☒ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) 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.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark 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.

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. ☐x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐o Yes ☐o No

As of ~~August 13, 2020,~~May 12, 2021, there were ~~70,181,217~~80,212,883 shares of Common Stock issued and outstanding.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Splash Beverage Group, Inc.

~~[f/k/a Canfield Medical Supply, Inc.]~~

Condensed Consolidated ~~Balance Sheets~~

~~June 30, 2020 and December 31, 2019~~

~~(Unaudited)~~Financial Statements

March 31, 2021

June 30, 2020 December 31, 2019
Assets
Current assets:
Cash and cash equivalents $ 118,751 $ 42,639
Accounts Receivable, net 359,657 11,430
Prepaid Expenses 19,114 5,449
Inventory 479,230 304,012
Other receivables 9,544 7,132
Total current assets 986,296 370,662

Non-current assets:
Deposit $ 56,366 $ 34,915
Goodwill 9,448,852 —
Investment in Salt Tequila USA, LLC 250,000 —
Right of use asset, net 130,101 162,008
Property and equipment, net 64,269 37,729
Total non-current assets 9,948,049 234,652

Total assets $ 10,935,884 $ 605,314

Liabilities and Deficiency in Stockholders' Equity

Liabilities:
  Current liabilities
Accounts payable and accrued expenses $ 1,118,582 $ 703,885
Right of use liability - current 89,950 81,502
Due to related parties 517,875 429,432
Bridge loan payable, net —   2,200,000
Related party notes payable —   1,505,100
Convertible Loan Payable 100,000 2,202,664
Notes payable, current portion 539,611 875,000
Royalty payable 90,000 39,000
Revenue financing arrangements 12,710 45,467
Shareholder advances 88,000 46,250
Accrued interest payable �� 805,602 1,604,498
Accrued interest payable - related parties —   546,362
Total current liabilities 3,362,330 10,279,160

Long-term Liabilities:
Related party notes payable - noncurrent 64,200 —
Right of use liability - noncurrent 40,151 82,238
Total long-term liabilities 104,351 82,238

Total liabilities 3,466,681 10,361,398

Common stock, (mezzanine shares) 12,605,283 shares, contingently convertible to notes payable at June 30, 2020 9,248,720 —

Deficiency in stockholders' equity:
Common Stock, $0.001 par, 100,000,000 shares authorized, 57,002,247 and 44,021,382 shares
issued 57,002,247 and 43,885,090 outstanding, at June 30, 2020 and December 31, 2019, respectively 57,002 44,021
Additional paid in capital 34,898,641 22,095,403
Treasury Stock, $0.001 par, 136,292 shares at cost —   (50,000 )
Accumulated deficit (36,735,159 ) (31,845,508 )
Total deficiency in stockholders' equity (1,779,517 ) (9,756,084 )

Total liabilities, mezzanine shares and deficiency in stockholders' equity $ 10,935,884 $ 605,314
~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~
3

~~Splash Beverage Group, Inc.~~
~~[f/k/a Canfield Medical Supply, Inc.]~~
~~Condensed Consolidated Statements of Operations~~
~~For the Three- and Six- Months Ended June 30, 2020 and 2019~~
~~(Unaudited)~~

Three months ended June 30, 2020 Three months ended June 30, 2019 Six months ended June 30, 2020 Six months ended June 30, 2019
Net revenues $ 612,308 $ 42,775 $ 724,311 $ 48,105
Cost of goods sold (287,773 ) (48,215 ) (394,987 ) (74,418 )
Gross margin 324,535 (5,440 ) 329,324 (26,313 )

Operating expenses:
Contracted services 165,697 179,714 423,678 430,770
Salary and wages 365,013 16,378 606,689 412,262
Other general and administrative 156,258 79,456 1,189,671 301,843
Sales and marketing 24,230 27,164 47,242 32,652
  Total operating expenses 711,198 302,712 2,267,280 1,177,527

Loss from operations (386,663 ) (308,152 ) (1,937,956 ) (1,203,840 )

Other income/(expense):
Interest income 205 —   16,356 —
Interest expense (21,854 ) 89,763   (1,935,491 ) (420,524 )
Gain from debt extinguishment 34,962 —   34,962 —
Total other income/(expense) 13,313 89,763 (1,884,172 ) (420,524 )

Provision for income taxes —   —   —   —

Net loss $ (373,350 ) $ (218,389 ) $ (3,822,129 ) $ (1,624,364 )

Net loss per share (basic and diluted) $ (0.01 ) $ (0.01 ) $ (0.07 ) $ (0.04 )

Weighted average number of common shares outstanding 56,908,703 41,807,563 51,113,403 41,603,074

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

4
1

~~Splash Beverage Group, Inc.~~
~~[f/k/a Canfield Medical Supply, Inc.]~~
~~Condensed Consolidated Statement of Deficiency in Stockholders’ Equity~~
~~For the six months ended June 30, 2020 and 2019~~
~~(Unaudited)~~
Splash Beverage Group, Inc.
Condensed Consolidated Balance Sheets
March 31, 2021 and December 31, 2020
(Unaudited)

March 31, 2021 December 31, 2020
Assets
Current assets:
Cash and cash equivalents $ 1,225,406 $ 380,000
Accounts Receivable, net 803,052 484,858
Prepaid Expenses 148,456 173,414
Inventory 868,663 798,273
Other receivables 93,424 90,919
Assets of discontinued operations 357,893 316,572
Total current assets 3,496,894 2,244,036

Non-current assets:
Deposits $ 275,694 $ 77,686
Goodwill 5,672,823 5,672,823
Investment in Salt Tequila USA, LLC 250,000 250,000
Right of use asset, net 1,161,476 80,479
Quart Vin License, net 211,762 219,512
Property and equipment, net 641,291 681,352
Total non-current assets 8,213,045 6,981,852

Total assets $ 11,709,940 $ 9,225,888

Liabilities and Deficiency in Stockholders’ Equity

Liabilities:
Current liabilities
Accounts payable and accrued expenses $ 1,090,986 $ 1,521,818
Right of use liability - current 270,771 57,478
Due to related parties 252,904 368,904

Related party notes payable 1,331,762 1,333,333
Convertible Loan Payable 100,000 100,000
Notes payable, current portion 837,477 999,736

Shareholder advances 416,201 —
Accrued interest payable 469,001 442,748
Liabilities of discontinued operations 592,882 591,642
Total current liabilities 5,361,984 5,415,659

Long-term Liabilities:
Related party notes payable - noncurrent 332,940 666,667
Notes payable - noncurrent 1,240,044 1,240,044
Liability to issue shares in APA 1,980,000 1,980,000
Right of use liability - noncurrent 890,939 25,521
Total long-term liabilities 4,443,923 3,912,232

Total liabilities 9,805,907 9,327,891

Common stock, (mezzanine shares) 0 and 12,605,283 shares, contingently convertible to notes payable at March 31, 2021 and December 31, 2020 — 9,248,720

Stockholders’ equity:
Common Stock, $0.001 par, 150,000,000 shares authorized, 80,104,839 and 63,471,129 shares issued and outstanding, at March 31, 2021 and December 31, 2020. 80,105 63,471
Additional paid in capital 67,855,882 52,175,541

Accumulated deficit (66,031,954 ) (61,589,735 )
Total deficiency in stockholders’ equity 1,904,033 (9,350,724 )

Total liabilities, mezzanine shares and deficiency in stockholders’ equity $ 11,709,940 $ 9,225,888

Total
Common Stock Treasury Stock Additional Accumulated Stockholders'
Shares Amount Shares Amount Paid-In Capital Deficit Equity (Deficit)

Balances at December 31, 2018 40,165,002 40,165 272,585 $ (100,000 ) $ 18,938,480 $ (26,709,776 ) $(7,831,132)

Issuance of Common stock for cash 27,258 27 —   —   19,973 —   $20,000
Issuance of Common stock for services 1,363 1 —   —   999 —   1,000
Share-based compensation —   —   —   —   —   —   -
Net loss —   —   —   —   —   (703,624 ) (703,624)

Balances at March 31, 2019 40,193,623 40,193 272,585 $ (100,000 ) $ 18,959,452 $ (27,413,400 ) $(8,513,755)

Issuance of Common stock for cash 483,837 484 —   —   354,516 —   $355,000
Issuance of Common stock for services —   —   —   —   —   —   -
Issuance of series B convertible preferred stock —   —   —   —   —   —   -
Issuance of Common stock from treasury —   —   —   —   —   —   -
Warrants issued in connection with debt modification —   —   —   —   —   —   -
Share-based compensation —   —   —   —   —   —   -
Net loss —   —   —   —   —   (921,520 ) (921,520)

Balances at June 30, 2019 40,677,460 40,677 272,585 $ (100,000 ) $ 19,313,968 $ (28,334,920 ) $(9,080,275)

Common Stock Treasury Stock Additional Accumulated
Total
Stockholders'
Shares Amount Shares Amount Paid-In Capital Deficit Equity (Deficit)
Balances at December 31, 2019 44,021,389 44,021 136,293 $ (50,000 ) $ 22,095,403 $ (31,845,506 ) $(9,756,084)

Issuance of common stock for convertible debt —   —   —   —   145,579 —   145,579
Incremental beneficial conversion for preferred A —   —   —   —   240,770 (240,770 ) -
Issuance of warrants on convertible instruments —   —   —   —   2,486,706 (828,903 ) 1,657,803
Issuance of common stock for services 817,753 818 (136,293 ) 50,000 549,182 —   600,000
Issuance of common stock for acquisition 11,913,200 11,913 —   —   9,161,251 —   9,173,164
Net loss —   —   —   —   —   (3,446,630 ) (3,446,630)

Balances at March 31, 2020 56,752,342 56,752 —   $ —   $ 34,678,891 $ (36,361,809 ) $(1,626,167)

Issuance of warrants —   —   —   —   77,434 —   77,434
Issuance of common stock for services —   —   —   —   —   -
Issuance of common stock for cash 249,912 250 —   —   142,316 —   142,566
Net loss —   —   —   —   (373,350 ) (373,350)

Balances at June 30, 2020 57,002,254 57,002 —   $ —   $ 34,898,641 $ (36,735,159 ) $(1,779,517)

The accompanying notes are an integral part of these condensed consolidated financial statements.

