Endovia Health Sciences, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Splash Beverage Group, Inc. Condensed Consolidated Financial Statements June 30, 2025 1 Splash Beverage Group, Inc. Condensed Consolidated Balance Sheets June 30, 2025 and December 31, 2024 June 30, 2025 December 31, 2024 Assets (unaudited) Current assets: Cash and cash equivalents $ 17,213 $ 15,346 Accounts receivable, net 140,626 396,855 Prepaid expenses 374,614 364,087 Inventory 855,326 893,061 Other receivables 217,499 234,770 Total current assets 1,605,278 1,904,119 Non-current assets: Deposits $ 48,922 $ 48,922 Investment in Salt Tequila USA, LLC 250,000 250,000 Water rights 20,000,000 — Right of use assets 201,916 351,336 Property and equipment, net 130,773 204,808 Total non-current assets 20,631,611 855,066 Total assets $ 22,236,889 $ 2,759,185 Liabilities and Stockholders’ Equity Liabilities: Current liabilities Accounts payable and accrued expenses $ 7,043,118 $ 5,232,241 Dividends payable 16,572 — Right of use liability, current portion 190,224 305,167 Related party notes payable 389,000 389,000 Notes payable, net of discounts 3,592,462 9,632,505 Shareholder advances — 200,000 Accrued interest payable 2,214,868 3,610,329 Total current liabilities 13,446,244 19,369,242 Long-term liabilities: Notes payable, net of discounts 52,534 1,971,095 Right of use liability – net of current portion 20,030 53,697 Total long-term liabilities 72,564 2,024,792 Total liabilities 13,518,808 21,394,034 Stockholders’ equity: Preferred stock, Series A $ 0.001 par value, 1,000 shares authorized, 1,000 shares issued and outstanding 1 — Preferred stock, Series A-1 $ 0.001 par value, 1,500 shares authorized, 650 shares issued and outstanding 1 — Preferred stock Series B, $ 0.001 par value, 12% cumulative, 150,000 shares authorized, 126,710 shares issued and outstanding 126 — Preferred stock Series C, $ 0.001 par value, 500,000 shares authorized, 20,000 shares issued and outstanding 20 — Common Stock, $ 0.001 par, 7,500,000 shares authorized, 1,899,876 shares issued, 1,669,835 shares outstanding at June 30, 2025 and December 31, 2024 1,900 1,670 Additional paid in capital 176,673,136 137,114,578 Accumulated other comprehensive loss 35,278 81,180 Accumulated deficit ( 167,992,381 ) ( 155,832,277 ) Total stockholders’ equity 8,718,081 ( 18,634,849 ) Total liabilities and stockholders’ equity $ 22,236,889 $ 2,759,185 Shares and per share amounts are reflective of the 1 for 40 reverse split that occurred on March 27, 2025. The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Splash Beverage Group, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss For the Three Months and Six Months Ended June 30, 2025 and June 2024 (Unaudited) Three months ended June 30 Six months ended June 30, 2025 2024 2025 2024 Net revenues — 1,046,782 438,272 2,587,462 Cost of goods sold — ( 802,352 ) ( 468,715 ) ( 2,179,417 ) Gross profit — 244,430 ( 30,443 ) 408,045 Operating expenses: Contracted services 201,660 201,036 421,268 419,865 Salary and wages 685,624 1,243,175 1,697,727 2,478,101 Non-cash share-based compensation 53,859 1,342,317 194,621 1,898,989 Other general and administrative 675,213 934,010 1,261,407 2,135,041 Sales and marketing 16,234 214,812 59,664 417,266 Total operating expenses 1,632,590 3,935,350 3,634,687 7,349,262 Loss from operations ( 1,632,590 ) ( 3,690,920 ) ( 3,665,130 ) ( 6,941,217 ) Other income/(expense): Interest income — 503 — 835 Interest expense ( 625,047 ) ( 622,063 ) ( 1,262,392 ) ( 1,154,661 ) Other Income/Expense — ( 406 ) ( 1,845 ) ( 1,902 ) Amortization of debt discount ( 674,962 ) ( 1,013,816 ) ( 1,653,683 ) ( 1,900,654 ) Loss on Extinguishment of debt ( 5,560,482 ) — ( 5,560,482 ) — Total other income/(expense) ( 6,860,491 ) ( 1,635,782 ) ( 8,478,402 ) ( 3,056,382 ) Provision for income taxes — — — — Net loss $ ( 8,493,081 ) $ ( 5,326,702 ) $ ( 12,143,532 ) $ ( 9,997,599 ) Other Comprehensive Income (Loss) Foreign currency translation loss 1,168 182 ( 45,902 ) ( 7,255 ) Total Comprehensive Income (Loss) $ ( 8,491,913 ) $ ( 5,326,520 ) $ ( 12,189,434 ) $ ( 10,004,854 ) (Loss) per share - continuing operations Basic and diluted $ ( 4.47 ) $ ( 4.34 ) $ ( 6.81 ) $ ( 8.52 ) Weighted average number of common shares outstanding - continuing operations Basic and diluted 1,899,876 1,227,897 1,784,896 1,173,745 Shares and per share amounts are reflective of the 1 for 40 reverse split that occurred on March 27, 2025. The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Splash Beverage Group, Inc. Consolidated Statement of Changes in Deficiency in Stockholders' Equity For the Six months ended June 30, 2025 and June 2024 (Unaudited) Series A Series A-1 Series B Series C Accumulated Total Common Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Additional Paid-In Other Comprehensive Accumulated Stockholders’ Equity Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Income Deficit (Deficit) Balances at December 31, 2023 1,108,252 $ 44,330 — — — — — — — — $ 127,701,710 $ ( 16,583 ) $ ( 133,334,783 ) $ ( 5,605,326 ) Note discount created from issuance of common stock and 5,000 200 — — — — — — — — 107,800 — — 108,000 Share based compensation — — — — — — — — — — 271,672 — — 271,672 Adoption of ASU 2020-06 — — — — — — — — ( 2,191,103 ) — 1,259,057 ( 932,046 ) Issuance of warrants on convertible instruments — — — — — — — — — 768,346 — — 768,346 Conversion of notes payable to common stock 38,800 1,552 — — — — — — — — 386,448 — — 388,000 Issuance of common stock for services 7,500 300 — — — — — — — — 176,700 — — 177,000 Accumulated Comprehensive loss - Translation, net — — — — — — — — — — — ( 7,437 ) — ( 7,437 ) Net loss — — — — — — — — — — — — ( 4,670,897 ) ( 4,670,897 ) Balances at March 31, 2024 1,159,552 46,382 — — — — — — — — 127,221,573 ( 24,020 ) ( 136,746,623 ) ( 9,502,688 ) Common stock issuable on convertible 18-month promissory note 23,125 925 — — — — — — — — 295,075 — — 296,000 Share based compensation — — — — — — — — — — 893,647 — — 893,647 Issuance of warrants on convertible instruments — — — — — — — — — 1,745,328 — — 1,745,328 Conversion of notes payable to common stock 151,488 6,060 — — — — — — — — 1,381,666 — — 1,387,726 Issuance of common stock for services 13,000 520 — — — — — — — — 152,150 — — 152,670 Accumulated Comprehensive loss - Translation, net — — — — — — — — — — — 182 — 182 Net loss — — — — — — — — — — — — ( 5,326,702 ) ( 5,326,703 ) Balances at June 30, 2024 1,347,165 $ 53,887 — $ — — $ — — $ — — $ — $ 131,689,438 $ ( 23,838 ) $ ( 142,073,325 ) $ ( 10,353,838 ) Balances at December 31, 2024 1,669,835 $ 1,670 — $ — — $ — — $ — — $ — $ 137,114,578 $ 81,180 $ ( 