DEF: Splash Beverage Seeks Shareholder Nod for Major Capital Plan

Splash Beverage Group, Inc. is seeking shareholder approval for critical proposals including significant common stock issuances and an equity incentive plan to address its severe capital needs and maintain NYSE American listing.

Summary

• An Annual Meeting of Stockholders is scheduled for October 31, 2025, to vote on seven key proposals.
• Proposals include the election of directors, ratification of Rose, Snyder & Jacobs LLP as the independent accounting firm for fiscal year 2025, and approval of common stock issuances exceeding 19.99% of outstanding shares for convertible securities and an Equity Line of Credit (ELOC) Agreement.
• Shareholders will also vote on approving the 2025 Equity Incentive Plan and a possible increase in the company's authorized common stock to 400,000,000 shares.
• The company has reported no revenue since March 2025, with $0 revenue for the three months ended June 30, 2025, and $438,272 for the three months ended March 31, 2025.
• Compliance with NYSE American continued listing standards was regained as of July 28, 2025, after resolving deficiencies related to financial tests and the timely filing of its Form 10-K for December 31, 2024, and Form 10-Q for March 31, 2025.
• The Board of Directors unanimously recommends that stockholders vote FOR all proposals.

Sentiment

Score: 2

Explanation: The company is in a highly distressed financial state, evidenced by zero revenue since March 2025 and a critical need for capital, which it plans to raise through highly dilutive measures. While regaining NYSE compliance is a positive, the underlying operational and financial challenges are severe.

Positives

• Regained compliance with NYSE American continued listing standards as of July 28, 2025, resolving previous deficiencies under Sections 1003(a)(i), (ii), (iii) and 1007.
• Debt exchange transactions on June 25, 2025, reduced $12,670,434 of outstanding promissory notes by exchanging them for Series B Preferred Stock, improving the balance sheet and stockholders' equity.
• The company has adopted a Clawback Policy, Insider Trading Policy, and Anti-Hedging Policy, enhancing corporate governance.

Negatives

• No revenue generated since March 2025, reporting $0 revenue for the three months ended June 30, 2025.
• A severe lack of working capital prevents the company from acquiring inventory and marketing products, jeopardizing its ability to remain operational.
• Proposed common stock issuances under convertible securities and the ELOC Agreement are expected to create significant dilution for current stockholders, potentially up to 29,976,592 shares for convertible securities and 43,750,000 shares for the ELOC.
• Failure to obtain shareholder approval for capital-raising proposals (Proposals 3 and 4) would prevent access to necessary capital and incur significant costs and management distraction.
• Outstanding related party payables and notes, including $400,000 to the CEO and $2,113,552 accrued interest on a revenue loan as of August 31, 2025.
• Several executive officers and directors had late Section 16(a) beneficial ownership reports for 2024 and 2025.

Risks

• Delisting from NYSE American: Failure to maintain compliance with listing standards (e.g., minimum share price, stockholders' equity) could lead to delisting, adversely affecting stock price and liquidity.
• Inability to remain operational: Lack of capital to acquire inventory and market products has resulted in no revenue since March 2025, threatening continued operations.
• Significant Stock Dilution: Issuance of common stock from convertible preferred stock, warrants, convertible notes, and the Equity Line of Credit (ELOC) will substantially dilute existing shareholders' ownership and voting power.
• Need for Reverse Stock Split: Potential future declines in common stock bid price, exacerbated by dilution, may necessitate another reverse stock split to maintain NYSE American listing, which could further impact investor perception.
• Reliance on ELOC: The company is relying on the ELOC Agreement to fund cash needs for the foreseeable future, and failure to approve this proposal would prevent access to this capital.
• Failure to Execute Business Plan: Even with capital, there is no assurance of success in recommencing sales, operating the Qplash platform, or developing the Costa Rica water extraction business.
• Increased Indebtedness: If convertible notes are not converted due to lack of shareholder approval, the company will remain burdened by this debt, which it lacks the cash to repay.

Future Outlook

The company is seeking shareholder approval for critical capital-raising initiatives, including an Equity Line of Credit and the issuance of shares under convertible securities, to fund working capital, general corporate expenses, repay indebtedness, and support growth initiatives. These measures are deemed necessary to remain operational and maintain NYSE American listing compliance. The company also plans to develop an infrastructure and business around water extraction rights in Costa Rica.

