U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
☐
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________to _________
Commission File Number 001-40471
SPLASH BEVERAGE GROUP, INC.
(Exact name of registrant as specified in its charter)
1314 E Las Olas Blvd. Suite 221
Fort Lauderdale, FL33301
(Address of principal executive offices) (Zip code)
(954)745-5815
(Registrant’s telephone number, including
area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, $0.001 par value per share SBEV NYSE American LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes
☒No
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐
Yes ☒No
Indicate by check mark whether the registrant (i)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒Yes☐
No
Indicate by checkmark whether the registrant has submitted
electronically every Interactive Data File required to be submitted pursuant to rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit such files). ☒Yes☐ No
Indicate by checkmark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company,” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has
filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
If securities are registered pursuant to Section 12(b)
of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a
shell company (as defined in rule 12b-2 of the Act). ☐ Yes ☒
No
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 $[*].0
On June 30, 2025, there were 1,899,876 shares of Common
Stock issued and outstanding.
SPLASH BEVERAGE GROUP, INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
Page
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 9
Item 1B. Unresolved Staff Comments 26
Item 2. Properties 27
Item 3. Legal Proceedings 27
Item 4. Mine Safety Disclosures 27
Item 6. Selected Financial Data
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 31
Item 8. Financial Statements and Supplementary Data F-1
Item 9A. Controls and Procedures 32
Item 9B. Other Information 32
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 32
PART III 33
Item 10. Directors, Executive Officers and Corporate Governance 33
Item 11. Executive Compensation 40
Item 14. Principal Accounting Fees and Services 45
Item 15. Exhibits and Financial Statement Schedules 46
Signatures 47
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.
● 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.
2
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.
3
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.
4
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.
5
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;
● Long-term relationships with retailers and the establishment of chains;
● Premium customer service;
● A highly experienced management team;
● Strategically selected, dedicated sales professionals;
● 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.
6
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.
7
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.
8
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.
9
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:
● maintain efficiencies in operations;
● manage our operating expenses to sufficiently support operating activities;
● maintain fixed costs at or near current levels; and
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