What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-04-15 compared with 2025-07-11 · 779 added, 529 removed, 668 unchanged (66% of the section changed)

Financial Statements and Supplementary

Financial Statements

and Supplementary Data.

Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID:

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Notes to the Consolidated Financial Statements

of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered

Public Accounting Firm

Report of Independent Registered Public Accounting

Firm (PCAOB ID:

To the Board of Directors and Stockholders

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or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Evaluation of Intangible Assets for Impairment

Description of the Matter

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

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

carrying value.

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

to the industry and company specific factors.

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

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

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

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

These factors were considered

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

Pursuant to current accounting

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

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

At December 31, 2024, the Company’s intangible

asset balance was $0.

Auditing management’s annual impairment tests was complex because

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

How We Addressed the Matter

Our audit procedures related to the evaluation of intangible assets for

impairment included the following, among others:

evaluated managements significant accounting policies related to the impairment of intangible

assets for reasonableness.

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

identifiable cash flows can be determined.

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

assessed the qualifications and competence of management

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

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

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

included in Note 2.

We determined that there are no critical audit matters.

Rose, Snyder & Jacobs LLP

We have served as the Company’s auditor since 2024

July 11, 2025

April 15, 2026

Splash Beverage Group, Inc.

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Other receivables

Assets of discontinued operations

Total current assets

Non-current assets:

Intangibles assets, net

Investment in Salt Tequila USA, LLC

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Property and equipment, net

Assets of discounted operations

Total non-current assets

Liabilities and Stockholders’ Equity

Liabilities and Stockholders’ Deficit

Current liabilities

Accounts payable and accrued expenses

Derivative liability

Dividends payable

Right of use liability, current portion

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Notes payable, net of discounts

Shareholder advances

Stockholder advances

Accrued interest payable

Liabilities of discontinued operations

Total current liabilities

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Total liabilities

Stockholders’ equity:

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

Stockholders’ deficit:

Preferred stock, Series A $ 0.001 par value, 1,000 shares authorized, 0 shares issued and outstanding

Preferred stock, Series A-1 $ 0.001 par value, 1,500 shares authorized, 1,300 shares issued and outstanding

Preferred stock Series B, $ 0.001 par value, 12% cumulative, 150,000 shares authorized, 123,731 shares issued and outstanding

Preferred stock Series C, $ 0.001 par value, 500,000 shares authorized, 0 shares issued and outstanding

Common Stock, $ 0.001 par, 400,000,000 shares authorized, 2,998,799 and 1,669,835 shares issued and outstanding, at December 31, 2025 and December 31, 2024, respectively

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( 155,832,277 )

Total stockholders’ equity

Total stockholders’ deficit

( 15,300,828 )

( 18,634,849 )

Total liabilities and stockholders’ equity

The share amounts above have been retroactively adjusted to reflect the

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

Total liabilities and stockholders’ deficit

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

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Cost of goods sold

( 3,799,758 )

( 13,281,457 )

Operating expenses:

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( 3,677,143 )

Loss on inventory write off

Loss on Extinguishment of debt

( 5,560,482 )

Change in FV derivative

Total other expense

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( 17,609,074 )

Discontinued operations:

Loss from discontinued operations, net of tax

( 6,147,477 )

Net (loss) from discontinued operations

( 6,147,477 )

$ ( 25,234,834 )

$ ( 23,756,551 )

Preferred Stock Dividends

Net loss available to common stockholders

$ ( 26,066,778 )

$ ( 23,756,551 )

Other comprehensive loss

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$ ( 23,658,788 )

Loss per share - continuing operations

Basic and Diluted

Loss per share - continuing operations – Basic and Diluted

Loss per share - discontinued operations Basic and Diluted

Net income (loss) per share - Basic and Diluted

Weighted average number of common shares outstanding - continuing operations

Basic and Diluted

The share amounts above have been retroactively adjusted to reflect the

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

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

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For the Years ended December 31, 2025 and 2024

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’ Equity

Balances at December 31, 2022

Preferred Stock

Stockholders'

Comprehensive

at December 31, 2023

$ 127,744,932

Note discount created from issuance of common stock and warrants on convertible instruments

Share based compensation

Conversion of notes payable to common stock

Issuance of common stock for services

Accumulated Comprehensive Income - Translation

$ ( 133,334,783 )

$ ( 5,605,326 )

Balances at December 31, 2023

of ASU 2020-06

( 2,191,103 )

based compensation

of common stock for convertible note

of warrants on convertible instruments

of common stock for services

of notes payable to common stock

Comprehensive Income - Translation

( 23,756,551 )

Balances at December 31, 2023

( 23,756,551 )

at December 31, 2024

$ 137,114,578

Adoption of ASU 2020-06

$ ( 155,832,277 )

Stock based compensation

Issuance of common stock for convertible note

Issuance of warrants on convertible instruments

Issuance of common stock for services

Conversion of notes payable to common stock

Accumulated Comprehensive Income - Translation

$ ( 18,634,849 )

based compensation

of Preferred stock A

of Preferred stock A-1 for cash

of Notes Payable to Preferred Stock B

of Preferred stock C for acquisition of Water Rights

( 20,000,000 )

Balances at December 31, 2024

of Preferred stock C

( 19,999,980 )

of warrants on convertible instruments

of Preferred stock B to common stock

of notes payable to common stock

of common stocks on convertible instruments

of common stock for services

Comprehensive loss - Translation, net

( 25,234,834 )

at December 31, 2025

$ 166,561,279

$ ( 181,899,055 )

$ ( 15,300,828 )

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

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$ ( 23,756,551 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

ROU assets, net

Amortization of debt discount

Loss from intangible impairment

Non-cash share based compensation

Changes in working capital items:

Accounts receivable, net

Inventory, net

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Accrued Interest payable

Net cash used in operating activities - continuing operations

( 8,003,919 )

( 10,189,263 )

Cash Flows from Investing Activities:

Capital Expenditures

Net cash used in investing activities -– continuing operations

Cash Flows from Financing Activities:

Cash advance (repayment) from shareholder

Related party cash advance

Proceeds from issuance of debt

Principal repayment of debt

loss from discontinued operations

to reconcile net loss to net cash used in operating activities:

and amortization

of debt discount

from intangible impairment

share-based compensation

in FV of derivative liability

on extinguishment of debt

in working capital items:

receivable, net

expenses and other current assets

payable and accrued expenses

interest payable

to issue shares

cash used in operating activities - continuing operations

( 4,820,018 )

( 7,303,145 )

Net cash provided by financing activities - continuing operations

Net cash effect of exchange rate changes on cash

Net Change in Cash and Cash Equivalents

flows from investing activities - continuing operations

cash used in investing activities - continuing operations

flows from financing activities - continuing operations:

advance (repayment) from related party

from issuance of debt

from sale of preferred stock

repayment of debt

( 2,009,541 )

Cash and Cash Equivalents, beginning of year

Cash and Cash Equivalents, end of year

Supplemental Disclosure of Cash Flow Information:

Cash paid for Interest

Supplemental Disclosure of Non-Cash Investing and Financing Activities

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

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

cash provided by financing activities - continuing operations

flows from discontinued operations

cash provided by (used in) discontinued operations

cash effect of exchange rates on cash

change in cash and cash equivalents

and cash equivalents, beginning of year

and cash equivalents, end of period

Disclosure of Cash Flow Information:

paid for Interest

Disclosure of Non-Cash Investing and Financing Activities

payable and accrued interest converted to Common Stock (944,685 shares in 2025 & 171,536 shares in 2024,)

debt discount in the form of issuance of equity instruments in conjunction with convertible notes

Convertible Preferred Stock Issued 126,710 shares exchanged for notes payable and accrued interest

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

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Note 1 – Business Organization and Nature of Operations

Splash Beverage Group (“SBG” or “Splash”),

formally Canfield Medical Supply, Inc.

(“CMS”) was incorporated in the State of Ohio on September 3, 1992, and changed

domicile to Colorado on April 18, 2012.

CMS was in the business of home health services, primarily the selling of durable medical equipment

and medical supplies to the public, nursing homes, hospitals and other end users.

On December 31, 2019, CMS entered into an Agreement

and Plan of Merger (the “Merger Agreement”) with SBG Acquisition Inc.

(“Merger Sub”), a Nevada Corporation wholly

owned by CMS, and Splash Beverage Group, Inc.

a Nevada corporation (“Splash”) pursuant to which Merger Sub merged with and

into Splash (the “Merger”) with Splash as the surviving company and a wholly-owned subsidiary of CMS.

The Merger was consummated

on March 31, 2020.

As the owners and management of Splash have voting

and operating control of CMS following the Merger, the Merger transaction was accounted for as a reverse acquisition (that is with Splash

as the acquiring entity), followed by a recapitalization.

As part of the recapitalization, previously issued

shares of SBG preferred stock have been reflected as shares of common stock that were received in the Merger.

These common shares have

been retrospectively presented as outstanding for all periods.

Splash specializes in the manufacturing process, distribution,

and sales & marketing of various beverages across multiple channels.

Splash operates in both the non-alcoholic and alcoholic beverage

Splash Beverage Group (“the Company” or “Splash”),

is a Nevada corporation originally incorporated in the State of Ohio in1992.

Splash specialized in the manufacturing process, distribution,

and sales and marketing of various beverages across multiple channels.

Splash operated in both the non-alcoholic and alcoholic beverage

Additionally, Splash operates its own vertically integrated B-to-B and B-to-C E-commerce distribution platform called Qplash.

further expanding its distribution abilities and visibility.

In July 2020 the Company filed a Certificate of Amendment

of Articles of Incorporation of CMS with the Secretary of State of the State of Colorado, pursuant to which the Company changed its name

to Splash Beverage Group, Inc.

On July 31, 2020, we received approval from FINRA to change the Company’s name from CMS

to Splash Beverage Group, Inc.

Our new ticker symbol is SBEV.

On December 24, 2020, SBG consummated an Asset Purchase

Agreement (the “Copa APA”) with Copa DI Vino ® Corporation (“CdV”), to purchase certain assets and

assume certain liabilities that comprise the Copa DI Vino ® business for a total purchase price of $ 5,980,000 , payable in

the combination of $ 2,000,000 in cash (“Cash Consideration”), $ 2,000,000 convertible promissory note (the “Convertible

Note”) to Seller and a variable number of shares of the Company’s common stock based on a attainment of revenue hurdles.

is one of the leading producers of premium wine by the glass in the United States with its primary offices and facilities in The Dalles,

On December 24, 2020, the Company consummated an Asset Purchase Agreement

(the “Copa APA”) with Copa DI Vino ® Corporation (“CdV”), to purchase certain assets and assume

certain liabilities that comprise the Copa DI Vino ® business for a total purchase price of $ 5,980,000 , payable in the combination

of $ 2,000,000 in cash (“Cash Consideration”), $ 2,000,000 convertible promissory note (the “Convertible Note”)

to Seller and a variable number of shares of the Company’s Common Stock based on a attainment of revenue hurdles.

CdV is one of

the leading producers of premium wine by the glass in the United States with its primary offices and facilities in The Dalles, Oregon.

On February 2021, Management initiated a plan to divest its CMS business.

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All Common Stock shares stated herein have been adjusted to reflect

Note 2 – Summary of Significant Accounting

Splash Beverage Group, Inc.

historical mission was 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 was comprehensive in the US and is also seeking to expand to select attractive international markets.

Through its division Qplash,

Splash’s distribution reach included e-commerce access to both business-to-business (B2B) and business-to-consumer (B2C) customers.

Prior to pausing its operations in February 2025, Qplash marketed 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.

On June 25, 2025, the Company entered into an Asset Purchase Agreement (the

“Asset Purchase Agreement”) with a third party (the “Seller”) under which the Seller sold certain water assets

located in Costa Rica to the Company in exchange for $20 million of Series C Convertible Preferred Stock (the “Series C”).

The Company issued the Series C to the Seller.

Section 1.04 of the Asset Purchase Agreement required the Seller to deliver the water assets

by December 31, 2025 or pay the Company $20 million in cash.

Section 1.04 of the Asset Purchase Agreement further stated that failure

to deliver either the water assets or the $20 million by December 31, 2025 rendered the Series C to be “null, void, and of no further

force or effect.” The Seller failed to comply with either requirement.

As a result, on April 14, 2026, the Board of Directors of

the Company terminated the Asset Purchase Agreement and cancelled the Series C, effective December 31, 2025.

Due to a lack of working capital, the Company has not generated revenue since

February 2025.

Currently, the Company’s operations are being conducted by its President, a full-time employee, its Chief Financial

Officer, a part-time employee, and its controller, a consultant.

Periodically, the President communicates with beverage industry people

including former customers, distributors and suppliers.

Due to its lack of adequate capital to acquire inventory , the Company has not

generated revenue since February 2025.

The Company purchased a small amount of inventory in December 2025 in advance of the selection

of the Company’s tequila as the house tequila for Senor Frog in certain markets.

The Company intends to further its commercialization

of its beverage business upon its receipt of sufficient capital.

In the interim, beyond the Senor Frog opportunity, the Company intends

to focus its efforts on distribution of the Chispo brand tequila, and re-launching its Qplash platform primarily to provide an online

supplement to sales of these products.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

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in consolidation.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

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 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 conform to accounting

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Actual results could differ from those estimates.

CORRECTION OF

PRIOR PERIOD ERROR

Company identified a material prior period error in the Consolidated Balance Sheet and Statement of Stockholders Equity recognition of

water rights.

On June 25, 2025, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with

a third party (the “Seller”) under which the Seller sold certain water assets located in Costa Rica to the Company in

exchange for $20 million of Series C Convertible Preferred Stock (the “Series C”).

The Company issued the Series C to the

Section 1.04 of the Asset Purchase Agreement required the Seller to deliver the water assets by December 31, 2025 or pay

the Company $20 million in cash.

Section 1.04 of the Asset Purchase Agreement further stated that failure to deliver either the water

assets or the $20 million by December 31, 2025 rendered the Series C to be “null, void, and of no further force or effect.”

The Seller failed to comply with either requirement.

As a result, on April 14, 2026, the Board of Directors of the Company terminated

the Asset Purchase Agreement and cancelled the Series C effective December 31, 2025.

The Company assessed

the materiality of this change in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting

99, “Materiality,” (ASC Topic 250, Accounting Changes and Error Corrections).

Based on this assessment, the

Company concluded that these error corrections in its Consolidated Statements of Cash Flows are to the previously presented consolidated

financial statements.

The corrections had an impact on the Consolidated Balance Sheet sand Consolidated Statements of Changes in Stockholders’

Equity, and notes to these consolidated financial statements, for any previously presented interim periods ended June 30, 2025 and September

Accordingly, the Company corrected the previously reported errors in the annual report for the years ended December 31, 2025

and 2024 in this Annual Report on Form 10-K.

The financial reporting

periods affected by this error include the Company’s previously reported unaudited consolidated financial statements for the periods

ended June 30, 2025 and September 30, 2025.

In addition, the Company expects to present the corrected interim 2025 amounts in its 2026

consolidated interim financial statements upon the filing of each of its Quarterly Reports on Form 10-Q on a year-to-date basis as a

correction to applicable 2025 periods.

A summary of the immaterial corrections to the Company’s previously reported audited

consolidated financial statements follows.

Corrected Consolidated

Balance Sheet and Statement of Stockholder equity for the periods listed below:

Corrected Consolidated Balance Sheet and Statement of Stockholder equity

June 30, 2025

$ ( 20,000,000 )

Subscriptions receivable

September 30, 2025

$ ( 20,000,000 )

Subscriptions receivable

Cash Equivalents and Concentration of Cash

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We had no cash equivalents at December 31, 2025 or December 31, 2024.

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

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

At December 31, 2025 and December 31, 2024, the Company’s

cash on deposit with financial institutions had not exceeded federally insured limits of $ 250,000 .

Accounts Receivable and Allowance for Doubtful

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of $ 15,748 and $ 396,855 , respectively.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

Inventory is stated at the lower of cost or net realizable

value, accounted for using the weighted average cost method.

The inventory balances at December 31, 2024 and December 31, 2023 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.

We establish provisions for excess or inventory near expiration 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.

for excess inventory are included in cost of goods sold and have historically been adequate to provide for losses on inventory.

manage inventory levels and purchase commitments in an effort to maximize utilization of inventory on hand and under commitments.

amount of our reserve was $ 621,178 and $ 290,524 at December 31, 2024 and December 31, 2023, respectively.

During the year ended December 31, 2025, the Company wrote off approximately

$0.5 million of inventory due to product expiration, as the inventory was determined to be unsaleable and had no recoverable value.

inventory balances at December 31, 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.

We establish provisions

for excess or inventory near expiration 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.

We manage inventory levels and purchase commitments in an effort to

maximize utilization of inventory on hand and under commitments.

The amount of our reserve was $ 0 and $ 621,178 at December 31, 2025 and

December 31, 2024, respectively.

Property and Equipment

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useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

The Company disposed of Copa Di Vino fixed assets during the year ended December 31, 2025 and recognized a loss of approximately $ 43,812

on the disposal.

Depreciation expense totaled $ 148,070 and $ 148,229

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Accumulated depreciation

( 1,976,522 )

( 1,828,293 )

Property, plant & equipment, net

The following taxes are paid when we sell tequila

or other alcoholic beverages.

The Company pays alcohol excise taxes based on product

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Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

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).

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of notes payable and due to the short duration of maturities.

The following table

presents the derivative financial instruments, the Company’ s only financial liabilities, measured

and recorded at fair value on the Company ’ s consolidated

balance sheet on a recurring basis, and their level within the fair value hierarchy as of December 31, 2025 and December 31, 2024:

Schedule of derivative

financial instruments

Balance December 31, 2024

Creation of derivative liability

Change in value

Reclassification to equity

Balance December 31, 2025

December 31, 2025

Schedule of derivative liability

Embedded conversion derivative liability

December 31, 2024

Embedded conversion derivative liability

The table below shows the option-pricing model inputs

used by the Company to value the derivative liability at each measurement date:

Schedule of option-pricing model inputs

December 31, 2025

December 31, 2024

Expected term

Expected average volatility

109 % - 122 %

Expected dividend yield

Risk-free interest rate

Revenue Recognition

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Other General and Administrative Expenses

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

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

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

Other General and Administrative expenses include

Amazon selling fees, cost of transportation from production site to other 3 rd party warehouses or customers, insurance cost,

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

Stock-Based Compensation

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not been exercised totaling 3,424,996 .

We conduct advertising for the promotion of our products.

Schedule of net loss per common share

Net income/(loss) per common shares:

Year ended December 31 2025

Year ended December 31, 2024

Net income/(loss

$ ( 25,282,186 )

$ ( 23,658,787 )

Dividends on Series A-1 and B preferred stock

Weighted-average shares outstanding

Net loss per common share

Historically, we conducted advertising for the promotion

of our products.

In accordance with ASC 720-35, advertising costs are charged to operations when incurred.

We recorded advertising expense of $ 486,942

and $ 1,721,547 for the years ended December 30, 2024 and 2023, respectively.

We recorded advertising expense

of $ 64,811 and $ 486,942 for the years ended December 31, 2025 and 2024, respectively.

Goodwill and other intangibles

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to be applied to historical and expected future operating results.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

At the time of acquisition, the Company estimates

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for any present value calculations.

The Company preliminarily estimates the value of the acquired identifiable intangible assets and then

finalizes the estimated fair values during the purchase allocation period, which does not extend beyond 12 months from the date of acquisition.

The Company’s amortization expense for acquired identifiable intangible assets with finite useful lives was $ 392,068 for fiscal

years 2024 and 2023.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

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 entered into an Asset Purchase Agreement

(the “Asset Purchase Agreement”) with a third party (the “Seller”) under which the Seller sold certain water

assets located in Costa Rica to the Company in exchange for $20 million of Series C convertible Preferred Stock (the “Series

The Company issued the Series C to the Seller.

Section 1.04 of the Asset Purchase Agreement required the Seller to deliver

the water assets by December 31, 2025 or pay the Company $20 million in cash.

Section 1.04 of the Asset Purchase Agreement further

stated that failure to deliver either the water assets or the $20 million by December 31, 2025 rendered the Series C to be “null,

void, and of no further force or effect.” The Seller failed to comply with either requirement.

As a result, on April 14, 2026, the

Board of Directors of the Company terminated the Asset Purchase Agreement and cancelled the Series C, effective December 31, 2025.

In accordance with ASC 350, Intangibles – Goodwill

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

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

within Selling, General, and Administrative Expenses.

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

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

million during the year ended December 31, 2024.

The impairment loss of $ 4.3 million during the year

ended December 31, 2024 was recorded in the statement of operations within Selling, General, and Administrative Expenses.

This impairment

was primarily driven by the decline in the Company’s sales and was calculated using the present value of future cash flows.

