SBEV 10-K
Endovia Health Sciences, Inc. (EDVA)
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the fiscal year ended
For the transition period from _________to _________
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Securities registered pursuant to Section 12(b) of the Act:
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| American LLC | ||||
| American LLC |
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The aggregate market value of the Registrant’s common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the Registrant’s most recently completed second quarter was $[*].
On June 30, 2025, there were shares of Common Stock issued and outstanding.
SPLASH BEVERAGE GROUP, INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
i
PART I
Except as otherwise indicated, references to “we”, “us”, “our”, “Splash”, “SBG” and the “Company” refer to Splash Beverage Group, Inc. and its wholly owned subsidiaries.
This Annual Report on Form 10-K (this “Annual 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 ability to raise capital to fund continuing operations; our ability to protect our intellectual property rights; the impact of any infringement actions or other litigation brought against us; competition from other providers and products; our ability to develop and commercialize products and services; changes in government regulation; our ability to complete capital raising transactions; and other factors (including the risks contained in the section of this Annual Report entitled “Risk Factors”) relating to our industry, our operations and results of operations. 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. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Except as otherwise indicated, references to “we”, “us”, “our”, “Splash”, “SBG” and the “Company” refer to Splash Beverage Group, Inc. and its wholly owned subsidiaries.
Item 1. Business.
Company Overview
Splash is a portfolio company managing multiple brands across several growth segments within the consumer beverage industry. Splash has built organizational capabilities and an infrastructure enabling it to incubate and/or acquire brands with the intention of efficiently accelerating them to higher volume and sales revenue. The management team has proven capabilities in building consumer franchises and marketing and distributing multiple brands of beverages within the non-alcoholic and alcoholic segments. Manufacturing is typically outsourced to third party co-packers and distillers, or in select cases for a brand such as Copa DI Vino® wines, performed within our own facility in Oregon.
We believe the distribution landscape in the beverage industry is changing rapidly as tech-enabled e-commerce business models are thriving. Direct to consumer, office or home solutions are projected to continue to gain traction in the future. Recognizing this opportunity Splash continues to shape its operating model to be vertically integrated with our e-commerce platform, Qplash, which purchases local and regional brands for developing a direct line of sales to boutique retail stores and consumers.
Splash’s wholly owned subsidiary, Splash Beverage Group II, Inc. was originally incorporated in the State of Nevada under the name TapouT Beverages, Inc. for the purpose of acquiring the rights under a license agreement with TapouT, LLC (Authentic Brands Group). In Q1 2024 the relationship between TapouT LLC and the Company was terminated.
1
In December 2020, Splash Beverage Group Inc. purchased the key assets of the Copa DI Vino® single serve wine company. The operations and IP for Copa DI Vino® are wholly owned by Splash and incorporated in the state of Nevada under the name Copa DI Vino® Wine Group Inc.
In addition, Splash has a joint venture with SALT Naturally Flavored Tequila and Pulpoloco sangria that comes in a biodegradable can.
The Company’s leadership understands the importance of infusing beverage brands with strong popular culture and lifestyle elements that drive trial, belief and, most importantly, repeat purchases.
Our management team led by Robert Nistico has over 28 years of experience in all levels of the three-tier distribution system used in the beverage industry working with brands such as Red Bull and companies such as Gallo Winery and Republic National Distributing Company (RNDC Texas). Our President & CMO, Bill Meissner, has led major beverage brands including Sparkling Ice, Fuze, Sweet Leaf Tea and Jones Soda. Our CFO, William Devereux, has over 15 years of experience in finance, with an emphasis on investing, fundraising, corporate strategy, and mergers and acquisitions. Our Senior Vice President of Sales, James Allred, has over 25 years’ experience in the beverage industry, predominately with Anheuser-Busch.
Our Strategy
Our strategy is to combine the traditional approach of manufacturing, distributing, and marketing of beverages, with early-stage brands that have a reasonable level of pre-existing brand awareness and market presence, or have attributes that we believe to be purely innovative. We believe this allows us to break through the clutter of numerous brand introductions and dilute risk. We apply this philosophy regardless of whether the brand is 100% owned or a joint venture.
For acquisition or joint venture consideration, we prefer to work with brands that already have one or more of the following in place:
| ● | Some level of preexisting brand awareness. |
| ● | Regional presence that can be expanded. |
| ● | Licensing an existing brand name. |
| ● | Add to an underdeveloped and/or growing category capitalizing on consumer trends. | |
| ● | Innovation to an existing attractive category (such as flavored tequila). | |
| ● | A near term clear path to profitability. |
We believe this platform model provides us with two paths to success: one, developing our wholly owned core brands and two, the ability to tap into high growth, early-stage brands ready to scale. This platform allows us to limit risk, and significantly reduce development expenses while simultaneously increasing efficiencies for all brands in our portfolio.
Our management team has over 80 years of combined experience in the beverage industry, including decades of successful brand introductions by our management team (Gallo, Red Bull, Bacardi, Diageo, Sparkling Ice, Coca-Cola, FUZE Beverage, NOS Energy, PepsiCo, SoBe Beverages, AB InBev, Muscle Milk, Marley Beverages), we believe our ability to break through the distribution and retail bottlenecks makes us an attractive joint venture partner to many new brand owners.
Splash has the ability to fully own a brand or be flexible to engage in business ventures structured with a revenue split, or an equity position.
The benefit to Splash in these shared brand ownerships is the ability to avoid the development costs for new products. This model spreads our risk over several brands, contributes to our economies of scale, improves our relationship with distributors and reduces the overall cost of infrastructure.
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The Company also believes the distribution landscape in the beverage category is changing rapidly. Tech-enabled business models are thriving and direct to consumer, office and home solutions are projected to continue to gain traction as beverage alcohol regulations evolve. A core strategy for us is to optimize the early success we’re seeing with the Qplash online platform, our consumer-packaged goods retail division and our first entry point into the growing e-commerce channel.
Products
During fiscal year 2024 we produced, distributed and marketed SALT Naturally Flavored Tequila (“SALT”), a 100% agave 80 proof line of flavored tequilas, Copa DI Vino® single serve wine by the glass, and also import Pulpoloco Sangria in 3 flavors.
The following is a description of these products.
SALT Flavored Tequila
We oversee production, distribute, and market the following flavors under the brand name SALT Naturally Flavored Tequila:
| ● | Citrus flavor |
| ● | Berry flavor |
| ● | Chocolate flavor |
Vodka, rum, and brown spirits have experienced significant growth when flavors are introduced, and we expect this growth of flavors to continue, as the tequila category continues to rapidly expand.
SALT is currently being distributed by various Anheuser-Busch & Miller-Coors distributorships, and other distributors in multiple U.S. states. Additionally, SALT is for sale in Mexico. SALT has also launched in Guatemala and Japan and efforts continue to grow the brand’s international presence.
SALT is a business venture between the Company and SALT USA, LLC. All aspects of manufacturing, logistics, distribution and marketing are our responsibility.
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TapouT License Agreement
We have the rights under a License Agreement with ABG TapouT (the “License Agreement”) to produce, market, sell and distribute TapouT sports beverages in North America (including US Territories and Military Bases), United Kingdom, Brazil, South Africa, Australia, Scandinavia, Peru, Colombia, Chile and Guatemala. The beverages covered by the License Agreement include sports drinks, energy drinks, energy shots, electrolyte chews, energy bars, water, protein, and teas.
We pay a 6% royalty of net sales or a guaranteed minimum annual royalty of $660,000, whichever is greater. The License Agreement will expire on December 31, 2025, with a renewal option through December 31, 2028 at which time it will be reviewed and renegotiated if necessary.
We have the right to use the TapouT brand to market, advertise and promote for sale our TapouT beverages and branded products. As part of the alliance, Splash commits to investing 2% of sales in marketing to the TapouT Performance Brand. TapouT provides marketing collateral for advertising and promotion and has influential relationships with select celebrities and athletic talent. TapouT agrees to use reasonable efforts to request its retained celebrities and/or athletes be present at autograph signings, tradeshows and other similar events. In Q1 2024 the relationship between TapouT LLC and the Company was terminated.
Copa DI Vino® Wine Group, Inc. (CdV) and Related Financing
On December 24, 2020, the Company entered into an Asset Purchase Agreement with CdV, pursuant to which the Company purchased certain assets and assumed certain liabilities that comprise the CdV business for a total purchase price of $5,980,000, payable in the combination of $2,000,000 in cash, a $2,000,000 convertible promissory note to CdV and a variable number of shares of the Company’s common stock based on an attainment of revenue hurdles.
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In conjunction with the acquisition, the Company also entered into a Revenue Loan and Security Agreement (the “Loan and Security Agreement”) by and among the Company, Robert Nistico, additional guarantor and each of the subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and, collectively, the “Guarantors”), and Decathlon Alpha IV, L.P. (the “Lender”). The Loan and Security Agreement provided for a revenue-based credit facility of $1,578,237 (the “Gross Amount”) with the Lender (the “Credit Facility”).
Copa DI Vino® Wine Group, Inc.
Copa DI Vino® is the leading producer of premium wine by the glass in the United States. The Copa DI Vino® product line is highly innovative as a ready to drink wine glass capable of going anywhere without the need for a bottle, corkscrew or glass. The company also has a growing keg wine business for on-premises restaurants and bars.
Through our acquisition of Copa DI Vino® Corporation, we are now able to offer nine varietals of wine: Pinot Grigio, Riesling, Merlot, Chardonnay, White Zinfandel, Moscato, Red Blend, Sauvignon Blanc and Cabernet Sauvignon. In addition to its wine varietals, Copa DI Vino® also procures Pulpoloco, a sangria which is encased in an eco-friendly fiber based can from Spain. The rights to utilize this packaging for multiple categories were conveyed to SBG in conjunction with the distribution rights.
E-commerce
“Qplash” is a wholly owned division of Splash. It is our first entry point into the growing e-commerce channel. The division sells beverages online through www.qplash.com, and third-party storefronts such as Amazon.com. Inside of the division, there are two primary customer groups: business to business retailers, which in turn offer the products to their customers, and business to consumer, selling direct to end users. The business-to-business program allows businesses to control inventory, order with payment terms, and offer the convenience of delivery directly to each store.
During fiscal year 2024, Qplash offered over 1,500 listings and has warehouses that ship from both California and Pennsylvania.
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Our Competitive Strengths
We believe the following competitive strengths contribute to the Company’s success and differentiate us from our competitors:
| ● | An established distribution network through global sales channels; |
| ● | A hybrid distribution model that leverages multiple routes to market, including national chains, independent local markets, regional chains, and specialty food and C-Stores |
| ● | Long-term relationships with retailers and the establishment of chains; |
| ● | Premium customer service; |
| ● | Dynamic and sustainable product offerings of natural quality and freshness with health benefits; |
| ● | A highly experienced management team; |
| ● | Strategically selected, dedicated sales professionals; |
| ● | Qplash, our e-commerce platform, which provides us an integrated distribution platform for our non-alcoholic brands; |
| ● | Ability to execute and distribute across many geographies on behalf of our licensed brand portfolio; | |
| ● | Strong brand awareness through partnerships and acquisitions of brands with pre-existing brand awareness, or viewed as truly innovative; and | |
| ● | Celebrity and professional athlete endorsement of our brands. |
Manufacturing and Co-packing
We are responsible for the manufacturing of Copa DI Vino® and SALT. The Copa DI Vino® product line is bottled at our manufacturing facility in The Dalles, Oregon. Pulpoloco is imported from Spain as a finished product.
Although we are responsible for manufacturing SALT, we do not directly manufacture these products, but instead outsource such manufacturing to third party bottlers and contract packers and distillers.
SALT products are manufactured in Mexico, under separate arrangements. Our co-packaging arrangements are terminable upon request and do not obligate us to produce any minimum quantities of products within specified periods.
We purchase concentrates, flavors, dietary ingredients, cans, bottles, caps, labels, and other components and ingredients for our beverage products from our suppliers, which are delivered to our manufacturing operations and various third-party bottlers and co-packers. In some cases, certain common supplies may be purchased by our various third-party bottlers and co-packers. Depending on the product, the third-party bottlers or packers add filtered water and/or other ingredients (including dietary ingredients) for the manufacture and packaging of the finished products into our approved containers in accordance with our formulas.
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Distribution
For our beverage-alcohol products, we operate within what is referred to as a “Three Tier Distribution System” where manufacturers are not permitted to sell directly to retailers, but instead contract for local and regional distribution with independent distributors. These distributors typically have geographic rights to distribute major beverage brands and call on every store in a given area such as major cities or regions. Our management team has extensive experience working within this channel and believes that we will be successful in building a strong network of these distributors.
In addition to working with these independent distributors, we also have distribution arrangements with national retail accounts to distribute some of our products directly through their warehouse operations. Most notably, SBG executed a distribution agreement with AB-InBev, for distribution with their own operations, AB ONE. This provides SBG very effective distribution capabilities.
Intellectual Property
During the fiscal year ended December 31, 2023, we were granted a trademark for Copa DI Vino®. The United States Patent and Trademark Office issued the trademark on March 12, 2024, providing our company exclusive rights to use the trademark in connection with the product categories specified in this Form 10-K.
Employees
We have 21 full-time employees, including non-officer employees and our executive officers. None of our employees are represented by a labor union. We have not experienced any work stoppages and consider our relations with our employees to be good.
Listing on the NYSE American
Our common stock and warrants are listed on the NYSE American exchange under the ticker symbols “SBEV” and “SBEV WT,” respectively.
Recent Developments
On February 7, 2025, Julius Ivancsits resigned as Chief Financial Officer of the Company. Mr. Ivancsits’s resignation as Chief Financial Officer was not because of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices, including accounting principles and practices. Mr. Ivancsits effective date was February 18, 2025 and the Company thanks Mr. Ivancsits for his service.
Simultaneously, on February 7, 2025, Dr. John Paglia also notified the Board of his intention to resign as an independent director of the Company and as a member of each committee of the Board on which he served, effective as of March 7, 2025. Dr. Paglia’s resignation was not the result of any dispute or disagreement with the Company or the Company’s Board of Directors on any matter relating to the operations, policies or practices of the Company. Dr. Paglia will be assisting the Company with its search for a new Audit Chair. The Company is grateful for his service and his assistance in the search for his replacement.
On March 20, 2025, the Board of Directors of the Company appointed Mr. William Devereux to serve as Chief Financial Officer of the Company, effective as of the same date.
Simultaneously, the Board of Directors of the Company appointed Mr. Thomas Fore to serve as a Director of the Company, effective March 20, 2025.