2
5

~~Splash Beverage Group, Inc.~~
~~[f/k/a Canfield Medical Supply, Inc.]~~
~~Condensed Consolidated Statement Cash Flows~~
~~For the Six Months Ended June 30, 2020 and 2019~~
~~(Unaudited)~~

Splash Beverage Group, Inc
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2021 and March 31, 2020
(Unaudited)

Six months ended June 30, 2020 Six months ended June 30, 2019
Net loss $ (3,822,129 ) $ (1,624,364 )
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 13,045 4,711
Amortization of ROU Asset 39,684 502
Debt discount (5,222 ) _
Gain from debt extinguishment (34,962 ) —
Interest on notes payable converted to common stock 231,692 —
Interest expense due to the issuance of warrants 1,657,805 —
Share-based compensation —   —
Shares issued in exchange for services 600,000 1,000
Other noncash charges (252,280 ) —
Changes in working capital items: —
Accounts receivable (36,641 ) 2,598
Inventory (153,804 ) (80,648 )
Prepaid expenses and other current assets (16,077 ) 38,187
Deposits (39,451 ) (1,043 )
Accounts payable and accrued expenses (56,268 ) (122,896 )
Royalty payable 51,000 (21,062 )
Accrued Interest payable 40,601 403,530
Net cash used in operating activities (1,783,007 ) (1,399,485 )

Cash Flows from Investing Activities:
Capital Expenditures (5,439 ) (4,526 )
Proceeds from sale of fixed assets 1,098
Investment in Salt Tequila USA, LLC (150,000 ) —
Net cash acquired in merger 72,442 —
Net cash used in investing activities (81,899 ) (4,526 )

Cash Flows from Financing Activities:
Proceeds from issuance of Common stock 1,610,000 375,000
Repayment of shareholder advance (120,106 ) —
Cash advance from shareholder 288,000 —
Proceeds from issuance of debt 264,249 160,413
Principal repayment of debt (61,248 ) —
Reduction of ROU Liability (39,877 ) —
Net cash provided by financing activities 1,941,018 535,413

Net Change in Cash and Cash Equivalents 76,112 (868,598 )

Cash and Cash Equivalents, beginning of year 42,639 938,040

Cash and Cash Equivalents, end of period $ 118,751 $ 69,442

Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 3,424 $ —

Supplemental Disclosure of Non-Cash Investing and Financing Activities
Notes payable and accrued interest converted to common stock (12,605,283 shares) 9,248,721 —
Series A & B preferred stock and declared dividends converted to common stock 14,587,623 —
Liability issued for investment in SALT Tequila USA, LLC 100,000 —  
Three months ended March 31,
2021 2020
Net revenues $ 2,417,701 $ 112,003
Cost of goods sold (1,742,875 ) (107,214 )
Gross margin 674,826 4,789

Operating expenses:
Contracted services 276,511 257,981
Salary and wages 2,020,447 241,676
Other general and administrative 2,727,513 1,031,264
Sales and marketing 41,878 23,012
Total operating expenses 5,066,349 1,553,933

Loss from operations (4,391,523 ) (1,549,144 )

Other income/(expense):

Interest income 114 16,151
Interest expense (92,211 ) (1,913,637 )
Gain from debt extinguishment 1,319 —
Total other income/(expense) (90,778 ) (1,897,486 )

Provision for income taxes — —

Net loss from continuing operations (4,482,301 ) (3,446,630 )

Net income from discontinued operations, net of tax 40,082 —

Net loss $ (4,442,219 ) $ (3,446,630 )

Earnings//(Loss)per share (basic diluted)
Continuing operations (0.06 ) (0.08 )

Weighted average number of common shares outstanding 73,927,596 44,021,393

The accompanying notes are an integral part of these condensed consolidated financial statements.

3
6

Splash Beverage Group, Inc.
~~[f/k/a Canfield Medical Supply,~~Consolidated Statement of Changes in Deficiency in Stockholders’ Equity
For the three months ended March 31, 2021 and 2020
Total
Common Stock Treasury Stock Additional Accumulated Stockholders’
Shares Amount Shares Amount Paid-In Capital Deficit Equity (Deficit)

Balances at December 31, 2019 44,021,389 44,021 136,293 $ (50,000 ) $ 22,095,403 $ (31,845,506 ) $ (9,756,083 )

Issuance of common stock for convertible debt — — — — 145,579 — 145,579
Incremental beneficial conversion for preferred A — — — — 240,770 (240,770 ) —
Issuance of warrants on convertible instruments — — — — 2,486,706 (828,903 ) 1,657,803
Issuance of options
Issuance of common stock for services 817,753 818 (136,293 ) 50,000 549,182 — 600,000
Issuance of common stock for cash
Issuance of common stock for acquisition 11,913,200 11,913 — — 9,161,251 — 9,173,164
Net loss — — — — — (3,446,630 ) (3,446,630 )

Balances at March 31, 2020 56,752,342 56,752 — — 34,678,891 (36,361,809 ) (1,626,167 )

Issuance of warrants on convertible instruments — — — — 8,996,844 — 8,996,844
Issuance of options — — — — — — —
Issuance of common stock for services 1,159,900 1,160 — — 3,014,580 — 3,015,740
Issuance of common stock for cash 1,736,356 1,736 — — 1,401,016 — 1,402,753
Net loss — — — — (22,570,893 ) (22,570,893 )

Balances at December 31, 2020 63,471,129 63,471 — $ — $ 52,175,541 $ (61,589,735 ) $ (9,350,725 )

Issuance of warrants for services — — — — 1,186,596 — 1,186,596
Issuance of common stock for services 505,000 505 — — 730,530 — 731,035
Issuance of common stock and warrants for cash 3,523,427 3,523 — — 4,527,101 — 4,530,624
Mezzanine shares 12,605,283 12,605 — — 9,236,115 — 9,248,720
Net loss — — — — — (4,442,219 ) (4,442,219 )

Balances at March 31, 2021 80,104,839 80,105 — $ — $ 67,855,882 $ (66,031,954 ) $ 1,904,032
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Splash Beverage Group, Inc.
Consolidated Statement Cash Flows
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
Three months ended March 31,
2021 2020
Net loss $ (4,442,219 ) $ (3,446,630 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 40,061 2,294
ROU asset, net 36,445 20,192
Gain from debt extinguishment — (763 )
Interest on notes payable converted to common stock — 231,692
Interest expense due to the issuance of warrants — 1,657,805
Non-cash warrant expense 1,186,596 —
Share-based compensation 731,035 600,000
Other noncash changes (362,515 ) (14,400 )
Changes in working capital items:
Accounts receivable, net (318,194 ) (80,198 )
Inventory, net (70,391 ) (153,836 )
Prepaid expenses and other current assets 22,453 2,467
Deposits — 190
Accounts payable and accrued expenses (430,831 ) 226,187
Royalty payable — 6,000
Accrued Interest payable 26,253 24,140
Net cash used in operating activities - continuing operations (3,581,308 ) (924,860 )

Net cash used in operating activities - discontinued operations (40,082 )

Cash Flows from Investing Activities:
Capital Expenditures — (2,419 )
Investment in Salt Tequila USA, LLC — (150,000 )
Net cash used in investing activities - continuing operations — (79,977 )

Net cash used in investing activities - discontinued operations — 72,442

Cash Flows from Financing Activities:
Proceeds from issuance of Common stock 4,530,624 1,500,000
Cash advance from shareholder 416,201 240,000
Repayment of cash advance (107,966 ) (120,000 )
Principal repayment of debt (333,333 ) (18,000 )
ROU liability, net (38,731 ) (19,788 )
Net cash provided by financing activities - continuing operations 4,466,796 1,582,212

Net cash provided by financing activities - discontinued operations — —

Net Change in Cash and Cash Equivalents 845,406 577,375

Cash and Cash Equivalents, beginning of year 380,000 42,639

Cash and Cash Equivalents, end of year $ 1,225,406 $ 620,014

Supplemental Disclosure of Cash Flow Information:
Cash paid for Interest $ — $ —

Supplemental Disclosure of Non-Cash Investing and Financing Activities
Notes payable and accrued interest converted to common stock (12,605,283 shares) — 9,248,721
Series A & B preferred stock and declared dividends converted to common stock — 14,587,623
Liability issued for investment in SALT Tequila USA, LLC — 100,000
The accompanying notes are an integral part of these financial statements.
5
Splash Beverage Group, Inc.]
Notes to the Condensed Consolidated Financial Statements

Note 1 – Business Organization and Nature of Operations

Splash Beverage Group (“SBG”), f/k/a Canfield Medical Supply, Inc. (the “CMS”), was incorporated in the State of Ohio on September 3, 1992, and changed domicile to Colorado on April 18, 2012. CMS is 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, 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~~E-commerce distribution platform called Qplash, further expanding its distribution abilities and visibility.

On July 2, 2020, CMS received a Certificate of Good Standing from the State of Colorado. This certificate allowed us to change our name from Canfield Medical Supply, Inc. to Splash Beverage Group, Inc. a Colorado company. On July 31, 2020, we received approval from FINRA to change the Company’s name from Canfield Medical Supply, Inc. 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 $5,980,000, payable in the combination of $2,000,000 in cash (“Cash Consideration”), $2,000,000 convertible promissory note (the “Convertible Note”) to Seller and a variable number of shares of the Company’s common stock based on a attainment of revenue hurdles. CdV is one of the leading producers of premium wine by the glass in the United States with its primary offices and facilities in The Dalles, Oregon.
On February 2021, Management initiated a plan to divest its CMS business. As a result, the assets and operations of CMS are reflected as discontinued operations.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Consolidation
These ~~condensed~~ consolidated financial statements include the accounts of Splash Beverage Group and its wholly owned subsidiaries, Holdings and Splash Mex, ~~in addition to the accounts of the~~ CMS ~~from March 31, 2020, the merger consummation date.~~(as discontinued operations), and Copa. All intercompany balances have been eliminated in consolidation.

Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (GAAP).

The accompanying financial statements have been prepared by us without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ have been made.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in ~~accordance with accounting principles generally accepted in the United States of America~~GAAP have been condensed or omitted. ~~It is suggested that these financial statements be read in conjunction with the consolidated financial statements and notes thereto included in our December 31, 2019 audited financial statements.~~ The results of operations for the period ended ~~June 30, 2020~~March 31, 2021 are not necessarily indicative of the operating results for the full year.

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 no cash equivalents at ~~June 30, 2020~~March 31, 2021 or December 31, ~~2019.~~2020.

Our cash in bank deposit accounts, at times, may exceed federally insured limits of $250,000. At ~~June 30, 2020~~March 31, 2021 we had ~~no bank accounts~~$511,146 over the federally insured limits. Our bank deposit accounts in Mexico $2,447 are uninsured.

6
7

Splash Beverage Group, Inc.
~~[f/k/a Canfield Medical Supply, Inc.]~~
Notes to the Condensed Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies, continued

Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable 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 ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, our accounts receivable amounts are reflected net of allowances of~~$359,657~~ $6,507 and ~~$11,430,~~$0, respectively.

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 ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 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 are 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 $355,780 and $366,109 at March 31, 2021 and December 31, 2020, respectively.

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 ~~3-10~~3-39 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.

Depreciation expense totaled ~~$10,750~~$43,487 and~~$1,806~~ $2,294 for the three months ended ~~June 30,~~March 31, 2021 and March 31, 2020, ~~and June 30, 2019, respectively. Depreciation expense totaled $13,045 and $4,711 for the six months ended June 30, 2020 and June 30, 2019,~~ respectively. Property and equipment as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 consisted of the following:

June 30,
2020 December 31,
2019 March 31, 2021 December 31, 2020
Property and equipment, at cost 206,006 88,758 2,076,710 718,884
Accumulated depreciation (141,738 ) (51,029 ) (1,435,419 ) (37,532 )
Property and equipment, net 64,269 37,729 641,291 681,352

~~Licensing Agreements~~Excise taxes
~~We capitalize~~The Company pays alcohol excise taxes based on product sales to both the ~~costs~~Oregon Liquor Control Commission and to the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (TTB). The Company is liable for ~~our licensing agreements with ABG TapouT, LLC and Salt Tequila USA, LLC, which are amortized to expense~~the taxes upon the removal of product from the Company’s warehouse on a ~~straight-line basis over~~per gallon basis. The federal tax rate is affected by a small winery tax credit provision which decreases based upon the ~~term~~number of gallons of wine production in a year rather than the ~~agreements.~~quantity sold.
Paycheck Protection Program
The ~~initial amount of~~Company records Paycheck Protection Program (“PPP”) loan proceeds in accordance with Accounting Standards Codification (“ASC”) 470, Debt. Debt is extinguished when either the ~~TapouT agreement as entered into~~debtor pays the creditor or the debtor is legally released from being the primary obligor, either judicially or by ~~a related party prior to~~ the Company’s assumption in 2013 was $4,000,000 to be paid over several years pursuant to a guaranteed minimum royalty agreement. Royalty costs incurred under the agreements, guaranteed minimum royalty amounts, are expensed as incurred.
~~We have not made any payments to Salt Tequila USA, LLC under the licensing agreement due to the immaterial level of our sales to date from the brand.~~
creditor.
8
7

Splash Beverage Group, Inc.
~~[f/k/a Canfield Medical Supply, Inc.]~~
Notes to the Condensed Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies, continued

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 ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, consistent with recent negotiations of notes payable and due to the short duration of maturities.