155,832,277 ) $ ( 18,634,849 ) Share based compensation — — — — — — — — — — 105,762 — — 105,762 Issuance of warrant for convertible note — — — — — — — — — 497,405 — — 497,405 Conversion of notes payable to common stock 224,541 224 — — — — — — — — 1,665,730 — — 1,665,954 Issuance of common stock for services 5,500 6 — — — — — — — — 34,994 — — 35,000 Accumulated Comprehensive loss - Translation, net — — — — — — — — — — — ( 47,070 ) — ( 47,070 ) Net loss — — — — — — — — — — — — ( 3,650,451 ) ( 3,650,451 ) Balances at March 31, 2025 1,899,876 1,900 — — — — — — — — 139,418,469 34,110 ( 159,482,728 ) ( 20,028,249 ) Share based compensation — — — — — — — — — — 53,859 — — 53,859 Issuance of Preferred stock A — — 1,000 1 — — — — — — 999 — — 1,000 Issuance of Preferred stock A-1 — — — — 650 1 — — — — 649,999 — — 650,000 Exchange of Notes Payable to Preferred Stock B — — — — — — 12,646 126 — — 16,387,277 — — 16,387,403 Issuance of Preferred stock C for acquisition of Water Rights — — — — — — — — 20,000 20 19,999,980 — — 20,000,000 Issuance of warrants on convertible instruments — — — — — — — — — — 162,553 — — 162,553 Accumulated Comprehensive loss - Translation, net — — — — — — — — — — — 1,168 — 1,168 Dividends payable — — — — — — — — — — ( 16,572 ) ( 16,572 ) Net loss — — — — — — — — — — — — ( 8,493,081 ) ( 8,493,081 ) Balances at June 30, 2025 1,899,876 $ 1,900 1,000 $ 1 650 $ 1 12,646 $ 126 20,000 $ 20 $ 176,673,136 $ 35,278 $ ( 167,992,381 ) $ 8,718,081 Shares and per share amounts are reflective of the 1 for 40 reverse split that occurred on March 27, 2025. The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Splash Beverage Group, Inc. Condensed Consolidated Statement of Cash Flows For the Six Months Ended June 30, 2025 and June 2024 (Unaudited) 2025 2024 Net loss $ ( 12,143,532 ) $ ( 9,997,599 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 74,035 270,263 Amortization of debt discount 1,653,683 1,900,654 ROU assets, net 811 42 Non-cash share-based compensation 194,621 1,898,989 Loss on extinguishment of debt 5,560,482 — Changes in working capital items: Accounts receivable, net 256,229 221,501 Inventory, net 37,735 946,778 Prepaid expenses and other current assets 6,743 ( 100,299 ) Deposits — 96 Accounts payable and accrued expenses 2,494,630 479,322 Accrued interest payable 460,164 642,192 Net cash used in operating activities ( 1,404,399 ) ( 3,738,061 ) Cash flows from investing activities: Capital expenditures — 1,500 Net cash used in investing activities — 1,500 Cash flows from financing activities: Cash advance (repayment) from related party — ( 30,000 ) Proceeds from issuance of debt 1,081,650 4,705,000 Proceeds from sale of preferred stock 651,000 — Principal repayment of debt ( 280,484 ) ( 1,302,864 ) Net cash provided by financing activities 1,452,166 3,372,136 Net cash effect of exchange rate changes on cash ( 45,900 ) ( 7,255 ) Net change in cash and cash equivalents 1,867 ( 371,680 ) Cash and cash equivalents, beginning of year 15,346 379,978 Cash and cash equivalents, end of period $ 17,213 $ 8,298 Supplemental disclosure of cash flow information: Cash paid for Interest $ 132,441 $ 479,463 Supplemental disclosure of non-cash investing and financing activities Notes payable and accrued interest converted to common stock (224,541 shares in 2025 & 171,536 shares in 2024,) 1,665,954 1,769,656 Non-cash debt discount in the form of issuance of equity instruments in conjunction with convertible notes 659,958 2,815,743 Series-B Convertible Preferred Stock Issued 126,710 Shares exchanged for $12,670,435 notes payable and accrued interest $ 16,387,404 — Series-C Convertible Preferred Stock Issued 20,000 Shares exchanged for Water Rights $ 20,000,000 — Shares and per share amounts are reflective of the 1 for 40 reverse split that occurred on March 27, 2025. The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Note 1 – Business Organization and Nature of Operations Splash Beverage Group, Inc. (the “Company”, “Splash”) seeks to identify, acquire, and build early stage or under-valued beverage brands that have strong growth potential within its distribution system. Splash’s distribution system is comprehensive in the US and is now expanding to select attractive international markets. Through its division Qplash, Splash’s distribution reach includes e-commerce access to both business-to-business (B2B) and business-to-consumer (B2C) customers. Qplash markets well known beverage brands to customers throughout the US that prefer delivery direct to their office, facilities, and or homes. On March 27, 2025, the Company implemented a 1.0 for 40.0 reverse stock split. All common stock shares 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. Note 2 – Summary of Significant Accounting Policies Basis of Accounting The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), and the requirements of the U.S. Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. Accordingly, they do not include all of the information and footnotes normally included in financial statements prepared in conformity with U.S. GAAP. They should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2024 Annual Report on Form 10-K, filed with the SEC on July 11, 2025 (the “Form 10-K”). The accompanying condensed consolidated financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessary for a fair presentation of its condensed financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the entire year. Basis of Presentation and Consolidation These consolidated financial statements include the accounts of Splash and its wholly owned subsidiaries Splash Beverage Holdings LLC (“Holdings”), Splash International Holdings LLC (“International”), Splash Mex SA de CV (“Splash Mex”), and Copa di Vino Wine Group, Inc. (“Copa di Vino”). All intercompany balances have been eliminated in consolidation. Our investment in Salt Tequila USA, LLC is accounted for at cost, as the company does not have the ability to exercise significant influence. Our accounting and reporting policies confirm to accounting principles generally accepted in the United States of America (GAAP). Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 6 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Cash Equivalents and Concentration of Cash Balance The Company considers all highly liquid securities with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at June 30, 2025 or December 31, 2024. Our cash in bank deposit accounts, at times, may exceed federally insured limits of $ 250,000 . At June 30, 2025 and December 31, 2024, the Company’s cash on deposit with financial institutions had not exceeded federally insured limits of $ 250,000 . Note 2 – Summary of Significant Accounting Policies, continued Accounts Receivable and Allowance for Doubtful Account s Accounts receivable are carried at their estimated recoverable amounts and are periodically evaluated for collectability based on past credit history with clients and other factors. The Company establishes provisions for losses on accounts receivable on the basis of loss experience, known and inherent risk in the account balance, and current economic conditions. Inventory Inventory is stated at the lower of cost or net realizable value, accounted for using the weighted average cost method. The inventory balances at June 30, 2025 and December 31, 2024 consisted of raw materials, work-in-process, and finished goods held for distribution. The cost elements of inventory consist of purchase of products, transportation, and warehousing. The Company establish provisions for excess or inventory near expiration are based on management’s estimates of forecast turnover of inventories on hand and under contract. A significant change in the timing or level of demand for certain products as compared to forecast amounts may result in recording additional provisions for excess or expired inventory in the future. Provisions for excess inventory are included in cost of goods sold and have historically been adequate to provide for losses on inventory. The Company manages inventory levels and purchase commitments in an effort to maximize utilization of inventory on hand and under commitments. The amount of our reserve was $ 621,178 at June 30, 2025 and December 31, 2024. Property and Equipment The Company records property and equipment at cost when purchased. Depreciation is recorded for property, equipment, and software using the straight-line method over the estimated economic useful lives of assets, which range from 3-39 years. Company management reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. Depreciation expense totaled $ 37,017 and $ 37,017 for the three months ended June 30, 2025 and June 30, 2024, respectively. For the six months ended June 30, 2025 and June 30, 2024, depreciation expense totaled $ 74,034 and $ 74,229 , respectively. Property and equipment as of June 30, 2025 and December 31, 2024 consisted of the following: Schedule of property and equipment 2025 2024 Auto 45,420 45,420 Machinery & equipment 1,165,313 1,165,313 Buildings 233,323 233,323 Leasehold improvements 723,638 723,638 Computer Software 5,979 5,979 Office furniture & equipment 7,657 7,657 Total cost 2,181,330 2,181,330 Accumulated depreciation ( 2,050,557 ) ( 1,976,522 ) Property, plant & equipment, net 130,773 204,808 7 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Excise taxes The Company pays alcohol excise taxes based on product sales to both the Oregon Liquor Control Commission and to the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (TTB). The company also pays taxes to the State of Florida – Division of Alcoholic Beverages and Tobacco. The Company is liable for the taxes upon the removal of product from the Company’s warehouse on a per gallon basis. 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. Note 2 – Summary of Significant Accounting Policies, continued Fair Value of Financial Instruments Financial Accounting Standards (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 - 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. Level 2 - 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). Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The liabilities and indebtedness presented on the condensed consolidated financial statements approximate fair values at June 30, 2025 and December 31, 2024, consistent with recent negotiations of notes payable and due to the short duration of maturities and market rates of interest. Embedded Debt Costs in Convertible Debt Instruments In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ ASU 2020-06 ”) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The Company has adopted ASU 2020-06 effective January 1, 2024 and has removed the effects of any embedded conversion features from certain of our convertible instruments. Revenue Recognition The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (Topic 606). This guidance sets forth a five-step model which depicts the recognition of revenue in an amount that reflects what the Company expects to receive in exchange for the transfer of goods or services to customers. 8 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements The Company recognizes revenue when the Company’s performance obligations under the terms of a contract with the customer are satisfied. Product sales occur for the Splash Beverage and E-commerce businesses once control of the Company’s products are transferred upon delivery to the customer. Revenue is measured as the amount of consideration that the Company expects to receive in exchange for transferring goods, and revenue is presented net of provisions for customer returns and allowances. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives offered to the Company’s customers and their customers. Sales taxes and other similar taxes are excluded from revenue. Note 2 – Summary of Significant Accounting Policies, continued Distribution expenses to transport our products, and warehousing expense after manufacture are accounted for in Other General and Administrative cost. Cost of Goods Sold Cost of goods sold include the costs of products, packaging, transportation, warehousing, and costs associated with valuation allowances for expired, damaged or impaired inventory. The cost of transportation from production site to other 3 rd party warehouses or customer is included in Other General and Administrative cost. Other General and Administrative Expenses Other General and Administrative expenses includes Amazon selling fees, cost associated with the outbound shipping and handling of finished goods, insurance cost, consulting cost, legal and audit fees, Investor Relations expenses, travel & entertainment expenses, occupancy cost and other cost. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, ” Compensation - Stock Compensation” . Under the fair value recognition provisions, cost is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period, which is generally the award’s vesting period. The Company uses the Black-Scholes option pricing model to determine the fair value of stock-based awards. We measure stock-based awards at the grant-date fair value for employees, directors and consultants and recognize compensation expense on a straight-line basis over the vesting period of the award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fair value of our common stock, and for stock options and warrants, the expected life of the option and warrant, and expected stock price volatility and exercise price. We used the Black-Scholes option pricing model to value its stock-based awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected life of stock options/warrants were estimated using the “simplified method,” which calculates the expected term as the midpoint between the weighted average time to vesting and the contractual maturity, we have limited historical information to develop reasonable expectations about future exercise patterns. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, we use comparable public companies as a basis for its expected volatility to calculate the fair value of award. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the award. The estimation of the number of awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts are recognized as an adjustment in the period in which estimates are revised. 9 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Income Taxes The Company uses the liability method of accounting for income taxes as set forth in ASC 740, ” Income Taxes” . Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. The Company records a valuation allowance when it is more likely than not that the deferred tax assets will be realized. Company management assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Note 2 – Summary of Significant Accounting Policies, continued For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. Company management has determined that there are no material uncertain tax positions at June 30, 2025 and December 31, 2024. Net income (loss) per share The net income (loss) per share is computed by dividing the net income (loss) less preferred stock dividends by the weighted average number of shares of common stock outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company’s convertible debt or preferred stock (if any), are not included in the computation if the effect would be anti-dilutive. Weighted average number of shares outstanding excludes anti-dilutive common stock equivalents, including stock options, warrants to purchase shares of common stock and shares issuable upon the conversion of notes payable. Schedule of net loss per common share Net income/(loss) per common shares: 3 months ended June 30, 2025 6 months ended June 30, 2025 Net income/(loss) $ ( 8,491,913 ) $ ( 12,189,434 ) Dividends on Series A-1 preferred stock $ ( 16,572 ) $ ( 16,572 ) Weighted-average shares outstanding 1,899,876 1,784,896 Net loss per common share $ ( 4.47 ) $ ( 6.81 ) Advertising The Company conducts advertising for the promotion of its products. In accordance with ASC 720-35, advertising costs are charged to operations when incurred. The Company recorded advertising expense of $ 18,295 and $ 109,624 for the three months ended June 30, 2025 and 2024, respectively. The Company recorded advertising expense of $ 40,721 and $ 187,251 for the six months ended June 30, 2025 and 2024, respectively. Goodwill and Intangibles Assets Goodwill represents the excess of acquisition cost over the fair value of the net assets acquired and is not subject to amortization. The Company reviews goodwill annually in the fourth quarter for impairment or when circumstances indicate carrying value may exceed the fair value. This evaluation is performed at the reporting unit level. If a qualitative assessment indicates that it is more likely than not that the fair value is less than carrying value, a quantitative analysis is completed using either the income or market approach, or a combination of both. The income approach estimates fair value based on expected discounted future cash flows, while the market approach uses comparable public companies and transactions to develop metrics to be applied to historical and expected future operating results. The Company’s goodwill and intangible assets were impaired to $ 0 at December 31, 2024. 10 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements 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 asset. 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. On June 25, 2025, the Company acquired water concession rights and related permits in Garabito, Puntarenas, Costa Rica, as part of the Utopia asset acquisition. The concession grants the legal right to extract up to 0.81 liters per second from the approved aquifer, with renewals available every ten years, contingent on approval by regulatory agencies in Costa Rica. Management expects the concession to be renewed for at least 100 years. The water rights are classified as indefinite-lived intangible assets under ASC 350 and are not amortized. Indefinite-lived intangible assets are tested for impairment annually or more frequently if indicators of impairment are present. As of June 30, 2025, the carrying amount of the water rights was $20.0 million, and no impairment was recorded. Note 2 – Summary of Significant Accounting Policies, continued Long-lived assets The Company evaluates long-lived assets for impairment when events or changes in circumstances may indicate the carrying amount of the asset group, generally an individual warehouse, may not be fully recoverable. For asset groups held and used, including warehouses to be relocated, the carrying value of the asset group is considered recoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceed the respective carrying value. In the event that the carrying value is not considered recoverable, an impairment loss is recognized for the asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group. For asset groups classified as held-for-sale (disposal group), the carrying value is compared to the disposal group’s fair value less costs to sell. The Company estimates fair value by obtaining market appraisals from third party brokers or using other valuation techniques. Foreign Currency Gains/Losses Foreign Currency Gains/Losses — foreign subsidiaries’ functional currency is the local currency of operations and the net assets of foreign operations are translated into U.S. dollars using current exchange rates. Gains or losses from these translation adjustments are included in the condensed consolidated statement of operations and other comprehensive loss as foreign currency translation gains or losses. Translation gains and losses that arise from the translation of net assets from functional currency to the reporting currency, as well as exchange gains and losses on intercompany balances, are included in foreign currency translation in the condensed consolidated