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Effective March 27, 2025, the Board of Directors of the Company approved a reverse stock split of the Company’s authorized and issued and outstanding shares of Common Stock at a ratio of 1-for-40 (the “Reverse Stock Split”). The Company filed a Certificate of Change pursuant to Nevada Revised Statutes Section 78.209 with the Secretary of State of the State of Nevada on March 26, 2025, to be effective March 27, 2025.
On April 7, 2025, NYSE American LLC (“NYSE American”) publicly announced and provided a notice to the Company that NYSE Regulation has determined to commence proceedings to delist the Company’s Common Stock and publicly trading Warrants to purchase one share of Common Stock, from NYSE American. NYSE Regulation has determined that the Company is no longer suitable for listing pursuant to Section 1009(a) of the NYSE American Company Guide (the “Company Guide”) as the Company was unable to demonstrate that it had regained compliance with Sections 1003(a)(i), (ii), and (iii) of the Company Guide by the end of the maximum 18-month compliance plan period, which expired on April 6, 2025.
On April 16, 2025, the Company, received an official notice of noncompliance (the “NYSE American Notice”) from NYSE Regulation stating that the Company is not in compliance with NYSE American continued listing standards (the “Filing Delinquency Notification”) due to the failure to timely file the Company’s Form 10-K for the year ended December 31, 2024 (the “Delinquent Report”) by the filing due date of April 15, 2025 (the “Filing Delinquency”).
On June 9, 2025, the Company filed a Certificate of Designation (the “Certificate of Designation” and, collectively with the Subscription Agreement, the “Issuance Documents”) classifying and designating the Series A Preferred Shares with the Secretary of State of Nevada, which Certificate of Designation became effective on June 9, 2025.
On June 10, 2025, the Company entered into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with Robert Nistico, the Company’s Chief Executive Officer (the “Purchaser”), pursuant to which the Company agreed to issue and sell one thousand (1,000) Series A Preferred Shares, par value $0.001 per share (the “Series A Preferred Shares”), to the Purchaser for an aggregate purchase price of $1,000 (the “Purchase Price”). The sale closed on June 10, 2025.
Effective June 25, 2025, Splash Beverage Group, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with accredited investors pursuant to which the Company sold and issued a total of 650 shares of newly designated Series A-1 Convertible Redeemable Preferred Stock (the “Series A-1”), together with one-year Class A Warrants to purchase a total of 162,500 shares of common stock (the “A Warrants”) and five-year Class B Warrants to purchase a total of 162,500 shares of common stock (the “B Warrants” and together with the A Warrants, the “Warrants”) for total gross proceeds of $650,000. The Company intends to use the proceeds for working capital and general corporate purposes.
Effective June 25, 2025, the Company entered into Securities Exchange Letter Agreements (the “Exchange Agreements”) with certain holders of promissory notes issued by the Company pursuant to which such holders agreed to exchange a total of $12,671,434 of outstanding balance of such notes in exchange for a total of 126,710 shares of the Company’s newly designated Series B Convertible Redeemable Preferred Stock (the “Series B”). The Company is engaging in the transactions contemplated by the Exchange Agreement in order to exchange debt for equity in an effort to regain compliance with the shareholder equity requirements of the NYSE American. This debt exchange is one key step in meeting the NYSE American continued listing requirements. The other key step is filing its tardy Form 10-K for the year ended December 31, 2024 and Form 10-Q for the three months ended March 31 2025.
On June 26, 2025, the Company entered into an Asset Purchase Agreement (the “Acquisition Agreement”) with Utopia Holdings Inc. as seller pursuant to which the Company agreed to purchase exclusive water rights and related assets to an underground network of aquifers located in Costa Rica (the “Assets”) in exchange for 20,000 shares of a newly designated Series C Convertible Preferred Stock (the “Series C”). On June 26, 2025, the Company issued such shares of Series C to the seller. Under the Acquisition Agreement, the seller agreed to deliver the Assets to the Company, or $20 million in lieu thereof (the “Alternative Consideration”), and if the seller fails to deliver the Assets or Alternative Consideration by December 31, 2025, the issuance of the Series C to the seller shall be cancelled.
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Corporate Information
Splash was originally incorporated in the State of Nevada under the name TapouT Beverages, Inc., for the purpose of acquiring the rights under a license agreement with TapouT, LLC (Authentic Brands Group) for the right to use the TapouT brand in connection with manufacturing and selling certain beverages. In Q1 2024 the relationship between TapouT LLC and the Company was terminated.
Splash executed a reverse merger with a fully reporting, public entity called Canfield Medical Supply, Inc. and became a wholly-owned subsidiary of Canfield Medical Supply Inc. on March 31, 2020. At the time of the merger Canfield’s state of incorporation was Colorado. At the time of the merger Canfield’s common stock was quoted on the OTCQB.
On July 31, 2021, we changed our name from Canfield Medical Supply, Inc. to Splash Beverage Group, Inc.
On June 11, 2021, our common stock and warrants to purchase common stock began trading on the NYSE American under the symbols “SBEV” and SBEV WT,” respectively.
On November 8, 2021, we changed our state of incorporation from Colorado to Nevada.
Our principal offices are located at 1314 E. Las Olas Blvd, Suite 221, Fort Lauderdale, Florida 33301. Our website address is www.splashbeveragegroup.com. We have not incorporated by reference into this Annual Report on Form 10-K the information that can be assessed through our website and you should not consider it to be part of this Annual Report on Form 10-K.
Available Information
We file annual, quarterly, and current reports, proxy statements and other information with the U.S. Securities Exchange Commission (the “SEC”). These filings are available to the public through the SEC’s website at http://www.sec.gov. All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included unless otherwise specified, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
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 Business
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 securities will have little or no value.
Rose, Snyder & Jacobs LLP, our independent registered public accounting firm for the fiscal year ended December 31, 2024, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2024, 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.
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. If we cannot continue as a going concern, our shareholders would likely lose most or all of their investment in us.
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Management recognizes that it may be required to obtain additional resources via issuances of indebtedness or equity to successfully execute its business plans. No assurances can be given that management will be successful in raising additional capital, if needed, or on acceptable terms. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next 12 months. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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 significant deficiency and material weakness exists over our financial reporting. We continue to implement and evaluate the effectiveness of additional policies and procedures to address identified control deficiencies in the design and operation of our internal control over financial reporting, as further described in Item 9A of this Annual Report (“Controls and Procedures”). 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. Management identified a material weakness in the Company’s internal controls related to dedicated services billing and revenue recognition, and has taken actions in 2025 to have the material weakness remediated. To note, the significant deficiency and material weakness over our financial reporting or the discovery of additional significant deficiencies or a material weakness and their possible effect on our results, could have material and adverse effect on our stock price.
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 in the future.
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 on our acquisition strategy and our ability to generate revenues. We incurred a net loss of $23.8 million for the year ended December 31, 2024. Our accumulated deficit increased to $155.8 million as of December 31, 2024, compared to the prior year’s deficit of $133.3 million.
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 our revenues do not increase significantly, we may never become profitable. Even if we achieve profitability in the future, 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.
If we are not able to successfully execute on our future operating plans and objectives, our financial condition and results of operation may be materially adversely affected, and we may not be able to continue as a going concern.
It is important that we meet our sales goals and increase sales going forward as our operating plan already reflects prior significant cost containment measures and may make it difficult to achieve top-line growth if further significant reductions become necessary. If we do not meet our sales goals, our available cash and working capital will decrease and our financial condition will be negatively impacted.
In order to be successful, we believe that we must, among other things:
| ● | increase the sales volume and gross margins for our products and those that we will acquire; | |
| ● | maintain efficiencies in operations; | |
| ● | manage our operating expenses to sufficiently support operating activities; | |
| ● | maintain fixed costs at or near current levels; and | |
| ● | avoid significant increases in variable costs relating to production, marketing and distribution. |
We may not be able to meet these objectives, which could have a material adverse effect on our results of operations. We have incurred significant operating expenses in the past and may do so again in the future and, as a result, will need to increase revenues in order to improve our results of operations. Our ability to increase sales will depend primarily on success in expanding our current markets, improving our distribution base, entering into Direct-To-Retail (DTR) arrangements with national accounts, and introducing new brands, products or product extensions to the market. Our ability to successfully enter new distribution areas and obtain national accounts will, in turn, depend on various factors, many of which are beyond our control, including, but not limited to, the continued demand for our brands and products in target markets, the ability to price our products at competitive levels, available positions within the retailer’s planograms, the ability to establish and maintain relationships with distributors in each geographic area of distribution and the ability in the future to create, develop and successfully introduce one or more new brands, products, and product extensions.
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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.
Our growth strategy is based in part on growth through strategic initiatives including both acquisitions and divestitures, 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.
The execution of our strategic initiatives could entail repositioning or similar actions that in turn require us to record impairments, restructuring and other charges. Any such charges would reduce our earnings. 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. Moreover, our customers may, in response to the announcement or consummation of a transaction, delay or defer purchasing decisions. If our customers delay or defer purchasing decisions, our revenues could materially decline or any anticipated increases in revenue could be lower than expected.
Failure to Successfully Integrate Acquired Businesses, Its Products and Other Assets into the Company, 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.
The consummation and integration of any acquired business, product or other 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. When the Company acquires cannabis businesses, it may obtain the rights to applications for licenses as well as licenses; however, the procurement of such applications for licenses and licenses generally will be subject to governmental and regulatory approval. 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 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 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.
Our beverage portfolio is 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.
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 image 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, PET, fiber-board, labels and cardboard cartons, flavorings and sweeteners. These component and ingredient costs are subject to fluctuation. If there were to be substantial increases in the prices of our ingredients, raw materials and packaging materials, to the extent that they cannot be recouped through increases in the prices of finished beverage products, would increase our operating costs and could reduce our profitability. If our supply of these raw materials is impaired or if prices increase significantly, it could affect the affordability of our products and reduce sales.
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If we are unable to secure sufficient ingredients or raw materials including glass, sugar, and other key supplies, we might not be able to satisfy demand on a short-term basis.
International trade disputes, including U.S. trade tariffs and retaliatory tariffs, could adversely impact our business.
International trade disputes, including threatened or implemented tariffs by the United States and threatened or implemented tariffs by foreign countries in retaliation, could adversely impact our business. Many of our tenants sell imported goods and tariffs or other trade restrictions could increase costs for these tenants. To the extent our tenants are unable to pass these costs on to their customers, our tenants could be adversely impacted. In addition, international trade disputes, including those related to tariffs, could result in inflationary pressures that directly impact our costs, such as costs for steel, lumber and other materials applicable to our redevelopment projects. Trade disputes could also adversely impact global supply chains which could further increase costs for us and our tenants or delay delivery of key inventories and supplies.
Significant political, trade, regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations.
Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S. federal administration, are difficult to predict and may have a material adverse effect on us. Similarly, changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For example, during the prior Trump administration, increased tariffs were implemented on goods imported into the U.S., particularly from China, Canada, and Mexico. On February 1, 2025, the U.S. imposed a 25% tariff on imports from Canada and Mexico, which were subsequently suspended for a period of one month, and a 10% additional tariff on imports from China. Historically, tariffs have led to increased trade and political tensions, between not only the U.S. and China, but also between the U.S. and other countries in the international community. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including, but not limited to, U.S. and China trade policies, could have a material adverse effect on our financial condition or results of operations.
Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.
As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while some jurisdictions, such as the United States, subject the mining, ownership and exchange of cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.
In January 2025, U.S. President Donald Trump issued an executive order forming a presidential working group to establish a clear regulatory framework for digital assets, and leaders in both houses of the U.S. Congress have announced a bicameral working group with the objective of passing legislation to provide regulatory clarity for the industry. Committees in both houses of the U.S. Congress have held hearings to ensure fair access to financial services, including for companies operating in the digital asset space. Additionally, President Trump and members of the U.S. Congress announced that they are studying the possibility of creating a national strategic digital asset reserve to include Bitcoin, and at least twelve states have introduced legislation to create strategic Bitcoin reserves.
While these ongoing regulatory developments appear to be positive, and we anticipate greater regulatory certainty in the future, given the difficulty of predicting the outcomes of ongoing and future regulatory actions and legislative developments, it is possible that future developments could have a material adverse effect on our business, prospects, or operations.
Our business, operations, financial position and timelines, could be materially adversely affected by the continuing military action in Ukraine and the war between Israel and Hamas.
As a result of the military action commenced in February 2022 by the Russian Federation and Belarus in Ukraine and the war between Israel and Hamas commenced in October 2023, and related economic sanctions imposed or that may in the future be imposed by certain governments, our financial position and operations may be materially and adversely affected. As our ability to continue to operate will be dependent on raising debt and equity finance, any adverse impact to those markets as a result of these conflicts, 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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Changes in government regulation or failure to comply with existing 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 soft drinks and other sweetened beverages. Changes in existing laws or regulations could require material expenses and negatively affect our financial results through lower sales or higher costs.
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, we may not achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers. Any failure of our brand 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 maintain brand image for our existing products and effectively build up brand image 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 image of the affected brands and could cause consumers to choose other products. Our brand image 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 our distributors, all of whom also distribute other beverage brands. Our products compete with all non-alcoholic and alcoholic beverages, most of which are marketed by companies with substantially greater financial resources than ours. Some of these competitors are placing severe pressure on independent distributors not to carry competitive brands such as ours. We 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.
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Legislative or regulatory changes that affect our products, including new taxes, could reduce demand for products or increase our costs.
Taxes imposed on the sale of certain of our products by federal, state and local governments in the United States, or other countries in which we operate could cause consumers to shift away from purchasing our beverages. Several municipalities in the United States have implemented or are considering implementing taxes on the sale of certain “sugared” beverages, including non-diet soft drinks, fruit drinks, teas and flavored waters to help fund various initiatives. These taxes could materially affect our business and financial results.
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. Most of our distributors, retailers and brokers 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. 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 sales and 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.
Our ability to maintain 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.
It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.
Our independent distributors and national accounts are not 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 continue to 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.
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If we do not adequately manage our inventory levels, our operating results could be adversely affected.
We need to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis. Our inventory supply depends 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. 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.
If we fail to maintain relationships with our independent contract manufacturers, our business could be harmed.
We do not manufacture SALT Tequila, Pulpoloco Sangria but instead outsource 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. We may not be able to maintain our relationships with current 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.
The volatility of energy and increased regulations may have an adverse impact on our gross margin.
Over the past few years, volatility in the global oil markets has resulted in variable fuel prices, which many shipping companies have passed on to their customers by way of higher base pricing and increased fuel surcharges. If fuel prices increase, we expect to experience higher shipping rates and fuel surcharges, as well as energy surcharges on our raw materials. It is hard to predict what will happen in the fuel markets in 2025 and beyond. Due to the price sensitivity of our products, we may not always be able to pass such increases on to our customers.
Disruption within our supply chain, contract manufacturing or distribution channels could have an adverse effect on our business, financial condition and results of operations.
Our ability, through our suppliers, business partners, contract 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 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.
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We 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.
We currently purchase our flavor concentrate from various flavor concentrate suppliers, and continually develop other sources of flavor concentrate for each 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. Consequently, 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.
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.
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 secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights. Failure to protect 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 rights, including our trademarks,
copyrights, licenses and trade secrets, 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. 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 research and development costs.
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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.
Our business is subject to many regulations and 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, provincial, state and local health agencies. 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, 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 and while we closely monitor developments in this area, 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.
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 of our 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. 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.
Litigation or legal could expose us to significant liabilities and damage our reputation.
We may become party to litigation claims and legal proceedings. 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 or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines, as well as disgorgement of profits.
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Additionally, there has been public attention directed at the beverage alcohol 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, liquidity, financial condition and results of operations.
We are subject to risks inherent in sales of products in international markets.
Our operations outside of the United States, contribute to our revenue and profitability, and we believe that developing and emerging markets could present future growth opportunities for us. However, there can be no assurance that existing or new products that we manufacture, distribute or 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, 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; inflationary currency, devaluation or fluctuation; increased costs of doing business due to compliance with complex foreign and U.S. 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.
Water scarcity and poor quality could negatively impact our costs and capacity.
Water is a main ingredient in substantially all of our products, is vital to the production of the agricultural ingredients on which our business relies and is needed in our manufacturing process. It also is critical to the prosperity of the communities we serve. Water is a limited resource in many parts of the world, facing unprecedented challenges from overexploitation, increasing demand for food and other consumer and industrial products whose manufacturing processes require water, increasing pollution and emerging awareness of potential contaminants, poor management, lack of physical or financial access to water, sociopolitical tensions due to lack of public infrastructure in certain areas of the world and the effects of climate change. As the demand for water continues to increase around the world, and as water becomes scarcer and the quality of available water deteriorates, we may incur higher costs or face capacity constraints and the possibility of reputational damage, which could adversely affect our profitability or net operating revenues in the long run.
Fluctuations in quantity and quality of grape supply could adversely affect our business.
A shortage in the supply of quality grapes may result from a variety of factors that determine the quality and quantity of our grape supply, including weather conditions, pruning methods, diseases and pests, the ability to buy grapes on long and short-term contracts and the number of vines producing grapes. Any shortage in grape production could cause a reduction in the amount of wine we are able to produce, which could reduce sales and adversely impact our results from operations. Factors that reduce the quantity of our grapes may also reduce their quality, which in turn could reduce the quality or amount of wine we produce. Deterioration in the quality of our wines could harm our brand name, reduce sales and adversely impact our business and results of operations.
Contamination of our wines could harm our business.
We are subject to certain hazards and product liability risks, such as potential contamination, through tampering or otherwise, of ingredients or products. Contamination of any of our wines could force us to destroy wine held in inventory and could cause the need for a product recall, which could significantly damage our reputation for product quality. We maintain insurance against certain of these kinds of risks, and others, under various insurance policies. However, the insurance may not be adequate or may not continue to be available at a price or on terms that are satisfactory to us and this insurance may not be adequate to cover any resulting liability.
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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. We believe that we have adopted 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, 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, we receive, process, transmit and store information relating to identifiable individuals (“personal data”), primarily employees, former employees and consumers with whom we interact. 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 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, 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.
If our third-party service providers and business partners do not satisfactorily fulfill their commitments and responsibilities, our financial results could suffer.
In the conduct of our business, we rely on relationships with third parties, including cloud data storage and other information technology service providers, suppliers, distributors, contractors, joint venture partners and other external business partners, for certain functions or for services in support of key portions of our operations. These third-party service providers and business partners are 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.
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Our results of operations may fluctuate from quarter to quarter for many reasons, including seasonality.
Our sales are seasonal, and we experience fluctuations in quarterly results as a result of many factors. Companies similar to ours have historically generated a greater percentage of our revenues during the warm weather months of April through September. 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.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.
The U.S. GAAP and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, stock-based compensation, trade spend and promotions, and income taxes are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported results.
If we are unable to maintain effective disclosure controls and procedures and internal control over financial reporting, our stock price and investor confidence could be materially and adversely affected.
We are required to maintain both disclosure controls and procedures and internal control over financial reporting that are effective. Because of their inherent limitations, internal control over financial reporting, however well designed and operated, can only provide reasonable, and not absolute, assurance that the controls will prevent or detect misstatements. Because of these and other inherent limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions. The failure of controls by design deficiencies or absence of adequate controls could result in a material adverse effect on our business and financial results, which could also negatively impact our stock price and investor confidence.
We are dependent on a distiller in Mexico to provide us with our finished SALT tequila product. Failure to obtain satisfactory performance from them or a loss of their services could cause us to lose sales, incur additional costs, and lose credibility in the marketplace.
We depend on a distiller in Mexico, a company in Jalisco, for the 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 distiller or an adverse change in the terms of its services could have a negative impact on our business. If our distiller in Mexico 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 the loss of the services of our distiller in Mexico, along with delays in shipments of products, 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.
Regulatory decisions and changes in the legal, regulatory and tax environment where our tequila is produced and where we operate could limit our business activities or increase our operating costs and reduce our margins.
Our business is subject to extensive regulation regarding production, distribution, marketing, advertising and labeling of beverage alcohol products in the U.S. and in Mexico, where our tequila is produced. We are required to comply with these regulations and maintain various permits and licenses. We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute, and sell spirits. 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,
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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 sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol.
We face substantial competition in the alcoholic and non-alcoholic beverage industry, and we may not be able to effectively compete.
Consolidation among spirits producers, distributors, wholesalers, or retailers could create a more challenging competitive landscape for our products. Consolidation at any level could hinder the distribution and sale of our products as a result of reduced attention and resources allocated to our brands, both during and after transition periods, because our brands might represent a smaller portion of the new business portfolio. Expansion into new product categories by other suppliers, or innovation by new entrants into the market, could increase competition in our product categories. Changes to our route-to-consumer models or partners in important markets could result in temporary or longer-term sales disruption, higher implementation-related or fixed costs, and could negatively affect other business relationships we might have with that partner. Distribution network disruption or fluctuations in our product inventory levels with distributors, wholesalers, or retailers could negatively affect our results for a particular period.
Our competitors may respond to industry and economic conditions more rapidly or effectively than we do. Our competitors offer products that compete directly with ours for shelf space, promotional displays, and consumer purchases. Pricing, (including price promotions, discounting, couponing, and free goods), marketing, new product introductions, entry into our distribution networks, and other competitive behavior by our competitors could adversely affect our sales margins, and profitability.
Our business operations may be adversely affected by social, political and economic conditions affecting market risks and the demand for and pricing of our products. These risks include:
| ● | Unfavorable economic conditions and related low consumer confidence, high unemployment, weak credit or capital markets, sovereign debt defaults, sequestrations, austerity measures, higher interest rates, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations; |
| ● | Changes in laws, regulations, or policies - especially those that affect the production, importation, marketing, sale, or consumption of our beverage alcohol products; |
| ● | Tax rate changes (including excise, sales, tariffs, duties, corporate, individual income, dividends, capital gains), or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur; |
| ● | Dependence upon the continued growth of brand names; |
| ● | Changes in consumer preferences, consumption, or purchase patterns - particularly away from tequila, and our ability to anticipate and react to them; bar, restaurant, travel, or other on-premise declines; |
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| ● | Unfavorable consumer reaction to our products, package changes, product reformulations, or other product innovation; |
| ● | Decline in the social acceptability of beverage alcohol products in our markets; |
| ● | Production facility or supply chain disruption; |
| ● | Imprecision in supply/demand forecasting; |
| ● | Higher costs, lower quality, or unavailability of energy, input materials, labor, or finished goods; |
| ● | Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher implementation related or fixed costs; |
| ● | Inventory fluctuations in our products by distributors, wholesalers, or retailers; Competitors’ consolidation or other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets; |
| ● | Insufficient protection of our intellectual property rights; |
| ● | Product recalls or other product liability claims; product counterfeiting, tampering, or product quality issues; |
| ● | Significant legal disputes and proceedings; government investigations (particularly of industry or company business, trade or marketing practices; |
| ● | Failure or breach of key information technology systems; |
| ● | Negative publicity related to our company, brands, marketing, personnel, operations, business performance or prospects; and |
| ● | Business disruption, decline, or costs related to organizational changes, reductions in workforce, or other cost-cutting measures, or our failure to attract or retain key executive or employee talent. |
Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations.
Global economic uncertainties, including foreign currency exchange rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us.
Our limited operating history makes it difficult to forecast our future results, making any investment in us highly speculative.
We have a limited operating history, and our historical financial and operating information is of limited value in predicting our future operating results. We may not accurately forecast customer behavior and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore, we may fail to make accurate financial forecasts. Our current and future expense levels are based largely on our investment plans and estimates of future revenue. As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall, which could then force us to curtail or cease our business operations.
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Risks Related to Our Securities
An investment in our common stock is speculative and there can be no assurance of any return on any such investment.
An investment in our common stock is speculative and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.
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.
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 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), 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.
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. Our Board of Directors is empowered, without shareholder 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.
We have 1,000 shares of Series A Preferred Stock authorized and outstanding with mirrored voting rights.
Series A Preferred Stock
Pursuant to a certificate of designation filed with the Secretary of State of the State of Nevada on June 10, 2025 (the “Certificate of Designation of Series A Preferred Stock”), one thousand (1,000) shares of preferred stock have been designated as Series A Preferred Stock, par value $0.001 per share, of the Company (“Series A Preferred Stock”). The Certificate of Designation provides that each Series A Preferred Share will have twenty-five thousand (25,000) votes and will vote together with the Company’s outstanding common shares, par value $0.001 (the “Common Shares”), as a single class, only with respect to the proposal related to the increase of authorized shares at the Special Meeting. The holder of the Series A Preferred Shares has granted an irrevocable proxy to certain officers of the Company to vote the Series A Preferred Shares in accordance with the terms of the Issuance Documents, in connection with the Special Meeting. Per the terms of the Issuance Documents, if voted, the Series A Preferred Shares are required to vote on the applicable proposals in the same “mirrored” proportion aggregate votes cast “FOR” and “AGAINST” on the proposal to increase the authorized shares by the holders of the Common Shares who properly vote on such proposal (but excluding any abstentions). Mr. Nistico, the Company’s Chief Executive Officer, directly beneficially owns such one thousand (1,000) share of Series A Preferred Stock.
The outstanding Series A Preferred Shares are required to be redeemed in whole, but not in part, upon the earliest of: (i) if such redemption is authorized and directed by the Board in its sole discretion, automatically and effective on such time and date specified by the Board in its sole discretion, (ii) automatically upon the approval by the Company’s shareholders of the increase of the authorized shares at any meeting of shareholders or (iii) immediately prior to the record date for the 2025 Annual Meeting of Shareholders of the Company Upon such redemption, the holder of the Series A Preferred Shares will receive aggregate consideration equal to the Purchase Price.
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The Series A Preferred will vote as described above to increase the number of authorized shares of our common stock, which could result in substantial dilution to existing stockholders if additional shares are issued. The increase in authorized shares provides us with greater flexibility to issue additional equity securities for various corporate purposes, including financings, equity compensation, or other strategic transactions. However, any such issuances may dilute the ownership interests of existing stockholders and could adversely affect the market price of our common stock. In addition, the issuance of additional shares may make it more difficult for a third party to acquire control of the Company, which could discourage or delay takeover attempts that could benefit stockholders. There can be no assurance as to when or if any additional shares will be issued or the terms on which such issuances may occur.
We have issued multiple classes of preferred stock in the Company that will result in dilution to existing stockholders upon their conversion
The issuance of common stock upon conversion of the our Series A-1 Preferred Stock, our Series B Redeemable Preferred Stock, and our Series C Convertible Preferred Stock will result in immediate and substantial dilution to the interests of other stockholders. Although 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. 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 sells 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
The market price of our common stock has been volatile over the year and may continue to be volatile.
The market price and trading volume of our common stock has been volatile over the past year, and it may continue to be volatile. Over fiscal year 2024 and the date of this annual report, our common stock has traded as low as $0.96 and as high as $29.20 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 coffee industry, general economic, industry and market conditions, the depth and liquidity of the market for our common stock, fluctuations in coffee prices, 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 in the Annual Report.
Because certain principal stockholders own a large percentage of our voting stock, other stockholders’ voting power may be limited.
As of December 31, 2024, our ten (10) largest shareholders own or controlled approximately 57% of our outstanding common stock . If those stockholders act together, they would have the ability to have a substantial influence on matters submitted to our stockholders for approval, including the election and removal of directors and the approval of any merger, consolidation or sale of all or substantially all of our assets. As a result, our other stockholders may have little or no influence over matters submitted for shareholder approval. In addition, the ownership of such stockholders could preclude any unsolicited acquisition of us, and consequently, adversely affect the price of our common stock. These stockholders may make decisions that are adverse to your interests.
We do not expect to pay dividends and investors should not buy our Common Stock expecting to receive dividends.
We do not anticipate that we will declare or pay any dividends in the foreseeable future. Consequently, you will only realize an economic gain on your investment in our common stock if the price appreciates. You should not purchase our common stock expecting to receive cash dividends. Therefore, our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations.
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There can be no assurances that our common stock will not be subject to potential delisting if we do not continue to maintain the listing requirements of the NYSE American.
Since June 11, 2021, our common stock has been listed on the NYSE American, under the symbol “SBEV”. The NYSE American has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing (i.e., being de-listed from the NYSE American), would make it more difficult for shareholders to sell our common stock and more difficult to obtain accurate price quotations on our common stock. This could have an adverse effect on the price of our common stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our common stock is not traded on a national securities exchange.
On October 6, 2023, the NYSE American notified the Company that we were not in compliance with Section 1003(a)(i) of the continued listing standards set forth in the NYSE American Company Guide (the “Company Guide”), requiring a listed company to have stockholders’ equity of (i) at least $2.0 million if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years. The notice had no immediate impact on the listing of our common stock, subject to our compliance with the other continued listing requirements. In accordance with applicable NYSE American procedures, we submitted a plan of compliance (the “Plan”) advising of the definitive action(s) the Company has taken, is taking, or would take, that would bring us into compliance with the continued listing standards within the 18 months of receipt of the notice. The NYSE American reviewed and accepted the Plan as a reasonable demonstration of an ability to conform to the relevant standards in the 18-month period. On December 20, 2023, we received a notification (the “Plan Letter”), with NYSE American acceptance of the proposed plan and further deficiency notice. In the Plan Letter the NYSE American indicated that in addition to Section 1003(a)(i), the Company was also not in compliance with Section 1003(a)(ii) of the Company Guide, requiring a listed company to have stockholders’ equity of at least $4.0 million if it has reported losses from continuing operations or net losses in three of its four most recent fiscal years.
On June 5, 2024, the Company received notification from the NYSE American indicating that it is not in compliance with the Exchange’s continued listing standards under Section 1003(a)(iii) of the Company Guide, requiring a listed company to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operations and/or net losses in its five most recent fiscal years.
On April 7, 2025, Company, NYSE American publicly announced and provided a notice to the Company that NYSE Regulation has determined to commence proceedings to delist the Company’s Common Stock and publicly trading Warrants to purchase one share of Common Stock, from NYSE American. NYSE Regulation has determined that the Company is no longer suitable for listing pursuant to Section 1009(a) of the NYSE American Company Guide as the Company was unable to demonstrate that it had regained compliance with Sections 1003(a)(i), (ii), and (iii) of the Company Guide by the end of the maximum 18-month compliance plan period, which expired on April 6, 2025.
On April 16, 2025, the Company, received an official notice of noncompliance from NYSE Regulation stating that the Company is not in compliance with NYSE American continued listing standards due to the failure to timely file the Company’s Form 10-K for the year ended December 31, 2024 by the filing due date of April 15, 2025.
Our common stock will continue to be listed and traded on the NYSE American during the 18-month period, subject to the Company’s compliance with the other continued listing standards of the NYSE American and continued periodic review by the NYSE American of the Company’s progress with respect to its Plan. There can be no assurance that the Company will be able to meet its goals set forth in the Plan. If we are unable to satisfy the NYSE American rules and listing standards, or are unable to make progress on our Plan, our securities could be subject to delisting.
If the NYSE American were to delist our securities from trading, we could face significant consequences, including, but not limited to, the following:
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● a limited availability for market quotations for our securities;
● reduced liquidity with respect to our securities;
● a determination that our common stock is a “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our common stock;
● limited amount of news and analyst coverage; and
● a decreased ability to issue additional securities or obtain additional financing in the future.
Our common stock could be further diluted as the result of the issuance of additional common stock, convertible securities, warrants or options.
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.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity
We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes. We routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the President who reports to our Chief Executive Officer, to manage the risk assessment and mitigation process.
We engage consultants, or other third parties in connection with our risk assessment processes. These service providers assist us to design and implement our cybersecurity policies and procedures, as well as to monitor and test our safeguards. We require each third-party service provider to certify that it has the ability to implement and maintain appropriate security measures, consistent with all applicable laws, to implement and maintain reasonable security measures in connection with their work with us, and to promptly report any suspected breach of its security measures that may affect our company.
We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.
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Governance
Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function. The board of directors’ audit committee is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including the information technology team at the direction of our President. Our executive team including our Chief Executive Officer, and Chief Financial Officer are responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel. This executive team is responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
Our cybersecurity incident response and vulnerability management policies are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including our Chief Executive Officer, and Chief Financial Officer. In addition, the Company’s incident response and vulnerability management policies include reporting to the audit committee of the board of directors for certain cybersecurity incidents including significant breaches to the Company’s networks or systems. The audit committee receives regular reports from the information technology team concerning the Company’s significant cybersecurity threats and risk and the processes the Company has implemented to address them. The audit committee also has access to various reports, summaries or presentations related to cybersecurity threats, risk and mitigation.
Item 2. Properties.
Splash’s physical offices are located at 1500 Cordova Rd; Fort Lauderdale, FL 33316 and 1491 2nd Street, Sarasota FL 34236 while our business office is located at 1314 East Las Olas Blvd, Suite 221, Fort Lauderdale, FL 33301. Copa’s office/manufacturing facility is located at 901 E. 2nd Street; The Dalles, OR 97058. Currently, the Company does not own any real property.
Item 3. Legal Proceedings.
We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial conditions. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.
The licensing agreement between TapouT LLC and the Company has been terminated. The parties are engaged in active and constructive settlement discussions pursuant to the terms of the agreement’s termination provisions. The Company anticipates that any final settlement will not exceed the amounts already recorded in its legal reserve and accrued accounts payable.
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 and tradeable warrants are publicly traded on the NYSE American under the symbol “SBEV” and “SBEV WS”.
Aggregate Number of Holders of Common Stock
As of June 30, 2025, there were 1,899,876 shares of Common Stock issued and outstanding. As of June 30, 2025, at our transfer agent owners totaled approximately 281 holders of record of our Common Stock.
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 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 of Directors deems relevant.
Securities Authorized for Issuance under Equity Compensation Plans
None.
Equity Compensation Plan Information
The information required by this item with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Annual Report on Form 10-K, and is incorporated herein by reference.
Purchases of Equity Securities by the Issuer.
There were no repurchases of our common stock during the year ended December 31, 2024.
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
Canfield Medical Supply, Inc. (“CMS”) a company’s whose common stock was quoted on the OTCQB entered into an Agreement and Plan of Merger with SBG Acquisition Inc. (“Merger Sub”), a Nevada Corporation wholly-owned by Canfield, and Splash Beverage Group, II Inc.. a Nevada corporation (“Splash”) pursuant to which Merger Sub merged with and into Splash (the “Merger”) with Splash as the surviving company and a wholly-owned subsidiary of Canfield. The Merger was consummated on March 31, 2020.
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As the owners and management of Splash had voting and operating control of CMS following the Merger, the Merger transaction was accounted for as a reverse acquisition (that is with Splash as the acquiring entity), followed by a recapitalization.
On July 31, 2020, CMS changed its name to Splash Beverage Group, Inc. (“SBG”). On June 11, 2021, SBG’s common stock and warrant to purchase common stock began trading on the NYSE American under the symbols “SBEV” and SBEV WT,” respectively.
On November 8, 2021, SBG reincorporated into the State of Nevada and became a Nevada corporation.
Our principal offices are located at 1314 E. Las Olas Blvd, Suite 221, Fort Lauderdale, Florida 33301. Our website address is www.splashbeveragegroup.com. We have not incorporated by reference into this Annual Report on Form 10-K the information that can be assessed through our website and you should not consider it to be part of this Annual Report on Form 10-K.
Results of Operations for the Year Ended December 31, 2024, compared to Year Ended December 31, 2023.
Revenue
Revenues for the year ended December 31, 2024 were $4.2 million compared to revenues of $18.9 million for the year ended December 31, 2023. Part of the $14.7` million decrease in sales was mainly due to a decrease in our beverage sales of $1.7 million. Additionally, revenues from our vertically integrated B2B and B2C e-commerce distribution platform called Qplash decreased approximately $13 million or 88.5% due to low inventory . Total sales declined due to limited liquidity to procure inventory to drive third-party sales.
Cost of Goods Sold
Cost of goods sold for the year ended December 31, 2024 were $3.8 million compared to cost of goods sold for the year ended December 31, 2023 of $13.3 million. The $9.5 million decrease in cost of goods sold was due to our decreased sales. The $8.4 million decrease in cost of goods sold was driven by decreased sales in the e-commerce and $1.1 million was driven by beverage business.
Operating Expenses
Operating expenses for the year ended December 31, 2024 were $16.4 million compared to $20.9 million for the year ended December 31, 2023. The decrease in operating expenses was primarily due to $1.7 million of marketing expense, $0.5 million of contracted services, $2.1 million of other general and administrative expenses partially offset by increases of the non-cash expenses related to share issuance of $1.2 million. The loss of intangible impairment of $4.2 million was recorded in the other general and administrative expenses.
Other Income/(Expense)
Other expenses for the year ended December 31, 2024 were $6.9 million compared to $5.7 million for the year ended December 31, 2023. The other expense increased of $1.2 million is mainly driven by an increase in interest expense. Interest expenses for the year ended December 31, 2024 were $2.9 million compared to $1.9 million for the year ended December 31, 2023. The $1.0 million increase in interest expense is due to new loans with a principal of $3.2 million with higher interest rates. The Company also reserved $0.3 million for legal settlement. Offset by a decrease in amortization of debt discount of $0.2 million and $0.03 million in other expenses.
29
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. In addition, the Company has an active registration statement on Form S-3 to facilitate raising additional funds.
As of December 31, 2024, we had total cash of $15,346, as compared with $379,978 at December 31, 2023. The decrease was primarily due to expenses relating to operating the business.
Net cash used for continuing operating activities during the year ended December 31, 2024, was $8.0 million as compared to the net cash used by continuing operating activities for the year ended December 31, 2023, of $10.2 million. The primary reason for the change in net cash used was due to an increase of $1.2 million in non-cash share-based compensation, and a decrease of $1.6 million in losses of the business, offset by a decrease of $0.6 million in working capital.
Net cash used for investing activities during the year ended December 31, 2024, was $0.01 million as compared to the net cash used for investing activities during the year ended December 31, 2023, of $0.01 million. The net cash used in the year 2024 was for machinery & equipment.
Net cash provided by financing activities during the year ended December 31, 2024, was $7.5 million compared to $6.1 million provided from financing activities for the year ended December 31, 2023. Company received $9.5 million and $6.6 million proceeds from the issuance of debt in years ending December 31, 2024 and 2023, respectively. No cash advance from shareholders in 2024, $0.2 million was received from a shareholder advance in the year ending December 31, 2023. Principal repayment of debt of $2.0 million and $1.0 million were made in years ending December 31, 2024 and 2023 respectively. A cash advance from related party of $0.01 million and $0.4 million was received in 2024 and 2023 respectively.
In order to have sufficient cash to fund our operations, we will need to raise additional equity or debt capital. 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. 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 notes 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.
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.
30
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.
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.
31
Item 8. Financial Statements and Supplementary Data.
F-1
Report
of Independent Registered Public Accounting Firm (PCAOB ID:
Report of Independent Registered Public Accounting Firm
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, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2024 and 2023, 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, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023, 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.
F-2
Evaluation of Intangible Assets for Impairment
Description of the Matter
As discussed in Note 2 to the consolidated financial statements, intangible assets are tested for impairment at least annually or when events or circumstances indicate the fair value of the asset may be below its carrying value. This analysis involves comparing events and circumstances such as general macroeconomic conditions, conditions specific to the industry and company specific factors. These fair value estimates are sensitive to significant assumptions and judgments, such as projections of operating expenditures, discount rates, and future levels of revenue.
The Company has experienced a decline in its reported amounts of Beverage revenue and the Beverage operating segment has experienced losses from operations for the past several years. These factors were considered a triggering event indicative of impairment, which resulted in an impairment assessment by management. Pursuant to current accounting guidance, management performed a quantitative analysis and concluded that its intangible assets were impaired and the Company recorded impairment charges of approximately $4.3 million during the year ended December 31, 2024. At December 31, 2024, the Company’s intangible asset balance was $0.
Auditing management’s annual impairment tests was complex because of the significant judgment required to evaluate management’s assumptions used to determine the fair value of the intangible assets.
How We Addressed the Matter in our Audit
Our audit procedures related to the evaluation of intangible assets for impairment included the following, among others:
| 1. | We evaluated managements significant accounting policies related to the impairment of intangible assets for reasonableness. |
| 2. | We evaluated management’s assessment of the grouping of long-lived assets for which separately identifiable cash flows can be determined. |
| 3. | With respect to the Company’s valuation of its intangible assets: |
| a. | We assessed the qualifications and competence of management |
| b. | We evaluated the methodologies used to determine the fair value of the Company’s intangible assets |
| c. | We reperformed management’s quantitative analysis to assess the impact of intangible asset impairment |
| 4. | We assessed the adequacy of the Company’s disclosures regarding impairment assessments included in Note 2. |
We have served as the Company’s auditor since 2023
July 11, 2025
F-3
| Splash Beverage Group, Inc. |
| Consolidated Balance Sheets |
| December 31, 2024 and December 31, 2023 |
| December 31, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts Receivable, net | ||||||||
| Prepaid Expenses | ||||||||
| Inventory | ||||||||
| Other receivables | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Deposit | ||||||||
| Goodwill | ||||||||
| Intangibles assets, net | ||||||||
| Investment in Salt Tequila USA, LLC | ||||||||
| Right of use assets | ||||||||
| Property and equipment, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Right of use liability, current portion | ||||||||
| Related party notes payable | ||||||||
| Notes payable, net of discounts | ||||||||
| Shareholder advances | ||||||||
| Accrued interest payable | ||||||||
| 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’ equity: | ||||||||
| Preferred stock, $ par value, shares authorized, shares issued | ||||||||
| Common Stock, $ par, shares authorized, and shares issued and outstanding, at December 31, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The share amounts above have been retroactively adjusted to reflect the 1 for 40 reverse stock split that took effect on March 27, 2025.
The accompanying notes are an integral part of these consolidated financial statements.
F-4
| Splash Beverage Group, Inc. |
| Consolidated Statements of Operations |
| For the Years Ended December 31, 2024 and December 31, 2023 |
| 2024 | 2023 | |||||||
| 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 | ( | ) | ( | ) | ||||
| Total other expense | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net (loss) from continuing operations, net of tax | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive loss | ||||||||
| Foreign currency translation gain (loss) | $ | $ | ||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share - continuing operations | ||||||||
| Basic and Diluted | ) | ) | ||||||
| Weighted average number of common shares outstanding - continuing operations | ||||||||
| Basic and Diluted | ||||||||
The share amounts above have been retroactively adjusted to reflect the 1 for 40 reverse stock split that took effect on March 27, 2025.
The accompanying notes are an integral part of these consolidated financial statements.
F-5
| Splash Beverage Group, Inc. |
| Consolidated Statements of Changes in Stockholders’ Equity |
| For the Years ended December 31, 2024 and 2023 |
| Common stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficit | (Deficit) | |||||||||||||||||||
| Balances at December 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||
| Note discount created from issuance of common stock and warrants on convertible instruments | ||||||||||||||||||||||||
| Share based compensation | — | |||||||||||||||||||||||
| Conversion of notes payable to common stock | ||||||||||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||
| Accumulated Comprehensive Income - Translation | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balances at December 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| 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 | ( | ) | ( | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
F-6
| Splash Beverage Group, Inc. |
| Consolidated Statements Cash Flows |
| For the Year Ended December 30, 2024 and 2023 |
| 2024 | 2023 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| ROU assets, net | ||||||||
| Amortization of debt discount | ||||||||
| Loss from intangible impairment | ||||||||
| Non-cash share based compensation | ||||||||
| Changes in working capital items: | ||||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Deposits | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued Interest payable | ||||||||
| Net cash used in operating activities - continuing operations | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Capital Expenditures | ( | ) | ( | ) | ||||
| Net cash used in investing activities -– continuing operations | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Cash advance (repayment) from shareholder | ||||||||
| Related party cash advance | ||||||||
| Proceeds from issuance of debt | ||||||||
| Principal repayment of debt | ( | ) | ( | ) | ||||
| Net cash provided by financing activities - continuing operations | ||||||||
| Net cash effect of exchange rate changes on cash | ||||||||
| Net Change in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
| Cash and Cash Equivalents, beginning of year | ||||||||
| Cash and Cash Equivalents, end of year | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for Interest | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Convertible notes payable and accrued interest converted to common stock (452,914 shares) | $ | $ | ||||||
| Convertible notes payable and accrued interest converted to common stock (458,500 shares) | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 1 – Business Organization and Nature of Operations
Splash Beverage Group (“SBG” or “Splash”), formally Canfield Medical Supply, Inc. (“CMS”) was incorporated in the State of Ohio on September 3, 1992, and changed domicile to Colorado on April 18, 2012. CMS was in the business of home health services, primarily the selling of durable medical equipment and medical supplies to the public, nursing homes, hospitals and other end users.
On December 31, 2019, CMS entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SBG Acquisition Inc. (“Merger Sub”), a Nevada Corporation wholly owned by CMS, and Splash Beverage Group, Inc. a Nevada corporation (“Splash”) pursuant to which Merger Sub merged with and into Splash (the “Merger”) with Splash as the surviving company and a wholly-owned subsidiary of CMS. The Merger was consummated on March 31, 2020.
As the owners and management of Splash have voting and operating control of CMS following the Merger, the Merger transaction was accounted for as a reverse acquisition (that is with Splash as the acquiring entity), followed by a recapitalization.
As part of the recapitalization, previously issued shares of SBG preferred stock have been reflected as shares of common stock that were received in the Merger. These common shares have been retrospectively presented as outstanding for all periods.
Splash specializes in the manufacturing process, distribution, and sales & marketing of various beverages across multiple channels. Splash operates in both the non-alcoholic and alcoholic beverage segments. Additionally, Splash operates its own vertically integrated B-to-B and B-to-C E-commerce distribution platform called Qplash, further expanding its distribution abilities and visibility.
In July 2020 the Company filed a Certificate of Amendment of Articles of Incorporation of CMS with the Secretary of State of the State of Colorado, pursuant to which the Company changed its name from CMS. to Splash Beverage Group, Inc. On July 31, 2020, we received approval from FINRA to change the Company’s name from CMS to Splash Beverage Group, Inc. Our new ticker symbol is SBEV.
On December 24, 2020, SBG consummated an Asset Purchase
Agreement (the “Copa APA”) with Copa DI Vino® Corporation (“CdV”), to purchase certain assets and
assume certain liabilities that comprise the Copa DI Vino® business for a total purchase price of $
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.
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.
F-8
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Our investment in Salt Tequila USA, LLC is accounted for at cost, as the company does not have the ability to exercise significant influence.
Our 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.
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
Our cash in uninsured foreign bank accounts was $
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, 2024 and December 31, 2023, our accounts receivable amounts are reflected net of allowances
of $
Inventory
Inventory is stated at the lower of cost or net realizable
value, accounted for using the weighted average cost method. The inventory balances at December 31, 2024 and December 31, 2023 consisted
of raw materials, work-in-process, and finished goods held for distribution. The cost elements of inventory consist of purchase of products,
transportation, and warehousing. We establish provisions for excess or inventory near expiration based on management’s estimates
of forecast turnover of inventories on hand and under contract. A significant change in the timing or level of demand for certain products
as compared to forecast amounts may result in recording additional provisions for excess or expired inventory in the future. 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.
F-9
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies, continued
Depreciation expense totaled $
| 2024 | 2023 | |||||||
| Auto | ||||||||
| Machinery & equipment | ||||||||
| Buildings & Tanks | ||||||||
| Leasehold improvements | ||||||||
| Computer Software | ||||||||
| Office furniture & equipment | ||||||||
| Total cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant & equipment, net | ||||||||
Excise taxes
The Company pays alcohol excise taxes based on product sales to both the Oregon Liquor Control Commission and to the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (TTB). The Company also pays taxes to the State of Florida – Division of Alcoholic Beverages and Tobacco. The Company is liable for the taxes upon the removal of product from the Company’s warehouse on a per gallon basis. The federal tax rate is affected by a small winery tax credit provision which decreases based upon the number of gallons of wine production in a year rather than the quantity sold.
Fair Value of Financial Instruments
Financial Accounting Standards (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:
| Level 1 - | Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. |
| Level 2 - | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). |
| Level 3 - | Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. |
The liabilities and indebtedness presented on the consolidated financial statements approximate fair values at December 31, 2024 and December 31, 2023, consistent with recent negotiations of notes payable and due to the short duration of maturities.
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 .
Advertising
We conduct 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.
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
F-12
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
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 | $ | $ | $ | $ | ||||||||||||
Note 2 – Summary of Significant Accounting Policies, continued
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.
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 gain during the year ended December 31, 2024 of $
Recent Accounting Pronouncements
Adoption of FASB ASU 2020-06
In August 2020, the Financial Accounting Standards Board (FASB) issued ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments and contracts by removing certain models that were previously required to be applied. The amendments are effective for the fiscal years beginning after December 15, 2023, with early adoption permitted. The Company adopted ASU 2020-06 effective January 1, 2024 and has removed the effects of any embedded conversion features from certain of our convertible instruments as of that date.
F-13
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 3 – Liquidity, Capital Resources and Going Concern Considerations
During 2024, the Company received $
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 $
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 July 11, 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, and it has a working capital deficit.
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. However, there is no assurance that the Company will be successful in implementing its plans or in raising additional funds. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The 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-14
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, 2024 | December 31, 2023 | ||||||||||
| Notes Payable and Convertible Notes Payable | ||||||||||||
| In December 2020, the Company entered into a 56- month loan with a company in the amount of $ | Variable | $ | ||||||||||
| In April 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 two individuals totaling $ | % | |||||||||||
| 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 the amount of $ | % | |||||||||||
| In December 2022, the Company entered into an eighteen-month loan with an individual in the amount of $ | % | |||||||||||
| In February 2023, the Company entered into a twelve-month loan with an entity in the amount of $ | % | $ | $ | |||||||||
| 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 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 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 $ | % | $ | $ | |||||||||
| In December 2023, the Company entered into a 2.5-month loan with an individual in the amount of $ | % | |||||||||||
| 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 $ | % | |||||||||||
| 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 September 2024, we 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, we entered into a merchant cash advance agreement in the amount of $ | % | |||||||||||
| In December 2024, we entered into a merchant cash advance agreement in the amount of $ | % | $ | $ | |||||||||
| In December 2024, the Company entered into a twelve-month loan with an individual in the amount of $ | % | |||||||||||
| Total notes payable | $ | $ | ||||||||||
| Less notes discount | ( | ) | ( | ) | ||||||||
| Less current portion | ( | ) | ( | ) | ||||||||
| Long-term notes payable | $ | $ | ||||||||||
F-15
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 4 – Notes Payable, Shareholder 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, 2024 and 2023. These amounts are reflective of the 1 for 40 reverse split.
As of December 31, 2024,
and December 31, 2023, the balance of the unamortized debt discount was $
Notes discount of $ and $ for the year ending December 31, 2024 and 2023 respectively is related to the discounted warrants and common shares issued in connection with the notes.
In June 2025, the Company exchanged
approximately $
| Interest Rate | December 31, 2024 |
December 31, 2023 | ||||||||||
| Shareholder Notes Payable | ||||||||||||
| In April 2024, revised Feb 2023 shareholder advance in
the amount of $ |
% | |||||||||||
| Less current portion | ( |
) | ( |
) | ||||||||
| Long-term notes payable | $ | $ | ||||||||||
Interest expense on related party notes payable was $24,000 and $20,400 for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2024, the Company’s convertible note balances are convertible into shares of common stock
F-16
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 5 – Licensing Agreement and Royalty Payable
The Company had a licensing agreement with ABG TapouT,
LLC (“TapouT”), providing the Company with licensing rights to the brand “TapouT” (i)energy drinks, (ii) energy
bars, (iii) coconut water, (iv) electrolyte gum/chews, (v) energy shakes, (vi) powdered drink mix, (viii) water (including enhanced water),
(vii) energy shots, (viii) teas, and (ix) sports drinks sold in the North America (including US Territories and Military Bases), United
Kingdom, Brazil, South Africa, Australia, Scandinavia, Peru, Colombia, Chile and Guatemala. The Company was required to pay a 6% royalty
on net sales, as defined, and are required to make minimum monthly payments of $
The Company has accrued guaranteed minimum royalty payments $
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.
Note 6 – Stockholders’ Equity
Common Stock
The Company underwent a 1 for 40 reverse split of its common stock on March 27, 2025. All share amounts and per share amounts are retroactively adjusted to reflect the effect of the reverse split.
On September 29, 2023, the Company entered into a
securities purchase agreement with certain accredited investors. Pursuant to such agreements, the Company sold:
On May 1, 2024, the Company entered into a securities
purchase agreement with certain accredited investors. Pursuant to such agreements, the Company sold:
During the year ended December 31, 2024, the Company granted share-based awards to certain consultants totaling shares of common stock at a weighted average price of $9.60, shares for extension of note, shares on conversion of convertible instruments, shares on debt discount and shares for non-cash compensation.
F-17
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
A convertible promissory note was issued to shareholder on April 15, 2024 for $ at % with conversion price of $14.0 per share. The note included share of warrant coverage. The loan matures in July 2025 with principal and interest due semi-annually. Accrued interest of $ was paid prior to August 15, 2024.
Preferred Stock
As of the date of this filing, the Company has issued four series of preferred stock: Series A, A-1, B, and C, each with distinct rights and preferences as outlined below. Note agreements were amended to be exchanged for Preferred B and the impact of those amendments is subject to further review.
Voting Rights
| ● | Series A carries 25,000 votes per share but is limited solely to voting on the authorization of additional shares. It has no other voting rights. Series A is expected to be retired following the special meeting. | |
| ● | Series A-1 carries 231 votes per share. | |
| ● | Series B and Series C do not carry any voting rights. |
Dividends
| ● | Series A does not accrue dividends. | |
| ● | Series A-1 and Series B carry a fixed 12% annual dividend, payable quarterly in arrears, in either cash or payment-in-kind (PIK) at the Company’s discretion. These dividends are mandatory and take priority over any dividends on common stock, regardless of whether common stock dividends are declared. | |
| ● | Series C does not accrue dividends. |
Conversion into Common Stock
| ● | Series A is not convertible. | |
| ● | Series A-1 is convertible into common stock at 80% of the VWAP, subject to a floor of $1.25 and a ceiling of $4.00. A-1 is convertible into a range of 162,500 to 520,000 common shares. | |
| ● | Series B is also convertible at 80% of the VWAP, with a floor of $1.25 and a ceiling of $6.00, and is convertible into a range of 2,118,333 to 10,168,000 common shares. | |
| ● | Series C is convertible at a fixed price of $3.00, resulting in the potential issuance of 6,666,667 common shares upon conversion. |
Redemption – at the sole discretion of the Company.
| ● | Series A is redeemable by the Company after the special meeting for $1,000. | |
| ● | Series A-1 and Series B are redeemable by the Company after two years from the date of issuance, for $650,000 and $12,700,000, respectively. | |
| ● | Series C is not redeemable. |
Seniority
| ● | Series B is the most senior class (Seniority Level 1). | |
| ● | Series A-1 ranks junior to Series B (Seniority Level 2). | |
| ● | Series C is the most junior class (Seniority Level 3). | |
| ● | Series A is a governance-related instrument and does not participate in liquidation or dividend preferences. |
F-18
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
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 | ||||||||||||
Please
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 at the time the 2020 plan was adopted as of December 31, 2024.
The 2020 Plan has an “evergreen” feature, which provides for the annual increase in the number of shares issuable under the plan by an amount equal to 5% of the number of issued and outstanding common shares at year end, unless otherwise adjusted by the board. At January 1, 2023 and 2024, the number of shares issuable under the 2020 plan increased by and shares, respectively.
In October 2023, the shareholders voted to increase the number of shares issuable under the Plan to 7.5%.
At December 31, 2024 the number of shares authorized under the 2020 plan is .
Note 6 – Stockholders’ Equity, continued
The following is a summary of the Company’s stock option activity:
| Options | 2024 | 2023 | |||||||||||||||
| 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.
F-19
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
During 2023, the Company granted options to
employees and directors at weighted average strike price of $, weighted average expected life of years, weighted average volatility
of %, weighted average risk-free rate of % and no dividend. On April 24, 2023, the Company modified the price of options
to $ from a weighted average price of $. The options have a weighted average expected life of years, weighted average volatility
of %, weighted average risk-free rate of % and no dividend. Following ASC Topic 718 the Company recognized an incremental expense
from the modification of the option pricing resulting in an expense of $
The Company determined the grant date fair value of the options granted using the Black Scholes Method using the following assumptions:
| December 31, 2024 | December 31, 2023 | |||||||
| Risk-free interest rates | % | % | ||||||
| Exercise price | $ | – | $ | |||||
| Expected life | years | years | ||||||
| Expected volatility | - | % | % | |||||
| Expected dividends | ||||||||
The fair value of stock options granted in 2024 has been measured at shares using the Black-Scholes option pricing model with the following assumptions: exercise price $ to $, expected life to years, expected volatility %, expected dividends %, risk free rate %.
During the year ended December 31, 2024, the fair value of options granted amounted to $. As of December 31, 2024, the intrinsic value of stock options outstanding and exercisable was $. Stock compensation expense for the years ended December 31, 2024 and 2023 was $ and $, respectively.
Note 6 – Stockholders’ Equity, continued
At December 31, 2024, there was approximately $
The following is a summary of the Company’s Warrant activity and reflects the 1 for 40 reverse split.
| Warrants | December 31, 2024 | December 31, 2023 | ||||||||||||||
| 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 | $ | $ | ||||||||||||||
F-20
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
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, 2024 | December 31, 2023 | |||||||
| Risk-free interest rates | % | % | ||||||
| Exercise price | $ | $ | ||||||
| Expected life | years | years | ||||||
| Expected volatility | % | % | ||||||
| Expected dividends | ||||||||
Note 7 – Related Parties
During the normal course of business, the
Company incurred expenses related to services provided by the CEO or Company expenses paid by the CEO, resulting in related party
payables. In conjunction with the acquisition of Copa di Vino, the Company also entered into a Revenue Loan and Security Agreement
(the “Loan and Security Agreement”) by and among the Company, Robert Nistico, additional Guarantor and each of the
subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and, collectively, the
“Guarantors”), and Decathlon Alpha IV, L.P. (the “Lender”). The Note Payable to Decathlon with a balance of
$
There were related party advances from our chief executive officer in the amount
of approximately $
Note 8 – Investment in Salt Tequila USA, LLC
The Company has a marketing and distribution agreement with SALT in Mexico for the manufacturing of our Tequila product line.