Schedule of statement of operations within Selling, General, and Administrative Expenses

December 31, 2024

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Total Intangible Assets

Note 2 – Summary of Significant Accounting

Policies, continued

Long-lived assets

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from third party brokers or using other valuation techniques.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 2 – Summary of Significant Accounting

Policies, continued

Foreign Currency Gain/Losses

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functional currency to the reporting currency, as well as exchange gains and losses on intercompany balances, are included in Other Comprehensive

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

The Company incurred a foreign currency translation net loss during the year ended December 31, 2025 of $ 47,352 and a foreign

currency translation net gain during the year ended December 31, 2024 of $ 97,763 .

Recent Accounting Pronouncements

Adoption of FASB ASU 2020-06

August 2020, the Financial Accounting Standards Board (FASB) issued ASU No.

2020-06, “Accounting

for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06

simplifies the accounting for convertible instruments and contracts by removing certain models

that were previously required to be applied.

The amendments are effective for the fiscal

years beginning after December 15, 2023, with early adoption permitted.

The Company adopted

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

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

In December 2023,

the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which expands disclosures in an entity ’ s

income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

will be effective for annual periods beginning after December 15, 2025.

Adoption of the standard will be applied on a prospective basis

and retrospective application to all periods presented is permitted.

The Company is currently evaluating the impact of ASU 2023-09 on

its future consolidated financial statements and related disclosures.

In November 2024,

the FASB issued Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses ( “ ASU

ASU 2024-03 is intended to enhance the disclosures for expenses for all public entities in accordance with ASC Topic 220, Income Statement-Reporting

Comprehensive Income.

ASU 2024-03 addresses investor requests for more detailed information about expenses, specifically cost of sales

and selling, general, and administrative expenses.

ASU 2024-03 requires a public entity to disclose the amounts of (a) purchases of inventory,

(b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized

as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption presented

on the face of the income statement as well as a qualitative description of the amounts remaining in the relevant expense captions that

are not separately disaggregated quantitatively.

ASU 2024-03 also requires a public entity to disclose the total amount of selling expenses

and the entity ’ s

definition of selling expenses.

ASU 2024-03 also requires a public entity to disclose the total amount of selling expenses and the entity ’ s

definition of selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within

fiscal years beginning after December 15, 2027.

Early adoption is permitted.

A public entity should apply ASU 2024-03 either prospectively

to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented

in the financial statements.

The Company is currently evaluating the impact of ASU 2024-03 on its future consolidated financial statements

and related disclosures.

All other newly issued but not yet effective accounting

pronouncements have been deemed to be not applicable or immaterial to the Company.

Splash Beverage Group, Inc.

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and Going Concern Considerations

During 2024, the Company received $ 9.5 million from

issuance of debt.

The Company’s consolidated financial

statements have been prepared on the basis of US GAAP for a going concern, on the premise that the Company is able to meet its

obligations as they come due in the normal course of business.

The Company sustained a net loss of approximately $ 22.9

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

million for the year ended December 31, 2024.

To date the Company has generated cash flows from issuances of equity and

indebtedness.

The accompanying financial statements have been prepared

assuming that the Company will continue as a going concern.

As of July 11, 202 5, the Company

has incurred significant losses from operations and has experienced negative cash flows from operating activities.

Additionally, the Company’s

current liabilities exceed its current assets, and it has a working capital deficit.

The Company’s consolidated financial statements

have been prepared on the basis of US GAAP for a going concern, on the premise that the Company is able to meet its obligations as they

come due in the normal course of business.

The Company sustained a net loss of approximately $25.0 million and negative cash flows from

operating activities of approximately $ 5.2 million for the year ended December 31, 2025.

To date the Company has generated cash flows

from issuances of equity and indebtedness.

The accompanying financial statements have been prepared assuming that the

Company will continue as a going concern.

As of December 31, 2025, the Company has incurred significant losses from operations and

has experienced negative cash flows from operating activities.

Additionally, the Company’s current liabilities exceed its current

assets, resulted in a working capital deficit.

During 2025, the Company received approximately $ 4.2 million from the issuance

of debt and $1.3 million from sale of preferred stock and warrants.

During 2024, the Company received approximately $ 9.5 million from

the issuance of debt.

Management’s plans in regard to these matters

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business plan.

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

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

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

The preferred stock offers a 12% cumulative dividend and potential conversion to Common Stock, subject to stockholder approval

and an increase in authorized Common Stock.

In June 2025, the Company exchanged approximately $12.67 million outstanding promissory

notes and accrued interest for 126,710 shares of Series B Preferred Stock.

By converting debt into equity, the Company enhanced its balance

sheet, reduced interest expense, and improved its stockholder equity position in furtherance of its goal of complying with exchange requirements.

The financial statements do not include any adjustments

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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 was due September 2025.

Note is guaranteed by a related party see note 6.

In April 2021, the Company entered into a six-month loan with an individual in the amount of $ 84,000 .

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 extended to April 2025.

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

The loan was exchanged to Series B Preferred stock in June 2025.

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 extended to April 2025.

The loan was exchanged to Series B Preferred stock in June 2025.

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 due date was extended to October 31, 2024.

In August 2022, the Company entered into a 56-months auto loan in the amount of $ 45,420 .

In December 2022, the Company entered into various eighteen-month loans with individuals totaling in the amount of $ 3,000,000 .

In December 2022, the Company entered into various eighteen-month loans with individuals totaling $ 4,000,000 .

The notes included 100 % warrant coverage.

One note $ 400,000 was converted.

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

The loans mature in June 2024 with principal and interest due at maturity with conversion price of $ 40.00 per share.

The loans were exchanged to Series B Preferred stock in June 2025.

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

The notes included 100% warrant coverage.

The loans matured in June 2024 and was in default

In February 2023, the Company entered into a twelve-month loan with an entity in the amount of $ 2,000,000 .

The convertible note included the issuance of 1,500,000 shares of common stock.

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

The loan was extended to May, 2024.

As of June 2024, the loan was fully converted.

The loan was exchanged to Series B Preferred stock in June 2025.

In May 2023, the Company entered into various eighteen-month loans with individuals totaling in the amount of $ 800,000 .

1 unchanged sentence

The loans mature in November 2024 with principal and interest due at maturity with conversion price of $ 40.00 per share.

The loans were extended to May 2025.

The loans were exchanged to Series B Preferred stock in June 2025.

In June 2023, the Company entered into various eighteen-month loans with individuals totaling in the amount of $ 350,000 .

The notes included 50 % warrant coverage.

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

In July 2023, the Company entered into a twelve-month loan with an individual in the amount of $ 750,000 .

The note included 50 % warrant coverage.

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

The loan was fully converted in September 2024.

The loans mature in December 2024 with principal and interest due at maturity with conversion price of $ 40.00 per share.

The loans were exchanged to Series B Preferred stock in June 2025.

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

The loan was extended to June 2025.

The loan matures in January 2025 with principal and interest due at maturity with conversion price of $ 40.00 per share.

The loan was exchanged to Series B Preferred stock in June 2025.

In August 2023, the Company entered into a twelve-month loan with an individual in the amount of $ 300,000 .

The convertible note included the issuance of 150,000 shares of Common Stocks.

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

Partial of the note was converted into common stock.

The loan matured in August 2024 with principal and interest due at maturity with a conversion price of $ 34.00 per share and is non-interest bearing.

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 February 2025

In October 2023, the Company entered into a loan with an individual in the amount of $ 196,725 The loan matures in March 2024.

Note is guaranteed by a related party.

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

The loan due date was extended to June 2025.

The Required payment was not made.

In October 2023, the Company entered into a loan with an individual in the amount of $ 130,000 .

2 unchanged sentences

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.

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

The loan was fully converted in January 2025

In December 2023, the Company entered into a 2.5-month loan with an individual in the amount of $ 450,000 .

The loan had a maturity of March 2024 with principal and interest due at maturity.

The loan was extended to February 2025.

The loan was fully converted in Decembre 2024.

The loan matured in April 2025 with principal and interest due at maturity with conversion price of $ 40.00 per share.

The loan was fully converted to Common Stock in January 2025

In January 2024, the Company entered into a 18-month loan with an individual in the amount of $ 250,000 .

1 unchanged sentence

The loan had a maturity of July 2025 with principal and interest due at maturity with conversion price of $ 20.00 per share.

The loan was exchanged to Series B Preferred stock in June 2025.

In February 2024, the Company entered into a 18-month loan with an individual in the amount of $ 150,000 .

1 unchanged sentence

The loan had a maturity of August 2025 with principal and interest due at maturity with conversion price of $ 16.00 per share.

The loan was exchanged to Series B Preferred stock in June 2025.

In February 2024, the Company entered into a 6-month loan with an individual in the amount of $ 315,000 .

1 unchanged sentence

The loan had a maturity of August 2024 with principal and interest due at maturity with conversion price of $ 15.20 per share.

This was extended to July 2025.

The loan was exchanged to Series B Preferred stock in June 2025.

In February 2024, the Company entered into a 18-month loan with an entity in the amount of $ 250,000 .

1 unchanged sentence

The loan matures in August 2025 with principal and interest due at maturity with conversion price of $ 18.40 per share.

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

The loan was in default.

The loan was exchanged to Series B Preferred stock in June 2025.

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

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

1 unchanged sentence

The loan matures in November 2026 with principal and interest due at maturity with conversion price of $ 16.00 per share.

The loan was exchanged to Series B Preferred stock in June 2025

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

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

Note is guaranteed by a related party

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

The loan matures in May 2025.

The loan was fully converted in January 2025.

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

The loan matures in April 2025.

The loan was fully converted in January 2025

The loan was fully converted to Common Stock in January 2025.

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

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 $ 14.00 per share.

The loans were exchanged to Series B Preferred stock in June 2025.

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.

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

In September 2024, the Company entered into an agreement

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

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

In October 2024, the Company entered into an agreement

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

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

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

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

Note is guaranteed by a related party

$800,000 was exchanged to Preferred stock in June 2025.

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 $ 15.20 per share.

The loan was exchanged to Series B Preferred stock in June 2025.

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.

In September 2024, the Company entered into an agreement with individuals totaling in the amount of $ 590,000 .

There is no stated maturity, the proceeds of which are to be used for a future acquisition.

$290,000 was exchanged to Series B Preferred stock in June 2025

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 were to be used for a future acquisition which did not occur.

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.

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.

The loan was fully converted to Common Stock.

In December 2024, the Company entered into a twelve-month loan with an individual in the amount of $ 225,000 .

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

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

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 $ 10.00 per share.

The loans of $150,000 were exchanged to Series B Preferred stock in June 2025.

In July 2025, the Company entered into a convertible promissory note in the amount of $ 30,000 .

The loans was due on August 31, 2025

In August 2025, the Company entered into a convertible promissory note with individuals totaling in the amount of $ 241,280 .

The loan had a maturity of May 2026 with principal and interest due at maturity.

The loans are convertible at 75% multiplied by the lowest trading price for the Company’s common stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date, subject to a 4.99% equity blocker.

In August 2025, the Company entered into a convertible promissory note in the amount of $ 183,280 .

The loan had a maturity of June 2026 with principal and interest due at maturity.

In September 2025, the Company entered into a twelve-month loan with individuals totaling in the amount of $ 2,200,000 .

The loan matures in September 2026 with principal and interest due at maturity and is convertible into the Company’s Common Stock at a conversion price equal to the lower of $ 1.75 and $ 0.01 above the closing price on the date of conversion.

In November 2025, the Company entered into a twelve-month loan with individuals totaling in the amount of $ 500,000 .

The loan matures in November 2026 with principal and interest due at maturity and is convertible into the Company’s Common Stock at a conversion price equal to the lower of $ 1.75 and $ 0.01 above the closing price on the date of conversion.

Total notes payable

1 unchanged sentence

( 3,031,917 )

( 2,876,387 )

Less current portion

( 9,632,505 )

( 7,748,518 )

Long-term notes payable

1 unchanged sentence

Notes to the Consolidated Financial Statements

Note 4 – Notes Payable, Shareholder Notes Payable, and Revenue

Note 4 – Notes Payable, Stockholder Notes Payable, and Revenue

Financing Arrangements, continued

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

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

and 2023 , respectively.

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

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

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

The Company’s convertible note balances

are convertible into 505,257

and 278,187 shares

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

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

As of December 31, 2024 ,

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

Interest expense on notes payable was $ 2,253,260

and $ 3,702,611

respectively.

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

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

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

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

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

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

in connection with the notes.

In June 2025, the Company exchanged

approximately $ 12.67

for the years ended December 31, 2025 and 2024, respectively.

Accrued interest was $ 2,282,528

and $ 3,610,329

at December 31, 2025 and December 31, 2024 , respectively.

The Company’s effective interest rate was 22.85 %

for the years ended December 31, 2025 and December 31, 2024, respectively.

The Company’s convertible note balances are

convertible into 944,685 and 505,257 shares of Common Stock for the years ended December 31, 2025 and 2024.

amounts are reflective of the 1 for 40 reverse split.

As of December 31, 2024, and December 31, 2023, the

balance of the unamortized debt discount was $ 26,896 and 3,677,143 respectively.

The Company adopted ASU 2020-06 on January 1, 2024, which

resulted in the reversal of the original beneficial conversion feature (BCF) amount to additional paid in capital for $ 2,191,103 , reversal

of the unamortized debt discount related to the beneficial conversion feature (BCF) for $932,047 with the balance being recorded through

retained earnings for $ 1,259,056 .

Notes discount of $ 3,401,524 and $ 3,251,106 for the

year ending December 31, 2025 and 2024 respectively is related to the discounted warrants and common shares issued in connection with

In June 2025, the Company exchanged approximately

$ 16.4 million of outstanding promissory notes for newly issued preferred equity.

The Company is undertaking these transactions to exchange

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

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

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

The exchange was the result of an agreement between

note holders and the company.

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

The Company did this exchange as part of

its effort to regain compliance with the stockholder equity requirements of the NYSE American.

By exchanging debt for equity, the Company

enhances balance sheet, reduces interest expense, and improves stockholder equity position in furtherance of its goal of complying with

exchange requirements.

The exchange was the result of an agreement between note holders and the Company.

