What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-07-11 · 138 added, 54 removed, 84 unchanged (70% of the section changed)

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These factors may cause our actual results to differ materially from any forward-looking statements.

The Company disclaim any obligation to publicly update these statements or disclose any difference between actual results and those reflected

The Company disclaims any obligation to publicly update these statements or disclose any difference between actual results and those reflected

in these statements.

Unless the context otherwise

requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer to

Splash Beverage Group and its subsidiaries.

requires, references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” or the “Company”

refer to Splash Beverage Group, Inc.

and its subsidiaries.

The following discussion and analysis should be read

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(the “Company”

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

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

within its distribution system.

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Qplash markets well known beverage brands to customers throughout the US that prefer delivery

direct to their office, facilities;

and or homes.

direct to their office, facilities and or homes.

Recent Developments

In 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 5.

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.

In June 2025, the Company issued 1,000 shares of Preferred A Stock to Robert

Nistico, CEO, a related party.

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

Nistico is the sole holder

of Preferred A, which is further discussed in Note 5.

In 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 5.

The accounting treatment of this transaction

is subject to further review and may be adjusted in the future.

In June 2025, the Company acquired certain assets,

including all contractual water rights to the aquifer located in Garabito, Puntarenas, Costa Rica.

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 fair value of the acquired assets has been preliminarily estimated at $20

million and is subject to further evaluation and assessment.

The Series C shares are convertible into common stock, subject to shareholder

approval, and further discussed in Note 5.

Results of Operations

for the Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024.

Revenues for the three months ended March 31, 2025

were approximately $0.4 million compared to revenues of approximately $1.5 million for the three months ended March 31, 2024.

million decrease in sales is due to a decrease in our beverage sales of $0.8 million.

Our revenues from our vertically integrated B2B

and B2C e-commerce distribution platform called Qplash decreased approximately $0.3 million due to low inventory.

Total sales declined

due to limited liquidity to procure inventory to drive third-party sales.

The Three Months and Six Months Ended June 30, 2025 compared to Three Months and Six Months Ended June 30, 2024

For the three months ended June 30, 2025, the Company

did not record any sales compared to revenues of approximately $1.1 million for the three months ended June 30, 2024.

This was primarily

due to a shortage of operating capital which limited our ability to maintain inventory and fulfil orders.

We remain committed to resolving

these constraints and resuming normal business activities in the upcoming quarter.

Revenue for the six months ended June 30, 2025 was

$0.4 million compared to revenues of $2.6 million for the six months ended June 30, 2024.

The $2.2 million decrease in sales is driven

by decreases in both the e-commerce and beverage businesses.

Cost of Goods Sold

Cost of goods sold for the three months ended March

31, 2025 were $0.5 million compared to cost of goods sold for the three months ended March 31, 2024 of approximately $1.4 million.

$0.9 million decrease in cost of goods sold for the three-month period ended March 31, 2025 is primarily due to our decreased sales.

Cost of goods sold for the three months ended June

30, 2025 was less than $0.01 million compared to cost of goods sold for the three months ended June 30, 2024 of approximately $0.8 million.

The decrease in cost of goods sold for the three-month period ended June 30, 2025 was primarily due to our decreased sales.

Cost of goods sold for the six months ended June 30,

2025 was $0.5 million compared to cost of goods sold for the six months ended June 30, 2024 of $2.2 million.

The $1.7 million decrease

in cost of goods sold was driven by decreased sales in both the e-commerce and beverage business.

Operating Expenses

Operating expenses for the three months ended March

31, 2025 were $2.0 million compared to $3.4 million for the three months ended March 31, 2024 a decrease of $1.4 million.

in our operating expenses was primarily due to non-cash expenses, new staff, benefit cost, freight cost and Amazon selling fees.

loss for the three months ended March 31, 2025 was $3.5 million as compared to a net loss of approximately $4.7 million for the three

months ended March 31, 2024.

The decrease in net loss is due to lower operating expenses.

During the quarter ended March 31, 2025, the Company

did not meet its payroll obligations for the months of February and March.

As a result, employees were not paid for services rendered

during that period.

The unpaid wages have been fully accrued as liabilities in the accompanying financial statements.

Operating expenses for the three months ended June 30, 2025 were $1.7 million compared

to $3.9 million for the three months ended June 30, 2024, a decrease of $2.2 million.

The decrease in our operating expenses was primarily

due to non-cash expenses, new staff, benefit cost, freight cost and Amazon selling fees.

Operating expenses for the six months ended June 30,

2025 were $3.6 million compared to $7.3 million for the six months ended June 30, 2024, a decrease of $3.7 million.

The decrease in operating

expenses was primarily due to non cash expenses, salary, marketing expense, freight cost and Amazon selling.

The net loss for the three months ended June 30, 2025

was $8.5 million as compared to a net loss of approximately $5.3 million for the three months ended June 30, 2024.

The net loss for the

six months ended June 30, 2025 was $12.2 million as compared to a net loss of approximately $10.0 million for the six months ended June

The increase in net loss is due to loss on extinguishment of debt and offset by lower operating expenses and the decrease in

amortization of debt discount.

The Company did not meet its payroll obligations during

the period from February to June 2025.

As a result, employees were not paid for services rendered during that period.

The unpaid wages

have been fully accrued as liabilities in the accompanying financial statements.