statement of operations and comprehensive loss. The Company incurred foreign currency translation net gain of $ 1,168 and net gain of $ 182 for the three months ending June 30, 2025 and 2024 respectively and net loss of $ 45,902 and net loss of $ 7,255 for the six months ending June 30, 2025 and 2024 respectively. Liquidity, Capital Resources and Going Concern Considerations The Company’s consolidated financial statements have been prepared on the basis of US GAAP for a going concern, on the premise that the Company is able to meet its obligations as they come due in the normal course of business. The Company historically has incurred significant losses and negative cash flows from operation since inception and had net-loss of approximately $8.5 million for three-month period ended June 30, 2025 and accumulated deficit of approximately $168.0 million through June 30, 2025. During the six-month period ended June 30, 2025, the Company’s net cash used in operating activities totaled approximately $ 1.4 million. Additionally, the Company’s current liabilities exceed its current assets, and it has a working capital deficit. To date the Company has generated cash flows from issuances of equity and indebtedness. 11 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Note 2 – Summary of Significant Accounting Policies, continued The Company received approximately $ 1.1 million from the issuance of debt and $ 0.7 million from sale of preferred stocks for the six months ending June 30, 2025. Management’s plans in regard to these matters include actions to sustain the Company’s operations, such as seeking additional funding to meet its obligations and implement its business plan. The Company has issued preferred stock as part of its strategy to regain compliance with the NYSE American listing standards and reduce debt. These preferred shares, specifically Series B 12% convertible preferred stock, were issued in exchange for promissory notes. The preferred stock offers a 12% cumulative dividend and potential conversion to common stock, subject to shareholder approval and an increase in authorized common stock. In June 2025, the Company exchanged approximately $12.62 million outstanding promissory notes and accrued interest for 126,710 shares of Series B Preferred Stock. By converting debt into equity, the Company enhances its balance sheet, reduces interest expense, and improves its shareholder equity position in furtherance of its goal of complying with exchange requirements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. If the Company is unable to continue as a going concern, adjustments would be necessary to the carrying values of its assets and liabilities and the reported amounts of revenues and expenses could be materially affected. Recent Accounting Pronouncements In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The Company has adopted ASU 2020-06 effective January 1, 2024, the Company recorded approximately $2.2 million as a reduction to the additional paid in capital and added approximately $1.3 million to the opening retained earnings in accordance with the authoritative guidance under ASU 2020-06. All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company. 12 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Note 3 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable Notes payable are generally nonrecourse and secured by all Company owned assets. Schedule of notes payable Interest Rate June 30, 2025 December 31, 2024 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 6. 17 % $ 170,620 $ 195,927 In April 2021, the Company entered into two six-month loans in the amount of $ 84,000 each. The loan had an original maturity of October 2021 with principal and interest due at maturity. The loan was exchanged to Series B Preferred stock in June 2025. 7 % — 168,000 In May 2021, the Company entered into a six-month loan with an individual in the amount of $ 50,000 . The loan had an original maturity of October 2021 with principal and interest due at maturity. The loan was exchanged to Series B Preferred stock in June 2025. 7 % — 50,000 In May 2021, the Company entered into a six-month loan with an individual in the amount of $ 10,000 . The loan had an original maturity of October 2021 with principal and interest due at maturity. The loan was extended to October 31, 2024. The note was in default. 7 % 10,000 10,000 In August 2022, the Company entered into a 56-months auto loan in the amount of $ 45,420 . 2.35 % 18,472 23,372 In December 2022, the Company entered into various eighteen-month loans with individuals totaling $ 4,000,000 . 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. The loans were exchanged to Series B Preferred stock in June 2025. 12 % — 2,600,000 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 loan was exchanged to Series B Preferred stock in June 2025. 12 % — 1,000,000 13 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. The loans were exchanged to Series B Preferred stock in June 2025. 12 % — 800,000 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. The loans were exchanged to Series B Preferred stock in June 2025. 12 % — 100,000 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. The loan was exchanged to Series B Preferred stock in June 2025. 12 % — 100,000 In August 2023, the Company entered into a twelve-month loan with an individual in the amount of $ 300,000 . The convertible note included the issuance of 150,000 shares of common stocks. The loan matures in August 2024 with principal and interest due at maturity with conversion price of $ 0.85 per share and is non-interest bearing. — % 43,000 43,000 In October 2023, the Company entered into a three-month loan with an individual in the amount of $ 500,000 . The loan matures in January 2024 with principal and interest due at maturity. The loan was extended to June 2025. 10 % 500,000 500,000 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. — % 58,612 66,278 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. The loan was fully converted to common stock in January 2025 12 % — 1,143,449 14 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. The loan was exchanged to Series B Preferred stock in June 2025. 12 % — 250,000 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. The loan was exchanged to Series B Preferred stock in June 2025. 12 % — 150,000 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. The loan was exchanged to Series B Preferred stock in June 2025. 12 % — 315,000 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. The loan was exchanged to Series B Preferred stock in June 2025. 