The Company is still assessing

the accounting impacts of these exchanges.

Schedule of notes payable

Interest Rate

Shareholder Notes Payable

In April 2024, revised Feb 2023 shareholder advance in

the amount of $ 200,000 .

Stockholder Notes Payable

In April 2024, revised Feb 2023 stockholder advance in the amount of $ 200,000 .

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

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

The loan matures in July 2025 with interest due semiannually.

The revised note were exchanged to Series B Preferred stock

in June 2025.

Less current portion

Long-term notes payable

Interest expense on related party notes payable was

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

Interest expense on related party notes payable was $ 11,720 and $ 24,000 for the

year ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, the Company’s convertible

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Note 5 – Licensing Agreement and Royalty

The Company had a licensing agreement with ABG TapouT,

LLC (“TapouT”), providing the Company with licensing rights to the brand “TapouT” (i)energy drinks, (ii) energy

bars, (iii) coconut water, (iv) electrolyte gum/chews, (v) energy shakes, (vi) powdered drink mix, (viii) water (including enhanced water),

(vii) energy shots, (viii) teas, and (ix) sports drinks sold in the North America (including US Territories and Military Bases), United

Kingdom, Brazil, South Africa, Australia, Scandinavia, Peru, Colombia, Chile and Guatemala.

The Company was required to pay a 6% royalty

on net sales, as defined, and are required to make minimum monthly payments of $ 55,000

in 2024 and 2023.

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

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

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

accounts payable.

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

year ended in December 2024.

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

The licensing agreement between

TapouT LLC and the Company has been terminated.

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

the terms of the agreement’s termination provisions.

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

already recorded in its legal reserve and accrued accounts payable.

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

in the condensed consolidated statement of operations and comprehensive

In connection with the Copa Asset Purchase Agreement,

we acquired the license to certain patents from 1/4 Vin SARL (“1/4 Vin”) On February 16, 2018, the Copa DI Vino ®

entered into three separate license agreements with 1/4 Vin SARL, (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.

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 consolidated statement of operations and comprehensive loss relating to the termination of the licensing agreement.

In connection with the Copa Asset Purchase

Agreement, we acquired the license to certain patents from 1/4 Vin SARL (“1/4 Vin”).

On February 16, 2018, the Copa DI

Vino ® entered into three separate license agreements with 1/4 Vin SARL, (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

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.

On April 4, 2025, the Company entered into a settlement agreement with CdV (the “Settlement Agreement”) under which the

parties agreed to the settlement of two lawsuits brought by CdV against the Company in Oregon and Florida, and the Company agreed to

pay CdV a total of $0.7 million with interest accruing at 12% per annum, with installment payments beginning on November 4, 2025 in

monthly payments of $63,000 plus applicable accrued interest.

The Settlement Agreement provides for certain events of default, the

occurrence of which, subject to the Company’s right to cure within 15 days as to a payment default or 30 days with respect to

other defaults, would entitle CdV to accelerate payment of the settlement amount, file suit against the Company and/or exercise its

right to setoff against any funds or other property in CdV’s possession .

See discontinued footnote 10 below.

Note 6 – Stockholders’ Equity

The Company underwent a 1 for 40 reverse split of

its common stock on March 27, 2025.

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

On September 29, 2023, the Company entered into a

securities purchase agreement with certain accredited investors.

Pursuant to such agreements, the Company sold:

(i) senior convertible

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

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

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

at an exercise price of $34.0 per Warrant Share.

On 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.

of shares of Common Stock have been adjusted to reflect the split.

The purpose of this reverse split was to ensure that the Company could

meet the per share price requirements of the NYSE American.

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

1 unchanged sentence

Pursuant to such agreements, the Company sold:

(i) senior convertible notes in the

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

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

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

During the year ended December 31, 2024, the Company

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

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

for non-cash compensation.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

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

(i) senior convertible notes in

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

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

up to an aggregate of 115,625 additional shares of Common Stock (the “Warrants”) at an exercise price of $34.0 per share .

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

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

The note included 14,286 share of warrant coverage.

The loan matures in

July 2025 with principal and interest due semi-annually.

The note included 14,286 warrants.

The loan matured in July 2025 with principal

and interest due semi-annually.

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

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’ Equity, continued

Preferred Stock

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

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

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

Note agreements were amended to be

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

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

solely to voting on the authorization of additional shares.

It has no other voting rights.

Series A is expected to be retired following

the special meeting.

Note agreements were amended to be exchanged

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

The Series A was automatically redeemed after the Company’s

2025 annual stockholders’ meeting.

Voting Rights

Series A-1 carries 180 votes per share.

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

Series A does not accrue dividends.

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

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Series C does not accrue dividends.

into Common Stock

Series A is not convertible.

Series A-1 is convertible

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

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

to 520,000 common shares.

Series B is also convertible

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

Series C is convertible

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

Conversion into Common Stock

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 262,500 to 840,000 Common Stock.

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 Stock.

Series C is convertible at a fixed price of $3.00, resulting in the potential issuance of 6,666,667 Common Stock upon conversion.

The parties agreed on April 9, 2026 that, notwithstanding anything in the Agreement or in any other agreements and documents between the parties to the contrary, the parties hereby agree to rescind and nullify the Transaction effective December 31, 2025.

In the furtherance thereof, the Company hereby agrees to transfer the Purchased Assets to Utopia, and Utopia hereby agrees to surrender the Purchase Price consisting of 20,000 shares of the Company’ s Series C Convertible Preferred Stock which were issued to Utopia, to the Company, in each case effective as of December 31, 2025

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 A-1 and Series B are redeemable by the Company after two years from the date of issuance, for $1,050,000 and $12,700,000, respectively.

Series C is not redeemable.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’ Equity, continued

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

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

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

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

In May - December 2025, the Company issued 1,300 shares of Series A-1 Preferred

Stock in exchange for approximately $1,300,000, of which 150 shares were issued during July 2025 in exchange for $150,000.

shares are convertible into common stock, subject to shareholder approval.

Investors of A-1 Shares also received 262,500 1-year A Warrants

exercisable into common stock at 80% of 5-day VWAP, and 262,500 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, Director, a related party.

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

Nistico is the sole holder of Preferred A.

The Company redeemed all 1,000 shares of Preferred A Stock.

As of December 31, 2025, no

shares of Preferred A Stock were issued and outstanding.

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.

agreements were amended to be exchanged for Preferred B.

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

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

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.

C shares are convertible into common stock, subject to shareholder approval.

The Series C were subsequently cancelled.

During the year ended December 31, 2025, 3,979 shares

of Preferred-B were converted into 328,779 shares of common stock.

A summary of the Company’s stock option plan

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Equity compensation plan approved by board of directors

In July 2020, the Board adopted the 2020 Stock Incentive

Plan (the “2020 Plan”), which provides for the grant of Options, Restricted Stock Awards, Stock Appreciation Rights, Performance

Units and Performance Bonuses to consultants and eligible recipients.

The total number of shares that may be issued under the 2020 plan

was 42,146 at the time the 2020 plan was adopted as of December 31, 2024.