Net Other Income and Expense

Interest expenses for the three months ended March

31, 2025 was $0.6 million compared to $0.5 million for the three months ended March 31, 2024.

The $0.1 million increase in interest expense

is due to new loans with a principal of $9.0 million.

Interest expenses for the three months ended

June 30, 2025 were $0.6 million and for the three months ended June 30, 2024.

Interest expenses for the six months ended June 30,

2025 were $1.2 million and for the six months ended June 30, 2024.

Other income was $0 and $0.01 million for the three

months ended March 31, 2025 and March 31, 2024 respectively.

months ended June 30, 2025 and June 30, 2024, respectively.

Amortization of debt discount for the three months

ended March 31, 2025 was approximately $1.0 million compared to $0.9 million for three months ended March 31, 2024.

ended June 30, 2025 was approximately $0.7 million compared to $1.0 million for the three months ended June 30, 2024.

Amortization of

debt discount for the six months ended June 30, 2025 was approximately $1.6 million compared to $1.9 million for six months ended June

LIQUIDITY, GOING CONCERN CONSIDERATIONS AND CAPITAL

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in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

As of March 31, 2025, the Company had total cash and

We plan to fund our operations through third party

and related party debt/advances, private placement of restricted securities and the issuance of stock in a subsequent offering until such

a time as the business achieves profitability or a business combination may be achieved.

However, there can be no assurance that we will

be successful in raising additional capital or that such capital, if available, will be on terms that are favorable to us.

Debt financing

and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific

actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise funds through collaborations,

or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams,

research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our

common stock.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit,

reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates

even if we would otherwise prefer to develop and market such product candidates ourselves.

As such, we have concluded that such plans do not alleviate the substantial

doubt about our ability to continue as a going concern for one year from the date the accompanying financial statements are issued.

Historically,

we have funded operations primarily through the issuance of equity and debt securities.

There is substantial doubt about our ability to

continue as a going concern.

As of June 30, 2025, the Company had total cash and

cash equivalents of $17,213 as compared with $15,346 at December 31, 2024.

Net cash used for operating activities during the

three months ended March 31, 2025 was $0.7 million as compared to the net cash used by operating activities for the three months ended

March 31, 2024 of $1.3 million.

The primary reasons for the change in net cash used are decreases in inventory, accrued expenses and accounts

receivable partially offset by increases in account payable.

For the period ending March 31, 2025 and March 31,

six months ended June 30, 2025 was $1.4 million as compared to the net cash used by operating activities for the three months ended June

30, 2024 of $3.7 million.

The primary reasons for the change in net cash used are decreases in interest payable, inventory and accrued.

For the period ending June 30, 2025 and June 30, 2024,

there were no capital asset transactions.

Net cash provided by financing activities during the

three months ended March 31, 2025 was $0.8 million compared to $1.0 million provided from financing activities for the three months ended

March 31, 2024.

During the three months ended March 31, 2025, the Company received $0.9 million for convertible note, which was offset

by repayments to debt holders of $0.1 million.

CONTRACTUAL OBLIGATIONS

Minimum Royalty Payments:

Inventory Purchase Commitments :

six months ended June 30, 2025 was $1.4 million compared to $3.7 million provided from financing activities for the six months ended June

During the six months ended June 30, 2025, the Company received $1.7 million for convertible note, which was offset by repayments

to debt holders of $0.3 million and shareholder advance in the amount of $0.2 million was exchanged to Series A-1 Preferred Stock.

Capital Resources

In June 2025, we exchanged approximately

$12.67 million of outstanding promissory notes and accrued interest for 126,710 shares of Series B 12% Convertible Preferred Stock.

transaction reduced outstanding debt, lowered interest expense, and improved our stockholders’ equity position.

The Series B Preferred

Stock accrues a 12% cumulative dividend and is convertible into common stock, subject to shareholder approval and an increase in authorized

This debt-to-equity conversion forms part of our broader plan to strengthen our balance sheet and regain compliance with NYSE

American listing standards.

Based on our current operating

plan, existing cash resources will not be sufficient to fund operations over the next 12 months.

Our future capital needs will depend

on numerous factors, including revenue growth, gross margin trends, operating expense levels, working capital requirements, and the timing

and extent of capital expenditures.

We are evaluating opportunities to raise additional capital through equity or debt financings and

may seek further debt restructurings to improve liquidity and reduce financing costs.

There can be no assurance that these plans will be

If we are unable to obtain adequate financing or generate positive cash flow from operations, we may need to further reduce

operating expenses, curtail business development activities, sell assets, or pursue other strategic alternatives.

have been no material changes in our contractual obligations from the information disclosed in our Annual Report on Form 10-K for the

fiscal year ended December 31, 2024.

Off-Balance Sheet Arrangements

The Company do not have any off-balance sheet arrangements

The Company does not have any off-balance sheet arrangements

(as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our

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Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a

recurring basis.

Fair value measurements involve significant judgment and estimation, particularly when observable inputs are limited

or not available.

Management utilizes valuation techniques such as discounted cash flow models, market comparable, and third-party appraisals

to determine fair values.

We measure certain financial assets and liabilities

at fair value on a recurring basis.

Fair value measurements involve significant judgment and estimation, particularly when observable

inputs are limited or not available.

Management utilizes valuation techniques such as discounted cash flow models, market comparable,

and third-party appraisals to determine fair values.

QUANTITATIVE AND

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis