EDVA 10-K
Endovia Health Sciences, Inc. (EDVA)
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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On April 14, 2026, there were shares of Common Stock issued and outstanding.
Documents Incorporated by Reference
Portions of the registrant’s definitive proxy statement for its 2026 Annual Meeting of Stockholders are incorporated by reference in Items 10, 11, 12, 13, and 14 of Part III of this Annual Report on Form 10-K.
SPLASH BEVERAGE GROUP, INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
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PART I
Except as otherwise indicated, references to “we”, “us”, “our”, “Splash” and the “Company” refer to Splash Beverage Group, Inc. and its wholly owned subsidiaries.
This Annual Report on Form 10-K (this “Annual Report” or this “Report”) contains “forward-looking statements” Forward-looking statements reflect our current view about future events. When used in this Report, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements include, but are not limited to, statements contained in this Report relating to our business strategy, our future operating results and liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation our need for additional capital to resume our revenue-generating operations, our ability to raise the capital needed on favorable terms or at all, our ability to meet regulatory requirements including the rules of the New York Stock Exchange (the “NYSE”) and maintain the listing of our Common Stock on the NYSE American, our ability to meet our debt obligations and the negative financial and operational consequences of failing to do so, our ability to close our planned acquisition of a CBD business, and the risks and uncertainties disclosed in “Item 1A -Risk Factors” contained in this Report. Actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Item 1. Business.
Company Overview
Historically, Splash was a portfolio company seeking to manage brands across viable growth segments within the consumer beverage industry. As a result of our lack of capital, we did not generate revenue from February 2025 until March 2026 when we delivered tequila as described below. Our beverage operations have historically not been profitable. Because of our lack of capital to generate revenue, our management reviewed strategic alternatives inside and outside of the beverage industry. As a result, on March 4, 2026 the Company entered into a non-binding letter of intent setting forth the principal terms of a potential acquisition of a leading manufacturer and multi-brand operator of federally compliant cannabinoid wellness products. See “Letter of Intent” immediately below for more information. As of the date of this Report, the Company has not entered into a definitive written agreement with respect to such potential transaction. The delay has been caused by a quest to make the acquisition tax-free for the target’s equity holders. Because the process for doing so would delay the closing of the proposed acquisition until late 2026, the Company has agreed to pay additional cash to the target company’s investors to cover their income taxes and reduce the equity component of the acquisition.
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Letter of Intent
On March 4, 2026, Splash entered into a letter of intent (the “Letter”) with the target company, Medterra CBD, LLC (“Medterra”), a leading manufacturer and multi-brand operator of federally compliant cannabinoid wellness products. Pursuant to the Letter, the parties agreed in principal on the terms of a potential business combination between Medterra and the Company, which transaction is subject to due diligence and execution of a definitive written agreement and other applicable agreements, receipt of audited financial statements of Medterra and customary closing conditions. In addition, the Company shall be required to raise capital to pay off Medterra’s debt of approximately $10.4 million. The proposed terms for the acquisition reflect an enterprise value of Medterra of $37.6 million or the issuance of approximately 54.4 million shares of Common Stock, which assumes repayment of its outstanding debt and delivery of approximately $10,000,000 in cash to pay off and extinguish the debt of Medterra and to cover the income taxes of the Medterra equity holders. At closing the Company will issue Medterra investors a number of shares of the Company’s Common Stock equal to up to 19.99% of the Company’s Common Stock then outstanding, and the remaining shares will be of two series of convertible preferred stock (“Series X” and “Series X-1”) to be issued to Medterra’s equity holders based on their existing ownership interests in Medterra. The Series X and X-1 shares will convert at $0.50 per share. The Common Stock to be issued at the closing shall have full rights equal to all outstanding Common Stock, except the holders may not vote upon the stockholder approval of the change of control contemplated by the acquisition. The Letter also provides that the Company will issue Series X-1 to Medterra’s lender with the stated value based upon the equity value of Medterra. In exchange the lender shall cancel its warrants to purchase equity of Medterra.
The Company now expects it can close the acquisition of Medterra in May 2026. The closing will be subject to the Company’s planned meetings with investors during the week of April 13th and its ability to raise the necessary capital as well as reaching a definitive agreement with Medterra and the parties meeting the closing conditions.
Because the Company recently rescinded its June 2025 acquisition of certain water rights in Costa Rica, it derecognized the $20 million of stockholders’ equity which created a stockholders’ deficit of $15,300,828 at December 31, 2025. The NYSE American Rules required us to have at least $6 million in stockholders’ equity. With the expected stockholder’s equity created by the Medterra acquisition, the Company will be in compliance with the NYSE American Rules. The Company is seeking to meet with the NYSE American Staff as soon as possible. There is no assurance that the NYSE American will permit us to maintain the listing of our Common Stock. See Item 1A – “Risk Factors.”
Our Strategy
Our primary focus is to complete the acquisition of Medterra as described above under “Letter of Intent.”
In addition, we are focusing on re-commencing material revenue-generating operations through our beverage business, including through sales of our Chispo Tequila brand subject to obtaining sufficient capital. In the furtherance of this Chispo tequila opportunity, in December 2025 we purchased $50,000 of inventory for the potential Senior Frogs order described under “Chispo Tequila” below.
The Company did not make any sales in the 2025 calendar year after March 2025 due to its lack of capital resources. The Company estimates that it will initially require $3,000,000 for the Chispo brand as well as general and administrative expenses for the next 12 months.
Chispo Tequila
Chispo is a tequila brand which we recently began distributing to one customer. See “Senor Frogs Selection” below. Chispo is an authentic blue agave blanco tequila, with fresh, sweet citrus, herbal floral notes ideal for cocktail mixing. We have entered into an arrangement with the Chispo producer under which we agreed to distribute the brand in certain states in the U.S., as well as in Guatemala and Europe. We expect that we will need approximately $500,000 in new financing to implement this business.
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Senior Frogs Selection
In January 2026 the Company announced that Senor Frog’s, an internationally recognized restaurant and entertainment brand known for its vibrant atmosphere and authentic cuisine, selected Chispo Tequila as its house tequila across an initial group of locations in Florida, the Bahamas, and Mexico. Senor Frog’s belongs to Grupo Anderson’s Mexico who owns more than 50 business units and 15 distinct restaurant brands across 4 countries. In March 2026, we shipped initial inventory to a distributor which we expect will permit us to recognize revenue for the three months ended March 31, 2026.
The rollout marks Chispo’s first high-profile national hospitality partner, providing early validation of the brand’s positioning and quality as it begins to scale in the on-premise channel. Senor Frog’s selected Chispo following an extensive evaluation of authentic tequila brands, with a focus on taste profile, consistency, and resonance with its broad and diverse customer base. Chispo’s smooth character and approachable style distinguished it in a competitive field of premium and value-positioned tequilas. Chispo Tequila is produced in Jalisco, Mexico in partnership with ZB Distillery, a respected distilling operation known for its commitment to quality and traditional tequila craftsmanship.
Costa Rica Water
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.
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Competition
We compete with a large variety of other companies in the marketplace for the sale of alcoholic products. The beverage sector is highly competitive, and include international, national, regional and local producers and distributors. Competitive factors in the beverage industry include price and promotional activity, advertising and marketing programs, point-of-sale merchandising, retail space management, customer service, product differentiation, packaging innovations and distribution methods.
Manufacturing and Co-packing
Although we are responsible for manufacturing tequila products, we do not directly manufacture these products, but instead outsource such manufacturing to third party bottlers and contract packers and distillers.
Chispo products are manufactured in Mexico, under contract manufacturing arrangements. These co-packaging arrangements are terminable upon request and do not obligate us to produce any minimum quantities of products within specified periods.
Historically our business strategy has entailed purchasing concentrates, flavors, dietary ingredients, cans, bottles, caps, labels, and other components and ingredients for our beverage products from our suppliers, which are delivered to our manufacturing operations and various third-party bottlers and co-packers. In some cases, certain common supplies may be purchased by our various third-party bottlers and co-packers. Depending on the product, the third-party bottlers or packers add other ingredients for the manufacture and packaging of the finished products into our approved containers in accordance with our formulas.
Distribution
For our beverage-alcohol products, we operated within what is referred to as a “Three Tier Distribution System” where manufacturers are not permitted to sell directly to retailers, but instead contract for local and regional distribution with independent distributors. These distributors typically have geographic rights to distribute major beverage brands and call on every store in a given area such as major cities or regions. Our President and CMO has extensive experience working within this channel and believes that we may be successful in building a strong network of these distributors.
In addition to working with these independent distributors, we also previously established distribution arrangements with national retail accounts.
Employees
We have one full-time employee our President who has extensive experience in the beverage business, one part-time employee, our Chief Financial Officer and a part-time accounting consultant. All of our employees and our consultant work remotely.
Listing on the NYSE American
Our Common Stock is listed on the NYSE American exchange under the ticker symbol “SBEV”.
Corporate Information
We are a Nevada corporation. Our website address is www.splashbeveragegroup.com. Our website is not incorporated into this Report.
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Available Information
We file annual, quarterly, and current reports, proxy statements and other information with the U.S. Securities Exchange Commission (the “SEC”). These filings are available to the public through the SEC’s website at http://www.sec.gov. All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included unless otherwise specified, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
Item 1A. Risk Factors.
You should carefully consider the risks described below as well as other information provided to you in this document, including information in the section of this document entitled “Cautionary Note Concerning Forward Looking Statements.” If any of the following risks actually occur, the Company’s business, financial condition or results of operations could be materially adversely affected, the value of the Company’s Common Stock could decline, and you may lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
Risks Related to our Financial Condition
Our auditors have included an explanatory paragraph in their opinion regarding our ability to continue as a going concern. If we are unable to continue as a going concern, our stockholders will lose all or some of their investments.
Rose, Snyder & Jacobs LLP, our independent registered public accounting firm for the fiscal year ended December 31, 2025, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2025, indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern. If we are unable to improve our liquidity position, we may not be able to continue as a going concern. This has continued as of the date of this Report.
We have sustained recurring losses and we have had working capital and stockholders’ equity deficits. These prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition. In addition, continued operations and our ability to continue as a going concern may be dependent on our ability to obtain additional financing in the near future and thereafter, and there are no assurances that such financing will be available to us at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through sales of our products, financing or from other sources or transactions, we will exhaust our resources and will be unable to continue operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next 12 months.
In order to continue and fund its operations, the Company will be required to obtain additional resources through sales and issuances of equity to successfully execute its business plans and keep the Common Stock listed on the NYSE American. No assurances can be given the Company will be successful in raising additional capital, if needed, or on acceptable terms. Sales of Common Stock or Common Stock equivalents would have the effect of diluting existing stockholders. If we are unable to raise the necessary capital on favorable terms, within the timeframes needed or at all, we could be forced to cease operations, and you could lose all or some of your investment.
Because we lack the required $6 million of minimum stockholders’ equity currently as well at December 31, 2025, our Common Stock may be delisted by the NYSE American.
On April 7, 2025, the NYSE American notified the Company that as a result of its failure to comply with the applicable continued listing rules including maintaining the required minimum stockholders’ equity, it determined to commence proceedings to delist the Company’s Common Stock from the exchange. The Company appealed the determination.
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On June 25, 2025, we acquired our Water Assets by issuing the Seller shares of our Series C Convertible Preferred Stock. The Series C contains a stated value of $20 million. Under Generally Accepted Accounting Principles, we accounted for this issuance by including $20 million of non-current assets on our balance sheet. On April 14, 2026, the Company rescinded the transaction and canceled the Series C in accordance with the provisions of the Asset Purchase Agreement, effective December 31, 2025. If we can complete the acquisition of Medterra, we expect we will have stockholders’ equity substantially above the $6 million minimum requirement. We cannot assure you that we will complete the acquisition of Medterra or that the NYSE American will permit our Common Stock to remain listed both prior to the planned closing and after the closing of the Medterra acquisition.
Because we lack the capital to acquire inventory and market our products, we have generated no revenue in 2025 after the three months ended March 31, 2025, making our ability to remain in operation more difficult, and there are substantial doubts as to our ability to continue as a going concern.
As reflected in this the consolidated financial statements contained in this Report, we had only $442,732 in net revenues for the year ended December 31, 2025. In fact, we did not generate any revenue in fiscal year 2025 after the three months ended March of 2025 due to a lack of operating capital which has hindered the Company’s ability to generate sales since that time. In order to generate material revenue, we estimate requiring at least $2,000,000 of working capital in order to acquire inventory and re-commence minimal operations. This does not include our plans for the Chispo tequila business which will require substantial additional capital. Specifically, management estimates needing approximately $500,000 to achieve its full year goals. In addition, we need approximately $3 million in working capital to grow our business, pay our current management, including benefits, an accounting consultant and the public company costs we are required to pay.
We have also entered into the Letter of Intent with Medterra contemplating a potential business combination with that entity. Assuming we enter into a definitive Agreement with Medterra and close the acquisition, we expect we will need approximately $10,000,000 to pay its indebtedness and the income taxes of Medterra’s investors and are working with capital partners and investors to attempt to raise an additional $25,000,000 at or subsequent to the closing of the proposed transaction to expand Medterra’s existing operations and sales inclusive of their participation in the recently launched federal CMS pilot program, additional working capital, and reserves. See “Risk Factors - Risks Related to. Our Business.”
Our lack of cash resources has prevented us from carrying on our commercialization activities. In addition, our lack of working capital has prevented us from marketing our products. Further, even if we can access the necessary capital, the Company must determine whether and what extent to invest such capital into various aspects of our business, including recommencing sales of beverage products, and we may be unsuccessful in developing and executing a business plan in this regard. Unless we raise enough money to not only pay our ongoing general and administrative expenses but also market our products and purchase inventory, we will not be able to remain operational.
We have experienced recurring losses from operations and negative cash flows from operating activities and anticipate that we will continue to incur significant operating losses before reaching profitability.
We have experienced recurring losses from operations and negative cash flows from operating activities. We expect to continue to incur significant expenses related to our ongoing operations and generate operating losses for the foreseeable future. The size of our losses will depend, in part, on the rate of future expenditures, our ability to execute our business plan and our ability to generate revenues. We incurred a net loss from continuing operations of approximately $25.2 million including $14.2 million of non-cash items for the year ended December 31, 2025.
We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our financial condition. Our prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition. If our products do not achieve sufficient market acceptance and we do not generate significant revenues, we may never become profitable. Even if we achieve profitability in the future, for which we can provide no assurance, we may not be able to sustain profitability in subsequent periods. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations. A decline in the value of our Company could cause you to lose all or part of your investment.
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We may become subject to litigation in connection with our cancellation of the Series C that we had previously issued under the Asset Purchase Agreement related to certain water assets.
