10-K: Splash Beverage Group Faces Financial Hurdles, Eyes CBD Acquisition

Splash Beverage Group's 2025 10-K reveals significant revenue decline and ongoing going concern issues, while pursuing a potential acquisition of Medterra CBD.

Summary

• Splash Beverage Group (SBEV) reported a substantial decrease in revenue for the fiscal year ended December 31, 2025, with revenues falling to $73,066 from $801,273 in the prior year, primarily due to a lack of operating capital.
• The company experienced a net loss of $25.2 million for the year, with a significant portion attributed to operating expenses and a $5.6 million loss on extinguishment of debt.
• Splash Beverage Group is actively pursuing a non-binding letter of intent to acquire Medterra CBD, LLC, a cannabinoid wellness products company, for an enterprise value of $37.6 million, which includes assuming Medterra's debt of approximately $10.4 million.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern due to recurring losses and a working capital deficit.
• SBEV is also focusing on re-launching its Chispo Tequila brand, having purchased $50,000 of inventory for a potential order from Senor Frogs, and estimates needing $3 million for this initiative and general operations.
• The company's common stock is listed on the NYSE American under the ticker SBEV, but it faces potential delisting due to insufficient stockholders' equity.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as highly negative due to the severe revenue decline, substantial net loss, going concern issues, and risk of delisting, despite the potential strategic acquisition.

Positives

• The company has entered into a non-binding letter of intent to acquire Medterra CBD, LLC, which could diversify its business into the growing cannabinoid wellness sector.
• The potential acquisition of Medterra is expected to bring the company into compliance with NYSE American's minimum stockholders' equity requirements.
• Splash Beverage Group is working to re-establish revenue-generating operations through its Chispo Tequila brand, with an initial order from Senor Frogs.
• The company has secured financing through various debt and equity issuances, including an equity line of credit, to support its operations.

Negatives

• Revenue for the year ended December 31, 2025, plummeted to $73,066 from $801,273 in 2024, a decrease of over 90%, due to a lack of operating capital.
• The company incurred a net loss of $25.2 million for the year ended December 31, 2025.
• Operating expenses increased to $14.2 million from $9.8 million, largely due to non-cash share-based compensation.
• The company has a significant working capital deficit and recurring losses, leading auditors to express substantial doubt about its ability to continue as a going concern.
• The company's common stock is at risk of delisting from the NYSE American due to insufficient stockholders' equity.
• The company rescinded an asset purchase agreement for water rights in Costa Rica, leading to the derecognition of $20 million in stockholders' equity.
• The company has a pending lawsuit from TapouT, LLC, seeking approximately $1.7 million for breach of a licensing agreement.

Risks

• The company's ability to continue as a going concern is in doubt due to recurring losses and a lack of capital.
• Failure to secure additional financing could force the company to cease operations.
• The potential acquisition of Medterra CBD is subject to due diligence, definitive agreement, and capital raising, with no assurance of completion.
• The company faces the risk of its common stock being delisted from the NYSE American due to insufficient stockholders' equity.
• Sales of common stock or convertible securities could result in significant dilution to existing stockholders.
• The company has identified material weaknesses in its internal control over financial reporting, including a lack of segregation of duties and insufficient accounting personnel.
• The company is subject to litigation, including a claim from TapouT, LLC, which could result in significant costs and liabilities.
• The company has not generated revenue since March 2025 and may not be able to re-commence operations without substantial additional capital.
• The company's ability to manage inventory and meet demand is contingent upon access to sufficient capital.

Future Outlook

The company's primary focus is to complete the acquisition of Medterra CBD. Additionally, it aims to re-commence revenue-generating operations through its beverage business, particularly the Chispo Tequila brand, contingent on securing sufficient capital. Management estimates needing approximately $3 million for the Chispo brand and general administrative expenses for the next 12 months, and potentially $10 million for the Medterra acquisition to cover debt and taxes, plus an additional $25 million for expansion.

Management Comments

• "Because of our lack of capital to generate revenue, our management reviewed strategic alternatives inside and outside of the beverage industry."
• "The Company did not make any sales in the 2025 calendar year after March 2025 due to its lack of capital resources."
• "We intend to fund our future operations through the issuance of equity securities until such a time as our business achieves profitability."
• "Our lack of cash resources has prevented us from carrying on our commercialization activities."
• "We plan to rectify these weaknesses by establishing written policies and procedures for our internal control of financial reporting and hiring additional accounting personnel at such time as we raise sufficient capital to do so."

Industry Context

StockSavvy.ai notes that Splash Beverage Group's pivot towards the cannabinoid wellness sector via the potential acquisition of Medterra CBD reflects a broader trend of companies seeking diversification into high-growth markets, especially in light of challenges within traditional beverage segments. The company's financial distress and focus on capital raising are common among early-stage or turnaround companies in competitive industries.

Comparison to Industry Standards

• The company's revenue of $73,066 for the year ended December 31, 2025, is significantly below industry averages for established beverage companies, highlighting its current operational challenges.
• The net loss of $25.2 million and negative stockholders' equity of $15.3 million indicate a financial position that is not in line with industry standards for healthy, operating companies.
• The company's reliance on external financing, including convertible notes and equity lines, is a common strategy for companies in distress or early growth phases, but the terms and availability of such financing are critical benchmarks.
• The potential acquisition of Medterra CBD, if completed, would represent a significant strategic shift, aligning Splash Beverage Group with the growing CBD market, which has seen substantial investment and growth, though it also faces evolving regulatory landscapes.

Legal Proceedings

• TapouT, LLC has filed a complaint seeking approximately $1,700,000 for breach of a licensing agreement.
• The company is in the process of resolving alleged and potential claims from investors referred to as the Uptime Investor Claims, with a settlement agreement under negotiation.
• A notice of claim for wages was served by a former employee, Miguel Ramirez, demanding back wages and penalties.

Related Party Transactions

• The company has outstanding related party advances from its former Chief Executive Officer, Robert Nistico, totaling approximately $0.4 million.
• Robert Nistico, former CEO, was issued 1,000 shares of Series A Preferred Stock, which were subsequently redeemed and cancelled.
• Robert Nistico was granted 750,000 warrants exercisable at $0.80 per share.

Stakeholder Impact

• Shareholders face significant dilution risk from future equity issuances and potential decline in stock value due to financial distress and delisting risk.
• Creditors may face risks related to the company's ability to meet its obligations, with an estimated $4.7 million in past due amounts.
• Employees may experience uncertainty regarding job security given the company's precarious financial situation and operational pauses.

Next Steps

• Complete the acquisition of Medterra CBD, LLC, subject to due diligence, definitive agreement, and capital raising.
• Secure sufficient capital to re-commence material revenue-generating operations for the Chispo Tequila brand.
• Engage with the NYSE American Staff to discuss compliance with listing requirements.
• Continue efforts to resolve the TapouT, LLC lawsuit and Uptime Investor Claims.

Key Dates

Recommendation

The company's severe financial distress, including a drastic revenue decline, substantial net loss, going concern issues, and risk of delisting, outweighs the potential upside from the proposed Medterra acquisition. The significant dilution from ongoing capital raises and the uncertainty surrounding the acquisition's completion make it a high-risk investment.

Keywords

Splash Beverage Group, SBEV, 10-K, Annual Report, Medterra CBD, Acquisition, Cannabinoid Wellness, Chispo Tequila, Going Concern, Liquidity, Financing, NYSE American, Delisting Risk, Beverage Industry