12 % — 250,000 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. — % 372,335 357,127 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. The loan was exchanged to Series B Preferred stock in June 2025 — % — 1,850,000 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. — % 130,639 181,341 In July 2024, the Company entered into a revenue purchase agreement in the amount of $ 178,250 . The loan matures in April 2025. The loan was fully converted to Common Stock in January 2025. 22 % — 91,999 15 In July 2024, the Company entered into a revenue purchase agreement in the amount of $ 120,750 . The loan matures in May 30, 2025. The loan was fully converted to Common Stock in January 2025 22 % — 120,750 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. The loans were exchanged to Series B Preferred stock in June 2025. 9 % — 500,000 In August 2024, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ 1,400,000 . The loan matures in February 2026 with principal and interest due at maturity with conversion price of $ 0.38 per share. $ 800,000 was exchanged to Preferred stock in June 2025. 12 % — 1,400,000 In August 2024, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ 100,000 . The loan matures in September 2025 with principal and interest due at maturity with conversion price of $ 0.38 per share. The loan was exchanged to Series B Preferred stock in June 2025. 12 % — 100,000 In September 2024, the Company entered into a merchant cash advance agreement in the amount of $ 325,000 to be paid weekly until the loan is paid in full. — % 65,861 82,261 In September 2024, the Company entered into an agreement with individuals totaling in the amount of $ 590,000 . $ 290,000 was exchanged to Series B Preferred stock in June 2025 — % 300,000 590,000 In October 2024, the Company entered into an agreement with individuals totaling in the amount of $ 950,000 . There is no stated maturity, the proceeds of which are to be used for a future acquisition. — % 950,000 950,000 In November 2024, the Company entered into a merchant cash advance agreement in the amount of $ 340,000 to be paid weekly until the loan is paid in full. The loan was in default. — % 311,713 311,713 In December 2024, the Company entered into a merchant cash advance agreement in the amount of $ 111,300 to be paid weekly until the loan is paid in full. — % — 111,300 16 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. 12 % 225,000 225,000 In January 2025, the Company entered into a 12-month loan with individuals in the amount of $ 350,000 . The note included 100 % warrant coverage. The loan had a maturity of January 2026 with principal and interest due at maturity with conversion price of $ 0.25 per share. The loans of $150,000 were exchanged to Series B Preferred stock in June 2025. 12 % 200,000 — In January 2025, the Company entered into a 18-month loan with individuals in the amount of $ 225,000 . The note included 100 % warrant coverage. The loan had a maturity of June 2026 with principal and interest due at maturity with conversion price of $ 0.25 per share. The loans were exchanged to Series B Preferred stock in June 2025. 12 % — — In January 2025, the Company entered into a convertible promissory note in the amount of $ 156,000 . The loan had a maturity of November 2025 with principal and interest due at maturity. 8 % 156,000 — In January 2025, the Company entered into a promissory note in the amount of $ 150,650 . The loan had a maturity of November 2025 with 1 st payment in July 2025. 22 % 150,650 — In April 2025, the Company entered into a senior convertible note in the amount of $ 200,000 with conversion price of $ 1.25 per share. The loan had a maturity of April 2030 with 125,000 5-year warrants exercisable at $2.00, and 83,334 5-year warrants exercisable into common stock at $3.00 15 % 200,000 — Total notes payable $ 3,862,902 $ 14,635,517 Less notes discount ( 217,906 ) ( 3,031,917 ) Less current portion ( 3,592,462 ) ( 9,632,505 ) Long-term notes payable $ 52,534 $ 1,971,095 17 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Note 3 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued Interest expense on notes payable was $ 625,047 and $ 607,903 for the three months ended June 30, 2025 and 2024, respectively. Interest expense on notes payable was $ 1,262,392 and $ 1,130,480 for the six months ended June 30, 2025 and 2024, respectively. Accrued interest amounted to $ 2,214,868 as of June 30, 2025. The Company recognized approximately $ 674,962 and approximately $ 1,013,815 of interest expense attributable to the amortization of the debt discount during the three months ended June 30, 2025 and 2024, respectively. The Company recognized approximately $ 1,653,683 and approximately $ 1,900,656 of interest expense attributable to the amortization of the debt discount during the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, and December 31, 2024, the balance of the unamortized debt discount was $ 217,906 and $ 2,859,430 respectively. Schedule of notes payable Interest Rate June 30, 2025 December 31, 2024 Shareholder Notes Payable In February 2023, we entered into a loan with an individual in the amount of $ 200,000 . The annual interest rate is 12 %. The loan was exchanged to Preferred stock in June 2025. 12 % — 200,000 Less current portion ( 0 ) ( 200,000 ) Long-term notes payable $ — $ — Interest expense on related party notes payable was $ 6,000 for the three months ended June 30, 2025 and 2024, respectively. Interest expense on related party notes payable was $ 12,000 for the six months ended June 30, 2025 and 2024, respectively. The Company’s effective interest rate was 20.63% for the six months ended June 30, 2025. As of June 30, 2025, the Company’s convertible note balances are convertible into 167,500 shares of common stock Note 4 – Licensing Agreement and Royalty Payable The licensing agreement between TapouT LLC and the Company was terminated in Q1 2024. The parties are engaged in active and constructive settlement discussions pursuant to the terms of the agreement’s termination provisions. 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. The Company has reserved $ 330,000 that is included in legal reserve in the condensed consolidated statement of operations and comprehensive loss relating to the termination of the ABG agreement. In connection with the Copa di Vino APA, the Company acquired the license to certain patents from 1/4 Vin SARL (“1/4 Vin”). On February 16, 2018, Copa di Vino entered into three separate license agreements with 1/4 Vin. 1/4 Vin has the right to license certain patents and patent applications relating to inventions, systems, and methods used in the Company’s manufacturing process. In exchange for notes payable, 1/4 Vin granted the Company a nonexclusive, royalty-bearing, non-assignable, nontransferable, terminable license which would continue until the subject equipment is no longer in service or the patents expire. 