Following the cancellation of the Series C that we had previously issued to the Seller under the Asset Purchase Agreement related to certain water assets located in Costa Rica, the Seller may determine to sue us challenging our position with respect to such cancellation. Specifically, 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, and 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.” As a result, the Company cancelled the Series C effective December 31, 2025. While the Company believes that it has adequate evidence demonstrating that the Seller failed to comply with either requirement, the Seller may nonetheless seek to sue the Company claiming that the Company was not entitled to cancel the Series C. Any resulting litigation which may arise from the foregoing could require us to incur significant costs and expenses, subject us to uncertainty with respect to our outstanding capital stock and any potential future transactions (including the potential business combination with Medterra), and divert our limited personnel and resources away from operational matters and strategic initiatives.
Risks Related to our Business
If we are unable to enter into a definitive agreement and close an acquisition of Medterra following our entry into a non-binding Letter of Intent on March 4, 2026 as described elsewhere in this Report, the Company and its stockholders will not receive the anticipated and intended benefits of such acquisition, and the Company would be forced to pursue alternative acquisitions or strategic transactions.
As disclosed elsewhere in this Report, we recently entered into a Letter of Intent with Medterra, a leading manufacturer and multi-brand operator of cannabinoid wellness products. Pursuant to the Letter, the parties agreed in principal on the terms of a potential business combination between Medterra and the Company, subject to due diligence and execution of a definitive written agreement and other applicable agreements, receipt of the 2025, audited financial statements of Medterra and customary closing conditions. In addition, the Company needs approximately $10.4 million of cash to close the transaction. The proposed terms for the transaction represent an enterprise value of Medterra of $37.6 million or the issuance of approximately 54,400,000 shares of Common Stock, which assumes repayment of its outstanding debt. This would represent substantial dilution to the Company’s existing stockholders.
While the closing of the acquisition would result in us becoming the parent holding company of a leading manufacturer and seller of cannabinoid products, the closing may not occur, including due to regulatory challenges arising from cannabis laws and the NYSE American requirements, our ability to raise the necessary cash and negotiate the definitive agreement, due diligence, the appearance of a competitive bid from another prospective purchaser, or the seller’s inability to maintain its operations for a sufficient time to allow the transaction to close, and other events and requirements that may not occur on favorable terms or at all and subject any potential transaction to substantial uncertainty. The Letter is non-exclusive and does not provide us with any recourse if Medterra were to decline to move forward with a transaction with us. The Letter also envisions us being required to raise a substantial amount of additional capital shortly following the closing of the business combination, which would further dilute our existing stockholders and could subject us to onerous terms that harm our ability to operate or pursue strategic transactions and alternatives. Even if we do acquire Medterra and raise the necessary capital to fund post-transaction operations in the future, there can be no assurance that such a development will yield the intended or expected benefits, result in sustained increases in prices and or volume of trading in our Common Stock, or otherwise create a meaningful return on investment or value to our stockholders.
Further, if we fail to enter into a definitive written agreement or a business combination does not close, all of the time and capital resources expended by the Company in such pursuit of such a transaction may be lost and unrecoverable by the Company or its stockholders. Unanticipated issues which may be beyond our control or that of the seller may arise that force us to suspend our pursuit of the target, including those referred to elsewhere herein. Such risks are inherent in any search for a new business and investors should be aware of them before investing in an enterprise such as ours.
Our strategic initiatives including acquisitions and divestitures may not be successful and may divert our management’s attention away from operations, and could create general customer uncertainty.
We have begun to explore strategic alternatives to our beverage business. Our growth strategy is based in part on growth through strategic initiatives including both acquisitions and divestitures of brands and assets, which poses a number of risks. We may not be successful in identifying appropriate acquisition candidates, achieving targeted values as part of a disposition, consummating an acquisition or divestiture on satisfactory terms, integrating any newly acquired or expanded business with our current operations, or separating a divested business or commingled operation effectively. We may issue additional equity, incur long-term or short-term indebtedness, spend cash or use a combination of these for all or part of the consideration paid in future acquisitions or expansion of our operations, which may not be available to us on terms we find advantageous or acceptable, if at all. In addition, subject to any requirements in the agreements governing our outstanding indebtedness, we may have significant discretion in how we employ the consideration received in a divestiture and our management may not apply such consideration in a way that is ultimately accretive to our business.
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The execution of our strategic initiatives will likely entail incurring goodwill assets or repositioning or similar actions that in turn require us to record impairments, restructuring and other charges. Any such charges would result in additional expense. We cannot guarantee that any future business acquisitions or divestitures will be pursued or that any acquisitions or divestitures that are pursued will be consummated.
Additionally, any acquisition or disposition (including the successful integration and separation of operations, products and personnel) may place a significant burden on our management and other internal resources. The diversion of management’s attention, and any difficulties encountered in such a process, could harm our business, financial condition, and operating results.
If we fail to successfully integrate acquired assets or businesses, or if integrated, failure to further the Company’s business strategy, may result in the Company’s inability to realize any benefit from such acquisition or other adverse consequences.
As disclosed above under “Business-Letter of Intent”, we are in discussions concerning a potential acquisition of Medterra contemplated by the Letter of Intent with that entity. Unidentified liabilities or other issues may arise with respect to the businesses and assets we have acquired or may in the future acquire, which could expose us to litigation, unexpected costs, regulatory actions and other negative events that could materially harm our business and financial condition. Further, we intend for = any such acquisitions to be a critical part of our business plan moving forward, subject to accessing the necessary capital, and such acquisitions may not yield the benefits expected or desired for our business.
In addition, even if we can access the necessary capital, we may face challenges in integrating and utilizing any acquired business or assets, particularly given any such undertaking will require the investment of resources to monetize and integrate into our other operations. Even if we can access the necessary capital to further these efforts we may be unable to effectively manage these efforts without incurring extensive additional costs or at all. This would put a further strain on our already limited personnel and resources. Further, the long-term commercial success of any such undertaking will depend on our ability to timely and in a cost-effective manner pursue and develop an infrastructure and network to obtain and distribute products in high quantities and in compliance with applicable regulatory and commercial requirements. If we are unsuccessful in navigating these challenges with respect to any acquired business or assets, it could fail to result in benefits to our Company, and we could be materially adversely affected by any of the foregoing events.
In general, the consummation and integration of any acquired business or assets into the Company may be complex and time-consuming and, if such businesses and assets are not successfully integrated, the Company may not achieve the anticipated benefits, cost-savings or growth opportunities. Furthermore, these acquisitions and other arrangements, even if successfully integrated, may fail to further the Company’s business strategy as anticipated, expose the Company to increased competition or other challenges with respect to the Company’s products or geographic markets, and expose the Company to additional liabilities associated with an acquired business, technology or other asset or arrangement. There are no guarantees that the Company will successfully consummate such acquisitions, and even if the Company consummates such acquisitions, the procurement of applications for licenses required to sell or distribute related products may never result in the grant of a license by any state or local governmental or regulatory agency and the transfer of any rights to licenses may never be approved by the applicable federal, state and/or local governmental or regulatory agency.
Demand for our products may be adversely affected by changes in consumer preferences or any inability on our part to innovate, market or distribute our products effectively, and any significant reduction in demand could adversely affect our business, financial condition or results of operations.
We aim to sell beverages comprised of a number of unique brands with reputations and consumer imagery that have been built over time. Our investments in marketing as well as our strong commitment to product quality are intended to have a favorable impact on brand image and consumer preferences. If we do not adequately anticipate and react to changing demographics, consumer and economic trends, health concerns and product preferences, our financial results could be adversely affected.
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Additionally, failure to introduce new brands, products or product extensions into the marketplace as current ones mature and to meet the changing preferences of consumers could prevent us from gaining market share and achieving long-term profitability. Product lifecycles can vary, and consumer preferences and loyalties change over time. Although we try to anticipate these shifts and innovate new products to introduce to our consumers, we may not succeed. Consumer preferences also are affected by factors other than taste, such as health and nutrition considerations and obesity concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product and pricing pressures. Sales of our products may be adversely affected by negative publicity associated with these issues. If we do not adequately anticipate or adjust to respond to these and other changes in consumer preferences, we may not be able to maintain and grow our brand images, and our sales may be adversely affected.
Volatility in the price or availability of the inputs we depend on, including raw materials, packaging, energy and labor, could adversely impact our financial results.
The principal raw materials we use include glass bottles, aluminum cans, polyethylene terephthalate, fiber-board, labels and cardboard cartons, flavorings and sweeteners. These component and ingredient costs are subject to fluctuation and environmental regulation. If there were to be substantial increases in the prices of these products, to the extent that they cannot be recouped through increases in the prices of finished beverage products, it would increase our operating costs. If our supply of these raw materials is impaired or if prices increase significantly due to tariffs or any other reason, it could affect the affordability of our products and reduce revenues.
If we are unable to secure sufficient ingredients or raw materials including glass, sugar, and other key supplies at acceptable prices, within a reasonable timeframe, at the locations needed or in general, we might not be able to satisfy demand on a short-term basis.
International trade developments, including tariffs and geopolitical conflicts, could adversely impact our business.
International trade developments, including heightened tariffs imposed by the United States under the Trump Administration on goods imported from various countries, tariffs imposed by foreign countries in retaliation, and litigation and uncertainties surrounding these developments, could adversely impact our business. Further, geopolitical conflicts such as the conflict with Iran and its proxies have had and are expected to continue to have an adverse impact on supply chains and the costs of purchasing and transporting goods. We and third parties on which we depend source various supplies used in our products from foreign countries, and tariffs and other international trade developments could therefore result in inflationary pressures that directly impact our costs for manufacturing and marketing products. These developments could also adversely impact global supply chains which could further increase costs for us and/or delay delivery of key inventories and supplies.
Significant new or increased tariffs, import and excise duties, or other taxes on or impacting beverage products, including raw and packaging materials, such as on imports from Mexico and exports to countries in which we plan to sell our products such as the United Arab Emirates from which we source many of our supplies for our products, and any additional retaliatory tariffs imposed by those governments on products imported into the U.S., could have a material adverse effect on our business, liquidity, financial condition, and results of operations. These developments continue to pose a significant risk to our business as well as the U.S. and global economies, including by shifting consumer behaviors, inhibiting sales, increasing costs, causing further economic and supply chain disruptions and inflationary pressures, and reducing economic activity. For example, if the costs of our products increase, we and our collaborators may be forced to increase the prices at which such products are sold, which could in turn reduce demand for and sales of those products, thereby negatively impacting our operating results. Alternatively, the heightened production costs would also have a negative impact on operating results even absent a decline in sales. Further, increases in the cost of oil and other resources used in the production and transportation of products could have a material adverse effect on the acquisition and use of such resources and gross margins.
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The extent and duration of the tariffs and the resulting impact on our business and general economic conditions are uncertain and depend on various factors, including negotiations between the United States and affected countries, the outcome of the United States tariff litigation, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. To the extent we need to locate new sources of raw materials and products as a result of tariffs, we may be unable to locate alternative sources on favorable terms or in the timeframes needed, and actions we may take to adapt to new tariffs or trade restrictions may force us to modify our operations or forgo business opportunities. Likewise, tariffs and import and export regulations could also limit the availability of our products, prompt consumers to seek alternative products, and provide an opportunity for competitors not subject to such tariffs to more effectively compete with us in markets where we conduct our business.
Our business, operations, financial position and timelines, could be materially adversely affected by government action and geopolitical conflicts.
Following President Trump’s inauguration in January 2025, certain trends and events have unfolded and continue to evolve and develop which are affecting and have the potential to further affect the global and United States capital markets and economies, including the inflation caused by the conflict with Iran, the continued high central bank interest rates, the imposition and threat of tariffs as well as subsequent developments and uncertainties surrounding tariffs, trade wars among nations and ongoing wars and geopolitical conflicts, and uncertain capital markets with significant volatility and declines in leading market indexes thus far 2026. The duration and scope of these events and their impact are at best uncertain, and their continuation may result in negative consequences on the U.S. or global economies.
The impositions of tariffs by the U.S. and any retaliatory actions by foreign countries, as well as refunds on tariffs following the U.S. Supreme Court’s ruling to strike down certain tariffs, could contribute to higher inflation and reduced economic activity for a prolonged period of time, thereby delaying any rate reductions or potentially resulting in rate increases in the future, as well as reduced demand for mortgages. Similarly, the wars in the Middle East and the Ukraine could also contribute to increased and prolonged inflation including by increasing the price of oil and causing adverse impacts on supply chains. These uncertainties and developments could result in supply chain issues, higher prices for goods and services or other adverse consequences on us and our vendors. In addition, these events come with an increased probability for an economic downturn or recession by making it more difficult for businesses to borrow money and individuals to maintain employment.
These developments follow the increase in interest rates that began in 2022 as the Federal Reserve in U.S. and central banks in other jurisdictions have sought to combat inflation. While in the U.S. inflation has declined, the conflict with Iran seems likely to having another inflationary impact. Further many economists view additional increases in inflation as a likely or possible consequence of these developments. Uncertainty surrounding rising or elevated prices and concerning the state and prospects for the U.S. and global economies and capital markets in the near term remains and has amplified due to the factors described above. If inflation does not fall low enough and/or the Federal Reserve declines to reduce interest rates in the near term, or tariffs and related developments adversely impact the economy, the result could be tipping the U.S. economy into a recession. In the wake of these events, the U.S. and global capital markets have demonstrated substantial volatility in the first quarter of 2026, as many investors consider economic outlooks to be uncertain and consider the risk of a recession and a decline in the marketplace to be increasingly probable or imminent. Ultimately the economy may turn into a recession with uncertain and potentially severe impacts upon the public capital markets and us. Among the potential consequences could be a substantial decline in stock prices including ours, a reduction in demand for securities of public companies (which may be more prevalent for smaller companies such as us) and more difficulty for us to raise capital we need and accessing capital on favorable terms or at all as a result.
As our ability to continue to operate will be dependent on raising capital, any adverse impact to markets as a result of these developments, including due to increased market volatility, decreased availability in third-party financing and/or a deterioration in the terms on which it is available (if at all), could negatively impact our business, results of operations, cash flows, financial condition, and/or prospects. The extent of any potential impact is not yet determinable, however.
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We compete in an industry that is brand-conscious, so brand name recognition and acceptance of our products are critical to our success.
Our business is dependent upon awareness and market acceptance of our products and brands by our target markets. In addition, our business depends on acceptance by our independent distributors and retailers of our brands as beverage brands that have the potential to provide incremental sales growth. If we are not successful in the revitalization and growth of our brand and product offerings, or in maintaining and expanding upon the brands we offer, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers. Any failure of our brands to maintain or increase acceptance or market penetration would likely have a material adverse effect on our revenues and financial results.
Our brands and brand images are keys to our business and any inability to maintain a positive brand image could have a material adverse effect on our results of operations.
Our success depends on our ability to develop brand images for our existing products and effectively build up brand images for new products and brand extensions. We cannot predict whether our advertising, marketing and promotional programs will have the desired impact on our products’ branding and on consumer preferences. In addition, negative public relations and product quality issues, whether real or imagined, could tarnish our reputation and images of the affected brands and could cause consumers to choose other products. Our brand images can also be adversely affected by unfavorable reports, studies and articles, litigation, or regulatory or other governmental action, whether involving our products or those of our competitors.
Competition from traditional and large, well-financed non-alcoholic and alcoholic beverage manufacturers may adversely affect our distribution relationships and may hinder development of our existing markets, as well as prevent us from expanding our markets.