The 2020 Plan has an “evergreen” feature,

which provides for the annual increase in the number of shares issuable under the plan by an amount equal to 5% of the number of issued

and outstanding common shares at year end, unless otherwise adjusted by the board.

At January 1, 2023 and 2024, the number of shares issuable

under the 2020 plan increased by 51,357 and 74,607 shares, respectively.

In October 2023, the shareholders voted to increase

the number of shares issuable under the Plan to 7.5%.

At December 31, 2024 the number of shares authorized

under the 2020 plan is 44,534 .

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’ Equity, continued

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 December 31, 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 stockholders 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.

The following is a summary of the Company’s

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Weighted average

Stock options

Weighted average

Balance – January 01

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the price modification made on April 24, 2023.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

During 2023, the Company granted 84,400 options to

employees and directors at weighted average strike price of $ 45.20 , weighted average expected life of 6.0 years, weighted average volatility

of 264.3 %, weighted average risk-free rate of 3.6 % and no dividend.

On April 24, 2023, the Company modified the price of 103,350 options

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

The options have a weighted average expected life of 6.3 years, weighted average volatility

of 266.7 %, weighted average risk-free rate of 3.6 % and no dividend.

Following ASC Topic 718 the Company recognized an incremental expense

from the modification of the option pricing resulting in an expense of $ 7,348 that was reflected during 2023.

The Company determined the grant date fair value of

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been measured at 15,000 shares using the Black-Scholes option pricing model with the following assumptions:

exercise price $ 13.2 to $ 21.60 ,

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

exercise price $ 6.04 , expected

life 10 years, expected volatility 254 %, expected dividends 0 %, risk free rate 4.0 %.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 6 – Stockholders’ Equity, continued

During the year ended December 31, 2025, the fair

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Stock compensation expense for the years ended December 31, 2025 and 2024 was $ 264,981 and $ 1,411,883 , respectively.

Note 6 – Stockholders’ Equity, continued

At December 31, 2024, there was approximately $ 300,000

unrecognized compensation costs related to stock options which will be recognized over the weighted average remaining years of 0.84 .

On July 31, 2025, the Board of Directors approved the issuance of 5,150,000

warrants to directors, officers, and employees with an exercise price of $0.80 per share and a ten-year term.

The awards included grants

to directors, the President, the then Chief Financial Officer, and certain employees, with vesting terms consistent with the award agreements.

All warrants are fully vested except those issued to the former Chief Executive Officer, Robert Nistico, for whom one-third (250,000)

was vested as of December 31, 2025 and 500,000 vest in equal 62,500 share increments quarterly over a two-year period with the first such

vesting date being October 31, 2025.

As such, as of December 31, 2025, 437,500 of Mr.

Nistico’s warrants were vested and 312,500

were unvested.

For the year ended December 31, 2025, the Company

recorded stock-based compensation expense of $ 8,456,951 , measured using the Black-Scholes option pricing model with the following assumptions:

exercise price $ 1.40 , expected life 5 years, expected volatility 254 %, expected dividends 0 %, risk free rate 4.37 %.

The following is a summary of the Company’s

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Balance - end of the year

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

The fair value of warrants recognized in the period

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Expected dividends

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 7 – 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

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.

During the normal course of business, the Company

incurred expenses related to services provided by its then Chief Executive Officer or Company expenses paid by its then Chief Executive

Officer, 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, its then Chief Executive

Officer, as an 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

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

at December 31, 2023.

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

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

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

The annual interest rate of the

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

The note includes 14,285 shares of warrant coverage.

The Note Payable to Decathlon

with a balance of $ 2,325,544 at December 31, 2025 and $ 1,995,950 at December 31, 2024.

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,

as an additional Guarantor and each of the subsidiary Guarantors from time-to-time party thereto, and with Timeless Funding LLC (the

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 $497,188 and $311,713 respectively

outstanding under this agreement as of December 31, 2025.

There were related party advances from our then Chief Executive Officer,

Robert Nistico, in the amount of approximately $ 0.4

million outstanding as of December 31, 2025 and approximately $ 0.4

million as of December 31, 2024.

The advances bear interest at rates ranging from 4% to 7% per annum, and interest expense was accrued

in accordance with the terms of the arrangements.

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

Nistico, our then Chief Executive Officer, a related party.

Preferred A is super voting preferred, not convertible into Common Stock.

Nistico is the sole holder of Preferred A.

As of December 31, 2025 the shares were redeemed and cancelled by the Company.

On July 31, 2025 as subsequently modified, the Company’s

Board of Directors granted Robert Nitisco 750,000 five-year Warrants , exercisable at $0.80 per share.

Note 8 – Investment in Salt Tequila USA,

The Company has a marketing and distribution agreement

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

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

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

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

to exercise significant influence over SALT Tequila USA, LLC.

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 %.

SALT Tequila was not produced or sold by the Company during the year ended

December 31, 2025.

It’s unlikely the Company will continue selling SALT in the future.

Note 9 – Lease

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when they are reasonably certain of being exercised.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Operating lease expense is recognized on a straight-line

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balance sheet at December 31, 2024.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

of operating lease liabilities

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Incremental borrowing rate

10 – Discontinued

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

On April 4, 2025, the Company entered

into a settlement agreement with CdV (the “Settlement Agreement”) under which the parties agreed to the settlement of two

lawsuits brought by CdV against the Company in Oregon and Florida, and the Company agreed to pay CdV a total of $0.7 million with interest

accruing at 12% per annum, with installment payments beginning on November 4, 2025 in monthly payments of $ 63,000 plus applicable accrued

The Settlement Agreement provides for certain events of default, the occurrence of which, subject to the Company’s right

to cure within 15 days as to a payment default or 30 days with respect to other defaults, would entitle CdV to accelerate payment of the

settlement amount, file suit against the Company and/or exercise its right to setoff against any funds or other property in CdV’s

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

to the lack of working capital to fund operations, it formed a license agreement with a 3 rd party to allow the continued

production and flow of product to the customers so that it could later be recovered as the funding challenges were then deemed as only

As the lack of funding persisted through the full year of 2025, the Company subsequently determined it no longer intends

to relaunch the product line.

As a result, accordingly, the Company has classified the related assets and liabilities associated

with its CdV as discontinued operations in its consolidated balance sheets and the results of its logistics and transportation services

business has been presented as discontinued operations in its consolidated statements of operations for all periods presented as the discontinuation

of its business had a major effect on its operations and financial results.

Unless otherwise noted, discussion in the other notes to consolidated

financial statements refers to the Company’s continuing operations.

