TapouT
Beverages, Inc., for the purpose of acquiring the rights under a license agreement with TapouT, LLC (Authentic Brands Group) for the right
to use the TapouT brand in connection with manufacturing and selling certain beverages. In Q1 2024 the relationship between TapouT LLC
and the Company was terminated.
Splash executed a reverse merger
with a fully reporting, public entity called Canfield Medical Supply, Inc. and became a wholly-owned subsidiary of Canfield Medical Supply
Inc. on March 31, 2020. At the time of the merger Canfield’s state of incorporation was Colorado. At the time of the merger Canfield’s
common stock was quoted on the OTCQB.
On July 31, 2021, we changed our
name from Canfield Medical Supply, Inc. to Splash Beverage Group, Inc.
On June 11, 2021, our common stock
and warrants to purchase common stock began trading on the NYSE American under the symbols “SBEV” and SBEV WT,” respectively.
On November 8, 2021, we changed
our state of incorporation from Colorado to Nevada.
Our principal offices are located
at 1314 E. Las Olas Blvd, Suite 221, Fort Lauderdale, Florida 33301. Our website address is www.splashbeveragegroup.com . We have
not incorporated by reference into this Annual Report on Form 10-K the information that can be assessed through our website and you should
not consider it to be part of this Annual Report on Form 10-K.
Available Information
We file annual, quarterly, and current reports, proxy
statements and other information with the U.S. Securities Exchange Commission (the “SEC”). These filings are available to
the public through the SEC’s website at http://www.sec.gov. All statements made in any of our securities filings, including all
forward-looking statements or information, are made as of the date of the document in which the statement is included unless otherwise
specified, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do
so by law.