The beverage industry is highly competitive. We compete with other beverage companies not only for consumer acceptance but also for shelf space in retail outlets and for marketing focus by distributors, all of whom also distribute other beverage brands. Our products will compete with a broad range non-alcoholic and alcoholic beverages, many of which are marketed by companies with substantially greater financial and marketing resources than ours. Management believes that some of these competitors are placing severe pressure on independent distributors not to carry competitive brands offered by smaller enterprises such as ours. We will also compete with regional beverage producers and “private label” brands.
Increased competitor consolidations, market-place competition, particularly among branded beverage products, and competitive product and pricing pressures could impact our earnings, market share and volume growth. If, due to such pressure or other competitive threats, we are unable to sufficiently maintain or develop our distribution channels, we may be unable to achieve our current revenue and financial targets. Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our existing markets, as well as on our ability to expand the market for our products.
Our reliance on distributors, retailers and brokers could affect our ability to efficiently and profitably distribute and market our products, maintain our existing markets and expand our business into other geographic markets.
Our ability to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to establish and maintain successful relationships with reliable distributors, retailers and brokers strategically positioned to serve those areas. All of the distributors, retailers and brokers we have used in the past sell and distribute competing products, including non-alcoholic and alcoholic beverages, and our products may represent a small portion of their businesses. The success of this network will depend on the performance of the distributors, retailers and brokers of this network. There is a risk that the mentioned entities may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities that may not be receptive to our product. Further, these third parties could reduce or terminate their relationship with us for any reason without liability to us. Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition from other beverage companies, some of which may have greater resources than we do. To the extent that our distributors, retailers and brokers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, including re-stocking the retail shelves with our products, our results of operations could be adversely affected. Furthermore, such third-parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities.
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Our ability to establish and expand our distribution network and attract additional distributors, retailers and brokers will depend on a number of factors, some of which are outside our control. Some of these factors include:
| ● | the level of demand for our brands and products in a particular distribution area; |
| ● | our ability to price our products at levels competitive with those of competing products; and |
| ● | our ability to deliver products in the quantity and at the time ordered by distributors, retailers and brokers. |
We may not be able to successfully manage all or any of these factors in any of our current or prospective geographic areas of distribution. Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results.
These third-party service providers and business partners are also subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory and market risks of their own. Our third-party service providers and business partners may not fulfill their respective commitments and responsibilities in a timely manner and in accordance with the agreed-upon terms. In addition, while we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk. If we are unable to effectively manage our third-party relationships, or for any reason our third-party service providers or business partners fail to satisfactorily fulfill their commitments and responsibilities, our financial results could suffer.
It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.
Once we re-commence sales, we plan to use independent distributors who will not be required to place minimum monthly or annual orders for our products. In order to reduce their inventory costs, independent distributors typically order products from us on a “just in time” basis in quantities and at such times based on the demand for the products in a particular distribution area. Accordingly, we cannot predict the timing or quantity of purchases by any of our independent distributors or whether any of our distributors will purchase products from us in the same frequencies and volumes as they may have done in the past. Additionally, our larger distributors and national partners may make orders that are larger than we have historically been required to fill. Shortages in inventory levels, supply of raw materials or other key supplies could negatively affect us including by such distributors and national partners locating competitive brands to meet their demand.
If we do not adequately manage our inventory levels, our operating results could be adversely affected.
Once we re-commence sales, we will need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis. Our inventory supply will depend available cash and on our ability to correctly estimate demand for our products. Our ability to estimate demand for our products is imprecise, particularly for new products, seasonal promotions and new markets. If we materially underestimate demand for our products or are unable to maintain sufficient inventory of raw materials, we might not be able to satisfy demand on a short-term basis. If we overestimate distributor or retailer demand for our products, we may end up with too much inventory, resulting in higher storage costs, increased trade spend and the risk of inventory spoilage. Additionally, our maintenance of inventory as needed to meet demand is contingent upon our access to sufficient capital, and due to our limited liquidity we have in the past and expect to continue in the future to be unable to obtain sufficient inventory unless and until we can gain access to the necessary capital. These challenges and the related risks will be heightened by recent developments such as the imposition of tariffs and any impacts thereof on us, the prices of supplies we utilize and the products we sell, delays and supply chain disruptions, similar factors relating to our vendors, and consumers and their demand for products at varying price points and quantities. If we fail to manage our inventory to meet demand, we could damage our relationships with our distributors and retailers and could delay or lose sales opportunities, which would unfavorably impact our future sales and adversely affect our operating results. In addition, if the inventory of our products held by our distributors and retailers is too high, they will not place orders for additional products, which would also unfavorably impact our sales and adversely affect our operating results.
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If we fail to maintain relationships with our independent contract manufacturers, our business could be harmed.
We do not manufacture tequila but have instead outsourced the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers). We do not own the plants or the majority of the equipment required to manufacture and package these brands. Our ability to maintain effective relationships with contract manufacturers and other third parties for the production and delivery of our beverage products in a particular geographic distribution area is important to the success of our operations within each distribution area. Our agreements with third parties enable such parties to terminate our relationship within a relatively short period of time. We may not be able to maintain our relationships with contract manufacturers or establish satisfactory relationships with new or replacement contract manufacturers, whether in existing or new geographic distribution areas. The failure to establish and maintain effective relationships with contract manufacturers for a distribution area could increase our manufacturing costs and thereby materially reduce gross profits from the sale of our products in that area. Poor relations with any of our contract manufacturers could adversely affect the amount and timing of product delivered to our distributors for resale, which would in turn adversely affect our revenues and financial condition. In addition, our agreements with our contract manufacturers are terminable at any time, and any such termination could disrupt our ability to deliver products to our customers.
Further, if third parties on which we depend to manufacture products increases their prices, we may not be able to secure alternative suppliers, and may not be able to raise the prices of our products to cover all or even a portion of the increased costs. Also, any failure by these third parties to perform satisfactorily or handle increased orders, or delays in shipping, could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues. We are also dependent upon such third parties continued liquidity and factors which affect such third parties ability to operate including:
| ● | adverse weather event and other acts of God; |
| ● | labor uncertainties including the availability of employees; |
| ● | environmental compliance; |
| ● | foreign exchange exposure; |
| ● | quality control; |
| ● | political instability; |
| ● | contract enforcement; |
| ● | intellectual property protection; and |
| ● | transportation disruptions. |
In turn, this could cause us to lose credibility in the marketplace and damage our relationships with distributors, ultimately leading to a decline in our business and results of operations. If we are not able to renegotiate these contracts on acceptable terms or find suitable alternatives, our business, financial condition or results of operations could be negatively impacted.
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If we experience disruption within our supply chain, manufacturing or distribution channels, it could have an adverse effect on our business, financial condition and results of operations.
Once we re-commence sales, our ability, through our suppliers, business partners, manufacturers, independent distributors and retailers, to make, move and sell products is critical to our success. Damage or disruption to our suppliers or to manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion, terrorism, pandemics, labor strikes, geopolitical events or other reasons, could impair the manufacture, distribution and sale of our products. Many of these events are outside of our control. Failure to take adequate steps to protect against or mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations.
We expect to rely upon our ongoing relationships with our key flavor suppliers. If we are unable to source our flavors on acceptable terms from our key suppliers, we could suffer disruptions in our business.
In the past, we have purchased our flavor concentrate from various flavor concentrate suppliers, and seek to continually develop other sources of flavor concentrate for certain of our products. Generally, flavor suppliers hold the proprietary rights to their flavor-specific ingredients. Although we have the exclusive rights to flavor concentrates developed with our current flavor concentrate suppliers, and while we have the rights to the ingredients for our products, we do not have the list of ingredients for our flavor extracts and concentrates, and in the event of a termination or failure to perform by these suppliers, we may be unable to obtain these exact flavors or concentrates from alternative suppliers on short notice. If we have to replace a flavor supplier, we could experience disruptions in our ability to deliver products to our customers, which could have a material adverse effect on our results of operations.
We are dependent on a distiller in Mexico to provide us with our finished tequila product. Failure to obtain satisfactory performance from them or a loss of their services could cause us to lose future sales, incur additional costs, and lose credibility in the marketplace.
The Company estimates that it requires a minimum of approximately $500,000 of additional capital to begin pursuing its Chispo business strategy beyond the Senior Frog opportunity. If we can raise sufficient capital to pursue this business strategy, we will depend on a distiller in Jalisco, Mexico for the tequila certification, production, bottling, labeling, capping and packaging of our finished tequila product. We do not have a written agreement with our distiller in Mexico obligating it to produce our product. The termination of our relationship with our distiller in Mexico or an adverse change in the terms of its services could have a negative impact on our business. If our distiller in increases its prices, we may not have alternative sources of supply at comparable prices and may not be able to raise the prices of our products to cover all, or even a portion, of the increased costs. In addition, if our distiller in Mexico fails to perform satisfactorily, fails to handle increased orders, or we lose the services of our distiller in Mexico, along with delays in shipments of products, it could cause us to fail to meet orders, lose sales, incur additional costs, and/or expose us to product quality issues. In turn, this could cause us to lose credibility in the marketplace and damage our relationships with our customers and consumers, ultimately leading to a decline in our business and results of operations.
If we are unable to attract and retain key personnel, our efficiency and operations would be adversely affected; in addition, management turnover causes uncertainties and could harm our business.
Our success depends on our ability to attract and retain highly qualified employees in such areas as finance, sales, marketing and product development. We compete to hire new employees, and, in some cases, must train them and develop their skills and competencies. We may not be able to provide our employees with competitive salaries, and our operating results could be adversely affected by increased costs due to increased competition for employees, higher employee turnover or increased employee benefit costs. We are dependent on our core management team whose knowledge, experience and connections in the industry are critical to our operations and business plan. The loss of these individuals or any other key personnel would therefore have a material adverse effect on our business and ability to operate and compete effectively.
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Further, Robert Nistico, our former Chief Executive Officer, resigned as Chief Executive Officer (but not as a director) effective November 14, 2025 and William Devereux, our former Chief Financial Officer, resigned as Chief Financial Officer effective November 30, 2025. Following these resignations, William Meissner, our President, became our principal executive officer, and we hired Marty Scott as our Interim Chief Financial Officer. We may be unable to attract, hire our maintain sufficient management-level employees and key personnel within a reasonable timeframe or under favorable terms, including due to the uncertainties relating to our lack of capital as well as the fierce competition for qualified candidates for such positions both within our industry and for public companies generally.
Changes to operations, policies and procedures, which can often occur with the appointment of new personnel, can create uncertainty, may negatively impact our ability to execute quickly and effectively, and may ultimately be unsuccessful. In addition, management transition periods are often difficult as the new employees gain detailed knowledge of our operations, and friction can result from changes in strategy and management style. Management turnover inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution.
Further, to the extent we experience additional management turnover, our operations, financial condition and employee morale could be negatively impacted. In addition, competition for top management is high and it may take months to find a candidate that meets our requirements. If we are unable to attract and retain qualified management personnel, our business could suffer.
If we fail to protect our trademarks and trade secrets, we may be unable to successfully market our products and compete effectively.
We rely on a combination of trademark and trade secrets, as well as confidentiality procedures and contractual provisions to protect our intellectual property rights and interests in our operations, products and processes. Failure to protect or maintain our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property and related rights and interests could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, particularly our trademarks and trade secrets to be of considerable value and importance to our business and our success, and we actively pursue the registration of our trademarks in the United States and internationally. However, the steps taken by us to protect these proprietary rights may not be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade secrets or similar proprietary rights, particularly outside of the United States where intellectual property rights may not be fully enforceable. In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated costs.
As part of the licensing strategy of our brands, we enter into licensing agreements under which we grant our licensing partners certain rights to use our trademarks and other designs. Although our agreements require that the use of our trademarks and designs is subject to our control and approval, any breach of these provisions, or any other action by any of our licensing partners that is harmful to our brands, goodwill and overall image, could have a material adverse impact on our business.
If we encounter product recalls or other product quality issues, our business may suffer.
Product quality issues, real or imagined, or allegations of product contamination, even when false or unfounded, could tarnish our image and could cause consumers to choose other products. In addition, because of changing government regulations or implementation thereof, or allegations of product contamination, we may be required from time to time to recall products entirely or from specific markets. Product recalls could affect our profitability and could negatively affect brand image.
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Because our business is subject to many regulations, noncompliance is costly.
The production, marketing and sale of our beverages, including contents, labels, caps and containers, are subject to the rules and regulations of various federal, foreign, state and local health and other agencies. The regulations to which we are subject impose requirements on production, distribution, marketing, advertising and labelling of products. We are required to comply with these regulations and to maintain various permits and licenses. We will be required to conduct business only with holders of licenses to import, warehouse, transport, distribute and sell our products. We cannot assure you that these and other governmental regulations applicable to our industry will not change or become more stringent. Moreover, because these laws and regulations are subject to interpretation, we may not be able to predict when and to what extent liability may arise. Additionally, due to increasing public concern over alcohol-related societal problems, including driving while intoxicated, underage drinking, alcoholism and health consequences from the abuse of alcohol, various levels of government may seek to impose additional restrictions or limits on advertising or other marketing activities promoting beverage alcohol products. Failure to comply with any of the current or future regulations and requirements relating to our industry and products could result in monetary penalties, suspension or even revocation of our licenses and permits. Costs of compliance with changes in regulations could be significant and could harm our business, as we could find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our sales and increase our losses.
Also, the distribution of beverage alcohol products is subject to extensive taxation (at both the federal and state government levels), and beverage alcohol products themselves are the subject of national import and excise duties in most countries around the world. An increase in taxation or in import or excise duties could also significantly harm our revenues and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol.
If a regulatory authority finds that a current or future product or production batch or “run” is not in compliance with any of these regulations, we may be fined, forced to recall products, or production may be stopped, which would adversely affect our financial condition and results of operations. Similarly, any adverse publicity associated with any noncompliance may damage our reputation and our ability to successfully market our products. Furthermore, the rules and regulations are subject to change from time-to-time, we cannot anticipate whether changes in these rules and regulations will impact our business adversely. Additional or revised regulatory requirements, whether labeling, environmental, tax or otherwise, could have a material adverse effect on our financial condition and results of operations.
If we complete the acquisition of Medterra, its CBD business will face substantial and challenging regulations. Government regulation of cannabinoids remains dynamic, multi-layered, and complex. The sale of CBD products are influenced by federal law, state legislation, and international regulatory frameworks, each of which shapes the permissible scope of manufacturing, marketing, labeling, distribution, and sale of such products. If we acquire Medterra, we will therefore be required to devote significant resources to monitoring regulatory developments and adjusting operations accordingly and may not be able to achieve the benefits anticipated or sought from such acquisition due to any adjustments to Medterra’s operations or other adverse developments which may arise from the foregoing.
Government regulations, any changes thereto and/or any failure by us to comply with these regulations, could adversely affect our business, financial condition and results of operations.