Management Comments

• Our Board unanimously recommends that the stockholders vote FOR each proposal being put before our stockholders at the Annual Meeting.
• Unless we can raise enough money to not only pay our ongoing general and administrative expenses but also market our products and purchase inventory, we will not be able to remain operational.
• We are relying upon proposal 4 [ELOC Agreement] to fund our cash needs for the foreseeable future.
• The Board believes that having the flexibility to issue additional shares in this circumstances could increase the overall value of the Company to our stockholders.

Industry Context

The company operates in the beverage industry, which is characterized by a competitive labor market for attracting and retaining talent. The company's current financial distress and lack of capital for inventory and marketing highlight significant challenges in a market that typically requires substantial investment in brand building and distribution.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for a detailed assessment against global benchmarks.
• The company's current financial state, marked by zero revenue since March 2025 and a critical need for capital, suggests performance significantly below industry standards for publicly traded beverage companies.
• The reliance on substantial dilution and an equity line of credit for basic operational funding is not typical for healthy, growing industry players.

Management Changes

Corporate Governance

Related Party Transactions

• Related party payables incurred for services and expenses paid by the CEO.
• Revenue Loan and Security Agreement with Decathlon Alpha IV, L.P. for $1,578,237, with Robert Nistico as a guarantor. $177,298 outstanding and $2,113,552 accrued interest as of August 31, 2025.
• Merchant Cash Advance Agreement with Cobalt Funding Solutions for $815,000, with Robert Nistico as a guarantor. $204,621 outstanding as of August 31, 2025.
• Two Merchant Cash Advance Agreements with Timeless Funding LLC for $325,000 and $340,000, with Robert Nistico as a guarantor. $60,860 and $306,713 outstanding respectively as of August 31, 2025.
• Related party advances from Chief Executive Officer Robert Nistico totaling $400,000 outstanding as of December 31, 2024, 2023, and August 31, 2025.
• A $200,000 stockholder note payable to Robert Nistico, which was exchanged for preferred stock in June 2025.
• One of the institutional investors in the $2,200,000 secured convertible promissory notes also holds shares of Series A-1 preferred stock.
• Warrants granted to executive officers and directors on August 15, 2025, totaling 5,150,000 exercisable at $0.80 per share.

Stakeholder Impact

• Shareholders: Face significant dilution from proposed common stock issuances (convertible securities, ELOC), which could depress share price. Voting on critical proposals that determine the company's ability to raise capital and remain listed.
• Employees: Benefit from the proposed 2025 Equity Incentive Plan, which aims to attract and retain talent through equity awards.
• Creditors: Approval of capital raise proposals could facilitate repayment of outstanding indebtedness, including convertible notes. Failure to approve could make debt repayment more challenging.
• Management: Their compensation includes equity awards, and the proposals are crucial for the company's operational continuity and strategic initiatives.

Next Steps

• Hold the 2025 Annual Meeting of Stockholders on October 31, 2025, to vote on the seven proposals.
• If proposals 3 and 4 are approved, proceed with issuing common stock under convertible securities and the ELOC Agreement to raise capital.
• Register shares underlying the ELOC Agreement on a Form S-1 with the SEC within 30 days of approval.
• Potentially effect a proportionate reverse stock split if needed to maintain NYSE American minimum bid price requirements.
• Develop an infrastructure and business around recently acquired water extraction rights in Costa Rica.
• File a Current Report on Form 8-K with the SEC within four business days of the Annual Meeting to report final voting results.

Key Dates

Recommendation

The company is in a precarious financial position, having generated no revenue since March 2025 and facing a severe lack of working capital. While management is attempting to address this through significant capital raises via convertible securities and an Equity Line of Credit, these measures will result in substantial dilution for existing shareholders (potentially over 70 million shares). The company's reliance on these highly dilutive financing methods, coupled with ongoing related-party debt and past compliance issues, indicates a high level of financial distress and operational risk. The potential for further reverse stock splits to maintain listing standards also signals underlying weakness. Given the dire financial state, the high risk of dilution, and the uncertainty of successful business execution even with new capital, the stock presents a strong sell recommendation for investors.

Keywords

Splash Beverage Group, SBEV, SEC filing, Proxy Statement, Capital Raise, Equity Line of Credit, Stock Dilution, Convertible Securities, NYSE American, Corporate Governance, Financial Distress, Beverage Industry, Shareholder Meeting, Risk Factors, Executive Compensation