The Company has a
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, 2024 and 2023. A majority of the real estate leases include options to extend the lease. Management reviews all options to extend at the inception of the lease and account for these options when they are reasonably certain of being exercised.
Operating lease expense is recognized on a straight-line
basis over the lease term and is included in operating expense on the Company’s condensed consolidated statement of operations and
comprehensive loss. Operating lease cost was $
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
F-21
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
| Undiscounted Future Minimum Lease Payments | Operating Lease | |||
| 2025 | $ | |||
| 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, 2024:
| 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, 2024:
| Remaining term on leases | ||||
| Incremental borrowing rate | % |
Note 10 – 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.
| Revenue | For the Year Ended, December 31, 2024 | For the Year Ended, December 31, 2023 | ||||||
| Splash Beverage Group | $ | $ | ||||||
| E-Commerce | ||||||||
| Total Revenues, | $ | $ | ||||||
| Segment operating loss: | 2024 | 2023 | ||||||
| Splash Beverage Group | $ | ( | ) | $ | ( | ) | ||
| E-Commerce | ( | ) | ( | ) | ||||
| Total segment operating loss | $ | ( | ) | $ | ( | ) | ||
F-22
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
| Reconciliation of segment loss to corporate loss: | 2024 | 2023 | ||||||
| Other income/expense | $ | ( | ) | $ | ( | ) | ||
| Amortization of debt discount | ( | ) | ( | ) | ||||
| Interest income & expense | ( | ) | ( | ) | ||||
| Legal reserve | ( | ) | ||||||
| Loss before income tax | $ | ( | ) | $ | ( | ) | ||
| Total Assets | December 31, 2024 | December 31, 2023 | ||||||
| Splash Beverage Group | $ | $ | ||||||
| E-Commerce | ||||||||
| Total Assets | $ | $ | ||||||
Splash Beverage Group revenue decreased for the year ending December 31, 2024 versus December 31, 2023 by $1.6 million or 30% with the main contribution from the decrease in revenue coming from TapouT and Pulpoloco. The contribution after marketing expenses increased by $1.2 million for the year ending December 31, 2024 versus December 31, 2023 due to decreased sales partially offset by cost decreases and marketing expense.
E-Commerce revenue decreased for the year ending December 31, 2024 versus December 31, 2023 by $8.9 million driven by low inventory. Contribution after Marketing expenses declined by $4.8 million due to decrease in sales.
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.
On June 5, 2024, the Company received notification from the NYSE American LLC (“NYSE American”) indicating that it is not in compliance with the NYSE American’s continued listing standards under Section 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”), requiring a listed company to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operations and/or net losses in its five most recent fiscal years. The Company is now subject to the procedures and requirements of Section 1009 of the Company Guide. If the Company is not in compliance with the continued listing standards by April 6, 2025 or if the Company does not make progress consistent with the Plan during the plan period, the NYSE American may commence delisting procedures.
The licensing agreement between TapouT LLC and the Company was terminated in Q1 2024. The parties are engaged in active and constructive settlement discussions pursuant to the terms of the agreement’s termination provisions. Based on the settlement discussions, the Company anticipates that any final settlement will not exceed the amounts already recorded in its legal reserve and accrued accounts payable.
Note 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.
At December 31, 2024, the Company’s net operating
loss carryforward for Federal income tax purposes was $
There was
F-23
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
Note 12 – Tax Provision, continued
The reconciliation of the income tax benefit is computed at the U.S. federal statutory rate as follows:
| 2024 | 2023 | |||||||
| Federal Statutory Tax Rate | % | % | ||||||
| Permanent Differences | ( | )% | ( | )% | ||||
| Change in Valuation Allowance | ( | )% | ( | )% | ||||
| Net deferred tax asset | ||||||||
The tax effects of temporary differences which give rise to the significant portions of deferred tax assets or liabilities at December 31 are as follows:
| 2024 | 2023 | |||||||
| 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 2024.
Note 13 – Subsequent Events
In January 2025, the Company entered into a convertible promissory note with a loan company in the amount of $163,000. The note has a six-month term, accrues interest at 12% and is convertible into shares of common stock of the Company with a discount rate of 35% of Market price.
In January 2025, the Company issued a 10-month promissory note in the amount of $150,650, that accrues interest at 12% and is convertible into shares of common stock at a 25% discount to the current market price.
In January 2025, the Company entered into a twelve-month loan with individuals totaling in the amount of $350,000. The note included warrant coverage of 35,000 5-year warrants with a $10 exercise price. The loan matures in January 2026 with principal and interest due at maturity with conversion price of $10.0 per share
In January 2025, the Company entered into an eighteen-month loan with individuals totaling $381,000. The note included warrant coverage of 38,100 5-year warrants with a $10 exercise price. The loan matures in June 2026 with principal and interest due at maturity with conversion price of $10 per share
F-24
Splash Beverage Group, Inc.
Notes to the Consolidated Financial Statements
On March 27, 2025, the Company implemented a 1.0 for 40.0 reverse stock split. All common stock shares, warrants, and conversion prices stated herein have been adjusted to reflect the split. The purpose of this reverse split was to maintain the Company’s listing on the NYSE American.
In April 2025, the Company issued a 5-year promissory note in the amount of 200,000, it accrues interest at 15%, and is convertible into shares of common stock at $1.25. The note also received 125,000 5-year warrants exercisable at $2.00, and 83,334 5-year warrants exercisable at $3.00.
In May 2025, the Company issued 650 shares of Series A-1 Preferred Stock in exchange for approximately $650,000. Series A-1 shares are convertible into common stock, subject to shareholder approval, and further discussed in Note 6. Investors of A-1 Shares also received 162,500 1-year A Warrants exercisable into common stock at 80% of 5-day VWAP, and 162,500 5-year B Warrants exercisable into common stock at $4.00. The accounting treatment of this transaction is subject to further review and may be adjusted in the future.
In June 2025, the Company issued 1000 shares of Preferred A Stock. Preferred A is super voting preferred, not convertible into common stock, and further discussed in Note 6.
In June 2025, the Company issued 126,710 shares of Series B Preferred Stock in exchange for approximately $12.7 million in previously outstanding convertible notes. The Series B shares are convertible into common stock, subject to shareholder approval and further discussed in Note 6. The accounting treatment of this transaction is subject to further review and may be adjusted in the future.
In June 2025, the Company acquired certain assets, including all contractual water rights to the aquifer located in Garabito, Puntarenas, Costa Rica. The Company issued 20,000 shares of Series C Preferred Stock as consideration, at an initial stated value of $1000 per share. Management determined that the transaction is an asset acquisition under ASC 805, as substantially all of the fair value is concentrated in a single identifiable asset—the water rights—and no substantive processes were acquired. The preliminary fair value of the acquired assets has been estimated at approximately $20 million and is subject to revision. The Series C shares are convertible into common stock, subject to shareholder approval, and further discussed in Note 6
F-25
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
We have adopted and maintain disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Exchange Act), that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), to allow for timely decisions regarding required disclosure.
As required by Exchange Act Rule 13a-15, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to our limited resources our disclosure controls and procedures are not effective in providing material information required to be included in our periodic SEC filings on a timely basis and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure about our internal control over financial reporting discussed below Following the 2022 evaluation by management of the effectiveness of the design and operation of our disclosure controls and procedures we implemented new controls and process in 2023.
(2) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company. Our internal control system was designed to, in general, provide reasonable assurance to our management and board regarding the preparation and fair presentation of published financial statements, but 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 the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. Based on that assessment, our management has determined that as of December 31, 2024, our internal control over financial reporting was not effective due to material weaknesses related to a limited segregation of duties due to our limited resources and the small number of 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 this control deficiency constitutes a material weakness which could 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.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding management’s assessment of our internal control over financial reporting pursuant to temporary rules of the SEC.
(3) Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting other than items highlighted above, identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934 that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth our executive officers and directors, their ages and position(s) with the Company.
| Name | Age | Position | ||
| Robert Nistico | 61 | Chief Executive Officer and Director | ||
| William Devereux(4) | 50 | Chief Financial Officer | ||
| Stacy McLaughlin(1) | 43 | Former Chief Financial Officer | ||
| Julius Ivancisits(2) | 53 | Former Chief Financial Officer | ||
| Ron Wall(5) | 57 | Former Chief Financial Officer | ||
| Fatima Dhalla(6) | 70 | Former Interim Chief Financial Officer | ||
| William Meissner | 58 | President, Chief Marketing Officer | ||
| Justin Yorke | 58 | Director | ||
| John Paglia(3) | 57 | Director | ||
| Thomas Fore | 59 | Director | ||
| Bill Caple | 66 | Director |
| (1) | Ms. McLaughlin resigned as the Chief Financial Officer of the Company on March 29, 2024 |
| (2) | Mr. Ivancsits informed the Company of his intention to resign as Chief Financial Officer of the Company Ion February 7, 2025, to be effective as of February 18, 2025. |
| (3) | Dr. Paglia informed the Company of his intention to resign as a member of the Board, as well as any other positions at the Company, on February 7, 2025, to be effective as of March 7, 2025. |
| (4) | On March 20, 2025, William Devereux was appointed as the Company’s Chief Financial Officer |
| (5) | Mr. Ron Wall resigned as the Chief Financial Officer of the Company on September 26, 2023 |
| (6) | Ms Fatima Dhalla resigned as the Interim Chief Financial Officer of the Company on January19, 2024. |
Directors are elected annually and hold office until the next annual meeting of the stockholders of the Company and until their successors are elected. Officers are elected annually by the Board of Directors (the “Board”) and serve at the discretion of the Board.
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Robert Nistico, age 60, on March 31, 2020 became the Chief Executive Officer and a member of the Board of the Company. Since 2012, Mr. Nistico has served as the Chief Executive Officer and a member of the Board of Splash Beverage Group, Inc., prior to the Company’s acquisition by CMS. Mr. Nistico also served as the president of Viva Beverages, LLC from 2009 to 2011. Mr. Nistico was the fifth employee at Red Bull North America, Inc. where he worked from 1996 to 2007 and served as Vice President of Field Marketing and Sr. Vice President/General Manager. Mr. Nistico was instrumental in building the Red Bull brand in North and Central America and the Caribbean from no revenues to $1.45 billion in annual revenues. Earlier, he held the brand position of Regional Portfolio V.P and Division Manager for Diageo (formerly I.D.V. / Heublein), General Sales Manager for Republic National (formerly The Julius Schepps Company) and North Texas State Manager for The E & J Gallo Winery (and a variety of other management positions for those companies). Mr. Nistico serves as a director of Apollo Brands. Mr. Nistico has more than 27 years of experience in the beverage industry, including direct and indirect sales management, strategic brand management & marketing, finance, operations, production and logistics. Mr. Nistico holds a B.A. from the University of Colorado.
William Devereux, age 50, on March 20, 2025 became our Chief Financial Officer. Mr. Devereux was CFO at Hembal Labs and Akin AI, where he secured enterprise contracts, sourced a merger offer, and positioned companies for significant investment. Earlier, he was a Partner at Daruma Capital, where he played a key leadership role in managing a $2B portfolio. He also advised on M&A and regulatory matters at Dames Point Partners and held leadership roles in investment strategy and corporate governance. An expert in corporate finance, capital allocation, and M&A strategy, William holds an MBA from the University of North Carolina at Chapel Hill and a BS in Finance from the University of Florida.
Julius Ivancsits, age 53, became the Chief Financial Officer of the Company on April 24, 2024. Prior to joining the Company, Mr. Ivancsits was the Chief Financial Officer of HEXO Corporation, from May 2022 to July 2023, assisting HEXO in its successful sale to Tilray brands in 2023. He founded and has been serving as the managing director at endurance CFO Advisory Services since the HEXO sale. Prior to his time at HEXO he served as the Chief Financial Officer at Goba Capital from 2021 until 2022, as the Chief Financial Officer at AlpHa Measurement Solutions, LLC from 2019 until 2021, and as the Chief Financial Officer at Be Green Packaging from 2017 until 2019. He also served in multiple roles at CPKelco with progressively increasing experience. Mr. Ivancsits has a BS in Business from Eastern Illinois University.
Stacy McLaughlin, age 43, became the Chief Financial Officer on January 24, 2024. Prior to serving as our Chief Financial Officer, Ms. McLaughlin was the Chief Financial Officer of Material Technologies, Corp. from 2022 to 2023. From 2013 to 2021, Ms. McLaughlin was the Vice President and Chief Financial Officer of Willdan Group, Inc. (Willdan), and prior to that, she was their Compliance Manager from 2010 to 2013. During her tenure at Willdan, she was responsible for accounting and finance functions, SEC reporting, investor relations, treasury, and managed a follow-on equity offering. Prior to Willdan, Ms. McLaughlin was, from 2009 to 2010, Senior Associate at Windes & McClaughry Accountancy Corporation and, from 2004 to 2009, Senior Audit Associate at the public accounting firm KPMG LLP. Ms. McLaughlin has a Masters in Accounting from the University of Southern California and BS from the University of Arizona. Ms. McLaughlin is a Certified Public Accountant (CPA).
William Meissner, age 58, became the President and Chief Marketing Officer of the Company in May of 2020. Mr. Meissner is a proven leader with more than twenty years of success in growing consumer brand companies with both large multinational and medium sized entrepreneurial organizations. Meissner has held several other leadership and board director roles. Prior to Splash Meissner was a board director and CEO in a beverage vertical organized by a mid-cap PE firm designed to acquire and build emerging brands, where he acquired two legacy tea brands from Nestle, Sweet Leaf Tea and Tradewinds Tea. Meissner served as CEO and Board Director or Genesis Today, Inc. a plant based superfood and supplement company, CEO and Board Director of a joint venture between Distant Lands Coffee Inc. and Caffitaly Systems s.p.a called Tazza Pronto Inc., CEO and Board Director of Jones Soda Inc., President of Talking Rain Beverages, Inc., Chief Marketing Officer of Coca-Cola’s Fuze Beverages, Brand Director of PepsiCo’s SoBe Beverages and Category Manager of Nutritional Beverages for Tetra Pak Inc. Meissner has an MBA from the University of Pittsburgh’s Katz Graduate School of Business and a Bachelor’s degree from Michigan State University.