Our business and properties are subject to various federal, state and local laws and regulations, including those governing the production, packaging, quality, labeling and distribution of beverage products. In addition, various governmental agencies have enacted or are considering additional taxes on certain non-alcoholic beverages as well as alcoholic beverages. Further, we are subject to licensing and permitting requirements in the various jurisdictions in which we conduct business. Changes in existing laws or regulations or any failure by us to fully comply with these varying and evolving requirements could require us to incur material expenses and negatively affect our financial results, including through lower sales, higher costs negative publicity and other adverse consequences.
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Moreover, because these laws and regulations are subject to interpretation, we may not be able to predict when, and to what extent, liability may arise. Additionally, due to increasing public concern over alcohol-related societal problems, including driving while intoxicated, underage drinking, alcoholism and health consequences from the abuse of alcohol, various levels of government may seek to impose additional restrictions or limits on advertising or other marketing activities promoting beverage alcohol products. Failure to comply with any of the current or future regulations and requirements relating to our industry and products, could result in monetary penalties, suspension or even revocation of our licenses and permits. Costs of compliance with changes in regulations could be significant and could harm our business, as we may find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our sales and profit potential.
In addition, the distribution of beverage alcohol products is subject to extensive taxation both in the United States and internationally (and, in the United States, at both the federal and state government levels), and beverage alcohol products themselves are the subject of national import and excise duties in most countries around the world. An increase in taxation or in import or excise duties could also significantly harm our revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol.
We will be exposed to product liability or other related liabilities which could have significant negative financial repercussions on our solvency.
Although we maintain general liability insurance and take certain other measures in an effort to reduce the risk of liabilities, these measures may not be sufficient for us to successfully avoid or limit product liability or other related liabilities. The Company has not generated any revenue since March 2025, and it does not currently carry product liability insurance. The Company intends to acquire product liability insurance prior to shipping any products, but may not have the capital to do so. Further, any contractual indemnification and insurance coverage we have in the future from parties supplying our products is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by these suppliers. Extensive product liability claims could be costly to defend and/or costly to resolve and could harm our reputation or business, and we may face uninsured or underinsured claims and liabilities due to the factors described above.
We could face issues including the risk of contamination of our products and/or counterfeit or confusingly similar products.
The success of our brands depends upon the positive image that consumers have of them. Contamination, whether arising accidentally or through deliberate third-party action, or other events that harm the integrity or consumer support for our brands, could affect the demand for our products. Contaminants in raw materials purchased from third parties and used in the production of our products or defects in the production processes, including third party manufacturers on which we rely and over which we lack control, could lead to low beverage quality, as well as illness among, or injury to, consumers of our products and could result in reduced sales of the affected brand or all of our brands and potentially serious damage to our reputation for product quality, as well as product liability claims. Also, to the extent that third parties sell products that are either counterfeit versions of our brands or brands that look like our brands, consumers of our brands could confuse our products with products that they consider inferior. This could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales and operations.
Contamination of any of our products could force us to destroy inventory we hold and could cause the need for a product recall, which could significantly damage our reputation for product quality.
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Significant additional labeling or warning requirements may inhibit sales of affected products.
Various jurisdictions may seek to adopt significant additional product labeling or warning requirements relating to the chemical content or perceived adverse health consequences of certain products. These types of requirements, if they become applicable to one or more of our products under current or future environmental or health laws or regulations, may inhibit sales of such products. For example, in California, a law requires that a specific warning appear on any product that contains a component listed by the state as having been found to cause cancer or birth defects. This law recognizes no generally applicable quantitative thresholds below which a warning is not required. If a component found in one of our products is added to the list, or if the increasing sensitivity of detection methodology that may become available under this law and related regulations as they currently exist, or as they may be amended, results in the detection of an infinitesimal quantity of a listed substance in one of our beverages produced for sale in California, the resulting warning requirements or adverse publicity could affect our sales.
If we are subject to litigation, we may incur significant liabilities and litigation expenses.
We have been subject to and may in the future become party to litigation. Litigation involves significant risks, uncertainties and costs, including distraction of management attention away from our business operations. We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates. Our policies and procedures require strict compliance by our employees and agents with all U.S. and local laws and regulations applicable to our business operations, including those prohibiting improper payments to government officials. Nonetheless, our policies and procedures may not ensure full compliance by our employees and agents with all applicable legal requirements. Improper conduct by our employees or agents could damage our reputation or lead to litigation that could result in civil, administrative or criminal penalties, including substantial monetary fines, as well as disgorgement of profits.
Additionally, there has been public attention directed at the alcoholic beverage industry, which we believe is due to concern over problems related to harmful use of alcohol, including drinking and driving, underage drinking and health consequences from the misuse of alcohol. We could be exposed to lawsuits relating to product liability or marketing or sales practices with respect to our alcoholic products. Adverse developments in lawsuits concerning these types of matters or a significant decline in the social acceptability of beverage alcohol products that may result from lawsuits could have a material adverse effect on our business, financial condition and results of operations.
Our industry faces the possibility of litigation including class actions alleging that the continued excessive use or abuse of beverage alcohol has caused death or serious health problems or that we failed to adequately warn consumers of the risks of alcohol consumption. It is also possible that governments could assert that the use of alcohol has significantly increased government-funded healthcare costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type.
For example, lawsuits have been brought in a number of states alleging that alcoholic beverage manufacturers and marketers have improperly targeted underage consumers in their advertising. Plaintiffs in these cases allege that the defendants’ advertisements, marketing and promotions violate the consumer protection or deceptive trade practices statutes in each of these states and seek repayment of the family funds expended by the underage consumers. While we have not been named in these lawsuits, we could be named in similar lawsuits in the future. Any class action or other litigation asserted against us could be expensive and time-consuming to defend against, depleting our cash and diverting our personnel resources and, if the plaintiffs in such actions were to prevail, our business could be harmed significantly.
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We are subject to risks inherent in sales of products in international markets.
Certain of our contemplated operations are outside of the United States, and there can be no assurance that these products that we sell will be accepted or be successful in any particular foreign market, due to local or global competition, product price, cultural differences, and consumer preferences or otherwise. There are many factors that could adversely affect demand for our products in foreign markets, including our inability to attract and maintain key distributors in these markets; volatility in the economic growth of certain of these markets; changes in economic, political or social conditions, tariffs including retaliatory tariffs, the status and renegotiations of the North American Free Trade Agreement, imposition of new or increased labeling, product or production requirements, or other legal restrictions; restrictions on the import or export of our products or ingredients or substances used in our products; currency fluctuations, and increased costs of doing business due to compliance with complex foreign laws and regulations. If we are unable to effectively operate or manage the risks associated with operating in international markets, our business, financial condition or results of operations could be adversely affected.
Our business and operations would be adversely impacted in the event of a failure or interruption of our information technology infrastructure or as a result of a cybersecurity attack.
The proper functioning of our own information technology (“IT”) infrastructure is critical to the efficient operation and management of our business. We may not have the necessary financial resources to update and maintain our IT infrastructure, and any failure or interruption of our IT system could adversely impact our operations. In addition, our IT is vulnerable to cyberattacks, computer viruses, worms and other malicious software programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our computer systems.
For example, in early 2026 we experienced a hacking incident wherein a malicious third party attempted to impersonate our President to divert funds. While the Company ultimately avoided losses from this incident, this event or similar events in the future could cause substantial financial, reputational and/or operational harm on us or third parties with whom we conduct business. It also delayed us several days from receiving funds we were owed under ELOC Agreement at a time when we had a need for the funds.
This incident reminded us of the need to adopt and maintain appropriate measures to mitigate potential risks to our technology infrastructure and our operations from these IT-related and other potential disruptions. However, given the unpredictability of the timing, nature and scope of any such IT failures or disruptions, as well as our limited resources and personnel, we could potentially be subject to downtimes, transactional errors, processing inefficiencies, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.
If we fail to comply with personal data protection and privacy laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which could negatively affect our business and operating results.
In the ordinary course of our business when we generate sales, we receive, process, transmit and store information relating to identifiable individuals (“personal data”), primarily employees, former employees and consumers with whom we interact. For example, when we operated Qplash we collected and processed personal data concerning consumers who access and purchase products on the platform. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws have been subject to frequent changes, and new legislation in this area may be enacted in other jurisdictions at any time. These laws impose operational requirements for companies receiving or processing personal data, and many provide for significant penalties and fines for noncompliance. These requirements with respect to personal data have subjected and may continue in the future to subject the Company to, among other things, additional costs and expenses and have required and may in the future require costly changes to our business practices and information security systems, policies, procedures and practices. Our security controls over personal data, the training of employees and vendors on data privacy and data security,
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and the policies, procedures and practices we implemented or may implement in the future may not prevent the improper disclosure of personal data by us or the third-party service providers and vendors whose technology, systems and services we use in connection with the receipt, storage and transmission of personal data. Unauthorized access or improper disclosure of personal data in violation of personal data protection or privacy laws could harm our reputation, cause loss of consumer confidence, subject us to regulatory enforcement actions (including fines), and result in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines and/or criminal prosecution, all of which could negatively affect our business and operating results.
Our results of operations may fluctuate from quarter to quarter for many reasons, including seasonality.
In the past, our sales were seasonal, and we may experience seasonality if we resume generating revenue. Companies similar to ours have historically generated a greater percentage of their revenues during the warm weather months of April through September. The timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another. As a result, management believes that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the fiscal year.
Material weaknesses in our internal control over financial reporting may cause us to fail to timely and accurately report our financial results or result in a material misstatement of our consolidated financial statements.
A material weakness exists over our financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis. As disclosed in this Report under “Item 9A-Controls and Procedures”, we have identified material weaknesses in the Company’s internal controls related to a limited segregation of duties due to our limited resources and insufficient accounting employees, resulting in a lack of controls to ensure maintenance of documentation supporting transactions recorded in the Company’s accounting records. Management has determined that these material weaknesses which result in material misstatements of significant accounts and disclosures that could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected. In addition, due to limited staffing, we are not always able to detect minor errors or omissions in reporting. Once we obtain sufficient working capital, we intend to remediate the material weaknesses. It is possible that the material weaknesses over our financial reporting or the discovery of additional material weaknesses and their possible effect on our financial and operating results, could have material and adverse effect on our stock price and investor confidence.
Risks Related to our Securities and Other Risks
Future sales of Common Stock, or the perception of such future sales, by some of our existing stockholders could cause our stock price to decline.
The market price of our Common Stock could decline as a result of sales of a large number of shares of our Common Stock in the market or the perception that these sales may occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares in the future at a time and at a price that we deem appropriate.
On September 19, 2025 the Company entered into the (“ELOC Agreement”) with C/M Capital Master Fund, LP (“C/M”) pursuant to which, subject to certain terms and conditions set forth therein, the Company may sell and issue to C/M shares of Common Stock for total gross proceeds of up to $35 million. The Company recently registered up to 10,000,000 shares of Common Stock pursuant to the ELOC Agreement. Since then, the Company has sold a total of 4,840,254 shares under the ELOC Agreement for total gross proceeds of $1,917,709 as of April 14, 2026. In addition, pursuant to Registration Rights Agreements entered into in connection with our sale of Series A-1 and accompanying Warrants, Series B, as well as subsequent convertible promissory notes, we recently registered the resale of an additional up to 7,765,238 shares of Common Stock issuable to holders of those securities. See also the Risk Factor titled “We have issued multiple classes of preferred stock and other securities of the Company that will result in dilution to existing stockholders upon their conversion and exercise.”
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Due to the passage of time many shares of our Common Stock outstanding or issuable upon conversion or exercise of derivative securities, including securities that were issued in 2025, are or may become sellable under Rule 144 under the Securities Act of 1933 (the “Securities Act”). In general, from time to time, certain of our stockholders may be eligible to sell all or some of their common shares by means of ordinary brokerage transactions in the open market pursuant to Rule 144, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement. Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), and current public information and notice requirements.
Sales of substantial amounts of our Common Stock in the public market, or the perception that such sales might occur, could adversely affect the market price of our Common Stock. We cannot predict if and when selling stockholders may sell such shares in the public market.
We have issued multiple classes of preferred stock and other securities of the Company that will result in dilution to existing stockholders upon their conversion and exercise.
The issuance of Common Stock upon conversion of our outstanding convertible preferred stock will result in immediate and substantial dilution to the interests of other stockholders. These series of preferred stock are convertible into a total of up to 7,635,998 shares of Common Stock, subject to beneficial ownership limitations and certain adjustments. Further, the Series A-1 and Series B each allow the holders to convert at a reduced conversion price equal to 80% of the average of the five trading day volume weighted average price calculated as of the date an applicable conversion notice, subject to a floor price of $1.25. The Series A-1 and Series B each entitle the holders thereof to quarterly dividends which may be paid in Common Stock in lieu of cash. Although conversions are subject to stockholder approval and thereafter holders may not receive shares of Common Stock exceeding 4.99% of our outstanding shares of Common Stock immediately after affecting such conversion, this restriction does not prevent holders from receiving shares up to the 4.99% limit, selling those shares, and then receiving the rest of the shares it is due, in one or more tranches, while still staying below the 4.99% limit. In addition, outstanding Warrants issued in connection with the sales of Series A-1 since June 2025 entitle the holders thereof to receive additional shares of Common Stock upon exercises thereof. If holders choose to do this, it will cause substantial dilution to the then holders of our Common Stock. Additionally, the continued sale of shares issuable upon successive conversions will likely create significant downward pressure on the price of our Common Stock as holders sell material amounts of our Common Stock over time and/or in a short period of time. This could place further downward pressure on the price of our Common Stock and in turn result in holders receiving an ever-increasing number of additional shares of Common Stock upon conversion of its securities, and adjustments thereof, which in turn will likely lead to further dilution, reductions in the exercise/conversion price of holders securities and even more downward pressure on our Common Stock, which could lead to our Common Stock becoming devalued or worthless.
Further, these series of preferred stock contain dividend rights and liquidation preferences in favor of the holders thereof that may operate to limit or reduce the rights of holders of our Common Stock, including with respect to dividends or liquidation events that may occur in the future. For example, the dividend rights of the preferred stock would reduce the Company’s ability to declare dividends while the preferred stock is outstanding. Further, the senior ranking in liquidation preference for the preferred stockholders would operate to reduce or eliminate any amounts which may otherwise have been available to Common Stockholders upon a dissolution or winding up of the Company. These terms could have a material adverse effect on the holders of our Common Stock.
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The market price of our Common Stock has been volatile and may continue to be volatile.
The market price and trading volume of our Common Stock has been volatile in recent periods, and it may continue to be volatile. For example, thus far in 2026 through April 10, 2026, our Common Stock has traded as low as $0.34 and as high as $0.98 per share. We cannot predict the price at which our Common Stock will trade in the future, and the price of our Common Stock may decline. The price at which our Common Stock trades may fluctuate significantly and may be influenced by many factors, including our financial results, developments generally affecting the beverage industry, general economic, industry and market conditions, the depth and liquidity of the market for our Common Stock, fluctuations in prices and costs, investor perceptions of our business, reports by industry analysts, negative announcements by our customers, competitors or suppliers regarding their own performances, and the impact of other Risk Factors discussed herein.