The following table presents the major classes of

assets and liabilities of the discontinued operations related to the Subsidiaries:

Schedule of major classes of

assets and liabilities of the discontinued operations

Assets of discontinued operations:

Accounts receivable, net

Prepaid Expenses

Total assets of discontinued operations

Liabilities of discontinued operations:

Notes payable, current portion

Accounts payable

Accrued expenses

Lease liabilities, current portion

Liabilities of discontinued operations, current portion

Total liabilities of discontinued operations

The following table summarizes the results of operations

of discontinued operations:

Year Ended December 31,

Cost of revenues, excluding depreciation and amortization

Operating expenses

( 2,296,979 )

Impairment loss

( 4,324,064 )

Other expenses

Loss from discontinued operations

$ ( 885,563 )

$ ( 6,147,477 )

Note 11 – Segment Reporting

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

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

of segment reporting information

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For the Year Ended, December 31,

Splash Beverage Group

Splash Beverage

Total Revenues,

Segment operating loss:

Splash Beverage Group

$ ( 14,742,528 )

operating loss:

( 13,183,573 )

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( 1,002,647 )

Total segment operating loss

segment operating loss

$ ( 14,186,220 )

$ ( 9,900,440 )

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Reconciliation of segment loss to corporate loss:

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( 3,700,620 )

Loss on Extinguishment of debt

( 5,560,482 )

Loss on inventory write off

Change in FV of Derivative

Legal reserve

5 unchanged sentences

Splash Beverage Group

Splash Beverage Group revenue decreased for the year

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

from TapouT and Pulpoloco.

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

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

E-Commerce revenue decreased for the year ending December

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

Contribution after Marketing expenses declined by $4.8 million

due to decrease in sales.

Assets of discontinued operations

Note 11 – Commitment and Contingencies

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business, financial condition or results of operations.

On June 5, 2024, the Company received notification

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

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

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

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

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

of the Company Guide.

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

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

The licensing agreement between TapouT LLC and the Company was terminated

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

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

recorded in its legal reserve and accrued accounts payable.

Note 12 – Tax Provision

The licensing agreement between TapouT LLC and the

Company was terminated in Q1 2024.

TapouT alleges that as a result of an unpaid invoice they had exercised their right pursuant to section

22 of the licensing agreement to terminate the licensing agreement.

TapouT alleges that as a result of the aforementioned termination,

pursuant to the licensing agreement, they are owed all unpaid fees and other amounts payable become immediately due.

As a result, TapouT

have brought two causes of action, the first being breach of contract for the unpaid invoice and the second for accounts stated for all

unpaid fees and other amounts payable.

TapouT, LLC is seeking approximately $1,700,000 for termination of the licensing agreement.

Company does not view this as a reasonable amount given that the Company believes TapOut LLC did not fulfill their obligations pursuant

the licensing agreement.

The Company believes the case will be settled for a lower amount and has booked a legal reserve of $330,000

as the estimate for the potential liability.

The parties have had multiple mediation sessions and are continuing their efforts to seek

an amicable resolution.

If these mediation efforts do not yield a settlement agreement, then the Company anticipates that litigation

shall continue.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

12 – Tax Provision

The Company has evaluated the positive and negative

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assets, the Company has recorded a full valuation allowance against its deferred tax assets.

At December 31, 2024, the Company’s net operating

On December 31, 2025, the Company’s net operating

loss carryforward for Federal income tax purposes was $ 128,566,840 , which will be available to offset future taxable income.

these carry forwards will begin to expire in 2032, except for the net operating losses generated January 1, 2018 and after, which amounted

to $ 76,541,071 , which can be carried forward indefinitely.

these carry forwards will begin to expire in 2032, except for the net operating losses generated January 1, 2018 and after, which can

be carried forward indefinitely.

There was no income tax expense or benefit for the

years ended December 31, 2025 and 2024 due to the full valuation allowance recorded.

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

Note 12 – Tax Provision, continued

The reconciliation of the income tax benefit is computed

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The tax effects of temporary differences which give

rise to the significant portions of deferred tax assets or liabilities at December 31 are as follows:

rise to significant portions of deferred tax

assets or liabilities on December 31 are as follows:

Schedule of deferred

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Company’s operations are 2015 through 2025.

Note 13 – Subsequent Events

In January 2025, the Company entered into a

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

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

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

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

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

market price.

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

totaling in the amount of $350,000.

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

The loan matures

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

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

loan with individuals totaling $381,000.

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

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

Splash Beverage Group, Inc.

Notes to the Consolidated Financial Statements

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

All common stock shares, warrants, and conversion prices

stated herein have been adjusted to reflect the split.

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

on the NYSE American.

In April 2025, the Company

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

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

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

Series A-1 shares are convertible

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

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

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

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

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

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

and further discussed in Note 6.

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

convertible notes.

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

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

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

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

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

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

The preliminary fair value of

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

The Series C shares are convertible into

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

13 – Subsequent Events

ELOC Letter Agreement

On January 26, 2026, the Company entered into an agreement

(the “Letter Agreement”) with C/M Capital Master Fund, LP (the “Investor”) which Investor is the counterparty

to that certain Securities Purchase Agreement dated September 19, 2025 establishing an equity line of credit facility between the Company

and the Investor (the “ELOC Agreement”).

Pursuant to the Letter Agreement, the Company in lieu of issuing the Investor shares

of Common Stock referred to in the ELOC Agreement as the “Commitment Shares”, as such term is defined and described in the

ELOC Agreement, the Company instead issued to the Investor a promissory note (the “Note”).

The Note has an initial principal

amount of $525,000, which shall be subject to increase up to $700,000 in connection with sales made under the ELOC Agreement which increase,

if applicable, would reflect the additional 0.5% of Commitment Shares the Investor was previously entitled to receive under the ELOC Agreement.

The Note bears no interest unless an event of default occurs whereupon interest accrues at a rate of 10% per annum, and matures on January

In addition, following the repayment of prior

promissory notes originally issued on September 22, 2025 to the Investor and an affiliate, the Note is subject to mandatory

prepayments from net proceeds received by the Company under the ELOC Agreement after the first $3 million of net proceeds

equal to 30% of any further net proceeds.

From January 1, 2026 through April 14, 2026, the Company

has sold 4,840,254 shares of Common Stock for total gross proceeds of $1,917,709 pursuant to the ELOC Agreement.

Appointment of Director

On February 2, 2026, the Board of Directors the Company

increased the size of the Board to five directors and appointed Brady Cobb to serve as a director of the Company to fill the newly created

vacancy, effective immediately.

2025 Equity Incentive Plan

On September 25, 2025 the Company adopted the 2025 Equity Incentive Plan covering

5,315,780 shares of Common Stock of which have been or may be issued or issuable to employees, non-employee directors, officers, consultants

and advisors of the Company and its subsidiaries.

Stock Conversion

of April 14, 2026, 24,251 shares of Series B preferred stock were converted into 1,940,120 shares of common stock.

In February 2026 a holder of

a $30,000 convertible note payable converted the note into 266,770 shares of common stock.

March 5, 2026 the Company announced it has executed a non-binding Letter of Intent (“LOI”) for a proposed merger with Medterra

CBD, LLC (“Medterra”), a leading manufacturer and multi-brand operator of federally compliant cannabinoid wellness products

sold to over 2 million customers across the United States and Internationally.

As of April 14, 2026, our Board of

Directors agreed to cancel the 5,050,000 Warrants granted on July 31, 2025 subject to each person as applicable agreeing to cancel them.

As of the date of this Report, 1,350,000 Warrants held by our former employees remain outstanding and all other Warrants have been canceled.

The Company intends to pursue its remedies with respect to the remaining Warrants .

Changes in and Disagreements with Accountants on Accounting

1 unchanged sentence

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data