S-1: Splash Beverage Group Faces Going Concern Doubt Amidst Zero Revenue

Splash Beverage Group, Inc. (SBEV) has not generated revenue since March 2025, raising substantial doubt about its ability to continue as a going concern, despite securing a $35 million equity line of credit.

Summary

• Splash Beverage Group, Inc. (SBEV) has ceased generating revenue since March 2025 due to a critical lack of capital, leading to substantial doubt about its ability to continue as a going concern.
• The company reported a net loss of $23,756,551 for the year ended December 31, 2024, and an accumulated deficit of $155,832,277 as of that date, further deteriorating to a net loss of $9,886,045 for the three months ended September 30, 2025, and an accumulated deficit of $178,284,467.
• To re-commence minimal operations, the company requires at least $2,000,000 in working capital, with additional needs of $6,000,000 for short-term goals and $22,000,000 for 12-month goals related to its Costa Rica Water Assets.
• Splash Beverage Group has entered into a Securities Purchase Agreement (ELOC) with C/M Capital Master Fund, LP, potentially providing up to $35,000,000 in gross proceeds, subject to various conditions and the company's discretion.
• Key business plans include distributing Chispo tequila (requiring $500,000), re-launching the Qplash e-commerce platform (requiring $2,000,000), and developing the Costa Rica Water Assets (requiring $4,000,000 for third-party extraction/shipping and $20,000,000 for its own bottling facility).
• The company acquired water extraction rights in Costa Rica in June 2025, valued at $20,000,000, and has received a $500,000 per month purchase order from a United Arab Emirates-based distributor, contingent on securing capital and regulatory approvals.
• A joint venture, BAAD Beverages LLC, was established in November 2025 for adult, THC, and CBD beverage products, with Splash's subsidiary holding a 51% financial interest for an initial capital contribution of $25,500.
• The company successfully regained compliance with NYSE American listing standards in July 2025, addressing previous deficiencies related to minimum stockholders' equity and timely filing of reports.
• Management turnover occurred in November 2025, with the resignation of the former CEO, Robert Nistico (who remains a director), and CFO, William Devereux, followed by the appointment of Martin Scott as interim CFO.
• Material weaknesses in internal control over financial reporting persist, attributed to limited segregation of duties and insufficient accounting employees.

Sentiment

Score: 2

Explanation: The company is in severe financial distress, having generated no revenue for an extended period and facing substantial doubt about its ability to continue as a going concern. While it has secured an ELOC and made some strategic moves, its current liquidity position, recurring losses, and heavy reliance on future capital raises for basic operations indicate a highly precarious situation.

Positives

• Regained compliance with NYSE American listing standards in July 2025, removing 'BC' and 'LF' indicators.
• Secured an Equity Line of Credit (ELOC) with C/M Capital Master Fund, LP, providing access to up to $35,000,000 in gross proceeds.
• Successfully completed a private placement offering in September 2025, raising $2,000,000 in gross proceeds from secured promissory notes.
• Acquired Costa Rica Water Assets in June 2025, valued at $20,000,000, with preliminary tests indicating high purity and quality water.
• Received a $500,000 per month purchase order from a United Arab Emirates-based distributor for bottled water from the Costa Rica Water Assets.
• Established a joint venture (BAAD Beverages LLC) for adult, THC, and CBD beverage products, with a 51% financial interest.
• Completed a significant debt-to-equity conversion in June 2025, exchanging approximately $12.67 million of outstanding promissory notes for Series B Preferred Stock, improving the balance sheet and reducing interest expense.
• Stockholders approved the ELOC agreement and the 2025 Equity Incentive Plan at the Annual Meeting on October 31, 2025.

Negatives

• Has not generated any revenue since March 2025 due to a lack of capital, making continued operations difficult.
• Auditors have included an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern.
• Experienced recurring net losses, including $23,756,551 for FY2024 and $22,029,577 for the nine months ended September 30, 2025.
• Accumulated deficit reached $178,284,467 as of September 30, 2025.
• Requires significant additional capital: at least $2,000,000 for minimal operations, $6,000,000 for short-term goals, and $22,000,000 for 12-month goals related to Water Assets.
• Incurred unpaid payroll obligations for employees from February to September 2025.
• Former CEO Robert Nistico and CFO William Devereux resigned in November 2025, creating management uncertainty.
• Identified material weaknesses in internal control over financial reporting due to limited segregation of duties and insufficient accounting employees.
• Faces a $1,400,000 breach of contract lawsuit from TapouT, LLC, with a legal reserve of $330,000.
• Entered into a settlement agreement with Copa di Vino for $700,000 plus 12% interest, with monthly payments of $63,000 starting November 2025.
• Several merchant cash advance agreements are in default.
• Significant potential for dilution from the ELOC (10,000,000 shares registered for resale) and conversion of outstanding preferred stock (up to 22,232,891 shares), warrants (6,807,383 shares), and convertible promissory notes (6,583,840 shares).

Risks

• Substantial doubt about the ability to continue as a going concern due to recurring losses and negative cash flows, and the need for significant additional capital.
• Inability to raise necessary capital on favorable terms or at all, which could force the company to cease operations.
• Failure of strategic initiatives, including acquisitions and divestitures, or difficulties in integrating acquired assets like the Costa Rica Water Assets.
• Challenges in developing and executing business plans for Chispo tequila, Qplash, and the Water Assets, potentially failing to generate material revenue.
• Demand for products may be adversely affected by changes in consumer preferences, health concerns, or ineffective marketing and distribution.
• Volatility in the price and availability of raw materials, packaging, energy, and labor, which could increase operating costs and reduce gross margins.
• Adverse impacts from international trade developments, including tariffs and geopolitical conflicts, affecting supply chains, costs, and sales.
• Intense competition in the beverage industry from larger, well-financed companies with greater resources.
• Reliance on third-party distributors, retailers, brokers, contract manufacturers, and distillers, with risks of inadequate performance, termination of relationships, or increased costs.
• Difficulty in predicting the timing and amount of sales due to distributors not being required to place minimum orders.
• Risks associated with inventory management, including underestimating or overestimating demand, leading to spoilage or lost sales.
• Dependence on key flavor suppliers and a single distiller in Mexico for tequila production, with potential for supply disruptions or increased costs.
• Inability to attract and retain key personnel, exacerbated by recent management turnover, which could adversely affect efficiency and operations.
• Failure to protect trademarks and trade secrets, potentially harming brand image and competitive position.
• Potential for material future impairment expenses related to indefinite-lived intangible assets, such as the $20,000,000 Water Assets.
• Risks of product recalls, contamination, or counterfeit products, which could damage reputation and sales.
• Noncompliance with extensive and evolving government regulations in the beverage industry, leading to penalties, license revocations, or increased costs.
• Exposure to product liability or other related liabilities, with current lack of product liability insurance.
• Vulnerability to cybersecurity attacks or failures in information technology infrastructure.
• Fluctuations in quarterly operating results due to seasonality.
• Material weaknesses in internal control over financial reporting, increasing the risk of financial misstatements.
• Significant dilution to existing stockholders from the issuance and resale of shares under the ELOC and conversion of other outstanding convertible securities.
• Potential for the market price of common stock to decline due to future sales by the Selling Stockholder or the perception of such sales.
• Risk of delisting from the NYSE American if the stock price falls below minimum bid price requirements.
• Management's broad discretion over the use of proceeds from capital raises, which may not yield significant returns or increase shareholder value.
• Preferred stock dividend rights and liquidation preferences that could limit or reduce the rights of common stockholders.

Future Outlook

The company plans to use proceeds from the Equity Line of Credit and other financings for working capital and general corporate purposes. Its strategic focus is on re-commencing distribution of Chispo tequila, establishing and growing operations for the Costa Rica Water Assets, and re-launching the Qplash e-commerce platform. The company intends to secure a water extraction facility in Costa Rica, which is estimated to cost $20 million and take at least one year to build. It is also exploring strategic alternatives, including potential acquisitions of assets or businesses outside the beverage industry, to create value for stockholders.

Management Comments

• "We believe the distribution landscape in the beverage industry is changing rapidly as tech-enabled e-commerce business models are thriving."
• "Because of our lack of revenue and the amount of capital we acquire to begin to generate revenue for each of our beverage businesses, we have begun looking at strategic alternatives where we may make an acquisition of assets or a business that presents value for our stockholders."
• "We remain committed to resolving these constraints and resuming normal business activities in the upcoming quarter."
• "Our team led by William Meissner has experience in all levels of beverage distribution system used in the beverage industry."

Industry Context

The beverage industry is highly competitive and brand-conscious, with significant competition from large, well-financed manufacturers. The distribution landscape is rapidly evolving, with tech-enabled e-commerce models gaining traction, including direct-to-consumer and office/home solutions. Consumer preferences are shifting towards health-focused and environmentally-friendly products, which the company aims to capitalize on with its Costa Rica Water Assets. However, the industry also faces increasing public concern over alcohol-related societal problems, potentially leading to additional restrictions or taxes on alcoholic beverages.