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Thomas Fore, age 59, became an independent director of the Board of the Company on March 20, 2025. Mr. Fore currently leads the real estate investment strategy for Epogee Capital Management, a Boston-based Registered Investment Advisory, and for Wise Capital, an international investment fund with more than $500MM AUM. Previously, he served as the CEO of TideRock Media from 2011 to 2024. TideRock has produced more than 15 feature films for the Sundance Labs Program and has worked with top Hollywood talent including: Elizabeth Banks, Richard Gere, Common, Danny Glover, and Christopher Columbus. TideRock co-founded the Sundance Investor’s Catalyst Lab in 2013 in order to provide education and resources to film investors. Thomas is a board member of My Pebble Inc., a private technology company which is involved in the effort to help companies become carbon neutral, and is a graduate of Towson University (1991) and has retired from the Baltimore City Police Department as a Detective Agent in 2000.
Justin Yorke, age 58, became a member of the Board of the Company on March 31, 2020. Since March 31, 2020, Mr. Yorke has also served as the Company’s Secretary. Mr. Yorke has over 25 years of experience in finance. Based in Hong Kong for over 10 years, he managed funds for a private Swiss Bank, Darier Henstch from 1997 to 2000. Prior to that, from 1995 to 1997, Mr. Yorke managed funds for Peregrine Investments and from 1990 to 1995 Unifund, Asia, Ltd, Hong Kong, a high net-worth family office headquartered Geneva, Switzerland. From 2000 to 2004, he was a partner at Asiatic Investment Management, based in San Francisco. Since 2004, Mr. Yorke has been a partner in San Gabriel Advisors, LLC and Arroyo Capital Management, LLC and is the manager of the San Gabriel Fund, JMW Fund and Richland Fund. The funds are highly diversified in focus with investment holdings, public, private equity and debt investments and real estate investments. He has a B.A. degree from UCLA. Mr. Yorke is the principal of WesBev LLC, which prior to the merger between CMS and our Company was the majority shareholder of the Company. He also is an acting director and audit committee chair of Processa Pharmaceuticals, (Nasdaq: PCSA). Mr. Yorke served as non-executive Chairman of Jed Oil and a Director/CEO at JMG Exploration.
Dr. Paglia, age 57, became a member of the Board of the Company as an independent director on February 26, 2024. He is currently an independent director, Audit Committee Chair and a member of the Nominating & Corporate Governance and Compensation Committee of Simulations Plus, Inc., from 2014 to present. Mr. Paglia is also an independent director, Audit Committee Chair and a member of the Nominating & Corporate Governance and Compensation Committee of Aeluma, Inc., from 2021 to present. Additionally, Dr. Paglia is currently on the Advisory Board of multiple companies, including SUM Ventures, Axxes Capital Inc., VitaNav Inc., and DigiLife Fund, among others. Dr. Paglia, a Professor of Finance, currently works at Pepperdine University in various positions, which have included Senior Associate Dean and Executive Director, since 2000-present. Dr. Paglia has a Doctor of Philosophy in Business Administration, from the University of Kentucky, a Master of Business Administration from Gannon University, a Bachelor of Science from Gannon University, and is also a Certified Public Accountant and Charted Financial Analyst.
Bill Caple, age 66, has served as an independent director of the Company since May 3, 2023. Over the past five years, Mr. Caple has primarily served as a consultant on corporate strategies, business development, corporate finance, and M&A. Mr. Caple is currently a board member of Covax Data, Inc. (“Covax”), where he also assists with establishing sales channels and business development for Covax’s cyber security AI blockchain product and assisting the company raise growth capital. Mr. Caple also founded and runs Caple Advisory, an international management consulting practice and investment banking firm, with a concentration in Asia. Previously, Mr. Caple served as a board member and C-suite executive of multiple hi-tech businesses, netting successful exits and public offerings of his companies (e.g. OTG Software NASDAQ: OTGS, now part of Dell EMC and OpenText). The Company believes that Mr. Caple is an asset to the Company because of his wealth of experience and success in corporate finance strategies, M&A, and business development to round out the Board’s top-tier level of expertise in key subjects.
Family Relationships
There are no family relationships among and between the issuer’s directors, officers, persons nominated or chosen by the issuer to become directors or officers, or beneficial owners of more than ten percent of any class of the issuer’s equity securities.
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Section 16(a) Beneficial Ownership Reporting Compliance
Com
Section 16(a) of the Securities Exchange Act requires that our directors and executive officers and persons who beneficially own more than 10% of our common stock (referred to herein as the “reporting persons”) file with the SEC various reports as to their ownership of and activities relating to our common stock. Such reporting persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of copies of the reports filed with the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements for fiscal year 2024 were complied with by each person who at any time during the 2024 fiscal year was a director or an executive officer or held more than 10% of our common stock, except for the following: Julius Ivancsits, and Stacy McLaughlin each filed a late Form 3 report at the time of their appointments and on becoming insiders of the Company. Julius Ivancsits filed a late Form 4 report on May 6, 2024.
Committees of the Board of Directors
Audit Committee
We have separately designated an Audit Committee. The Audit Committee is responsible for, among other things, the appointment, compensation, removal and oversight of the work of the Company’s independent registered public accounting firm, overseeing the accounting and financial reporting process of the Company, and reviewing related person transactions. During fiscal year 2024 our Audit Committee is comprised of John Paglia and Bill Caple. Under NYSE listing standards and applicable SEC rules, all the directors on the audit committee must be independent. Also, as a smaller reporting company, we are only required to maintain an audit committee of two independent directors. Our Board has determined that John Paglia and Bill Caple are independent under NYSE listing standards and applicable SEC rules. John Paglia is the Chairperson of the audit committee. Each member of the audit committee is financially literate and our Board has determined that John Paglia qualifies as an “audit committee financial expert” as defined in applicable SEC rules. The Audit Committee operates under a written charter adopted by the Board of Directors, which can be found on our website at www.splashbeveragegroup.com. During 2024, the Audit Committee held four meetings in person or through conference calls. The Company has replaced Dr. Paglia on the Audit Committee with Thomas Fore.
Compensation and Management Resources Committee
We have established a Compensation and Management Resources Committee of our Board of Directors. The purpose of the Compensation and Management Resources Committee is to assist the Board in discharging its responsibilities relating to executive compensation, succession planning for the Company’s executive team, and to review and make recommendations to the Board regarding employee benefit policies and programs, incentive compensation plans and equity-based plans.
During fiscal year 2024 the members of our Compensation and Management Resources Committee were Bill Caple and John Paglia. Bill Caple is the chairperson of the Compensation and Management Resources Committee. As of March 7, 2025, Dr. Paglia is no longer be a member of the Compensation and Management Resources Committee. The Company has replaced Dr. Paglia on the Compensation Committee with Thomas Fore.
Under NYSE listing standards, we are required to have at least two members of the compensation committee, all of whom must be independent directors. Our board of directors has determined that each of John Paglia and Bill Caple is independent under NYSE listing standards. The Compensation and Management Resources Committee is responsible for, among other things, (a) reviewing all compensation arrangements for the executive officers of the Company and (b) administering the Company’s stock option plans. The Compensation and Management Resource Committee operates under a written charter adopted by the Board of Directors, which can be found on our website at www.splashbeveragegroup.com within the “Investor Information” section.
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The duties and responsibilities of the Compensation and Management Resources Committee in accordance with its charter are to review and discuss with management and the Board the objectives, philosophy, structure, cost and administration of the Company’s executive compensation and employee benefit policies and programs; no less than annually, review and approve, with respect to the Chief Executive Officer and the other executive officers (a) all elements of compensation, (b) incentive targets, (c) any employment agreements, severance agreements and change in control agreements or provisions, in each case as, when and if appropriate, and (d) any special or supplemental benefits; make recommendations to the Board with respect to the Company’s major long-term incentive plans applicable to directors, executives and/or non-executive employees of the Company and approve (a) individual annual or periodic equity-based awards for the Chief Executive Officer and other executive officers and (b) an annual pool of awards for other employees with guidelines for the administration and allocation of such awards; recommend to the Board for its approval a succession plan for the Chief Executive Officer, addressing the policies and principles for selecting a successor to the Chief Executive Officer, both in an emergency situation and in the ordinary course of business; review programs created and maintained by management for the development and succession of other executive officers and any other individuals identified by management or the Compensation and Management Resources Committee; review the establishment, amendment and termination of employee benefits plans, review employee benefit plan operations and administration; and any other duties or responsibilities expressly delegated to the Compensation and Management Resources Committee by the Board from time to time relating to the Committee’s purpose.
The Compensation and Management Resources Committee may request any officer or employee of the Company or the Company’s outside counsel to attend a meeting of the Compensation and Management Resources Committee or to meet with any members of, or consultants to, the Compensation and Management Resources Committee. The Company’s Chief Executive Officer does not attend any portion of a meeting where the Chief Executive Officer’s performance or compensation is discussed, unless specifically invited by the Compensation and Management Resources Committee.
The Compensation and Management Resources Committee has the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of director, Chief Executive Officer or other executive officer compensation or employee benefit plans and has sole authority to approve the consultant’s fees and other retention terms. The Compensation and Management Resources Committee also has the authority to obtain advice and assistance from internal or external legal, accounting or other experts, advisors and consultants to assist in carrying out its duties and responsibilities and has the authority to retain and approve the fees and other retention terms for any external experts, advisors or consultants.
During 2024, the Compensation Management Resources Committee held two meetings in person or through conference calls.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for overseeing the appropriate and effective governance of the Company, including, among other things, (a) nominations to the Board of Directors and making recommendations regarding the size and composition of the Board of Directors and (b) the development and recommendation of appropriate corporate governance principles. During fiscal year 2024 the Nominating and Corporate Governance Committee consists of John Paglia and Bill Caple, each of whom is an independent director (as defined under Section 803 of the NYSE American LLC Company Guide). The Chairperson of the committee is Bill Caple. The Nominating and Corporate Governance Committee operates under a written charter adopted by the Board of Directors, which can be found on our website at www.splashbeveragegroup.com within the “Investor Information” section. The Company is currently in the process of replacing Dr. Paglia.
The Nominating and Corporate Governance Committee adheres to the Company’s bylaws provisions and Securities and Exchange Commission rules relating to proposals by stockholders when considering director candidates that might be recommended by stockholders, along with the requirements set forth in the committee’s Policy with Regard to Consideration of Candidates Recommended for Election to the Board of Directors, also available on our website. The Nominating and Corporate Governance Committee of the Board of Directors is responsible for identifying and selecting qualified candidates for election to the Board of Directors prior to each annual meeting of the Company’s stockholders. In identifying and evaluating nominees for director, the Committee considers each candidate’s qualities, experience, background and skills, as well as other factors, such as the individual’s ethics, integrity and values which the candidate may bring to the Board of Directors.
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During 2024, the Nominating and Corporate Governance Committee held two meetings in person or through conference calls.
Meetings of the Board of Directors same as above
During 2024, the Board of Directors held six meetings. During 2024, each member of our Board of Directors attended at least 75% of the aggregate of all meetings of our Board of Directors and of all meetings of committees of our Board of Directors on which such member served that were held during the period in which such director served.
The Board of Directors also approved certain actions by unanimous written consent.
Director Independence
The NYSE listing standards require that a majority of our Board be independent. Our Board has determined that John Paglia and Bill Caple are “independent directors” as defined in the NYSE listing standards. Our independent directors will have regularly scheduled meetings at which only independent directors are present. The Company is currently in the process of replacing Dr. Paglia.
Involvement in Certain Legal Proceedings
Our Directors and Executive Officers have not been involved in any of the following events during the past ten years:
| 1. | any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| 2. | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| 3. | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; |
| 4. | being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| 5. | being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| 6. | being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
| 7. | Such person was the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
i. Any federal or state securities or commodities law or regulation; or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
38
| 8. | Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Board leadership structure and role in risk oversight
The Board of Directors oversees our business and affairs and monitors the performance of management. In accordance with corporate governance principles, the Board of Directors does not involve itself in day-to-day operations. The directors keep themselves informed through discussions with the Chief Executive Officer and other key executives, visits to the Company’s facilities, by reading the reports and other materials that we send them and by participating in Board and committee meetings. Each director’s term will continue until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. The information set forth in Item 1C is incorporated herein by reference.
Code of Ethics
We have adopted a code of business conduct and ethics that applies to our directors, officers (including our Chief Executive Officer, Chief Financial Officer and any person performing similar functions) and employees. Our Code of Ethics is available at our website at www.splashbeveragegroup.com.
Clawback Policy
On September 20, 2023, the Board adopted the Splash Beverage Group Clawback Policy (the “Clawback Policy”), effective September 20, 2023, providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer. A copy of the Clawback Policy has been filed herewith, and can also be found at www.splashbeveragegroup.com.
Insider Trading Policy
The Company has adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors, officers and employees. A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2024. In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements.
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Item 11. Executive Compensation
EXECUTIVE AND DIRECTOR COMPENSATION
The following table sets forth information for our two most recently completed fiscal years ending December 31, 2024 and December 31, 2023 concerning all of the compensation awarded to, earned by the executive officers named below.
| Name and Principal Position | Year | Salary | Bonus | Other | Stock Awards | Option Awards | Nonequity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | Total | |||||||||||||||||||||||||||
| Robert Nistico, CEO | 2024 | $ | 324,819 | — | $ | 13,800 | — | $ | 396,000 | — | — | $ | 734,619 | |||||||||||||||||||||||
| 2023 | $ | 333,125 | — | $ | — | — | — | — | — | $ | 347,525 | |||||||||||||||||||||||||
| William Meissner, President and CMO | 2024 | $ | 324,819 | — | $ | 9,200 | — | $ | 247,500 | — | — | $ | 581,519 | |||||||||||||||||||||||
| 2023 | $ | 333,125 | — | $ | — | — | — | — | — | $ | 333,125 | |||||||||||||||||||||||||
| Ronald Wall, CFO(1) | 2024 | $ | — | — | $ | — | — | — | — | — | $ | — | ||||||||||||||||||||||||
| 2023 | $ | 249,438 | — | $ | — | — | — | — | — | $ | 249,438 | |||||||||||||||||||||||||
| Fatima Dhalla, Interim CFO(2) | 2024 | $ | — | — | $ | — | — | $ | 16,200 | — | — | $ | 16,200 | |||||||||||||||||||||||
| 2023 | $ | 55,950 | $ | $ | 55,950 | |||||||||||||||||||||||||||||||
| Stacy McLaughlin, Former CFO(3) | 2024 | $ | 60,937 | — | $ | — | — | — | — | — | $ | 60,937 | ||||||||||||||||||||||||
| 2023 | $ | — | — | $ | — | — | — | — | — | $ | — | |||||||||||||||||||||||||
| Julius Ivancsits, CFO(3) | 2024 | $ | 209,280 | $ | 4,000 | 247,500 | $ | 460,780 | ||||||||||||||||||||||||||||
| 2023 | $ | — | — | $ | — | — | — | — | — | $ | — | |||||||||||||||||||||||||
| William Devereux (4) | 2024 | — | — | — | — | — | — | — | $ | — | ||||||||||||||||||||||||||
| 2023 | — | — | — | — | — | — | — | $ | — | |||||||||||||||||||||||||||
(1) On September 26, 2023, Ronald Wall resigned as Chief Financial Officer of the Company.