18 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Note 5– Stockholders’ Equity Common Stock On March 27, 2025, the Company implemented a 1.0 for 40.0 reverse stock split. The reverse stock split was authorized by the Company’s Board of Directors on March 14, 2025. All common stock shares stated herein have been adjusted to reflect the split. The purpose of this reverse split was to ensure that the Company can meet the per share price requirements of the NYSE American. During the six-months ended June 30, 2025, we issued 5,500 shares valued at $ 35,000 in exchange for services and 224,541 shares for conversion of notes payable and accrued interest totaling $ 1,665,953 . Preferred Stock The Company evaluated the classification of the Preferred Stock and related warrants issued with the Series A-1 Preferred Stock in accordance with ASC 480, Distinguishing Liabilities from Equity , and ASC 815, Derivatives and Hedging . Based on this assessment, management determined that the Preferred Stock and warrants meet the criteria for equity classification. Specifically, the instruments are not mandatorily redeemable, do not embody obligations to repurchase the Company’s shares by transferring assets, and do not require settlement in a variable number of shares with a monetary value that is fixed, tied to a variable other than the Company’s own stock, or indexed to something other than the Company’s stock. The warrants are indexed solely to the Company’s common stock and meet the scope exception under ASC 815-10-15. Accordingly, the Preferred Stock and related warrants have been classified as components of stockholders’ equity in the accompanying condensed consolidated financial statements. The Company has issued four series of preferred stock: 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. Voting Rights ● 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 will be retired following the special meeting scheduled for August 29,2025. Series A shares are held solely by Robert Nistico, CEO, a related party. ● Series A-1 carries 231 votes per share. ● Series B and Series C do not carry any voting rights. Dividends ● 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. Conversion 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 shares. ● Series C is convertible at a fixed price of $3.00, resulting in the potential issuance of 6,666,667 common shares upon conversion. 19 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements 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. Seniority ● 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. 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. 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. 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. Mr. Nistico is the sole holder of Preferred A. In June 2025, the Company exchanged previously issued convertible notes, $10,580,336 of principal and $2,090,105 interest for 126,710 shares of Preferred Stock B, eliminating $7,699,596 of current liabilities and $2,070,712 of long-term liabilities. These liabilities were previously carried net of unamortized discounts. Debt agreements were amended to be exchanged for Preferred B. The Series B shares are convertible into common stock, subject to shareholder approval. The note discount on the date of conversion was 1,843,519, The loss on extinguishment of debt was $ 5,560,482 recorded in accordance with ASC 470. The fair market value of the Preferred Stock B utilized in the computation of the loss on extinguishment was $16,387,404. 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 $1,000 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 acquisition of the water rights was recorded at a cost of $20 million, which is the fair value of the Series C preferred shares issued as consideration for the acquisition of the water rights. The Series C shares are convertible into common stock, subject to shareholder approval. Stock Plan 2020 Plan adjusted for the 1 for 40 reverse split. 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 152,383 as of June 30, 2025. 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. In October 2023, the shareholders voted to increase the number of shares issuable under the Plan to 7.5%. At January 1, 2024 and 2025, the number of shares issuable under the 2020 plan increased by 83,119 and 125,238 shares, respectively. 20 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements The following is a summary of the Company’s stock option activity: Schedule of stock option activity Options 2025 2024 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Balance - January 1* 216,212 $ 29.60 106,475 $ 45.20 Granted 15,000 6.04 15,750 23.60 Exercises — — — — Cancelled 12,500 13.20 — — Balance – March 31, 218,712 $ 28.78 122,225 $ 42.40 Granted — — 96,375 13.20 Exercises — — — — Cancelled — — — — Balance – June 30, 218,712 $ 28 . 78 218,600 $ 29.60 Exercisable – June 30, 190,119 $ 31.11 171,379 $ 32.80 The fair value of stock options granted in 2025 has been measured at $ 90,531 using the Black-Scholes option pricing model with the following assumptions: exercise price $ 6.0 , expected life 10 years, expected volatility 254 %, expected dividends 0 %, risk free rate 4.00 %. During the three-month period ended June 30, 2025 and June 30, 2024, the company granted 0 and 96,375 options to new employees under the 2020 plan, respectively. During the six-month period ended June 30, 2025 and June 30, 2024, stock-based compensation was recorded $ 159,531 and $ 1,276,900 respectively. The remaining unamortized stock-based compensation as of June 30,2025 was $ 201,822 . Note 5 – Stockholders’ Equity, continued Common Stock Issuable, Liability to Issue Stock and Shareholder Advances The shareholder advances in the amount of $ 0.2 million was exchanged to 2,444 shares of Preferred Stock B in June 2025. Note 6 – Related Parties 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 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, L.P. (the “Lender”). The Note Payable to Decathlon with a balance of $ 2,183,504 at June 30, 2025 and $ 1,995,950 at December 31, 2024. On April 2024, the Company also entered into a Merchant Cash Advance 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 Cobalt Funding Solutions (the “Lender”). The Loan and Security Agreement provided a loan of $815,000, with the gross and interest amount of $326,028 with the Lender (the “Credit Facility”). There was $372,335 outstanding under this agreement as of June 30, 2025. 