Our Common Stock could be further diluted as the result of the issuance of additional Common Stock, convertible securities, warrants or options.
We expect to need to issue additional shares of Common Stock and/or Common Stock equivalents in the near term in order to meet our capital requirements and to close the Medterra acquisition or strategic transaction. Our issuance of additional Common Stock, convertible securities, options and warrants could affect the rights of our stockholders, result in a reduction in the overall percentage holdings of our stockholders, could put downward pressure on the market price of our Common Stock, could result in adjustments to conversion and exercise prices of outstanding notes and warrants, and could obligate us to issue additional Common Stock to certain of our stockholders.
We incur significant additional costs as a result of being a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
We incur increased costs associated with corporate governance requirements that are become applicable to us as a public company, including rules and regulations of the SEC, under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Customer Protection Act of 2010, and the Exchange Act, as well as the rules of the NYSE American. These rules and regulations significantly increase our accounting, legal and financial compliance costs and make some activities more time consuming, including due to increased training of our current employees, additional hiring of new employees, and increased assistance from consultants. These rules and regulations also make it more expensive for us to maintain directors’ and officers’ liability insurance. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Board or as executive officers. Furthermore, these rules and regulations increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, our management team must devote substantial attention to interacting with the investment community and complying with the increasingly complex laws pertaining to public companies, which may divert attention away from the day-to-day management of our business, including operational, research and development and sales and marketing activities. Increases in costs incurred or diversion of management’s attention as a result of becoming a publicly traded company may adversely affect our business, prospects, financial condition, results of operations, and cash flows.
Our Board of Directors may issue and fix the terms of shares of our preferred stock without stockholder approval, which could adversely affect the voting power of holders of our Common Stock or any change in control of our Company.
Our Articles of Incorporation authorize the issuance of up to 5,000,000 shares of “blank check” preferred stock, with par value $0.001 per share, with such designation rights and preferences as may be determined from time-to-time by the Board of Directors (the “Board”). Our Board is empowered, without stockholder approval, to issue shares of preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our Common Stock. In the event of such issuances, the preferred stock could be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our company. Any such issuance would be subject to terms and conditions of any current offering that may disallow any such issuance.
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Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity
Like all companies that utilize technology, we are subject to threats of breaches of our technology systems. To mitigate the threat to our business, our goal to take a comprehensive approach to cybersecurity risk management. Our lack of capital has prevented us from having a more robust cybersecurity program. The company’s data and its security is actively managed with oversight from a 3rd party IT provider. Due to the lack of capital, we have not devoted sufficient resources to cybersecurity. We intend to make investments to maintain the security of our data and cybersecurity infrastructure when feasible including based on our access to sufficient capital. There can be no guarantee that our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective. We do not believe that risks from prior cybersecurity threats have materially affected our business to date. We can provide no assurance that there will not be incidents in the future or that future attacks will not materially affect us, including our business strategy, results of operations, or financial condition. in early 2026 we experienced a hacking incident wherein a malicious third party attempted to impersonate our President to divert funds.
Item 2. Properties.
We do not maintain a physical office. The address listed in this Report is a PO Box which receives our mail.
Item 3. Legal Proceedings.
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except for the litigation disclosed below, we are not currently a party to any legal or arbitration proceeding the outcome of which, if ‘determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash flows, or financial condition.
On August 14, 2024, TapouT, LLC, (“TapouT”), filed a Complaint against the Company in the Supreme Count of New York for New York County (the “Court”). The Complaint pertains to breach of a certain Licensing Agreement dated December 8, 2011, under which the Company became a successor in interest on July 1, 2013, pursuant to an amendment to the Licensing Agreement.
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. The 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.
The Company is in the process of resolving alleged and potential claims from investors that are referred to as the “Uptime Investor Claims.” A settlement agreement is in place, and revisions to the same are being negotiated by the Company’s counsel after alleged defaults occurred under the original agreement. There is a chance that the subsequent revised agreements are not finalized and litigation could ensue, however the Company will exhaust all efforts to finalize the revised agreements as quickly as possible.
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The Company intends to take all necessary steps to continue to vigorously defend against the action. The parties meet regularly on this matter in an attempt to settle the matter prior to the court date, but to date no settlement offer has been agreed upon.
On April 14, 2026, the Company was served with a Notice of Claim for Wages made by Miguel Ramirez, a former employee of the Company, demanding back wages in the amount of $32,154.70 and asserting that additional penalties of $12,480 and other remedies of $5,000 are payable in connection with the claim. The claim was filed with the State of Nevada's Department of Business and Industry, Office of the Labor Commissioner. The Company intends to investigate the claim.
The Company is party to various credit facilities, loan agreements, notes, leases, guarantees, settlement arrangements and other financing and contractual obligations (collectively, the “Obligations”), certain of which contain affirmative and negative covenants, financial maintenance requirements, performance obligations, cross-default provisions and other restrictions customary for obligations of this type. From time to time, the Company may be in default, or may be deemed to be in default, under one or more of its Obligations, including as a result of covenant breaches, payment defaults, failures to satisfy performance or reporting requirements, breaches of contractual terms, non-compliance with settlement obligations, cross-default triggers, or other events of default. There can be no assurance that the Company will be able to comply with all such covenants and obligations in the future or that any such defaults will not occur.
While any such defaults or breaches may arise under individual Obligations, the aggregate principal amount and associated liabilities of such Obligations, taken together, may be material to the Company. The existence of any actual or alleged default or breach could permit lenders, counterparties or other stakeholders to accelerate repayment, terminate commitments, enforce settlement terms, exercise remedies against collateral, pursue damages or other contractual remedies, or otherwise initiate enforcement or legal proceedings, including pursuant to cross-default or cross-acceleration provisions in other agreements. There can be no assurance that any such counterparties would not exercise such rights or that the Company would be able to cure any such defaults, obtain waivers, or otherwise avoid the exercise of remedies.
Any such events, whether individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, liquidity, results of operations and ability to continue as a going concern. In addition, the Company may be required to seek waivers, amendments, forbearance arrangements, refinancings or other accommodations from its creditors or counterparties, which may not be available on favorable terms, or at all, and there can be no assurance that the Company will be able to obtain any such relief on acceptable terms or within required timeframes.
The Company owes an estimated $4.7 million to certain creditors for past due amounts. The Company is in discussions with these creditors and is seeking to negotiate an acceptable resolution and settlement of these balances. However, no assurances can be made that a resolution will be met, in which case we may face litigation from these creditors.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company’s Common Stock is publicly traded on the NYSE American under the symbol “SBEV”.
Aggregate Number of Holders of Common Stock
As of April 14, 2026, there were 9,953,538 shares of Common Stock issued and outstanding. As of April 14, 2026, approximately 280 holders of record of our Common Stock in addition to beneficial owners who hold their shares at accounts with broker-dealers.
Dividends
We have not declared any cash dividends on our Common Stock since inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings, if any, for use in our business operations. Any decisions as to future payment of cash dividends will depend on our earnings and financial position and such other factors as the Board deems relevant.
Purchases of Equity Securities by the Issuer.
There were no repurchases of our Common Stock during the year ended December 31, 2025.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the Audited Consolidated Financial Statements and Notes to Audited Consolidated Financial Statements filed herewith. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties, and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Annual Report, and other factors that we may not know.
Business Overview
From 2020, we have been engaged in the beverage businesses, although we have not generated revenue since February 2025.
The Company’s efforts to commercialize its beverage products as described under “Business”. In addition, the Company is pursuing potential strategic alternatives, including a potential acquisition as described above under “Business-Letter of Intent.”
RESULTS OF OPERATIONS
Our consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue our operation. Our results of operations reflect our continuing operations and reflect losses from discontinued operations related to the discontinuation of our Copa Di Vino businesses. All financial information has been restated to reflect our discontinued operations for all periods presented.
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For the year ended December 31, 2025 compared with the year ended December 31, 2024
The following table sets forth our revenues, expenses and net loss for the years ended December 31, 2025 and 2024.
| For the Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | 73,066 | $ | 801,273 | ||||
| Cost of goods sold | (56,168 | ) | (921,070 | ) | ||||
| Operating expenses | (14,203,118 | ) | (9,780,643 | ) | ||||
| Loss from operations | (14,186,220 | ) | (9,900,440 | ) | ||||
| Other income (expenses), net | (10,163,051 | ) | (7,708,634 | ) | ||||
| Income (loss) from continuing operations | (24,349,271 | ) | (2,105,961 | ) | ||||
| Loss from discontinued operations | (885,563 | ) | (17,609,074 | ) | ||||
| Net income (loss) | (25,234,834 | ) | (17,609,074 | ) | ||||
| Foreign currency translation gain (loss) | (47,532 | ) | (6,147,477 | ) | ||||
| Comprehensive loss | $ | (25,282,186 | ) | $ | (23,756,551 | ) | ||
Results of Operations for the Year Ended December 31, 2025, compared to Year Ended December 31, 2024.
Revenue
Revenues for the year ended December 31, 2025 were $0.07 million compared to revenues of $0.8 million for the year ended December 31, 2024. The $0.73 million decrease in sales primarily due to a shortage of operating capital which hindered our ability to obtain inventory and generate sales. The Company did not make any sales in the 2025 calendar year after March 2025 due to its lack of capital resources. The Company is seeking to raise at least $3 million in the fiscal year ending December 31, 2026 in order to re-establish portions of its prior business through the sale of tequila products.
Cost of Goods Sold
Cost of goods sold for the year ended December 31, 2025 were $0.06 million compared to cost of goods sold for the year ended December 31, 2024 of $0.29 million. The $0.23 million decrease in cost of goods sold was due to our decreased sales. The Company did not make any sales in the 2025 calendar year after March 2025 due to its lack of capital resources.
Operating Expenses
Operating expenses for the year ended December 31, 2025 were $14.2 million compared to $9.8 million for the year ended December 31, 2024. The increase in operating expenses was primarily due to an increase of approximately $8.6 million of Non-cash share-based compensation partially offset by decreased by a reduced contract services of $0.17 million and reduced salary and wages of $0.32 million and reduced sales and marketing of $0.4 million. The reductions in operational and general and administrative expenses related to our lack of sales activities in 2025 due to the lack of adequate capital.
Other Income/(Expense)
Other expenses for the year ended December 31, 2025 were $10.2 million compared to $7.7 million for the year ended December 31, 2024. The other expense increased of $2.5 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.
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During 2025, the Company recognized a $5.6 million loss on extinguishment of debt in connection with the exchange of certain outstanding loans, including principal and accrued interest totaling approximately $12.6 million, for preferred stock. This non-cash expense significantly contributed to the increase in other expense. Interest expense for the year ended December 31, 2025 was $2.6 million compared to $3.7 million for the year ended December 31, 2024, representing a decrease of approximately $1.8 million. The decrease was primarily attributable to the debt exchange transaction described above, which reduced outstanding borrowings and related interest obligations.
Amortization of debt discount decreased from $3.7 million in 2024 to $1.9 million in 2025 due to the reduction in debt balances following the exchange transactions. In addition, the Company recorded a $0.5 million inventory write-off during 2025. These increases in expense were partially offset by the absence of a $0.3 million legal settlement reserve recorded in 2024 that did not recur in 2025.
Discontinued Operations
Due to the lack of working capital to fund operations, it formed a license agreement with a 3rd 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 temporary. 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 summarizes the results of operations of discontinued operations:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | 369,666 | $ | 3,353,935 | ||||
| Cost of revenues, excluding depreciation and amortization | 416,913 | 2,878,688 | ||||||
| Gross loss | (47,247 | ) | 475,247 | |||||
| Operating expenses | (669,760 | ) | (2,296,979 | ) | ||||
| Impairment loss | — | (4,324,064 | ) | |||||
| Other expenses | (168,557 | ) | (1,681 | ) | ||||
| Loss from discontinued operations | $ | (885,564 | ) | $ | (6,147,477 | ) | ||
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
Due to our lack of capital, we did not generate any revenue between March 2025 and February of 2026. In order to generate material revenue, we require at least $3,000,000 of working capital in order to acquire inventory and re-commence minimal operations. This includes our plans for our Chispo business and general and administrative expenses. Our lack of cash resources has prevented us from carrying on our commercialization activities. In addition, our lack of working capital has prevented us from marketing our products.
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In addition, we would need additional capital to acquire and fund the operations of any business we may acquire in a business combination in the future, including potentially Medterra if we can structure, negotiate and pursue a transaction under the Letter of Intent with that entity. See “Part I, Item 1-Business-Recent Developments-Letter of Intent” at page 2. See also Item 1A – “ Risk Factors”.
We have historically raised capital to fund our operations and capital needs through the issuance of debt and equity securities. In August 2025, the Company issued convertible promissory notes with individuals in the aggregate principal amount of $424,560. These loans mature in May or June 2026 and have an interest rate of 22% per annum. In September 2025 we sold secured convertible promissory notes in the principal amount of $2,200,000 for total gross proceeds of $2,000,000, which notes do not bear any interest absent an event of default, and mature on September 22, 2026.
In September 2025 we also entered into the ELOC Agreement which subject to certain conditions including obtaining and maintaining the registration of the shares on an effective registration statement allows us to access additional capital, we plan to access and deploy such capital to re-commence certain of our operations and to establish new operations as described in this Report. From January 27, 2026 through April 14, 2026, the Company has sold 4,840,254 shares under the ELOC Agreement for total gross proceeds of $1,917,709. The Company has recently been relying upon the ELOC Agreement as a source of liquidity. Its ability to generate material capital is in large part based on the future liquidity and the market price of our Common Stock.
In November 2025, the Company borrowed $500,000 from two accredited investors and issued senior promissory notes with a combined original principal amount of $588,235, reflecting a 15% original issue discount. The notes mature on February 12, 2026, accrue interest at 6% starting 30 days after issuance, and include customary default provisions. The notes also permit the holders, at their discretion, to apply outstanding principal, accrued interest, and any Company securities they hold as consideration for participation in future equity, equity-linked, or debt financings.
From June through December 2025, we raised a total of $1,300,000 from the sale of 1,300 shares of Series A-1 Convertible Preferred Stock (“Series A-1”), Class A Warrants to purchase 325,000 shares of Common Stock and Class B Warrants to purchase 325,000 shares of Common Stock.
In December 2025, the Company entered into agreements to issue a total of 113,636 shares of Common Stock and 1,136 shares of Series D Convertible Preferred Stock to holders of options to purchase a total of up to $600,000 shares of Common Stock in exchange for the termination of such options.
We intend to fund our future operations through the issuance of equity securities until such a time as our business achieves profitability. However, there can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. We will be required to pursue sources of additional capital through various means, including debt or equity financings. Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other derivative securities, and the issuance of incentive awards under equity employee incentive plans, which may have additional dilutive effects. Financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to pledge or relinquish valuable assets or rights on terms that may not be favorable to us and/or may reduce the value of our Common Stock. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible preferred stock and warrants, which will adversely impact our financial condition. Our ability to obtain needed financing may be impaired by such factors as the capital markets and our history of losses, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to curtail or cease operations.
28
As such, we have concluded that such plans do not alleviate the substantial doubt about our ability to continue as a going concern for one year from the date the accompanying financial statements are issued. There is therefore substantial doubt about our ability to continue as a going concern.
Because our Common Stock is listed on the NYSE American, we cannot issue any indebtedness while listed due to our negative stockholders’ equity as described in this Report. Further we need to raise material equity in order to complete the Medterra acquisition plan to use the ELOC to support our minimal working capital needs but that requires our stock to trade actively enough; otherwise the investor will sell any Common Stock we issue which will depress the price to a point where our Common Stock will automatically be delisted.
As of April 14, 2026, the Company had total cash and cash equivalents of $732,307.
Net cash used for continuing operating activities during the year ended December 31, 2025, was $4.8 million as compared to the net cash used by continuing operating activities for the year ended December 31, 2024, of $7.3 million. In 2025, we had a loss on debt extinguishment of $5.6 million arising from debt to equity exchanges, and non-cash share based compensation of $8.6 million related to warrants issued to our directors, officers and certain employees.
Net cash provided by financing activities during the year ended December 31, 2025 was $5.1 million compared to $7.5 million provided from financing activities for the year ended December 31, 2024. The Company received $4.3 and $$9.5 million in proceeds from the issuance of debt in years ending December 31, 2025 and 2024, respectively. The Company received $1,300,000 and $0 in proceeds from the issuance of equity securities in years ending December 31, 2025 and 2024, respectively.
Warrants
Effective July 31, 2025, the Company issued 5,050,000 Warrants to its officers, directors and certain employees. As of April 14, 2026, our Board of Directors agreed to cancel the Warrants subject to each person as applicable agreeing to cancel them. As of the date of this Report, 1,350,000 Warrants held by former employees remain outstanding and all other Warrants have been canceled. The Company intends to pursue its remedies with respect to the remaining Warrants.
Critical Accounting Estimates
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as the disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.
Revenue
The Company faces significant judgment in revenue recognition due to the complexities of the beverage industry’s competitive landscape and diverse distribution channels. Determining the timing of revenue recognition involves assessing factors such as control transfer, returns, allowances, trade promotions, and distributor sell-through data. Historical analysis, market trends assessment, and contractual term evaluations inform revenue recognition judgments. However, inherent uncertainties persist, underscoring the critical nature of revenue recognition as it significantly impacts financial statements and performance evaluation.
29
Allowance for Doubtful Accounts
The allowance for doubtful accounts is established based on historical experience, current economic conditions, and specific customer collection issues. Management evaluates the collectability of accounts receivable on an ongoing basis and adjusts the allowance as necessary. Changes in economic conditions or customer creditworthiness could result in adjustments to the allowance for doubtful accounts, impacting our reported financial results.
Inventory Valuation
We value inventory at the lower of cost or net realizable value. Estimating the net realizable value of inventory involves significant judgment, particularly when market conditions change rapidly or when excess or obsolete inventory exists. Management regularly assesses inventory quantities on hand, future demand forecasts, and market conditions to determine whether write-downs to inventory are necessary.
Fair Value Measurements
We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value measurements involve significant judgment and estimation, particularly when observable inputs are limited or not available. Management utilizes valuation techniques such as discounted cash flow models, market comparables, and third-party appraisals to determine fair values.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable for smaller reporting companies.
30
Item 8. Financial Statements and Supplementary Data.
F-1
Report of Independent Registered Public Accounting Firm (PCAOB ID: 468)
To the Board of Directors and Stockholders
Splash Beverage Group, Inc.
Fort Lauderdale, Florida
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Splash Beverage Group, Inc. at December 31, 2025 and 2024, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Uncertainty
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations and has an accumulated deficit and a working capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
We have served as the Company’s auditor since 2024
April 15, 2026
F-2
| Splash Beverage Group, Inc. |
| Consolidated Balance Sheets |
| December 31, 2025 and December 31, 2024 |
| December 31, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses | ||||||||
| Inventory | ||||||||
| Other receivables | ||||||||
| Assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Deposit | ||||||||
| Investment in Salt Tequila USA, LLC | ||||||||
| Right of use assets | ||||||||
| Property and equipment, net | ||||||||
| Assets of discounted operations | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Liabilities: | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Derivative liability | ||||||||
| Dividends payable | ||||||||
| Right of use liability, current portion | ||||||||
| Related party notes payable | ||||||||
| Notes payable, net of discounts | ||||||||
| Stockholder advances | ||||||||
| Accrued interest payable | ||||||||
| Liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Notes payable, net of discounts | ||||||||
| Right of use liability, net of current portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock, Series A $ par value, shares authorized, shares issued and outstanding | ||||||||
| Preferred stock, Series A-1 $ par value, shares authorized, shares issued and outstanding | ||||||||
| Preferred stock Series B, $ par value, 12% cumulative, shares authorized, shares issued and outstanding | ||||||||
| Preferred stock Series C, $ par value, shares authorized, shares issued and outstanding | ||||||||
| Common Stock, $ par, shares authorized, and shares issued and outstanding, at December 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| 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 consolidated financial statements.
F-3
| Splash Beverage Group, Inc. |
| Consolidated Statements of Operations |
| For the Years Ended December 31, 2025 and December 31, 2024 |
| 2025 | 2024 | |||||||
| Net revenues | $ | $ | ||||||
| Cost of goods sold | ( | ) | ||||||
| Gross margin | ( | ) | ||||||
| Operating expenses: | ||||||||
| Contracted services | ||||||||
| Salary and wages | ||||||||
| Non-cash share-based compensation | ||||||||
| Other general and administrative | ||||||||
| Sales and marketing | ||||||||
| Total operating expenses | ||||||||
| Loss from continuing operations | ( | ) | ( | ) | ||||
| Other income/(expense): | ||||||||
| Other Income/expense | ( | ) | ||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Legal reserve | ( | ) | ||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||
| Loss on inventory write off | ( | ) | ||||||
| Loss on Extinguishment of debt | ( | ) | ||||||
| Change in FV derivative | ( | ) | ||||||
| Total other expense | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net (loss) from continuing operations, net of tax | ( | ) | ( | ) | ||||
| Discontinued operations: | ||||||||
| Loss from discontinued operations, net of tax | ( | ) | ( | ) | ||||
| Net (loss) from discontinued operations | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Preferred Stock Dividends | ( | ) | ||||||
| Net loss available to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive loss | ||||||||
| Foreign currency translation gain (loss) | $ | ( | ) | $ | ||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| 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 | ||||||||
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 consolidated financial statements.
F-4
| Splash Beverage Group, Inc. |
| Consolidated Statements of Changes in Stockholders’ Equity |
| For the Years ended December 31, 2025 and 2024 |
| Common Stock | Series
A Preferred Stock | Series
A-1 Preferred Stock | Series
B Preferred Stock | Series
C Preferred Stock | Additional | Subscription | Accumulated Other | Total Stockholders' | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Paid-In Capital | Receivable | Comprehensive | Accumulated | Equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Adoption of ASU 2020-06 | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Preferred stock A | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption of Preferred stock A | — | ( | ) | ( | ) | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Preferred stock A-1 for cash | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange of Notes Payable to Preferred Stock B | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Preferred stock C for acquisition of Water Rights | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of Preferred stock C | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of warrants on convertible instruments | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Preferred stock B to common stock | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of notes payable to common stock | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stocks on convertible instruments | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive loss - Translation, net | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends payable | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 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 consolidated financial statements
F-5
| Splash Beverage Group, Inc. |
| Consolidated Statements Cash Flows |
| For the Year Ended December 31, 2025 and 2024 |
| 2025 | 2024 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| (Income) loss from discontinued operations | ||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| ROU assets, net | ( | ) | ||||||
| Loss from intangible impairment | ||||||||
| Non-cash share-based compensation | ||||||||
| Change in FV of derivative liability | ||||||||
| Loss on extinguishment of debt | ||||||||
| Changes in working capital items: | ||||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Deposits | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued interest payable | ||||||||
| Liability to issue shares | ||||||||
| Net cash used in operating activities - continuing operations | ( | ) | ( | ) | ||||
| Cash flows from investing activities - continuing operations | ||||||||
| Capital expenditures | ||||||||
| Net cash used in investing activities - continuing operations | ||||||||
| Cash flows from financing activities - continuing operations: | ||||||||
| Cash advance (repayment) from related party | ||||||||
| Proceeds from issuance of debt | ||||||||
| Proceeds from sale of preferred stock | ||||||||
| Principal repayment of debt | ( | ) | ( | ) | ||||
| Net cash provided by financing activities - continuing operations | ||||||||
| Cash flows from discontinued operations | ||||||||
| Operating cash flows | ( | ) | ||||||
| Investing cash flows | ||||||||
| Financing cash flows | ||||||||
| Net cash provided by (used in) discontinued operations | ( | ) | ||||||
| Net cash effect of exchange rates on cash | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of year | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for Interest | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Notes payable and accrued interest converted to Common Stock (944,685 shares in 2025 & 171,536 shares in 2024,) | $ | $ | ||||||
| Non-cash debt discount in the form of issuance of equity instruments in conjunction with convertible notes | $ | $ | ||||||
| Series-B 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 consolidated financial statements.
F-6
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 1 – Business Organization and Nature of Operations
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 segments. Additionally, Splash operates its own vertically integrated B-to-B and B-to-C E-commerce distribution platform called Qplash.
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 $
On February 2021, Management initiated a plan to divest its CMS business. As a result, the assets and operations of CMS have been retrospectively reflected as discontinued operations. On November 12, 2021 the Company changed its state of Domicile from Colorado to Nevada.
In coordination with up listing to the NYSE on June 11, 2021 the Company consummated a 1.0 for 3.0 reverse stock split. All Common Stock shares stated herein have been adjusted to reflect the split.
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.
F-7
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
These consolidated financial statements include the accounts of Splash and its wholly owned subsidiaries, Holdings and Splash Mex, and CdV. All intercompany balances have been eliminated in consolidation.
Our investment in Salt Tequila USA, LLC is accounted for at cost, as the company does not have the ability to exercise significant influence.
Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (GAAP).
Certain reclassifications have been made to the prior period financial statements to conform to the current period classifications. These reclassifications had no impact on net loss.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CORRECTION OF PRIOR PERIOD ERROR
The 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 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.
The Company assessed the materiality of this change in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 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 30, 2025. 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:
| June 30, 2025 | ||||||||||||
| As Reported | Correction | As Corrected | ||||||||||
| Water rights | $ | $ | ( | ) | $ | |||||||
| Subscriptions receivable | $ | $ | $ | |||||||||
| September 30, 2025 | ||||||||||||
| As Reported | Correction | As Corrected | ||||||||||
| Water rights | $ | $ | ( | ) | $ | |||||||
| Subscriptions receivable | $ | $ | $ | |||||||||
Cash Equivalents and Concentration of Cash Balance
We consider all highly liquid securities with an original
maturity of three months or less to be cash equivalents. We had
At December 31, 2025 and December 31, 2024, the Company’s
cash on deposit with financial institutions had not exceeded federally insured limits of $
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivables are carried at their estimated
collectible amounts and are periodically evaluated for collectability based on past credit history with clients and other factors. We
establish provisions for losses on accounts receivable on the basis of loss experience, known and inherent risk in the account balance,
and current economic conditions. At December 31, 2025 and December 31, 2024, our accounts receivable amounts are reflected net of allowances
of $
F-8
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Inventory
Inventory is stated at the lower of cost or net realizable
value, accounted for using the weighted average cost method. 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. The
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 $
Property and Equipment
We record property and equipment at cost when purchased.
Depreciation is recorded for property, equipment, and software using the straight-line method over the estimated economic useful lives
of assets, which range from 3-20 years. Company management reviews the recoverability of all long-lived assets, including the related
useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.
The Company disposed of Copa Di Vino fixed assets during the year ended December 31, 2025 and recognized a loss of approximately $
Depreciation expense totaled $
| 2025 | 2024 | |||||||
| Auto | ||||||||
| Machinery & equipment | ||||||||
| Buildings & Tanks | ||||||||
| Leasehold improvements | ||||||||
| Computer Software | ||||||||
| Office furniture & equipment | ||||||||
| Total cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant & equipment, net | ||||||||
Excise taxes
The following taxes are paid when we sell tequila or other alcoholic beverages.
The Company pays alcohol excise taxes based on product sales to both the Oregon Liquor Control Commission and to the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (TTB). The Company also pays taxes to the State of Florida – Division of Alcoholic Beverages and Tobacco. The Company is liable for the taxes upon the removal of product from the Company’s warehouse on a per gallon basis. The federal tax rate is affected by a small winery tax credit provision which decreases based upon the number of gallons of wine production in a year rather than the quantity sold.
Fair Value of Financial Instruments
Financial Accounting Standards (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:
| Level 1 - | Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. |
F-9
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
| Level 2 - | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). |
| Level 3 - | Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. |
The liabilities and indebtedness presented on the consolidated financial statements approximate fair values at December 31, 2025 and December 31, 2024, consistent with recent negotiations 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:
| Balance December 31, 2024 | $ | |||
| Creation of derivative liability | ||||
| Change in value | ||||
| Reclassification to equity | ( | ) | ||
| Balance December 31, 2025 | $ |
December 31, 2025
| Amount | Level 1 | Level 2 | Level 3 | |||||||||||||
| Embedded conversion derivative liability | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
December 31, 2024
| Amount | Level 1 | Level 2 | Level 3 | |||||||||||||
| Embedded conversion derivative liability | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ |
The table below shows the option-pricing model inputs used by the Company to value the derivative liability at each measurement date:
| Year ended December 31, 2025 | Year ended December 31, 2024 | |||||||
| Expected term | . years | — | ||||||
| Expected average volatility | - | % | ||||||
| Expected dividend yield | — | — | ||||||
| Risk-free interest rate | % | |||||||
Revenue Recognition
We recognize revenue under ASC 606, Revenue from Contracts with Customers (Topic 606). This guidance sets forth a five-step model which depicts the recognition of revenue in an amount that reflects what we expect to receive in exchange for the transfer of goods or services to customers.
F-10
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
We recognize revenue when our performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control of our products is transferred upon delivery to the customer. Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring goods and is presented net of provisions for customer returns and allowances. The amount of consideration we receive and revenue we recognize varies with changes in customer incentives we offer to our customers and their customers. Sales taxes and other similar taxes are excluded from revenue.
Distribution expenses to transport our products, and warehousing expense after manufacture are accounted for in Other General and Administrative cost.
Cost of Goods Sold
Cost of goods sold include the costs of products, packaging, transportation, warehousing, and costs associated with valuation allowances for expired, damaged or impaired inventory. The cost of transportation from production site to other 3rd party warehouses or customer is included in Other General and Administrative cost.
Other General and Administrative Expenses
Other General and Administrative expenses include Amazon selling fees, cost of transportation from production site to other 3rd 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
We account for stock-based compensation in accordance with ASC 718,”Compensation - Stock Compensation”. Under the fair value recognition provisions, cost is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period, which is generally the option vesting period. We use the Black-Scholes option pricing model to determine the fair value of stock options. We early adopted ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”, which aligns accounting treatment for such awards to non-employees with the existing guidance on employee share-based compensation in ASC 718.