~~Convertible Instruments~~8
U.S. GAAP requires the bifurcation of certain conversion rights contained in convertible indebtedness and account for them as free standing derivative financial instruments according to certain criteria. This criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional as that term is described under applicable U.S. GAAP.
When bifurcation is required, the embedded conversion options are bifurcated from the convertible note, resulting in the recognition of discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.
With respect to convertible preferred stock, we record a dividend for the intrinsic value of conversion options embedded in preferred securities based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.
9

Splash Beverage Group, Inc.
~~[f/k/a Canfield Medical Supply, Inc.]~~
Notes to the Condensed Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies, continued

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.

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, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.

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.

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.

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 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. Company management has determined that there are no material uncertain tax positions at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019.~~
2020.
10
9

Splash Beverage Group, Inc.
~~[f/k/a Canfield Medical Supply, Inc.]~~
Notes to the Condensed Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies, continued

Net ~~loss~~income (loss) per share
The net ~~loss~~income (loss) per share is computed by dividing the net ~~loss~~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~~Company’s convertible debt or preferred stock (if any), are not included in the computation if the effect would be anti-dilutive.

Numerator 2021 2020
Net loss from continuing applicable to common shareholders $ (4,482,301 ) $ (3,446,630 )
Three-months ended Three-months ended Six-months ended Six-months ended
Numerator June 30, 2020 June 30, 2019 June 30 2020 June 30, 2019
Net loss applicable to common shareholders $ (373,350 ) $ (218,389 ) $ (3,822,129 ) $ (1,624,364 )
Earnings from discontinued applicable to common shareholders $ 40,082 $ —

Denominator
Weighted average number of common shares outstanding 56,908,703 41,807,563 51,113,403 41,603,563 73,927,596 44,021,393

Net loss per share (basic and diluted) $ (0.01 ) $ (0.01 ) $ (0.07 ) $ (0.04 )
Net loss per share from continuing operations (basic diluted) $ (0.06 ) $ (0.08 )

Net income per share from discontinued operations (basic diluted) $ 0.00 $ 0.00

Weighted average number of shares outstanding excludes anti-dilutive common stock equivalents, including warrants to purchase 3 million shares of common stock for nominal consideration.

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 $47,785 and $23,012 for the three-months ended March 31, 2021 and 2020, respectively.

~~Related Parties~~Goodwill
~~We are indebted~~Goodwill represents the excess of acquisition cost over the fair value of the net assets acquired and is not subject to ~~certain members~~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 ~~our Board~~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. During 2020, the company recorded an impairment charge associated with the CMS acquisition. See Note 16.
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 ~~Directors at June 30, 2020~~the asset group, generally an individual warehouse, may not be fully recoverable. For asset groups held and ~~December 31, 2019. Transactions between us~~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 ~~Board members are summarized in Notes 4~~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 8.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.
Recent Accounting Pronouncements
In ~~February~~June 2016, ~~the~~that FASB issued ASU ~~2016-02,~~2016-13, “~~Leases~~Financial Instruments – Credit Losses” (Topic ~~842)~~326). This ASU ~~requires~~provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a ~~lessee to recognize a right-of-use asset and a lease liability for most leases in its balance sheet.~~reporting entity at each reporting date.

~~We adopted~~Management is currently assessing the new standard on January 1, 2019, using the modified retrospective method. The adoption of this standard resulted in recognition of a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, for all leases with a term greater than 12 months. When available, webut does not believe that it would use the rate implicit in the lease to discount lease payments to present value. However, our leases generally do not provide a readily determinable implicit rate. Therefore, our management estimates the incremental borrowing rate to discount lease payments based on the information at the lease commencement. The accounting for finance leases is substantially unchanged. Given the nature of our operation, the adoption of Topic 842 did not have a material impact on our balance sheet, statement of income, or liquidity. Refer to Note 10 – Operating Lease Obligations for information regarding our adoption of Topic 842 and the Company’s undiscounted future lease payments and the timing of those payments.effect.

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

Note 3 – Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our business operations have not yet generated significant revenues, and we have sustained net losses of approximately ~~$3.8~~$4.4 million during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 and have an accumulated deficit of approximately ~~$40.5~~$66.0 million at ~~June 30, 2020.~~March 31, 2021. In addition, we have current liabilities in excess of current assets of approximately ~~$2.4~~$1.9 million at ~~June 30, 2020.~~March 31, 2021. Further, we are in default on approximately ~~$0.6~~$0.9 million of indebtedness, including accrued interest.

Our ability to continue as a going concern in the foreseeable future is dependent upon our ability to generate revenues and obtain sufficient long-term financing to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and plans to raise capital as needed and to generate revenues to satisfy our capital needs. No assurance can be given that we will be successful in these efforts.

These factors, among others, raise substantial doubt about our ability to continue as a going concern for a reasonable period of time. These condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

10
11

Splash Beverage Group, Inc.
~~[f/k/a Canfield Medical Supply, Inc.]~~
Notes to the Condensed Consolidated Financial Statements
Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable
Notes payable are generally nonrecourse and secured by all Company owned assets.
Interest Rate March 31, 2021 December 31, 2020
Notes Payable

In February 2014, we entered into a 12-month term loan agreement with an individual in the amount of $200,000. The note included warrants for 66,146 shares of common stock at $0.73 per share. The warrants expired on February 28, 2017 and none were exercised at that date. The note matured and remains in default. 15% 150,000 150,000

In March 2014, we entered into a short-term loan agreement with an entity in the amount of $200,000. The note included warrants for 272,584 shares of common stock at $0.94 per share. The warrants expired on February 28, 2017 and none were exercised at that date. The loan matured and remains in default. 8% 200,000 200,000

In May 2020, we entered into a two year loan with the SBA under the Paycheck Protection Program established by the CARES Act in the amount of $94,833. The note requires monthly payments of principal and interest starting in December 2020 and maturing in May 2021. See note 13. 1% 94,833 89,612

In June 2020, we entered into a six-month loan with an individual in the amount of $100,000. The loan matures in December 2020 with principal and interest due at maturity. 12% — 100,000
In August 2020, we entered into a nine-month loan with a company in the amount of $112,000. The loan requires 9 amortized payments of principal and interest in the amount of $12,246 with the final payment due September 2020. 4.8% 25,238 62,719
Notes payable for license agreements due in 36 monthly payments of $10,000, interest imputed at 10%, maturing in January 2021. 10.0% 29,212 59,212
In December 2020, we entered into a 56 month loan with a company in the amount of $1,578,237. The loan requires payments of 3.75% of the previous months revenue. Various 1,578,237 1,578,237

Total notes payable $ 2,077,520 $ 2,239,780

Less current portion (837,477 ) (999,736 )

Long-term notes payable $ 1,240,044 $ 1,240,044
Interest expense on notes payable was $9,625 and $49,430 for the three months ended March 31, 2021 and 2020, respectively. Accrued interest was $273,880 at March 31, 2021.
11
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements

Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued

~~Notes payable are generally nonrecourse and secured by all Company owned assets.~~
Related Parties Notes Payable

In December 2020, we entered into a 18 month loan with an individual in the amount of $2,000,000. The loan requires 18 monthly amortized payments of principal and interest in the amount of $144,444 with the final payment due June 2022. 2.0%            1,664,702                  2,000,000

Less current portion           (1,331,762)                (1,333,333)

Long-term notes payable $           332,940 $                666,667

Interest Rate June 30, 2020 December 31, 2019
Notes Payable

In October 2013, we entered into a short-term loan agreement with an entity in the amount of $25,000. In March 2020 the full outstanding principal balance of $25,000 and unpaid accrued interest of $11,345 was converted into 234,767 shares of common stock according to the Merger Agreement. 7 % $ —   $ 25,000

In February 2014, we entered into a 12-month term loan agreement with an individual in the amount of $200,000. The note included warrants for 66,146 shares of common stock at $0.73 per share.  The warrants expired on February 28, 2017 and none were exercised at that date. The note matured and remains unpaid. 15 % 150,000 150,000

In March 2014, we entered into a 12-month term loan agreement with an individual in the amount of $500,000.  The note included warrants for 681,461 shares of common stock at $0.92 per share. The warrants expired on February 28, 2017 and none were exercised at that date.  In March 2020 the full outstanding principal balance of $500,000 and unpaid accrued interest of $373,065 was converted into 1,124,802 shares of common stock according to the Merger Agreement. 15 % —   500,000

In March 2014, we entered into a short-term loan agreement with an entity in the amount of $200,000. The note included warrants for 272,584 shares of common stock at $0.94 per share. The warrants expired on February 28, 2017 and none were exercised at that date. The loans matured and remain unpaid. 8 % 200,000 200,000

In May 2020, we entered into a two year loan with an entity under the Paycheck Protection Program established by the CARES Act in the amount of $94,833.32. The note requires monthly payments of principal and interest starting in December 2020 and maturing in May 2020. We expect $73,167 of the loan amount to be forgiven in accordance with the CARES Act. 1 % 94,833 —

In June 2020, we entered into a six-month loan with an individual in the amount of $100,000. The loan matures in December 2020 with principal and interest due at maturity. 12 % 100,000 —
$ 544,833 $ 875,000
Interest expense on related party notes payable was ~~$10,429~~$0 and ~~$28,813~~$37,967 for the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019, respectively. Interest expense on notes payable was $59,859 and $57,626 for the six months ended June 30, 2020 and 2019,~~ respectively. Accrued interest was ~~$245,005 at June 30, 2020~~
~~Concurrently with the consummation~~$0 as of the Merger, notes payable of $525,000 and accrued interest were converted to shares of Splash common stock, which were exchanged for Splash Beverage Group, Inc. [Formerly known as Canfield Medical Supply, Inc.] shares. Pursuant to the terms of the conversion agreements, these investors have the right to rescind the common shares received and receive replacement notes payable if we fail to raise $9 million in a secondary initial public offering by September 30, 2020. As a result, these shares are classified as mezzanine equity in our condensed consolidated balance sheet.
March 31, 2021.
12
12

Splash Beverage Group, Inc.
~~[f/k/a Canfield Medical Supply, Inc.]~~
Notes to the Condensed Consolidated Financial Statements
Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued
    Interest     March 31,     December 31,
Rate 2021 2020
Convertible Bridge Loans Payable

In May 2015, we entered into a 3-month term loan agreement with an individual in the amount of $100,000. The annual interest rate for this bridge loan was 32% for the first 90 days, and 4% thereafter, compounded monthly. Variable $ 100,000 $ 100,000
13
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued
Interest expense on the convertible bridge loans payable was $32,000 and $93,785 for the three months ended March 31, 2021 and 2020, respectively. Accrued interest was $179,215 at March 31, 2021.
On April 24, 2017, a note holder filed a complaint against the Company for a promissory note in default. The note holder is requesting summary judgment in the amount of $279,215.
14
Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements
~~Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued~~
Interest Rate June 30, 2020 December 31, 2019
Related Parties Notes Payable

During 2012, we entered into two 6-month term loan agreements with an entity, totaling $150,000. The notes included warrants for 68,146 shares of common stock at $0.73 per share which expired unexercised in 2017. In March 2020 the full outstanding principal balance of $41,500 and unpaid accrued interest of $31,515 was converted into 98,726 shares of common stock according to the Merger Agreement. 7 % $ —   $ 41,500

In March 2014, we entered into a $50,000 12-month term loan agreement. The note included warrants for 136,292 shares of common stock at $0.92 per share. The warrants expired unexercised on February 28, 2017.  In March 2020 the full outstanding principal balance of $50,000 and unpaid accrued interest of $24,145 was converted into 99,252 shares of common stock according to the Merger Agreement. 8 % —   50,000

During 2015, we entered into a 12-month term loan agreement with an individual in the amount $250,000.  In March 2020 the full outstanding principal balance of $250,000 and unpaid accrued interest of $101,850 was converted into 98,726 shares of common stock according to the Merger Agreement. 8 % —   250,000

In February 2012, we entered into a loan agreement with an officer of the Company in the amount of $100. On September 25, 2018 an additional $10,500 loan agreement was entered into. In March 2020 the full outstanding principal balance of $10,600 and unpaid accrued interest of $1,189 was converted into 15,734 shares of common stock according to the Merger Agreement. 7 % —   10,600

During 2013, 2014, 2015, and 2016, we entered into several 12-month term loan agreements with an officer of the Company in the amounts of $57,000, $225,000, $105,000, and $9,000, respectively. In March 2020 the full outstanding principal balance of $396,000 and unpaid accrued interest of $146,828 was converted into 727,344 shares of common stock according to the Merger Agreement. 7 % —   396,000
~~Continued on next page~~
13
~~Splash Beverage Group, Inc.~~
~~[f/k/a Canfield Medical Supply, Inc.]~~
~~Notes to the Condensed Consolidated Financial Statements~~
~~Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued~~
Interest Rate June 30, 2020 December 31, 2019
Related Parties Notes Payable, continued

During 2012, 2013, 2014, and 2016, we entered into 6-month term loan agreements with an officer of the Company in the amounts of $155,000, $210,000, $150,000 and $40,000, all respectively. The notes included warrants for issuances of 204,438 shares of common stock at $.092 per share. The warrants expired unexercised on March 1, 2017. In March 2020 the full outstanding principal balance of $495,000 and unpaid accrued interest of $213,010 was converted into 942,504 shares of common stock according to the Merger Agreement. 7 % —   495,000

During 2013, 2014 and 2017, we entered into 12-month term loan agreements with an officer of the Company in the amounts of $60,000, $50,000 and $10,000. In March 2020 the full outstanding principal balance of $120,000 and unpaid accrued interest of $50,305 was converted into 228,328 shares of common stock according to the Merger Agreement. 7 % —   120,000

During 2018, we entered into a long term note payable with an entity owned by an officer for $12,000 to be payable on July 10, 2020. In March 2020 the full outstanding principal balance of $12,000 and unpaid accrued interest of $1,050 was converted into 17,407 shares of common stock according to the Merger Agreement. 12 % —   12,000

During 2019, we entered into a term note payable with an entity owned by an officer for $130,000 to be paid on August 8, 2019. In March 2020 the full outstanding principal balance of $130,000 and unpaid accrued interest of $9,078 was converted into 182,525 shares of common stock according to the Merger Agreement. 12 % —   130,000
$ —   $ 1,505,100
Interest expense on related party notes payable was $0 and $24,814 for the three months ended June 30, 2020 and 2019, respectively. Interest expense on related party notes payable was $37,967 and $49,628 for the six months ended June 30, 2020 and 2019, respectively. Accrued interest was $0 as of June 30, 2020.
Concurrently with the consummation of the Merger, notes payable of $1,505,100 and accrued interest were converted to shares of Splash common stock, which were exchanged for Splash Beverage Group, Inc. [Formerly known as Canfield Medical Supply, Inc.] shares. Pursuant to the terms of the conversion agreements, these investors have the right to rescind the common shares received and receive replacement notes payable if we fail to raise $9 million in a secondary initial public offering by September 30, 2020. As a result, these shares are classified as mezzanine equity in our condensed consolidated balance sheet.
14
~~Splash Beverage Group, Inc.~~
~~[f/k/a Canfield Medical Supply, Inc.]~~
~~Notes to the Condensed Consolidated Financial Statements~~
~~Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued~~
Interest Rate June 30, 2020 December 31, 2019
Convertible Bridge Loans Payable

In May 2015, we entered into a 3-month term loan agreement with an individual in the amount of $100,000. The annual interest rate for this bridge loan was 32% for the first 90 days, and 4% thereafter, compounded monthly. See left $ 100,000 $ 100,000

In October 2015, we entered into a 3-month term loan agreement with two individuals in the amount of $25,000. On December 26, 2018, the outstanding principal and accrued interest of $14,388 was consolidated into a new $39,388 term loan due August 26, 2020. In March 2020 the full outstanding principal balance of $39,388 and unpaid accrued interest of $5,973 was converted into 59,694 shares of common stock according to the Merger Agreement. 12 % —   39,388

In June 2015, we entered into a 3-month term loan with two individuals in the amount of $100,000. On December 26, 2018, the outstanding principal amount of $100,000 and accrued interest of $64,307 was consolidated into a new $164,307 term loan due August 26, 2020. In March 2020 the full outstanding principal balance of $164,307 and unpaid accrued interest of $24,916 was converted into 249,013 shares of common stock according to the Merger Agreement. 12 % —   164,307

During 2016, 2017 and 2018, we entered into multiple loan agreements with an entity in varying amounts. On December 26, 2018, the outstanding principal of $235,500 and accrued interest of $155,861 was consolidated into a new $391,361 term due August 26, 2020. In March 2020 the full outstanding principal balance of $391,361 and unpaid accrued interest of $43,823 was converted into 435,184 shares of common stock according to the Merger Agreement. 12 % —   391,361

During 2016, we entered into 3-month term loan agreements with an individual totaling $20,000. The loan was extended to August 14, 2020. In March 2020 the full outstanding principal balance of $20,000 and unpaid accrued interest of $10,096 was converted into 41,336 shares of common stock according to the Merger Agreement. 9 % —   20,000

During 2014 through 2018, we entered into convertible promissory note agreements with various terms ranging from 90 days to 18 months at 18% interest with an entity which were consolidated into one loan at 12% in 2018 totaling $795,137 with a due date of August 26, 2020. In March 2020 the full outstanding principal balance of $795,137 and unpaid accrued interest of $89,037 was converted into 884,174 shares of common stock according to the Merger Agreement. 12 % —   795,137

During 2015 and 2016, we entered into a series of 3-month term convertible promissory note agreements at 18% interest with an entity which were consolidated into one loan at 12% in 2018 totaling $692,471 with a due date of August 26, 2020. In March 2020 the full outstanding principal balance of $692,471 and unpaid accrued interest of $77,541 was converted into 770,012 shares of common stock according to the Merger Agreement. 12 % —   692,471
$ 100,000 $ 2,202,664
~~During 2018, we issued convertible bridge loans payable which are convertible, at the holders’ option, into shares of our common stock.~~
During 2018 multiple convertible bridge loans payable to five counterparties, and related unpaid interest were consolidated into five new convertible bridge loans payable totaling $2,082,665. The notes are of varying amounts and are due in August 2020, at an interest rate of 12%. We analyzed the notes and concluded the conversion terms did not constitute beneficial conversion features. The principal amount and any accrued and unpaid interest are convertible at the conversion price of a potential future offering of the Company.
15
~~Splash Beverage Group, Inc.~~
~~[f/k/a Canfield Medical Supply, Inc.]~~
~~Notes to the Condensed Consolidated Financial Statements~~
~~Note 4 – Notes Payable, Related Party Notes Payable, Convertible Bridge Loans Payable, Revenue Financing Arrangements and Bridge Loan Payable, continued~~
Interest expense on the convertible bridge loans payable was $8,000 and $70,480 for the three months ended June 30, 2020 and 2019, respectively. Interest expense on the convertible bridge loans payable was $101,785 and $140,960 for the six months ended June 30, 2020 and 2019, respectively. Accrued interest was $155,215 at June 30, 2020.
~~On April 24, 2017, a note holder filed a complaint against the Company for a promissory note in default. The note holder is requesting summary judgment in the amount of $247,215.~~
Concurrently with the consummation of the Merger, notes payable of $2,102,664 and accrued interest were converted to shares of Splash common stock, which were exchanged for Splash Beverage Group, Inc. [Formerly known as Canfield Medical Supply, Inc.] shares. Pursuant to the terms of the conversion agreements, these investors have the right to rescind the common shares received and receive replacement notes payable if we fail to raise $9 million in a secondary initial public offering by September 30, 2020. As a result, these shares are classified as mezzanine equity in our condensed consolidated balance sheet.
Interest Rate June 30, 2020 December 31, 2019
Revenue Financing Arrangements

During August 2015, we entered into a 3-month term loan agreement with an entity in the amount of $50,000, with required daily payments of $999. we entered into two additional 3-month loan agreements with the entity in 2016 in the amounts of $60,000 and $57,000, with required daily payments of $928 and $713, respectively.   The term loans matured and remain unpaid. 10 % 28,032 28,032

During November 2016, we entered into a short-term loan agreement with an entity in the amount of $55,000 with required daily payments of $1,299. The note was in default as of December 31, 2018. In 2019, we entered into a settlement agreement with monthly installment payments of $6,000.  The loan is scheduled to be fully repaid in 2020. 12 % 17,435 17,435
$ 45,464 $ 45,464
~~Interest expense on the revenue financing arrangements was $25,067 and $1,723 for the year ended June 30, 2020 and 2019, respectively. Accrued interest was $0 at June 30, 2020.~~
~~Bridge Loan Payable~~
We issued an additional bridge loan in October 2018 for $2 million with a one-year maturity to GMA Bridge Fund LLC (“GMA”). This bridge loan contains a 10% administration fee of which the full $200,000 was accrued at December 31, 2019 and included in bridge loan payable, net. We incurred $271,670 of loan costs, which was fully amortized at December 31, 2019. Interest on the bridge loan was 0.5% monthly for the first six months and 0.75% monthly for the next six months. At the same time the debt was issued, we entered into a separate agreement in which GMA provided consulting services for one year (“Consulting Agreement”). We compensated GMA for the Consulting Agreement services by issuance of a warrant with a 5-year term to acquire 1,362,922 shares of our common stock at an exercise price of $0.01 per share. The warrant vested immediately. The value of the warrant, based on a Black-Scholes option pricing model, was $991,423 and was expensed in full in 2018. Interest expense on the bridge loan for the six months ended June 30, 2020 was $0 and accrued interest at June 30, 2020 was $0.
As part of GMA’s conversion agreement, we replaced the original warrants to purchase 1 million shares and granted additional warrants. To purchase 1 million shares. The value of the warrants based on a Black-Scholes option pricing model, was $1,657,805, and was expensed.
Concurrently with the consummation of the Merger, the $2,500,000 note payable of was converted to shares of Splash common stock, which were exchanged for Splash Beverage Group, Inc. [Formerly known as Canfield Medical Supply, Inc.] shares. Pursuant to the terms of the conversion agreements, GMA has the right to rescind the common shares received and receive replacement notes payable if we fail to raise $9 million in a secondary initial public offering by September 30, 2020. As a result, these shares are classified as mezzanine equity in our condensed consolidated balance sheet.
16
~~Splash Beverage Group, Inc.~~
~~[f/k/a Canfield Medical Supply, Inc.]~~
~~Notes to the Condensed Consolidated Financial Statements~~

Note 5 – Licensing Agreement and Royalty Payable

We have a licensing agreement with ABG TapouT, LLC (“TapouT”), providing us with licensing rights to the brand “TapouT” on energy drinks, energy shots, water, teas and sports drinks for beverages sold in the United States of America, its territories, possessions, U.S. military bases and Mexico. Under the terms of the agreement, we are required to pay a 6% royalty on net sales, as defined. In ~~2020~~2021 and ~~2019,~~2020, we are required to make monthly payments of ~~$45,000~~$49,500 and ~~$39,000,~~$45,000, respectively.

~~The~~There were no unpaid ~~amount of~~ royalties ~~was $90,000~~ at ~~June 30, 2020. Guaranteed~~March 31, 2021. We paid the guaranteed minimum royalty payments ~~totaled~~of $148,500 and $135,000 ~~and $117,000~~ for the ~~three months~~three-months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ which is included in general and administrative expenses. ~~Guaranteed minimum royalty payments totaled $270,000~~
In connection with the Copa APA, 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 ~~$234,000~~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 ~~six months ended June 30, 2020 and 2019,~~Company a nonexclusive, royalty-bearing, non-assignable, nontransferable, terminable license which would continue until the subject equipment is ~~included~~no longer in ~~general and administrative expenses.~~service or the patents expire. Amortization will be approximately $31,000 annually until the license agreement is fully amortized. The asset is being amortized over a 10-year useful life.

Note 6 – Deficiency in Stockholders’ Equity

~~Series A and B Convertible Preferred~~Common Stock
~~As part of the merger consummated on~~At March 31, 2020, all series A and B convertible preferred stock were converted to common stock. If the Company is unable to achieve the capital raise event as defined in the Merger Agreement by September 30, 2020, these shareholders can rescind their commonwe issued 817,753 shares ~~back to preferred shares. Below are the new rights to these shareholders if they decide to rescind:~~
~~Series A Convertible Preferred Stock~~:
~~Rank. The Series A Preferred Stock shall rank, with respect to dividend rights and to rights upon any voluntary or involuntary liquidation, dissolution or winding up~~ of ~~the Company (each, a “Liquidation Event”), (a) senior in preference and priority to the~~ common stock in exchange for services provided to us. The shares were valued at $0.73 per share. We recognized share-based compensation expense of $600,000, which is classified within the ~~Company (the “Common Stock”) and any other class or series~~contracted services line on the Statement of equity security established and designated by the Board of Directors the terms of which do not expressly provide that it ranks senior in preference or priority to or on parity with the Series A Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “Junior Securities”), (b) on parity, without preference or priority, with each other class or series of equity security established and designated by the Board of Directors the terms of which expressly provide that it ranks on parity, without preference or priority to, the Series A Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “Parity Securities”), and (c) junior in preference and priority to each other class or series of equity security established and designated by the Board of Directors the terms of which expressly provide that it ranks senior in preference or priority to the Series A Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “Senior Securities”).
~~Dividends. Holders of~~Operations. At March 31, 2021, we issued 505,000 shares of ~~the Series A Preferred Stock are entitled~~common stock in exchange for services provided to receive, when, as and if declared by the Board, out of funds legally available for the payment of dividends, cumulative cash dividends at an annual rate of eight percent (8%) of the Original Issue Price per share (equal to $.08 per share per annum). Dividends shall accrue on each share of Series A Preferred Stock from the date of issuance thereof, whether paid or not, and shall be cumulative and compounded annually.
Liquidation Preference. In the event of any Liquidation Event, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of any Junior Securities by reason of their ownership thereof, an amount per share equal to one hundred fifty percent (150%) of the Series A Original Issue Price (the “Liquidation Preference”), plus the amount of accrued and unpaid dividends thereon from the Original Issue Date through the date of liquidation. If upon any such Liquidation Event the assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled under this, the holders of shares of Series A Preferred Stock and Parity Securities shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to suchus. The shares were ~~paid in full.~~
~~Conversion. The holders of Series A Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):~~
~~Optional Conversion. Each share of Series A Preferred Stock shall be convertible,~~valued at the option of the holder thereof, at any time and from time to time, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Series A Original Issue Price by the Conversion Price (as defined below) in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series A Preferred Stock without the payment of additional consideration by the holder thereof (the “Conversion Price”) shall initially be $1.28 per share. Such initial Conversion Price, and the rate at which shares of Series A Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. All accrued and unpaid dividends may be converted by each holder of Series A Preferred Stock into Common Stock by first determining the number of shares of Series A Preferred Stock that could be purchaseda fair market value stock price based on the ~~Series A Original Issue Price then in effect and then determining~~agreement date. We recognized share-based compensation expense of $731,035, which is classified within the number of shares of Common Stock such additional shares of Series A Preferred Stock are convertible into. By way of illustration only, if the accrued and unpaid dividends are equal to $100,000, then basedcontracted services line on the ~~Series A Original Issue Price~~Statement of ~~$1.00 and a Conversion Price of $0.85, the holders of Series A Preferred Stock would receive an additional 85,000 shares of Common Stock.~~
Automatic Conversion. Upon the consummation of an underwritten public offering of the Common Stock of the Company (“IPO”) , each share of Series A Preferred Stock shall automatically be converted into such number of fully paid and non-assessable shares of Common Stock at a Conversion Price equal to the lesser of (i) the Conversion Price in effect immediately prior to the consummation of the IPO or (ii) fifty percent (50%) of the public offering price of the Common Stock in the IPO. All accrued and unpaid dividends may be converted by each holder of Series A Preferred Stock into Common Stock by first determining the number of shares of Series A Preferred Stock that could be purchased based on the Series A Original Issue Price then in effect and then determining the number of shares of Common Stock such additional shares of Series A Preferred Stock are convertible into. By way of illustration only, if the accrued and unpaid dividends are equal to $100,000, then based on the Series A Original Issue Price of $1.00 and a Conversion Price of $0.85, the holders of Series A Preferred Stock would receive an additional 85,000 shares of Common Stock.
Operations.
17
15

Splash Beverage Group, Inc.
Notes to the Condensed Consolidated Financial Statements

Note 6 – Deficiency in Stockholders’ Equity, continued

~~Series B Convertible Preferred Stock~~Private Placement Memorandum (PPM):
~~Rank. The Series B Preferred Stock shall rank, with respect to dividend rights and to rights upon any voluntary or involuntary liquidation, dissolution or winding up~~Our Board of Directors has determined that it is in the best interests of the ~~Company (each,~~Corporation and its stockholders to obtain working capital by conducting a ~~“Liquidation Event”), (a) senior in preference and priority to~~private placement offering of 3,636,364 shares of the common stock of the Company, ~~(the “Common Stock”) and any other class or series~~$0.001 value per share at a purchase price of ~~equity security established and designated by the Board~~$1.10 per share for aggregate gross proceeds of Directors the terms of which do not expressly provide that it ranks senior in preference or priority to or on parity with the Series B Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “Junior Securities”), (b) on parity, without preference or priority, with the Series A Preferred Stock and with each other class or series of equity security established and designated by the Board of Directors the terms of which expressly provide that it ranks on parity, without preference or priority to, the Series B Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “Parity Securities”), and (c) junior in preference and priority to each other class or series of equity security established and designated by the Board of Directors the terms of which expressly provide that it ranks senior in preference or priority to the Series B Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “Senior Securities”).
~~Dividends. The holders~~$4,000,000. As part of the ~~Series B Preferred Stock shall be entitled~~PPM, each purchaser received a warrant to ~~receive cash dividends, when, as and if declared~~purchase one share for every two shares purchased. In February 2021, we completed our PPM by ~~the Board, out~~issuing a total of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend on any other class of Preferred Stock, except for the Series A Preferred Stock which shall be paid at the same time as the Series B Preferred Stock is paid, and Common Stock of the Corporation at an annual rate of nine percent (9%) of the Original Issue Price per share (equal to $.09 per share per annum) payable out of legally available funds. Dividends shall accrue on each share of Series B Preferred Stock from the date of issuance thereof, whether paid or not, and shall be cumulative and compounded annually. Such dividends shall be payable on the first day of each January, April, July and October commencing with respect to each share of Series B Preferred Stock, on the first of such dates to occur after the issuance of such share (each such date a “Dividend Payment Date”) to the holders of record at the close of business on the fifteenth day of each December, March, June and September, respectively, subject to declaration of such dividends by the Board. All dividends paid with respect to shares of Series B Preferred Stock shall be paid pro rata to the holders entitled thereto. Dividends, if paid, must be paid, on all outstanding shares of Series B Preferred Stock contemporaneously. If any dividend shall not be paid on a Dividend Payment Date, for any reason, the right of the holders to receive such dividend shall not lapse or terminate but each such dividend shall accrue and be paid to such holders, subject to the conversion provisions below. No dividend shall be paid to the holders of any shares of Common Stock until all dividends, including accrued dividends, then owing to the holders of Series B Preferred Stock, shall have been paid in full.
~~Liquidation Preference. In the event of any Liquidation Event, the holders~~3,637,065 of shares and warrants with gross proceeds of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of any Junior Securities by reason of their ownership thereof, an amount per share equal to one hundred fifty percent (150%) of the Series B Original Issue Price (the “Liquidation Preference”), plus the amount of accrued and unpaid dividends thereon from the Original Issue Date through the date of liquidation. If upon any such Liquidation Event the assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series B Preferred Stock the full amount to which they shall be entitled under this Section , the holders of shares of Series B Preferred Stock and Parity Securities shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.$4,000,771.

~~Conversion. The holders of Series B Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):~~
Optional Conversion. Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Series B Original Issue Price by the Conversion Price (as defined below) in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series B Preferred Stock without the payment of additional consideration by the holder thereof (the “Conversion Price”) shall initially be $1.28 per share. Such initial Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. All accrued and unpaid dividends may be converted by each holder of Series B Preferred Stock into Common Stock by first determining the number of shares of Series B Preferred Stock that could be purchased based on the Series B Original Issue Price then in effect and then determining the number of shares of Common Stock such additional shares of Series B Preferred Stock are convertible into. By way of illustration only, if the accrued and unpaid dividends are equal to $100,000, then based on the Series B Original Issue Price of $1.50 and a Conversion Price of $1.28, the holders of Series B Preferred Stock would receive an additional 78,125 shares of Common Stock.
Automatic Conversion. Upon the consummation of an underwritten public offering of the Common Stock of the Company (“IPO”), each share of Series B Preferred Stock shall automatically be converted into such number of fully paid and non-assessable shares of Common Stock at a Conversion Price equal to the lesser of (i) the Conversion Price in effect immediately prior to the consummation of the IPO or (ii) fifty percent (50%) of the public offering price of the Common Stock in the IPO. All accrued and unpaid dividends may be converted by each holder of Series B Preferred Stock into Common Stock by first determining the number of shares of Series B Preferred Stock that could be purchased based on the Series B Original Issue Price then in effect and then determining the number of shares of Common Stock such additional shares of Series B Preferred Stock are convertible into. By way of illustration only, if the accrued and unpaid dividends are equal to $100,000, then based on the Series B Original Issue Price of $1.50 and a Conversion Price of $1.28, the holders of Series B Preferred Stock would receive an additional 78,125 shares of Common Stock.
~~Common Stock~~
In 2019, we issued 1,846,078 shares of our common stock in exchange for services provided to us. The shares were valued at $0.73 per share. We recognized share-based compensation expense of $1,354,500, which is classified within the contracted services line on the Statement of Operations. At June 30, 2020, we issued 249,912 shares of common stock in exchange for cash. The shares were valued at $0.73 per share.
Treasury Stock
Since its inception, we have repurchased shares from our shareholders. To date, we have repurchased 1,226,630 shares, of which 817,753 have been retired.

In connection with a 2018 consulting agreement, we ~~were~~are committed to issue the 408,877 shares held in treasury upon the occurrence of certain events or milestones. We issued 136,292 shares in July 2018, 136,292 shares in July 2019 and 136,292 shares onat March 31, 2020.

Warrant ~~Issuance-Common Stock~~
~~As part of the sale and issuance of 4,088,765 shares of our Series~~Issuance-Series A Convertible Preferred Stock ~~we issued 4,088,765 warrants to purchase shares of our common stock at a price of $0.73 per share. The warrants had a five-year term and expired during 2019.~~

As an incentive to convert their Series A preferred stock we issued 1,000,000 new warrants to the holders of our Series A preferred stock to purchase shares of SBG common stock at $0.18 per share. Concurrently with the consummation of the Merger, these warrants were exchanged for warrants to purchase 1,362,922 of Splash Beverage Group, Inc. ~~[Formerly known~~shares all of which were outstanding as ~~Canfield Medical Supply, Inc.] shares.~~of March 31, 2021. These warrants have a 3-year term.

Warrant ~~Issuance-Common~~Issuance-Series B Convertible Preferred Stock

As part of the sale and issuance of 5,333,675 shares of our Series B Convertible Preferred Stock, we issued 2,666,839 warrants to purchase shares our common stock at a price of $1.10 per share. The warrants have a 5-year term. At ~~June 30, 2020,~~March 31, 2021, there are ~~1,145,786~~565,819 warrants ~~outstanding with a weighted average remaining life of 0.3 years.~~

~~As part of the sale of 100,000 shares of common stock, we issued 325,000 warrants to purchase shares of our common stock at a price of $0.25 per share. These warrants have a 3-year term.~~

outstanding.

Splash Beverage Group, Inc.

~~[f/k/a Canfield Medical Supply, Inc.]~~

Notes to the Condensed Consolidated Financial Statements

Note 7 – Share-Based Payments

Warrant Issuance-GMA Consulting Services

We issued 1,362,922 warrants to purchase shares of our common stock at $0.007 per share as part of our consulting agreement with GMA, at December 31, ~~2019, the weighted average life of the outstanding warrants is 3.75 years.~~2019.

The warrants entitle the holder to purchase one share per warrant of the Company’s common stock at a price of $0.01 per share during the five-year period commencing on October 2, 2018, or, if greater, the number of common shares with a market value equivalent to two percent of the enterprise value of the Company at an exercise price of $0.008 per share.

As an incentive for GMA to convert their debt and accrued interest into shares of common stock, we retired the original 1,362,922 warrants and issued 2,725,844 pre-merger new warrants to purchase shares of our common stock at $0.18 per share. These warrants have a 3-year ~~term.~~term and remain outstanding as of March 31, 2021.

Stock Plan

We have adopted the 2012 Stock Incentive Plan for SBG (the “Plan”), which provides for the grant of common stock and stock options to employees. We have reserved 4,088,765 shares for issuance under the Plan. The option exercise price generally may not be less than the underlying stock’s fair market value at the date of the grant and generally have a term of ten years. On December 31, 2018, the sole option holder at the time, our CEO, exercised his options to purchase 2,657,698 shares of common stock at a purchase price of $0.12 per share, totaling $312,000, which total purchase price was paid by the cancelation of the equivalent amount of debt owed by us to the CEO. On December 7, 2019, our Board of Directors granted 1,124,410 options to certain employees and consultants. None of these options were exercised at ~~June 30, 2020. There are 1,124,410 options issued and outstanding under the Plan at June 30, 2020.~~March 31, 2021. As of ~~June 30, 2020,~~March 31, 2021, the total number of options available for grant is ~~306,657.~~306,657 under this plan.

We measure employee stock-based awards at the grant-date fair value and recognizes employee 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, the expected life of the option, and expected stock price volatility and exercise price. We used the Black-Scholes option pricing model to value its stock option 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 was 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 and employment duration for its stock options grants. 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 options granted. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option. The estimation of the number of stock 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.

~~We recognized stock-based compensation expense of $265,589 for the year ended December 31, 2019. There was no unrecognized compensation cost related to stock option awards at June 30, 2020.~~

Concurrently with the consummation of the Merger, options to purchase 825,000 ~~SBC~~SBG shares were converted to options to purchase 1,124,410 Splash Beverage Group, Inc. ~~[Formerly Canfield Medical Supply, Inc.]~~ shares.

	Options		Weighted Average Exercise Price				Weighted Average
					Options		Exercise Price
Outstanding - beginning of year		1,124,410	$	0.77
Outstanding - Beginning of 2021						3,758,910	$	0.76
Granted		—				-	$	-
Exercised		—	$	—		-	$	-
Cancelled/forfeited		—	$	—		-	$	-
Outstanding - June 30, 2020		1,124,410	$	0.77
Outstanding - March 31, 2021						3,758,910	$	0.76

Exercisable at June, 30 2020		1,124,410	$	0.77
Exercisable at March, 31 2021						3,758,910	$	0.76

Weighted average grant date fair value of options during year		N/A				-

Weighted average duration to expiration of outstanding options at June 30, 2020		4.8
Weighted average duration to expiration of outstanding options at March 31, 2021						4.3

Splash Beverage Group, Inc.

~~[f/k/a Canfield Medical Supply, Inc.]~~

Notes to the Condensed Consolidated Financial Statements

In August 2020, we adopted a new incentive plan. The 2020 Long-Term Incentive Compensation Plan (the “Plan”) is established by Splash Beverage Group, Inc., a Colorado corporation (the “Company”), to create incentives which are designed to motivate Participants to put forth maximum effort toward the success and growth of the Company and to enable the Company to attract and retain experienced individuals who by their position, ability and diligence are able to make important contributions to the Company’s success. Toward these objectives, the Plan provides for the grant of Options, Restricted Stock Awards, Stock Appreciation Rights (“SARs”), Performance Units and Performance Bonuses to Eligible Employees and the grant of Nonqualified Stock Options, Restricted Stock Awards, SARs and Performance Units to Consultants and Eligible Directors, subject to the conditions set forth in the Plan. At December 31, 2020, the board approved the granting of 2,634,500 warrants were issued under this new plan. These warrants expire in 5 years.

Note 8 – Related Parties

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, net of ~~$517,875 as of June 30, 2020.~~$252,904 at March 31, 2021. The related party payable to the CEO bears no interest payable and is due on demand. We also assumed a $50,000 note for the President of WesBev who is the majority shareholder of ~~Splash Beverage Group, Inc. [Formerly known as Canfield Medical Supply, Inc.].~~SBG.

There are related party notes payable of $0$1.6 million outstanding as of ~~June 30, 2020~~March 31, 2021 as discussed in Note 4.

Note 9 – Investment in Salt Tequila USA, LLC

On December 9, 2013, we entered into a marketing and distribution agreement with SALT Tequila USA, LLC (“SALT”) in Mexico for the manufacturing of our product line. The agreement was for a one-year term with an additional two-year renewal. On December 28, 2015, the agreement was extended through 2020. In the December 9, 2013 agreement, we received a 5% ownership interest in SALT, 12 months after the date of the agreement we received an additional 5% ownership interest in SALT, and 24 months after the date of the agreement we received an additional 5% interest, resulting in a total interest of 15% in SALT. ~~We have not recorded the cost of the investment or our share of its results of operations as the amounts are considered immaterial.~~

SALT also has sold product to an unrelated international alcohol distributor, American Spirits Exchange, for preliminary market testing in 9 of 16 states that they distribute to, that are government-controlled alcohol resellers. In 2019 we had no sales for SALT Tequila. On December 31, 2018, we created a Mexican subsidiary, Splash MEX SA DE CV (“Splash Mex”) for the exporting of SALT Tequila from Mexico to the USA, South and Central Americas. Splash Mex will also act as the manufacturing and distribution agent of TapouT in Central and South Americas. Applications for the appropriate licenses required for import and wholesale of alcohol in the USA have been completed for at the Federal and State levels. These licenses will permit direct alcohol sales to distributors and wholesalers thereby limiting the use of agents for importing SALT Tequila to the USA for distribution.

On March 26, 2020, we entered into a new amended stock sale and purchase agreement. The agreement is for $1,000,000 to be paid in 4 tranches of $250,000 and entitles us to receive additional equity interest in Salt Tequila USA, LLC as follows:

●

Tranche 1 – 7.5%

●

Tranche 2 – 5.0%

●

Tranche 3 – 5.0%

●

Tranche 4 – 5.0%

Once all tranches are paid-out we will have a total equity stake of 37.5% of Salt Tequila USA, LLC.

During 2020, we paid the first tranche of $250,000 resulting in a total interest of 22.5%.

Splash Beverage Group, Inc.

~~[f/k/a Canfield Medical Supply, Inc.]~~

Notes to the Condensed Consolidated Financial Statements

Note 10 – Operating Lease Obligations

Effective July 2018, we entered into a lease agreement for the right to use and occupy office space. The lease term commenced July 1, 2018 and is scheduled to expire after 36 months, on June 30, 2021.

Prior to the current lease, we entered into a lease agreement in 2014 for the right to use and occupy office space. The lease term commenced November 1, 2014 and was scheduled to expire after 62 months, on March 31, 2020. The lease was terminated in February 2018.

Effective November 2019, we entered into a ~~new~~6-month lease agreement for our NY ~~affiliate. The lease is for six months and will expire~~affiliate which expired on April 30, 2020. ~~This lease was not subjected to the new lease standard, Topic 842.~~

Effective November 2019, we entered into a new lease with Interport Logistics, LLC. The lease term commenced on November 11, 2019 and is scheduled to expire on November 11, ~~2020.~~2022.

Effective May 2019, we entered into a new lease in Mexico. The lease commenced May 1, 2019 and is scheduled to expire after 24 months, on April 1, 2021. We are in the process of negotiating a new lease for our Mexican warehouse.

Effective January 2021, we entered into a lease agreement for the right to use and occupy office space. The lease term commenced January 18, 2021 and is scheduled to expire after 18 months, on July 31, 2022.

Effective January 2021, we entered into a lease agreement for the right to use and occupy office and manufacturing space. The lease term commenced January 1, 2021 and is scheduled to expire after 60 months, on December 31, 2025.

The following table presents the discounted present value of minimum lease payments for our office and warehouses to the amounts reported as financial lease liabilities on the ~~condensed~~ consolidated balance sheet at ~~June 30, 2020:~~March 31, 2021:

Undiscounted Future Minimum Lease Payments	Operating Lease		Undiscounted Future Minimum Lease Payments	Operating Lease

2020	$	47,456
2021		59,291
Thereafter		29,086
2021 (nine months)				$	246,339
2022					294,347
2023					252,000
2024					252,000
2025					249,357
Total		135,832			1,294,043
Amount representing imputed interest		(5,732)			(132,333	)
Total operating lease liability		130,101			1,161,710
Current portion of operating lease liability		89,950			270,771
Operating lease liability, non-current	$	40,151		$	890,939

The table below presents information for lease costs related to our operating leases at ~~June 30, 2020:~~March 31, 2021:

Operating lease cost:
Amortization of leased assets	$	87,798	$	211,913
Interest of lease liabilities		9,180		26,825
Total operating lease cost	$	96,978	$	238,738

The table below presents lease-related terms and discount rates at ~~June 30, 2020:~~March 31, 2021:

Remaining term on leases		101 to 2857 months
Incremented borrowing rate			~~5.0~~	%5.0%

Splash Beverage Group, Inc.