Comparison to Industry Standards

• The company's water from Costa Rica is positioned to outperform certain high-quality water brands like Fiji and Evian in key mineral purity benchmarks, leveraging its source location in a 'Blue Zone' known for natural purity and longevity.

Management Changes

Corporate Governance

Legal Proceedings

• TapouT, LLC filed a Complaint on August 14, 2024, seeking $1,400,000 for breach of a licensing agreement. The company believes the amount is unreasonable and has booked a legal reserve of $330,000. A motion to compel mediation is pending.
• Entered into a settlement agreement with Copa di Vino Corporation on April 4, 2025, to settle two lawsuits. The company agreed to pay $700,000 plus 12% interest, with monthly payments of $63,000 commencing November 4, 2025.

Related Party Transactions

• Robert Nistico (former CEO, current director) has related party advances of approximately $400,000 outstanding as of September 30, 2025, with asserted but unagreed interest.
• Robert Nistico guaranteed several loans, including a revenue loan and security agreement with Decathlon Alpha IV, L.P., and merchant cash advance agreements with Cobalt Funding Solutions and Timeless Funding LLC.
• Issued 1,000 shares of Preferred A Stock to Robert Nistico in June 2025, which is super voting preferred and not convertible into common stock.
• Borrowed $500,000 from C/M Capital Master Fund, LP and WVP Emerging Manager Onshore Fund, LLC (affiliates of the Selling Stockholder) in November 2025, issuing senior promissory notes.
• The Board approved a prepayment of approximately $146,000 for 90 days of compensation for the CFO and Controller in September 2025, with the unearned portion offset against the CFO's accrued vacation upon resignation.

Stakeholder Impact

• Shareholders face significant dilution risk from the potential issuance of up to 10,000,000 shares under the ELOC, and the conversion of over 35,000,000 shares from outstanding preferred stock, warrants, and convertible notes.
• Existing common stockholders' rights may be limited by the dividend rights and liquidation preferences of the various series of preferred stock.
• Employees experienced unpaid payroll obligations from February to September 2025, which could negatively impact morale and retention.
• Customers may face product shortages or inconsistent availability due to the company's lack of capital to acquire inventory and re-commence operations.
• Creditors face heightened risk due to the company's substantial doubt about its ability to continue as a going concern and its reliance on future capital raises to meet obligations.
• Suppliers may experience delays or non-payment for goods and services due to the company's severe liquidity constraints.

Next Steps

• Access and deploy capital from the Equity Line of Credit and other financings to re-commence operations.
• Re-commence distribution of the Chispo brand tequila, requiring approximately $500,000 in new financing.
• Establish and grow material operations for the Costa Rica Water Assets, with an initial need of $4,000,000 for third-party extraction and shipping, and a long-term plan to build a $20,000,000 facility.
• Obtain approval from the United Arab Emirates Health Ministry to fulfill the $500,000 per month water purchase order.
• Re-launch the Qplash e-commerce platform, requiring approximately $2,000,000.
• Continue exploring strategic alternatives, including potential acquisitions of assets or businesses outside the beverage industry.
• Continue active and constructive settlement discussions regarding the TapouT, LLC litigation.
• Address and remediate material weaknesses in internal control over financial reporting.
• Consider the proposal to increase the company's authorized common stock to 400,000,000 shares at the adjourned meeting on December 10, 2025.

Key Dates

Recommendation

Splash Beverage Group is in a critical financial state, marked by zero revenue for an extended period, substantial and recurring net losses, and an accumulated deficit exceeding $178 million. The auditors' going concern warning underscores the severe operational and financial challenges. While the company has secured an Equity Line of Credit and made some strategic acquisitions, its ability to execute on these plans is entirely dependent on raising significant additional capital, which carries substantial dilution risk for existing shareholders. Management turnover and identified material weaknesses in internal controls further compound the risk. The company's current financial health and high reliance on speculative future funding make it a highly speculative and precarious investment.

Keywords

Splash Beverage Group, SBEV, Equity Line of Credit, ELOC, Going Concern, Beverage Industry, Chispo Tequila, Costa Rica Water Assets, Qplash, E-commerce, THC Beverages, CBD Beverages, Capital Raise, Dilution, NYSE American, Financial Reporting, Risk Management, Corporate Governance, Liquidity