We measure stock-based awards at the grant-date fair value for employees, directors and consultants and recognize compensation expense on a straight-line basis over the vesting period of the award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fair value of our Common Stock, and for stock options and warrants, the expected life of the option and warrant, and expected stock price volatility and exercise price. We used the Black-Scholes option pricing model to value its stock-based awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected life of stock options/warrants were estimated using the “simplified method,” which calculates the expected term as the midpoint between the weighted average time to vesting and the contractual maturity, we have limited historical information to develop reasonable expectations about future exercise patterns. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, we use comparable public companies as a basis for its expected volatility to calculate the fair value of award. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the award. The estimation of the number of awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts are recognized as an adjustment in the period in which estimates are revised.
F-11
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Income Taxes
We use the liability method of accounting for income taxes as set forth in ASC 740,”Income Taxes”. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. We record a valuation allowance when it is not more likely than not that the deferred tax assets will be realized.
Company management assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.
For those income tax positions where there is less
than
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and Common Stock issuable upon the conversion of the Company’s convertible debt or preferred stock (if any), are not included in the computation if the effect would be anti-dilutive.
Weighted average number of shares outstanding excludes anti-dilutive Common Stock equivalents, including warrants to purchase shares of Common Stock and warrants granted by our Board that have not been exercised totaling .
| Net income/(loss) per common shares: | Year ended December 31 2025 | Year ended December 31, 2024 | ||||||
| Net income/(loss | $ | ( | ) | $ | ( | ) | ||
| Dividends on Series A-1 and B preferred stock | ( | ) | ||||||
| Weighted-average shares outstanding | ||||||||
| Net loss per common share | $ | ( | ) | $ | ( | ) | ||
Advertising
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 $
Goodwill and other intangibles
Goodwill represents the excess of acquisition cost over the fair value of the net assets acquired and is not subject to amortization. The Company reviews goodwill annually in the fourth quarter for impairment or when circumstances indicate carrying value may exceed the fair value. This evaluation is performed at the reporting unit level. If a qualitative assessment indicates that it is more likely than not that the fair value is less than carrying value, a quantitative analysis is completed using either the income or market approach, or a combination of both. The income approach estimates fair value based on expected discounted future cash flows, while the market approach uses comparable public companies and transactions to develop metrics to be applied to historical and expected future operating results.
F-12
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
At the time of acquisition, the Company estimates
the fair value of the acquired identifiable intangible assets based upon the facts and circumstances related to the particular intangible
asset. Inherent in such estimates are judgments and estimates of future revenue, profitability, cash flows and appropriate discount rates
for any present value calculations. The Company preliminarily estimates the value of the acquired identifiable intangible assets and
then finalizes the estimated fair values during the purchase allocation period, which does not extend beyond
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.
In accordance with ASC 350, Intangibles – Goodwill
and Other, the Company performed an impairment test for its Brand Name, Customer Relationships and license. Based on this assessment,
the Company determined that the carrying value of the intangible asset exceeded its fair value, resulting in an impairment loss of $
The impairment loss of $
| December 31, 2024 | ||||||||||||||||
| Gross Amount | Accumulated Amortization | Loss on Impairment | Net Carrying Value | |||||||||||||
| Finite: | ||||||||||||||||
| Goodwill | $ | $ | $ | |||||||||||||
| Brands | $ | $ | $ | $ | ||||||||||||
| Customer Relationships | $ | |||||||||||||||
| License | $ | |||||||||||||||
| Total Intangible Assets | $ | $ | $ | $ | ||||||||||||
Long-lived assets
The Company evaluates long-lived assets for impairment on an annual basis, when relocating or closing a facility, or when events or changes in circumstances may indicate the carrying amount of the asset group, generally an individual warehouse, may not be fully recoverable. For asset groups held and used, including warehouses to be relocated, the carrying value of the asset group is considered recoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceed the respective carrying value. In the event that the carrying value is not considered recoverable, an impairment loss is recognized for the asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group. For asset groups classified as held-for-sale (disposal group), the carrying value is compared to the disposal group’s fair value less costs to sell. The Company estimates fair value by obtaining market appraisals from third party brokers or using other valuation techniques.
F-13
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Foreign Currency Gain/Losses
Foreign subsidiaries’ functional currency is
the local currency of operations and the net assets of foreign operations are translated into U.S. dollars using current exchange rates.
Gain or losses from these translation adjustments are included in the consolidated statement of operations and other comprehensive (loss)
income as foreign currency translation gains or losses. Translation gains and losses that arise from the translation of net assets from
functional currency to the reporting currency, as well as exchange gains and losses on intercompany balances, are included in Other Comprehensive
Income. The Company incurred a foreign currency translation net loss during the year ended December 31, 2025 of $
Recent Accounting Pronouncements
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. The update 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 2024-03”). 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.
F-14
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 3 – Liquidity, Capital Resources and Going Concern Considerations
The Company’s consolidated financial statements
have been prepared on the basis of US GAAP for a going concern, on the premise that the Company is able to meet its obligations as they
come due in the normal course of business. The Company sustained a net loss of approximately $25.0 million and negative cash flows from
operating activities of approximately $
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 $
Management’s plans in regard to these matters include actions to sustain the Company’s operations, such as seeking additional funding to meet its obligations and implement its business plan. The Company has issued preferred stock as part of its strategy to regain compliance with the NYSE American listing standards and reduce debt. These preferred shares, specifically Series B 12% convertible preferred stock, were issued in exchange for promissory notes. The preferred stock offers a 12% cumulative dividend and potential conversion to Common Stock, subject to 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 that might result from the outcome of this uncertainty. If the Company is unable to continue as a going concern, adjustments would be necessary to the carrying values of its assets and liabilities and the reported amounts of revenues and expenses could be materially affected.
F-15
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 4 – Notes Payable, Related Party Notes Payable, and Revenue Financing Arrangements
Notes payable are generally nonrecourse and secured by all Company owned assets.
| Interest Rate | December 31, 2025 | December 31, 2024 | ||||||||||
| Notes Payable and Convertible Notes Payable | ||||||||||||
| In December 2020, the Company entered into a 56- month loan with a company in the amount of $ | % | $ | $ | |||||||||
| In April 2021, the Company entered into two six-month loans in the amount of $ | % | |||||||||||
| In May 2021, the Company entered into a six-month loan with an individual in the amount of $ | % | |||||||||||
| In May 2021, the Company entered into a six-month loan with an individual in the amount of $ | % | |||||||||||
| In August 2022, the Company entered into a 56-months auto loan in the amount of $ | % | |||||||||||
| In December 2022, the Company entered into various eighteen-month loans with individuals totaling $ | % | |||||||||||
| In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ | % | |||||||||||
F-16
| In May 2023, the Company entered into various eighteen-month loans with individuals totaling in the amount of $ | % | |||||||||||
| In June 2023, the Company entered into various eighteen-month loans with individuals totaling in the amount of $ | % | |||||||||||
| In July 2023, the Company entered into a twelve-month loan with an individual in the amount of $ | % | |||||||||||
| In August 2023, the Company entered into a twelve-month loan with an individual in the amount of $ | % | |||||||||||
| In October 2023, the Company entered into a three-month loan with an individual in the amount of $ | % | |||||||||||
| In October 2023, the Company entered into a loan with an individual in the amount of $ | % | |||||||||||
| In October 2023, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ | % |
F-17
| In January 2024, the Company entered into a 18-month loan with an individual in the amount of $ | % | |||||||||||
| In February 2024, the Company entered into a 18-month loan with an individual in the amount of $ | % | |||||||||||
| In February 2024, the Company entered into a 6-month loan with an individual in the amount of $ | % | |||||||||||
| In February 2024, the Company entered into a 18-month loan with an entity in the amount of $ | % | |||||||||||
| In April 2024, the Company entered into a commercial financing agreement in the amount of $ | % | |||||||||||
| In May 2024, the Company entered into an eighteen-month loan with individuals totaling in the amount of $ | % | |||||||||||
| In June 2024, the Company entered into a revenue purchase agreement in the amount of $ | % | |||||||||||
| In July 2024, the Company entered into a revenue purchase agreement in the amount of $ | % |
F-18
| In July 2024, the Company entered into a revenue purchase agreement in the amount of $ | % | |||||||||||
| In August 2024, the Company entered into a 5-year loan with individuals totaling in the amount of $ | % | |||||||||||
| In August 2024, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ | % | |||||||||||
| In August 2024, the Company entered into a eighteen-month loan with individuals totaling in the amount of $ | % | |||||||||||
| In September 2024, the Company entered into a merchant cash advance agreement in the amount of $ | % | |||||||||||
| In September 2024, the Company entered into an agreement with individuals totaling in the amount of $ | % | |||||||||||
| In October 2024, the Company entered into an agreement with individuals totaling in the amount of $ | % | |||||||||||
| In November 2024, the Company entered into a merchant cash advance agreement in the amount of $ | % | |||||||||||
| In December 2024, the Company entered into a merchant cash advance agreement in the amount of $ | % |
F-19
| In December 2024, the Company entered into a twelve-month loan with an individual in the amount of $ | % | |||||||||||
| In January 2025, the Company entered into a 12-month loan with individuals in the amount of $ | % | |||||||||||
| In July 2025, the Company entered into a convertible promissory note in the amount of $ | % | |||||||||||
| In August 2025, the Company entered into a convertible promissory note with individuals totaling in the amount of $ | % |
F-20
| In August 2025, the Company entered into a convertible promissory note in the amount of $ | % | |||||||||||
| In September 2025, the Company entered into a twelve-month loan with individuals totaling in the amount of $ | % | |||||||||||
| In November 2025, the Company entered into a twelve-month loan with individuals totaling in the amount of $ | % | |||||||||||
| Total notes payable | $ | $ | ||||||||||
| Less notes discount | ( | ) | ( | ) | ||||||||
| Less current portion | ( | ) | ( | ) | ||||||||
| Long-term notes payable | $ | $ |
F-21
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 4 – Notes Payable, Stockholder Notes Payable, and Revenue Financing Arrangements, continued
Interest expense on notes payable was $
The Company’s convertible note balances are convertible into and shares of Common Stock for the years ended December 31, 2025 and 2024. 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 $
Notes discount of $ and $ for the year ending December 31, 2025 and 2024 respectively is related to the discounted warrants and common shares issued in connection with the notes.
In June 2025, the Company exchanged approximately
$
| Interest Rate | December 31, 2025 | December 31, 2024 | ||||||||
| Stockholder Notes Payable | ||||||||||
| In April 2024, revised Feb 2023 stockholder advance in the amount of $ | ||||||||||
| Less current portion | ( | ) | ||||||||
| Long-term notes payable | $ | $ | ||||||||
Interest expense on related party notes payable was $
As of December 31, 2025, the Company’s convertible note balances are convertible into shares of Common Stock
F-22
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 5 – Licensing Agreement and Royalty Payable
The licensing agreement between TapouT LLC and the
Company was terminated in Q1 2024. The parties are engaged in active and constructive settlement discussions pursuant to the terms of
the agreement’s termination provisions. Based on the settlement discussions, the Company anticipates that any final settlement will
not exceed the amounts already recorded in its legal reserve and accrued accounts payable. The Company has reserved $
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. 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
Common Stock
On March 27, 2025, the Company implemented
On May 1, 2024, the Company entered into a securities
purchase agreement with certain accredited investors. Pursuant to such agreements, the Company sold:
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 warrants. The loan matured in July 2025 with principal
and interest due semi-annually. Accrued interest of $
F-23
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 6 – Stockholders’ Equity, continued
Preferred Stock
The Company evaluated the classification of the Preferred Stock and related warrants issued with the Series A-1 Preferred Stock in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. Based on this assessment, management determined that the Preferred Stock and warrants meet the criteria for equity classification. Specifically, the instruments are not mandatorily redeemable, do not embody obligations to repurchase the Company’s shares by transferring assets, and do not require settlement in a variable number of shares with a monetary value that is fixed, tied to a variable other than the Company’s own stock, or indexed to something other than the Company’s stock. The warrants are indexed solely to the Company’s Common Stock and meet the scope exception under ASC 815-10-15. Accordingly, the Preferred Stock and related warrants have been classified as components of stockholders’ equity in the accompanying condensed consolidated financial statements.
The Company has issued four series of preferred stock: Series A, A-1, B, and C, each with distinct rights and preferences as outlined below. Note agreements were amended to be exchanged for Preferred B and the impact of those amendments is subject to further review. 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. |
Dividends
| ● | Series A-1 and Series B carry a fixed 12% annual dividend, payable quarterly in arrears, in either cash or payment-in-kind (PIK) at the Company’s discretion. These dividends are mandatory and take priority over any dividends on Common Stock, regardless of whether Common Stock dividends are declared. | |
| ● | Series C does not accrue dividends. |
Conversion into Common Stock
| ● | Series A-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-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. |
F-24
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 6 – Stockholders’ Equity, continued
Seniority
| ● | Series B is the most senior class (Seniority Level 1). | |
| ● | Series A-1 ranks junior to Series B (Seniority Level 2). | |
| ● | Series C is the most junior class (Seniority Level 3). |
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. Series A-1 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. Mr. 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. Debt
agreements were amended to be exchanged for Preferred B. The Series B shares are convertible into common stock, subject to shareholder
approval. The note discount on the date of conversion was 1,843,519, The loss on extinguishment of debt was $
In June 2025, the Company acquired certain assets, including all contractual water rights to the aquifer located in Garabito, Puntarenas, Costa Rica. The Company issued 20,000 shares of Series C Preferred Stock as consideration, at an initial stated value of $1,000 per share. Management determined that the transaction is an asset acquisition under ASC 805, as substantially all of the fair value is concentrated in a single identifiable asset—the water rights—and no substantive processes were acquired. The acquisition of the water rights was recorded at a cost of $20 million, which is the fair value of the Series C preferred shares issued as consideration for the acquisition of the water rights. The Series C shares are convertible into common stock, subject to shareholder approval. The Series C were subsequently cancelled. See Note 1.
During the year ended December 31, 2025, shares of Preferred-B were converted into shares of common stock.
Stock Plans
A summary of the Company’s stock option plan and changes during the year ended is as follows:
| Plan Category | No. of Shares to be Issued Upon Exercise or Vesting of Outstanding Stock Options | Weighted Average Exercise Price of Outstanding Stock Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities | |||||||||
| Equity compensation plan approved by board of directors | $ | |||||||||||
| Total | $ | |||||||||||
F-25
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 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 and shares, respectively.
The following is a summary of the Company’s stock option activity:
| Options | 2025 | 2024 | |||||||||||||||
| Stock options | Weighted average | Stock options | Weighted average | ||||||||||||||
| Balance – January 01 | $ | $ | |||||||||||||||
| Granted | |||||||||||||||||
| Exercises | |||||||||||||||||
| Cancelled | |||||||||||||||||
| Balance – December | $ | $ | |||||||||||||||
| Exercisable - December 31 | $ | $ | |||||||||||||||
* These prices are reflective of the price modification made on April 24, 2023.