21 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements On September 2024 and November 2024 the Company also entered into a Merchant Cash Advance 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 with Timeless Funding LLC (the “Lender”). The Loan and Security Agreement provided a loan of $ 325,000 and $340,000, with the gross and interest amount of $ 172,250 and $173,400 respectively with the Lender (the “Credit Facility”). There was $ 65,861 and $311,713 respectively outstanding under this agreement as of June 30, 2025. There were related party advances from our chief executive officer in the amount of approximately $ 0.4 million outstanding as of June 30, 2025 and approximately $ 0.4 million as of December 31, 2024. 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. Mr. Nistico is the sole holder of Preferred A. Note 7 – Investment in Salt Tequila USA, LLC The Company has a marketing and distribution agreement with SALT Tequila USA, LLC (“SALT”) for the manufacturing of our Tequila product line in Mexico. The Company has a 22.5 % percentage ownership interest in SALT, this investment is carried at cost less impairment, the investment does not have a readily determinable fair value. The Company has the right to increase our ownership to 37.5 %. Note 8 – Leases The Company has various operating lease agreements primarily related to real estate and office. The Company’s real estate leases represent a majority of the lease liability. Lease payments are mainly fixed. Any variable lease payments, including utilities, common area maintenance are expensed during the period incurred. Variable lease costs were immaterial for the quarter ended June 30, 2025 and 2024. A majority of the real estate leases include options to extend the lease. Management reviews all options to extend at the inception of the lease and account for these options when they are reasonably certain of being exercised. Operating lease expense is recognized on a straight-line basis over the lease term and is included in operating expense on the Company’s condensed consolidated statement of operations and comprehensive loss. Operating lease cost was $ 184,136 and $ 163,590 during the period ended June 30, 2025 and 2024, respectively. The following table sets for the maturities of our operating lease liabilities and reconciles the respective undiscounted payments to the operating lease liabilities in the consolidated balance sheet at June 30, 2025 Schedule of operating lease liabilities Undiscounted Future Minimum Lease Payments Operating Lease 2025 (six months remaining) 160,856 2026 52,703 2027 2,976 Total 216,535 Amount representing imputed interest ( 6,281 ) Total operating lease liability 210,254 Current portion of operating lease liability 190,224 Operating lease liability, non-current $ 20,030 22 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Note 8 –Leases, continued The table below presents lease-related terms and discount rates at June 30, 2025: Schedule of lease-related terms Remaining term on leases 1 to 21 months Incremental borrowing rate 5.0 % To 9 % Note 9 – Segment Reporting The Company has two reportable operating segments: (1) the manufacture and distribution of non-alcoholic and alcoholic brand beverages, and (2) the e-commerce sale of beverages. These operating segments are managed separately and each segment’s major customers have different characteristics. Segment Reporting is evaluated by our Chief Executive Officer and Chief Financial Officer. Note: The Copa di Vino business is included in our Splash Beverage Group segment. Schedule of segment reporting information 3 months ended 6 months ended Revenue, net June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Splash Beverage — 1,023,405 379,260 2,223,687 E-Commerce — 23,377 59,012 363,775 Net Revenue — 1,046,782 438,272 2,587,462 3 months ended 6 months ended Segment Operating loss: June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Splash Beverage ( 1,377,146 ) ( 3,685,962 ) ( 3,139,259 ) ( 6,930,901 ) E-Commerce ( 255,444 ) ( 4,958 ) ( 525,871 ) ( 10,316 ) Total Contribution after marketing ( 1,632,590 ) ( 3,690,920 ) ( 3,665,130 ) ( 6,941,217 ) 3 months ended 6 months ended Reconciliation of segment loss to corporate loss: June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Other income/expense ( 0 ) ( 407 ) ( 1,845 ) ( 1,902 ) Amortization of debt discount ( 674,962 ) ( 1,013,816 ) ( 1,653,683 ) ( 1,900,654 ) Interest income and expense ( 625,047 ) ( 621,559 ) ( 1,262,392 ) ( 1,153,826 ) Loss on Extinguishment of debt ( 5,560,482 ) — ( 5,560,482 ) — Loss from continuing operations ( 8,493,081 ) ( 5,326,702 ) ( 12,143,532 ) ( 9,997,599 ) Total assets June 30, 2025 December 31, 2024 Splash Beverage Group 22,207,726 2,610,207 E-Commerce 28,162 148,978 Total assets $ 22,235,889 $ 2,759,185 23 Splash Beverage Group, Inc. Notes to the Condensed Consolidated Financial Statements Note 10 – Commitment and Contingencies The Company is a party to assert 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. As disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2025, on July 28, 2025, the Company received two letters from the NYSE Regulation confirming that the Company has regained compliance with the continued listing standards of the NYSE American LLC (“NYSE American”). The licensing agreement between TapouT LLC and the Company was terminated in Q1 2024. The parties are engaged in active and constructive settlement discussions pursuant to the terms of the agreement’s termination provisions. 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 11 – Subsequent Events In July 2025, the Company issued 150 shares of Series A-1 Preferred Stock in exchange for $150,000. The July issuance is convertible into 37,500 – 120,000 shares of common stock. Series A-1 shares are convertible into common stock, subject to shareholder approval. Investors of A-1 Shares also received 37,500 1-year A Warrants exercisable into common stock at 80% of 5-day VWAP, and 37,500 5-year B Warrants exercisable into common stock at $4.00. All outstanding A-1 shares (800) are convertible into 200,000 – 640,000 shares of common stock, subject to shareholder approval. In August 2025, the Company entered into a 12% promissory note in the amount of $183,200. This loan has a maturity of May 2026 with the 1 st payment in January 2026. In August 2025, the Company entered into a 22% promissory note in the amount of $58,000. This loan has a maturity of May 2026 with the 1 st payment in January 2026. 24