~~[f/k/a Canfield Medical Supply, Inc.]~~

Notes to the Condensed Consolidated Financial Statements

Note 11 – Line of Credit

At ~~June 30,~~December 31, 2020 SBG owed $68,000 to a financial institution under a revolving line of ~~credit which is classified within other current liabilities.~~credit. The line of credit is secured by the assets of SBG is due on demand, and bears interest at variable rates approximately 6.1% at ~~June 30,~~December 31, 2020. ~~Interest expense under~~As part of the ~~note~~acquisition of Copa di Vino the LOC was ~~approximately $900 during the three months ended June 30, 2020. Interest expense under the note was approximately $2,000 during the six months ended June 30, 2020.~~paid off.

Note 12 – PPP Loan

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond the point of origin. On March 20, 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

In response to the COVID-19 outbreak in the United States, the CARES Act (the “Act”) was passed by Congress and signed into law on March 27, 2020. In connection with the CARES Act, the Company and its subsidiary applied for and received loans with an original aggregate principal balance of approximately $158,000. These loans and interest will be forgiven as long as the funds are used for qualifying expenditures as outlined in the Act. The loans bear interest at 1%, with an 18 month term, and has a 6-month initial payment deferral. See Note 4.

As of March 31, 2021, we have a balance of $94,833. In April 2021, we received notification of forgiveness for the entire outstanding balance.

Note 13 – Business Combinations

As stated in Note 1, we consummated the merger of ~~SBG~~CMS on March 31, 2020 which was accounted for as a reverse merger.

The value of our merger was approximately $9.2 million based on the valuation of the ~~SBG~~CMS equity on the date of consummation.

The following summarizes our allocation of the purchase price for the acquisition:

Cash and cash equivalents	$	72,442	$	72,442
Accounts receivable	$	311,586		311,586
Inventory	$	21,415		21,415
Property and equipment	$	38,110		38,110
Goodwill	$	9,448,832		9,448,832
Accounts payable, accrued expenses and other liabilities	$	719,221		719,221
Purchase price	$	9,173,164	$	9,173,164

During 2020, the goodwill associated with the CMS merger was impaired. See Note 16.

SBG-Copa Acquisition:

As stated in Note 1, we consummated the acquisition of Copa di Vino Company on December 24, 2020. The purchase price consideration was comprised of $1.5 million in debt, $0.5 million in cash and $2.0 million in contingent shares, for total consideration of approximately $6.0 million.

The following summarizes our allocation of the purchase price for the acquisition:

	Purchase Accounting
Accounts receivable, net		88,131
Other current assets		11,236
Inventory		273,951
Property and equipment, net		663,273
License agreement, net		222,095
Goodwill		5,672,823
Total identifiable assets		6,931,509

Accounts payable and accrued expenses		882,279
Note payable		69,212
Equity		5,980,000
Total liabilities and equity		6,931,509

Note 14 – Segment Reporting

The Company evaluates segment reporting in accordance with the FASB Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Executive Officer and Chief Financial Officer.

Note: The Copa di Vino business is included in our Splash Beverage Group segment.

Three-Months Ending Six-Months Ending
Revenue Q2 2020 Q2 2019 Q2 2020 Q2 2019
Beverages 412,729 42,775 524,732 48,105
Medical Devices 199,579 — 199,579 —

Total Revenues 612,308 42,775 724,311 48,105

Total assets June 2020 December 2019
Beverages 1,172,224 605,314
Medical Devices 9,763,660 —

Total Assets 10,935,884 605,314

Revenue	2021		2020
Splash Beverage Group		825,742		112,003
E-Commerce		1,313,182		-
Medical Devices - Discontinued		278,777		-

Total Revenues		2,417,701		112,003

Total assets	2021		2020
Splash Beverage Group		10,605,847		8,403,670
E-Commerce		746,198		505,646
Medical Devices - Discontinued		357,893		316,572

Total Assets		11,709,940		9,225,888

Note 15 – Commitment and Contingencies

We are 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 we do 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.

Capital Raise

In connection with the merger we are committed to our previous preferred stock and debt holders to raise $9 million in a secondary IPO or debt, as defined in the agreements.

In February 2021, we successfully raised the $9 million required.

Stock Price Guarantee

We have a commitment to issue additional shares associated with specific stock price guarantee granted to an investor. See Note 4.

Note 16 – Goodwill

In accordance with ASC 350, Intangibles—Goodwill and Other, we test goodwill for impairment for each reporting unit on an annual basis, or when events or circumstances indicate the fair value of a reporting unit is below its carrying value.

Our goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the business climate, and unforeseen competition.

We have the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The option of whether or not to perform a qualitative assessment is made annually and may vary by reporting unit. Factors we consider in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount of the net assets of its reporting units, sustained decrease in its share price, and other relevant entity specific events. If the management determines on the basis of qualitative factors that the fair value of the reporting unit is more likely than not less than the carrying value, then we perform a quantitative test for that reporting unit. The fair value of each reporting unit is compared to the reporting unit’s carrying value, including goodwill. Subsequent to the adoption on January 1, 2017 of Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, if the fair value of a reporting unit is less than its carrying value, we recognize an impairment equal to the excess carrying value, not to exceed the total amount of goodwill allocated to that reporting unit.

At December 31, 2020, our management determined that an impairment charge of approximately $9.5 million, was necessary to reduce the goodwill relating to our Medical Device Segment the impairment charge was primarily related to the net cash flow projection of that business unit.

Note 1617 – Subsequent Events

~~Private Placement Memorandum (PPM)~~

~~Our Board of Directors~~In April 2021, SBG received notification that its PPP loan has ~~determined that it is~~been forgiven in the best interests of the Corporation and its stockholders to obtain working capital by conducting a private placement offering of 2,727,272 shares of the common stock of the Company, no par value per share at a purchase price of $1.10 per share for aggregate gross proceeds of $3,000,000. As part of the PPM, each common share holds one-half warrant. As of August 14, 2020 the company has not sold any shares.full.

~~Company Name Change~~

In ~~July 2020,~~April 2021 we filed a ~~Certificate~~registration statement on Form S-1 for the sale of ~~Amendment~~up to $60 million of common stock.

In May 2021, our board of directors approved the Company to increase the amount of authorized shares from 150,000,000 to 250,000,000. In addition, the board has approved the Company the right to affect a reverse stock split with a range from 1 to 1.5 up to 1 to 10. The Company’s Articles of Incorporation have not yet been amended with respect to ~~change our name to Splash Beverage Group Inc. On July 31, 2020,~~either of the a above-referenced actions.

In May 2021, we received ~~approval from FINRA regarding our name change.~~

~~New Stock Issuance~~

~~On July 1, 2020, we enter a subscription agreement with one~~$718,000 in convertible notes which has an annual interest rate of ~~our existing shareholders for $110,000 in exchange for 100,000 of our common stock at $1.10 per share. As part of the agreement we granted 325,000 warrants at a purchase price of $0.25 per warrant.~~

On July 8, 2020, we enter a subscription agreement with one of our existing shareholders for $500,000 in exchange for 454,546 of our common stock at $1.10 per share. As part of the agreement we granted 554,546 warrants.7%. All notes mature October 2021.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

The information in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements that are not of historical fact may be deemed to be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties. In some cases you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue”, the negative of the terms or other comparable terminology. Actual events or results may differ materially from the anticipated results or other expectations expressed in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks included from time to time in other reports or registration statements filed with the United States Securities and Exchange Commission. These factors may cause our actual results to differ materially from any forward-looking statements. We disclaim any obligation to publicly update these statements or disclose any difference between actual results and those reflected in these statements.

Unless the context otherwise requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer to Splash Beverage Group ~~Inc.~~and its subsidiaries.

The following discussion and analysis should be read in conjunction with the Condensed Financial Statements (unaudited) and Notes to Condensed Financial Statements (unaudited) filed herewith.

Business Overview

Splash Beverage Group (“SBG”), f/k/a Canfield Medical Supply, Inc. (the “CMS”), was incorporated in the State of Ohio on September 3, 1992, and changed domicile to Colorado on April 18, 2012. ~~CMS is 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.

Prior to the Merger, 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 and the Company continues to operate the home health supply business as a separate division.

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, 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~~E-commerce distribution platform called Qplash, further expanding its distribution abilities and visibility.

In July, 2020, ~~we filed a Certificate of Amendment of Articles of Incorporation to change our~~the Company changes its name from Canfield Medical Supply, Inc. to Splash Beverage Group, Inc. ~~On July 31, 2020, we received approval from FINRA regarding our name change.~~ Our new ticker symbol is SBEV.

On December 24, 2020, SBG consummated an Asset Purchase Agreement(the “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 $5,980,000, payable in the combination of $2,000,000 in cash (“Cash Consideration”), $2,000,000 convertible promissory note (the “Convertible Note”) to Seller and a variable number of shares of the Company’s common stock based on a attainment of revenue hurdles. CdV is one of the leading producers of premium wine by the glass in the United States with its primary offices and facilities in The Dalles, Oregon.

Results of Operations for the Three Months Ended ~~June 30, 2020~~March 31, 2021 compared to Three Months Ended ~~June 30, 2019.~~March 31, 2020.

Revenue

Revenues for the three months ended ~~June 30, 2020~~March 31, 2021 were ~~$612,308~~$2,417,701 compared to revenues of ~~$42,775~~$112,003 for the three months ended ~~June 30, 2019.~~March 31, 2020. The ~~$569,533~~$2,305,698 increase in sales ~~was~~is due to ~~Salt Tequila ($121,392), Qplash –our~~an increase within our vertically integrated B2B and B2C e-commerce distribution platform ~~which~~called Qplash ($1,313,182). This platform sells ~~their products~~goods on both Amazon and ~~Shopify ($300,148) and Canfield’s medical device~~Shopify. In addition, we had increased sales from our single-serve wine business ($~~225,579)~~742,355). Cost of goods sold for the three months ended ~~June 30, 2020~~March 31, 2021 were ~~$287,773~~$1,742,875 compared to cost of goods sold for the three months ended ~~June 30, 2019~~March 31, 2020 of ~~$48,215.~~$107,214. The ~~$239,558~~$1,635,661 increase in cost of goods sold for the three-month period ended ~~June 30, 2020 was~~March 31, 2021 is primarily due to our increased sales, and as our sales increased, our cost of sales for those sales correspondingly increased.

Operating Expenses

Operating expenses for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 were ~~$2,268,819~~$5,066,349 compared to ~~$1,177,527~~$1,553,933 for the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. The ~~$1,091,292~~$3,512,416 increase in our operating expenses was primarily a result of recording ~~$500,000 in consulting fees for one~~the warrants issued pursuant to certain private placements conducted by the Company, increased headcount from the Copa acquisition and the addition of ~~our investors, $188,053 in~~new sales reps, professional fees ~~$132,453 in consulting fees relating to the Qplash business, $100,000 for treasury stock issuance~~($1,100,000) and ~~$108,516 of payments made for our TapouT license.~~shipping costs ($325,160). The net loss for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was ~~$3,822,129~~$4,442,219 as compared to a net loss of ~~$1,624,364~~$3,446,630 for the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. The ~~increase~~decrease in net loss is due to our increase in operating expenses ~~slightly~~ offset by our increase in revenues.