(2) Effective January 19, 2024, Fatima Dhalla, resigned as the Interim Chief Financial Officer of the Company.
(3) The individual listed was appointed during fiscal year 2024 and received no compensation during the last completed fiscal year.
(4) The individual listed was appointed during fiscal year 2025 and received no compensation during the last two completed fiscal year.
Employment Agreements
Except as described below, the Company does not have any employment agreements in place with any of its executive officers. The board of directors reserves the right to increase the salary of our executive officers, and/or to grant them equity awards, including stock, options or other equity securities, from time to time, as additional compensation or bonuses.
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Robert Nistico - CEO and Director
On March 12, 2012, the Company entered into an employment agreement with Robert Nistico, pursuant to which Mr. Nistico serves as Chief
Executive Officer of the Company. Pursuant to Mr. Nistico’s employment agreement, the Company pays Mr. Nistico an annual salary
of $275,000. Mr. Nistico is also eligible to receive an annual bonus of 50% of his annual salary, and was granted an option to purchase
350,000 shares of common stock. In the event Mr. Nistico terminates his employment with the Company he shall provide the Company a minimum
of 45 days of written notice.
On December 9, 2019, the board of directors of the Company extended Mr. Nistico’s employment agreement beginning December 1, 2019, and ending on November 30, 2024. Pursuant to the amendment, the Company increased Mr. Nistico’s base salary from $275,000 to $325,000.
William Devereux -- CFO
Pursuant to the terms of an employment agreement dated February 21, 2025, the Company employed Mr. William Devereux as its Chief Financial Officer on a full-time basis. Effective March 3, 2025, Mr. Devereux’s annual salary is $325,000. He is also entitled to a $60,000 signing bonus and discretionary annual performance bonus of up to $162,500, upon achieving certain targets that are to be defined on an annual basis. Mr. Devereux is also entitled to participate in all qualified plans, holidays and other employee benefits which the Company, in its sole discretion, may maintain from time to time for the benefit of its employees in general. Pursuant to his employment agreement, granted 600,000 options to acquire shares of common stock of the Company, with such shares vesting in 200,000 share increments annually (with the first vest to occur on March 3, 2025). Continued vesting of these options and the underlying shares is subject to Mr. Devereux’s employment remaining in good standing with the Company.
Julius Ivancsits – Former CFO
Pursuant to the terms of an employment agreement dated April 22, 2024, the Company employed Mr. Julius Ivancsits as its Chief Financial Officer on a full-time basis. Effective April 24, 2024, Mr. Ivancsits annual salary is $325,000. He is also entitled to a discretionary annual performance bonus of up to $162,500, upon achieving certain targets that are to be defined on an annual basis. Mr. Ivancsits is also entitled to participate in all qualified plans, holidays and other employee benefits which the Company, in its sole discretion, may maintain from time to time for the benefit of its employees in general. Pursuant to his employment agreement, granted 750,000 options to acquire shares of common stock of the Company, with such shares vesting in 250,000 share increments annually (with the first vest to occur on April 24, 2024). Continued vesting of these options and the underlying shares is subject to Mr. Ivancsits’ employment remaining in good standing with the Company.
Stacy McLaughlin – Former CFO
Pursuant to the terms of an employment agreement dated January 22, 2024, the Company employs Ms. Stacy McLaughlin as its Chief Financial Officer on a full-time basis. Effective January 24, 2024, Ms. McLaughlin’s annual salary is $325,000. She is also entitled to an annual performance bonus of up to $162,500, upon achieving certain targets that are to be defined on an annual basis. Ms. McLaughlin is also entitled to participate in all qualified plans, holidays and other employee benefits which the Company, in its sole discretion, may maintain from time to time for the benefit of its employees in general. On March 5, 2024, pursuant to her employment agreement, Ms. McLaughlin was granted 600,000 restricted shares of Common Stock. These shares will vest in tranches of 50,000 per quarter, until exhausted, with the first tranche vesting upon the completion of the first quarter of 2024. Continued vesting of these shares is subject to Ms. McLaughlin’s employment remaining in good standing with the Company. In the event that the company is acquired within the two years of January 24, 2024, the vesting schedule that the shares are subject to will accelerate, contingent on Ms. McLaughlin’s employment being in good standing to the date on which the acquisition closes.
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William Meissner - CMO and President
On May 4, 2020, the Company entered into an employment agreement with William Meissner, pursuant to which Mr. Meissner serves as President and Chief Marketing Officer of Company. Pursuant to Mr. Meissner’s employment agreement, the Company pays Mr. Meissner an annual base salary of $325,000 and includes annual increases based on cost of living adjustments and performance at the discretion of the Company’s Chief Executive Officer. Mr. Meissner is also eligible for a discretionary bonus, as determined by the Company’s Chief Executive Officer, of up to 50% of Mr. Meissner’s base salary. Mr. Meissner also received a grant of an option to purchase 666,667 shares of common stock under the Company’s equity incentive plan. The employment agreement with Mr. Meissner’s does not have a fixed termination date and permits the Company to terminate Mr. Meissner upon twenty days prior written notice and grants Mr. Meissner the right to resign upon twenty days prior written notice.
Directors Compensation
Directors Compensation
During the fiscal year ended December 31, 2024, our directors were paid compensation in cash and options for serving as Directors of the Company. The awards below have been adjusted for the 1 for 40 reverse split.
| Name | Year | Fees Earned or Paid in Cash | All Other Compensation | Stock Awards | Option Awards | Total Compensation | ||||||||||||||||||
| Thomas Fore(1) | 2024 | — | — | — | — | — | ||||||||||||||||||
| Justin Yorke | 2024 | — | — | — | — | — | ||||||||||||||||||
| Bill Caple | 2024 | $ | 69,996 | — | — | $ | 161,500 | $ | 231,496 | |||||||||||||||
| John Paglia | 2024 | $ | 45,000 | — | — | $ | 318,000 | $ | 363,000 | |||||||||||||||
| (1) | Mr. Fore was appointed as a director of the Company in 2025, and received no compensation during fiscal year 2024. |
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board or a committee thereof.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors, executive officers or any associate or affiliate of our Company during the last two fiscal years is or has been indebted to our Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
Equity Compensation Plan
On May 21, 2020, the Board adopted the 2020 Long-Term Incentive Compensation 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 other eligible recipients. The Plan has been in effect since July 1, 2020, for a period of ten years thereafter. The Plan continues to remain in effect until all matters relating to the payment of Awards and administration of the Plan have been settled.
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Outstanding Equity Awards at Fiscal Year-End
The following table has been adjusted for the 1 for 40 reverse split and summarizes the total outstanding equity awards as of December 31, 2024, for each Named Executive Officer:
| Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Un-Exercisable | Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | ||||||||||||||
| Robert Nistico | 2/28/2020 | 3,975 | — | — | $ | 44.80 | 2/21/2025 | |||||||||||||
| Robert Nistico | 10/16/2020 | 25,000 | — | — | $ | 44.80 | 10/15/2025 | |||||||||||||
| Robert Nistico | 9/16/2021 | 13,250 | — | — | $ | 44.80 | 9/16/2031 | |||||||||||||
| Robert Nistico | 4/18/2024 | 30,000 | — | — | $ | 13.20 | 4/18/2034 | |||||||||||||
| William Meissner | 10/16/2020 | 10,417 | — | — | $ | 44.80 | 10/16/2025 | |||||||||||||
| William Meissner | 9/16/2021 | 2,500 | — | — | $ | 44.80 | 9/16/2031 | |||||||||||||
| William Meissner | 4/18/2024 | 18,750 | — | — | $ | 13.20 | 4/18/2034 | |||||||||||||
| Julius Ivancsits | 4/22/2024 | 6,250 | 12,500 | — | $ | 13.20 | 4/22/2034 | |||||||||||||
| Fatima Dhalla | 3/31/2024 | 750 | — | — | $ | 13.20 | 3/31/2034 | |||||||||||||
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of July 9, 2025, for:
| ● | each of our current directors and executive officers; | |
| ● | all of our current directors and executive officers as a group; and | |
| ● | each person, or group of affiliated persons, who beneficially owned more than 5% of our common stock. |
Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole investment power with respect to all shares of common stock that they beneficially, subject to applicable community property laws. Unless otherwise specified, the address for each of the persons named in the table is 1314 E Las Olas Blvd. Suite 221, Fort Lauderdale, Florida 33301.
Our calculation of the percentage of beneficial ownership is based on 1,547,776 shares of common stock outstanding as of March 31, 2025. We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under Rule 13d-3 of the Exchange Act of 1934, as amended (the “Exchange Act”), a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares: (i) voting power, which includes the power to vote or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person or persons, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person or persons (and only such person or persons) by reason of these acquisition rights.
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| Name | Shares of Common Stock | Percentage of Common Stock | ||||||
| Executive Officers and Directors | ||||||||
| Robert Nistico | 36,752 | 2.20 | % | |||||
| Justin Yorke(1) | 137,153 | 8.21 | % | |||||
| John Paglia | — | — | ||||||
| William Meissner | — | — | ||||||
| Julius Ivancsits | — | — | ||||||
| Officers and Directors as a Group (5 individuals) | 173,905 | 10.21 | % | |||||
| 5% or greater owners: | ||||||||
| LK Family Partnership | 74,800 | 4.48 | % | |||||
| Total | 248,705 | 14.89 | % | |||||
| C | (1) | Of which 82,431 shares are held by Richland Fund LLC, 34,950 shares are held by JMW Fund LLC and 19,772 shares are held by San Gabriel LLC. All funds are managed by Mr. Yorke. |
Securities Authorized for Issuance under our Equity Compensation Plan
The following table gives information as of December 31, 2024, the end of the most recently completed fiscal year, about shares of common stock that have been issued under our Splash Beverage Group, Inc. 2020 Incentive Plan. Under the 2020 Incentive Plan we have 8,648,486 options outstanding as of December 31, 2023. See Note 6. On October 6, 2023, at our 2023 annual meeting of stockholders our stockholders approved an amendment to the 2020 Incentive Plan to: (1) increase the aggregate number of shares of common stock available by 1,500,000 shares to a total of 1,807,415 shares and (2) increase the automatic annual increase in the number of shares under the 2020 Incentive Plan from 5% to 7.5% of the total number of shares of common stock outstanding as of December 31st of the preceding fiscal year.
| 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 | |||||||||
| Equity compensation plan approved by board of directors | 106,475 | $ | 32.40 | 42,146 | ||||||||
| Total | 106,475 | $ | 32.40 | 42,146 | ||||||||
Item 13. Certain Relationships and Related Transactions and Director Independence.
The following is a description of the transactions and series of similar transactions, since December 31, 2024, that we were a participant or will be a participant in, which:
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| ● | the amount involved exceeds the lesser of $120,000 or one percent of the average of the smaller reporting company’s total assets at year-end for the last two completed fiscal years; and |
| ● | any of our directors, executive officers, holders of more than 5% of our capital stock (which we refer to as “5% stockholders”) or any member of their immediate family had or will have a direct or indirect material interest, other than compensation arrangements with directors and executive officers. |
During the normal course of business, we incurred expenses related to services provided by our CEO or Company expenses paid by our CEO, resulting in related party payables. In conjunction with the acquisition of Copa DI Vino®, the Company also entered into a Revenue Loan and Security Agreement (the “Loan and Security Agreement”) by and among the Company, Robert Nistico, additional Guarantor and each of the subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and, collectively, the “Guarantors”), and Decathlon Alpha IV, L.P. (the “Lender”). The Loan and Security Agreement provided for a revenue-based credit facility of $1,578,237 (the “Gross Amount”) with the Lender (the “Credit Facility”). There was $195,927 outstanding and $1,800,023 accrued interest under this agreement as of December 31, 2024.
On April 2024, the Company also entered into a Merchant Cash Advance Agreement (the “Loan and Security Agreement”) by and among the Company, Robert Nistico, additional Guarantor and each of the subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and, collectively, the “Guarantors”), and Cobalt Funding Solutions (the “Lender”). The Loan and Security Agreement provided a loan of $815,000, with the gross and interest amount of $326,028] with the Lender (the “Credit Facility”). There was $455,335 outstanding under this agreement as of December 31, 2024.
On September 2024 and November 2024 the Company also entered into a Merchant Cash Advance Agreement (the “Loan and Security Agreement”) by and among the Company, Robert Nistico, additional Guarantor and each of the subsidiary guarantors from time-to-time party thereto (each a “Guarantor”, and, collectively, the “Guarantors”), and with Timeless Funding LLC (the “Lender”). The Loan and Security Agreement provided a loan of $325,000 and $340,000, with the gross and interest amount of $172,250 and $173,400 respectively with the Lender (the “Credit Facility”). There was $85,260 and $311,713 respectively outstanding under this agreement as of December 31, 2024.
There were related party advances from our chief executive officer in the amount of $0.4 million outstanding as of December 31, 2024 and a shareholder note payable outstanding in the amount of $200,000 as of December 31, 2024.
Item 14. Principal Accounting Fees and Services.
December 31, 2024
| Audit - Rose, Snyder & Jacobs LLP | $ | 180,500 | ||
| Audit related -CohnReznick LLP | $ | 7,500 | ||
| Audit related - Rose, Snyder & Jacobs LLP | — | |||
| Tax | 32,000 | |||
| Total | $ | 220,000 |
December 31, 2023
| Audit - Rose, Snyder & Jacobs LLP | $ | 40,000 | ||
| Audit - Daszkal Bolton, LLP and CohnReznick LLP | 10,000 | |||
| Audited related | — | |||
| Tax | 29,000 | |||
| Total | $ | 79,000 |
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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.
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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:July 11, 2025 |
By: | /s/ Robert Nistico |
| Name: | Robert Nistico | |
| Chairman of the Board and Chief Executive Officer | ||
| (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/ Robert Nistico | Chief Executive Officer and Director | July 11, 2025 | ||
| Robert Nistico | (Principle Executive Officer) | |||
| /s/ William Devereux | Chief Financial Officer, Treasurer | July 11, 2025 | ||
| William Devereux | (Principal Financial and Accounting Officer) | |||
| /s/ Justin Yorke | Director, Secretary | July 11, 2025 | ||
| Justin Yorke | ||||
| /s/ Thomas Fore | Director | July 11, 2025 | ||
| /sThomas Fore | ||||
| /s/ Bill Caple | Director | July 11, 2025 | ||
| Bill Caple |
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EXHIBIT INDEX
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50
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| 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 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. |
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