The Company determined the grant date fair value of the options granted using the Black Scholes Method using the following assumptions:
| December 31, 2025 | December 31, 2024 | |||||||
| Risk-free interest rates | % | % | ||||||
| Exercise price | $ | $ | – | |||||
| Expected life | years | years | ||||||
| Expected volatility | % | % - | % | |||||
| Expected dividends | ||||||||
The fair value of stock options granted in 2025 has been measured at shares using the Black-Scholes option pricing model with the following assumptions: exercise price $, expected life years, expected volatility %, expected dividends %, risk free rate %.
F-26
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 6 – Stockholders’ Equity, continued
During the year ended December 31, 2025, the fair value of options granted amounted to $. As of December 31, 2025, the intrinsic value of stock options outstanding and exercisable was $. Stock compensation expense for the years ended December 31, 2025 and 2024 was $ and $, respectively.
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 $, measured using the Black-Scholes option pricing model with the following assumptions: exercise price $, expected life years, expected volatility %, expected dividends %, risk free rate %.
The following is a summary of the Company’s warrant activity and reflects the 1 for 40 reverse split.
| Warrants | December 31, 2025 | December 31, 2024 | ||||||||||||||
| Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price | |||||||||||||
| Balance – beginning of the year | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercises | ||||||||||||||||
| Cancelled | ||||||||||||||||
| Balance - end of the year | $ | $ | ||||||||||||||
The fair value of warrants recognized in the period has been estimated using the Black-Scholes option pricing model with the following assumptions.
| December 31, 2025 | December 31, 2024 | |||||||
| Risk-free interest rates | % | 4.64 | % | |||||
| Exercise price | $ | $ | ||||||
| Expected life | years | years | ||||||
| Expected volatility | % | % | ||||||
| Expected dividends | ||||||||
F-27
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 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 $
There were related party advances from our then Chief Executive Officer,
Robert Nistico, in the amount of approximately $
In June 2025, the Company issued 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. Mr. 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 five-year Warrants , exercisable at $0.80 per share. See Note 6.
Note 8 – Investment in Salt Tequila USA, LLC
The Company has a marketing and distribution agreement with SALT Tequila USA, LLC (“SALT”) for the manufacturing of our Tequila product line in Mexico.
The Company has a
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
The Company has various operating lease agreements primarily related to real estate and office space. The Company’s real estate leases represent a majority of the lease liability. Lease payments are mainly fixed. Any variable lease payments, including utilities, and common area maintenance are expensed during the period incurred. Variable lease costs were immaterial for the year ended December 31, 2025 and 2024. A majority of the real estate leases include options to extend the lease. Management reviews all options to extend at the inception of the lease and account for these options when they are reasonably certain of being exercised.
F-28
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Operating lease expense is recognized on a straight-line
basis over the lease term and is included in operating expense on the Company’s condensed consolidated statement of operations and
comprehensive loss. Operating lease cost was $
The following table sets for the maturities of our operating lease liabilities and reconciles the respective undiscounted payments to the operating lease liabilities in the consolidated balance sheet at December 31, 2024.
| Undiscounted Future Minimum Lease Payments | Operating Lease | |||
| 2026 | ||||
| 2027 | ||||
| Total | ||||
| Amount representing imputed interest | ( | ) | ||
| Total operating lease liability | ||||
| Current portion of operating lease liability | ( | ) | ||
| Operating lease liability, non-current | $ | |||
The table below presents information for lease costs related to our operating leases at December 31, 2025:
| Operating lease cost: | ||||
| Amortization of leased assets | $ | |||
| Interest of lease liabilities | ||||
| Total operating lease cost | $ |
The table below presents lease- related terms and discount rates at December 31, 2025:
| Remaining term on leases | ||||
| Incremental borrowing rate | % | |||
NOTE 10 – Discontinued operations
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 $
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 $
F-29
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Due to the lack of working capital to fund operations, it formed a license agreement with a 3rd 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 temporary. 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:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets of discontinued operations: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid Expenses | ||||||||
| Inventory | ||||||||
| PP&E | ||||||||
| 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, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues, excluding depreciation and amortization | ||||||||
| Gross loss | ( | ) | ||||||
| Operating expenses | ( | ) | ( | ) | ||||
| Impairment loss | ( | ) | ||||||
| Other expenses | ( | ) | ( | ) | ||||
| Loss from discontinued operations | $ | ( | ) | $ | ( | ) | ||
Note 11 – Segment Reporting
We have two reportable operating segments: (1) the manufacture and distribution of non-alcoholic and alcoholic beverages, and (2) the retail sale of beverages and groceries online. These operating segments are managed separately and each segment’s major customers have different characteristics. Segment Reporting is evaluated by our chief operating decision maker, which continues to be our chief executive officer.
F-30
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
| Revenue | For the Year Ended, December 31, 2025 |
For the Year Ended, December 31, 2024 | ||||||
| Splash Beverage | ||||||||
| E-Commerce | ||||||||
| Total Revenues, | $ | $ | ||||||
| Segment operating loss: | 2025 | 2024 | ||||||
| Splash Beverage | ( | ) | ( | ) | ||||
| E-Commerce | ( | ) | ( | ) | ||||
| Total segment operating loss | $ | ( | ) | $ | ( | ) | ||
| Reconciliation of segment loss to corporate loss: | 2025 | 2024 | ||||||
| Other income/expense | $ | $ | ( | ) | ||||
| Amortization of debt discount | ( | ) | ( | ) | ||||
| Interest income & expense | ( | ) | ( | ) | ||||
| Loss on Extinguishment of debt | ( | ) | ||||||
| Loss on inventory write off | ( | ) | ||||||
| Change in FV of Derivative | ( | ) | ||||||
| Legal reserve | ( | ) | ||||||
| Loss before income tax | $ | ( | ) | $ | ( | ) | ||
| Total Assets | December 31, 2025 | December 31, 2024 | ||||||
| Splash Beverage Group | $ | $ | ||||||
| Assets of discontinued operations | ||||||||
| E-Commerce | ||||||||
| Total Assets | $ | $ | ||||||
Note 11 – Commitment and Contingencies
The Company is a party to asserted claims and are subject to regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial condition or results of operations.
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. The 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.
F-31
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 12 – Tax Provision
The Company has evaluated the positive and negative evidence in assessing the realizability of its deferred tax assets. This assessment included the evaluation of scheduled reversals of deferred tax liabilities, estimates of projected future taxable income and tax planning strategies to determine which deferred tax assets are more likely than not to be realized in the future. Due to uncertainty about the Company’s ability to utilize its deferred tax assets, the Company has recorded a full valuation allowance against its deferred tax assets.
On December 31, 2025, the Company’s net operating
loss carryforward for Federal income tax purposes was $
There was no income tax expense or benefit for the years ended December 31, 2025 and 2024 due to the full valuation allowance recorded.
The reconciliation of the income tax benefit is computed at the U.S. federal statutory rate as follows:
| 2025 | 2024 | |||||||
| Federal Statutory Tax Rate | % | % | ||||||
| Permanent Differences | ( | %) | ( | %) | ||||
| Change in Valuation Allowance | ( | %) | ( | %) | ||||
| Net deferred tax asset | ||||||||
The tax effects of temporary differences which give rise to significant portions of deferred tax
assets or liabilities on December 31 are as follows:
| 2025 | 2024 | |||||||
| Deferred Tax Assets: | ||||||||
| Net Operating Losses | $ | $ | ||||||
| Accrued Interest/Interest Expense Limitation | ||||||||
| Total deferred tax assets | ||||||||
| Deferred Tax Liabilities: | ||||||||
| Depreciation | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Total Net Deferred Tax Assets | $ | $ | ||||||
The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The open tax years subject to examination with respect to the Company’s operations are 2015 through 2025.
F-32
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 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 26, 2028.
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.
ELOC Sales
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.
Preferred Stock Conversion
As of April 14, 2026, 24,251 shares of Series B preferred stock were converted into 1,940,120 shares of common stock.
Convertible Note
In February 2026 a holder of a $30,000 convertible note payable converted the note into 266,770 shares of common stock.
Letter of Intent
On 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.
Warrants
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.
F-33
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
(1) Evaluation of Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our President (principal executive officer) and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, our President and Chief Financial Officer have concluded that our disclosure controls and procedures as of December 31, 2025 were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms because of certain material weaknesses in the Company’s internal control over financial reporting.
Specifically, management has identified a limited segregation of duties due to our limited resources and insufficient accounting personnel, resulting in a lack of controls to ensure maintenance of documentation supporting transactions recorded in the Company’s accounting records.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
| · | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
| · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
| · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting based on the parameters set forth above and has concluded that as of December 31, 2025, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“US GAAP”) as a result of the following material weaknesses:
31
| · | The Company does not have sufficient segregation of duties within accounting functions. |
| · | The Company does not have written documentation of our internal controls policies and procedures. |
| · | The Company’s human resources, processes and systems are not sufficient to enable the production of timely and accurate financial statements in accordance with US GAAP. |
We plan to rectify these weaknesses by establishing written policies and procedures for our internal control of financial reporting and hiring additional accounting personnel at such time as we raise sufficient capital to do so.
Item 9B. Other Information.
Unregistered Sales of Equity Securities
The following are certain unregistered sales of securities which occurred in the year ended December 31, 2025 and more recently
Securities Issuances
Form June 2025 through December 2025, the Company sold and issued a total of 1,300 shares of Series A-1, which by their terms are convertible into up to 1,040,000 shares of Common Stock, 325,000 Class A Warrants to Purchase Common Stock, and 325,000 Class B Warrants to Purchase Common Stock, for total gross proceeds of $1,300,000.
From January 27, 2026 through April 14, 2026, the Company sold and issued a total of 4,840,254 such shares of Common Stock under the ELOC Agreement with C/M, for total gross proceeds of $1,917,709.
During the year ended December 31, 2025 the Company issued and sold a total of 1,300 shares of Series A-1 preferred stock for total gross proceeds of $1,300,000
During the year ended December 31, 2025, the Company sold and issued a total of $3,296,560 of convertible promissory notes in exchange for total gross proceeds of $3,296,560. These convertible promissory notes are convertible into a total of 7,418,485 shares of Common Stock.
Each of the transactions set forth above was exempt from registration pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 thereunder as a transaction not involving a public offering.
Securities Conversions or Exchanges
During the year ended December 31, 2025, the Company issued a total of 126,760 shares of Series B convertible stock for settlement of $12,670,435 of convertible notes and accrued interest.
During the year ended December 31, 2025, the Company issued a total of 328,799 shares of Common Stock in connection with conversions of a total of 3,979 shares of Series B.
During the year ended December 31, 2025, the Company issued a total of 224,541 shares of Common Stock in connection with conversions of a total of $2,502,246 of notes payable and accrued interest.
32
In December 2025, the Company entered into agreements to issue a total of 113,636 shares of Common Stock and 1,136 shares of Series D Convertible Preferred Stock (the “Series D”) to holders of options to purchase a total of up to $600,000 shares of Common Stock in exchange for the termination of such options. Each share of Series D is convertible into 100 shares of Common Stock, subject to beneficial ownership limitations and compliance with the rules of the NYSE American.
During the period January 1, 2026 to April 10, 2026 a total of 15,501 shares of series B preferred stock were converted into 1,240,120 shares of common stock.
In February 2026 a convertible note in the amount of $30,000 was converted into 266,700 shares of common stock.
Other Disclosure
The disclosure set forth in “Item 1 – Business – Costa Rica Water” is incorporated herein by reference.
The disclosure se forth in “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Warrants” is incorporated herein by reference
Rule 10b5-1 and Non-Rule 10b5-1 Plans
During the three-month period ended December 31, 2025, no officer
or director has
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
33
PART III
The information required by Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and Director Independence), and Item 14 (Principal Accounting Fees and Services) is incorporated by reference to the Company’s definitive proxy statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2025.
34
PART IV
Item 15. Exhibits and Financial Statement Schedules.
The following documents are filed as part of this Annual Report on Form 10-K:
1. Financial Statements. See the Financial Statements starting on page F-1, of this Annual Report, which is incorporated into this Item by reference.
2. Exhibits. The exhibits listed in the Exhibit Index, which appears immediately following the signature page and is incorporated herein by reference, and filed as part of this Annual Report on Form 10-K.
35
EXHIBIT INDEX
36
37
38
39
| 31.1 | Rule 13a-14(a)/ 15d-14(a) Certification of Principal Executive Officer* |
| 31.2 | Rule 13a-14(a)/ 15d-14(a) Certification of Principal Financial Officer* |
| 32.1 | Certification of CEO pursuant to 18. U.S.C. Section 1350 as adopted, pursuant to Section 906 of Sarbanes-Oxley Act of 2002** |
| 32.2 | Certification of CFO pursuant to 18. U.S.C. Section 1350 as adopted, pursuant to Section 906 of Sarbanes-Oxley Act of 2002** |
| 97.1 | Clawback Policy of the Company (incorporated by reference herein to Exhibit 97.1 filed with Annual Report on Form 10-K filed with the SEC on March 29, 2024) |
| *101.INS | Inline XBRL Instance Document (filed herewith) |
| *101.SCH | Inline XBRL Taxonomy Extension Schema (filed herewith) |
| *101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith) |
| *101.LAB | Inline XBRL Taxonomy Extension Label Linkbase (filed herewith) |
| *101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith) |
| *101.DEF | Inline XBRL Taxonomy Definition Linkbase (filed herewith) |
| *104 | Cover Page Interactive Data File (embedded within the Inline XBRL document filed as Exhibit 101) |
| * | Filed herewith |
| ** | Furnished herewith |
|
*** |
Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission staff upon request. |
| **** | Indicates management contract or compensatory plan, contract or agreement. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SPLASH BEVERAGE GROUP, INC. (Registrant) | ||
| Date: April 15, 2026 | By: | /s/ William Meissner |
| Name: | William Meissner, President | |
| (Principal Executive Officer) | ||
Pursuant to the requirements of the Securities Act of 1934 this Annual Report on Form 10-K was signed by the following persons on behalf of the Registrant and in the capacities and on the dates stated:
| Signature | Title | Date | ||
| /s/ William Meissner | President | April 15, 2026 | ||
| William Meissner | (Principal Executive Officer) | |||
| /s/ Martin Scott | Interim Chief Financial Officer | April 15, 2026 | ||
| Martin Scott | (Principal Financial and Accounting Officer) | |||
| /s/ Robert Nistico | Director | April 15, 2026 | ||
| Robert Nistico | ||||
| /s/ Justin Yorke | Director, Secretary | April 15, 2026 | ||
| Justin Yorke | ||||
| /s/ Thomas Fore | Director | April 15, 2026 | ||
| Thomas Fore | ||||
| /s/ Bill Caple | Director | April 15, 2026 | ||
| Bill Caple | ||||
| /s/ Brady Cobb | Director | April 15, 2026 | ||
| Brady Cobb |
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