~~Other Income/(Expense)~~Interest Expense

~~Other interest/(expense)~~Interest expenses for the three months ended ~~June 30, 2020~~March 31, 2021 were ~~$13,314~~$92,211 compared to ~~$89,763~~$1,913,637 for the three months ended ~~June 30, 2019.~~March 31, 2020. The ~~$76,449~~$1,821,426 decrease ~~in our interest expenses was primarily a result converting the majority of our debt into common stock in Q1 2020 as part of our merger.~~

~~Results of Operations for the Six Months Ended June 30, 2020 compared to Six Months Ended June 30, 2019.~~

~~Revenue~~

~~Revenues for the six months ended June 30, 2020 were $ $724,311 compared to revenues of $48,105 for the six months ended June 30, 2019. The $676,206 increase in sales was due to Salt Tequila $122,151~~, Qplash – our vertically integrated B2B and B2C e-commerce distribution platform which sells their products on Amazon and Shopify ($300,148) and Canfield’s medical device business $199,579. Cost of goods sold for the six months ended June 30, 2020 were $ 394,987 compared to cost of goods sold for the six months ended June 30, 2019 of $74,418. The $ 320,569 increase in cost of goods sold for the six-month period ended June 30, 2020 was primarily due to our increased sales, and as our sales increased, our cost of sales for those sales correspondingly increased.

~~Operating Expenses~~

Operating expenses for the six months ended June 30, 2020 were $2,268,819 compared to $1,177,527 for the six months ended June 30, 2019. The $1,091,292 increase in our operating expenses was primarily a result of recording $500,000 in consulting fees for one of our investors, $188,053 in professional fees, $132,453 in consulting fees relating to the Qplash business, $100,000 for treasury stock issuanceand $108,516 of payments made for our TapouT license. The net loss for the six months ended June 30, 2020 was $3,823,668 as compared to a net loss of $1,624,364 for the six months ended June 30, 2019. The increase in net loss is due to our increase in operating expenses slightly offset by our increase in revenues.

~~Other Income/(Expense)~~

~~Other interest/(expense) for the six months ended June 30, 2020 were $1,884,173 compared to $420,524 for the six months ended June 30, 2019. The $1,463,649 increase~~ in our interest expenses was primarily a result of recording a finance charge of ~~$1,657,805~~ $1,821,426associated with warrants issued to one of our note ~~holders.~~holders in Q1 2020.

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.

As of ~~June 30, 2020,~~March 31, 2021, we had total cash and cash equivalents of ~~$ $118,751,~~$1,225,406, as compared with ~~$42,639~~$380,000 at December 31, ~~2019.~~2020. The increase ~~was~~is primarily due to ~~issuances of notes payable offset~~cash received from private placements conducted by ~~expenses relating to the operating the business.~~us.

Net cash used for operating activities during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was ~~$ 1,783,007~~$3,581,308 as compared to the net cash used by operating activities for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 of ~~$1,399,485.~~$924,860. The primary reasons for the change in net cash used ~~was~~is due to losses sustained and increases ~~for issuance of warrants,~~in inventory, offset by non-cash ~~expenses.~~expenses relating to warrant expense ($1,186,596) and share-based compensation ($731,035).

Net cash used for investing activities during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was ~~$81,999~~$0 as compared to the net cash used by operating activities for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 of ~~$4,526.~~$152,419. The net cash used in the first ~~half~~quarter of 2020 was primarily due to the $150,000 payment made to SALT Tequila ~~USA, offset by $72,422 of cash obtained in the acquisition of Canfield Medical Supply, Inc.~~USA.

Net cash provided by financing activities during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was ~~$1,941,018~~$4,466,796 compared to ~~$535,413~~$1,582,212 provided from financing activities for the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. During the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, we received ~~$2,162,249~~$4,946,825 from investors, ~~and related parties,~~ which was offset by repayments to shareholders and debt holders of ~~$120,106 and a settlement payment of $61,248.~~$441,299.

CONTRACTUAL OBLIGATIONS

Minimum Royalty Payments:

~~As stated in Note 5, we~~We have a licensing agreement with ABG TapouT, LLC (“TapouT”). Under the licensing agreement, we have minimum royalty payments to TapouT for the next ~~three~~two years.

~~2020 $540,000~~

·●

2021 $594,000

·●

2022 $653,400

Inventory Purchase Commitments:

None.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for Smaller Reporting Companies.

ITEM 4. CONTROLS AND PROCEDURES

~~(a)~~
(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our ~~reports filed under the~~ Securities and Exchange Commission Act of 1934 ~~as amended (the Exchange Act),~~reports is recorded, processed,+ summarized, and reported within the ~~required~~ time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our ~~Chairman, Chief Executive Officer~~chief executive officer and ~~Chief Financial Officer,~~chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. ~~Under~~In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As further discussed below, we carried out an evaluation, under the supervision and with the participation of our management, including ~~the Chief Executive Officer~~our chief executive officer and ~~Chief Financial Officer, we have evaluated~~chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as ~~required by Exchange Act Rule 13a-15(b) as~~defined in Rules 13a-15(e) and 15d-15(e) of the ~~end of the period covered by this report.~~Exchange Act. Based on that evaluation, ~~the Chief Executive Officer has~~our chief executive officer and chief financial officer concluded that, ~~these disclosure controls and procedures are ineffective due to the size~~because of ~~the organization. We are addressing~~certain material weaknesses in our ~~needs to enhance our effectiveness. sThere have been no changes to~~internal control over financial reporting our disclosure controls and procedures ~~during~~as defined in Rule 13a-15(e) and 15d-15(e) under the ~~three months ended June 30, 2020.~~ Exchange Act were not effective as of March 31, 2021. The material weaknesses relate to the absence of in-house accounting personnel with the ability to properly account for complex transactions and a lack of separation of duties between accounting and other functions.

We hired a consulting firm to advise on technical issues related to U.S. generally accepted accounting principles as related to the maintenance of our accounting books and records and the preparation of our consolidated financial statements. Although we are aware of the risks associated with not having dedicated accounting personnel, we are also at an early stage in the development of our business. We anticipate expanding our accounting functions with dedicated staff and improving our internal accounting procedures and separation of duties when we can absorb the costs of such expansion and improvement with additional capital resources. In the meantime, management will continue to observe and assess our internal accounting function and make necessary improvements whenever they may be required. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. In addition, if we are unable to successfully remediate this material weakness and if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected and we may be unable to maintain compliance with applicable stock exchange listing requirements.

(b)	Changes in Internal Controls over Financial Reporting

There has been no change in our internal control over financial reporting 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 ~~the three months ended June 30, 2020~~our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Since the most recent evaluation date, there have been no significant changes in our internal control structure, policies, and procedures or in other areas that could significantly affect our internal control over financial reporting.

~~(b) Changes in Internal Controls~~

There were no significant changes in the Company's internal controls over financial reporting or in other factors that could significantly affect these internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS

The COVID-19 pandemic has had, and we expect will continue to have, certain negative impacts on our business and operations, and such impacts may have a material adverse effect on our business and results of operations.

The current COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the global economy and financial markets. The human and economic consequences of the COVID-19 pandemic as well as the measures being taken by governments, businesses (including the Company and our suppliers, bottlers/distributors, co-packers and other service providers) and the public at large to limit the COVID-19 pandemic, have and will, directly and indirectly impact our business and results of operations, including, without limitation, the following:

	●	Deteriorating economic conditions and financial uncertainties in many of our major markets due to the COVID-19 pandemic, such as increased and prolonged unemployment, decreases in per capita income and the level of disposable income, declines in consumer confidence, or economic slowdowns or recessions, could affect consumer purchasing power and consumers’ ability to purchase our products, thereby reducing demand for our products. In addition, public concern among consumers regarding the risk of contracting COVID-19 may also reduce demand for our products.
	●	The closure of on-premise retailers and other establishments that sell our products as a result of the COVID-19 pandemic may also adversely impact our sales and results of operations.
	●	Our advertising, marketing, promotional, sponsorship and endorsement activities have been, and will continue to be, disrupted by reduced opportunities for such activities due to measures taken to limit the spread of the COVID-19 pandemic and the cancellations of sporting events, concerts and other events may result in decreased demand for our products. Our product sampling programs, which are part of our strategy to develop brand awareness, have been, and will continue to be, disrupted by the COVID-19 pandemic. If we are unable to successfully adapt to the changing landscape of advertising, marketing, promotional, sponsorship and endorsement opportunities created by the COVID-19 pandemic, our sales, volume growth and overall financial results could be negatively affected.
	●	Our innovation activities, including our ability to introduce new products in certain markets, have been delayed and/or adversely impacted by the COVID-19 pandemic. If such innovation activities are disrupted and we continue to delay the launch of new products and/or we are unable to secure sufficient distribution levels for such new products, our business and results of operations could be adversely affected.
	●	Some of our suppliers, bottlers/distributors and co-packers may experience plant closures, production slowdowns and disruptions in operations as a result of the impact of the COVID-19 pandemic. This could result in a disruption to our operations.
	●	We may experience delays in the sourcing of certain raw materials as a result of shipping delays due to, among other things, additional safety requirements imposed by port authorities, closures of or congestion at ports, reduced availability of commercial transportation, border restrictions and capacity constraints.
	●	As a result of the COVID-19 pandemic, including related governmental measures, restrictions, directives and guidance, we have required most of our office-based employees to work remotely. We may experience reductions in productivity and disruptions to our business routines while our remote work policy remains in place. If our employees working remotely do not maintain appropriate measures to mitigate potential risks to our technology and operations from information technology-related disruptions, we may face cybersecurity threats. Employees of our third-party service providers who are working remotely, with whom we may share data, are subject to similar cybersecurity risks.
	●	Governmental authorities at the U.S. federal, state and/or municipal level and in certain foreign jurisdictions may increase or impose new income taxes, indirect taxes or other taxes or revise interpretations of existing tax rules and regulations as a means of financing the costs of stimulus or may take other measures to protect populations and economies from the impact of the COVID-19 pandemic. Increases in direct and indirect tax rates could affect our net income, and increases in consumer taxes could affect our products’ affordability and reduce our sales.
	●	We may be required to record significant impairment charges with respect to goodwill or intangible assets whose fair values may be negatively affected by the effects of the COVID-19 pandemic.
	●	The financial impact of the COVID-19 pandemic may cause one or more of the financial institutions we do business with to fail or default in their obligations to us or to become insolvent or file for bankruptcy, which could cause us to incur significant losses and negatively impact our results of operations and financial condition.
	●	Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may result in negative publicity and the Company becoming a party to litigation claims and/or legal proceedings, which could consume significant financial and managerial resources, result in decreased demand for our products and injury to our reputation.
	●	The resumption of normal business operations after the disruptions caused by the COVID-19 pandemic may be delayed or constrained by its lingering effects on our suppliers, bottlers/distributors, co-packers, contractors, business partners and other service providers.

Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a material adverse effect on our business, reputation, operating results and/or financial condition. The full extent to which the COVID-19 pandemic will negatively affect our business, reputation, operating results and/or financial condition will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities and other third parties in response to the COVID-19 pandemic.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~See notes 6 and 16.~~None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

No disclosure required.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits required by Item 601 of Regulation S-K.

Exhibits		Description
31.1		Certification of CEO and Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically
31.2		Certification of CFO and Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically
32.1		Certification of CEO and Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically
32.2		Certification of CFO and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically
101		XBRL Exhibits

SIGNATURES

Pursuant to the requirements 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.

	~~CANFIELD MEDICAL SUPPLY,~~SPLASH BEVERAE GROUP, INC.

Date: ~~August 13, 2020~~May 12, 2021	By:	/s/ Robert Nistico
		Robert Nistico, Chairman and CEO

Date: ~~August 13, 2020~~May 12, 2021	By:	/s/ Dean Huge
		Dean Huge, CFO

Colorado		34-1720075
(State or other jurisdiction of incorporation or formation)		(I.R.S. employer identification number)

Title of each class		Trading Symbol		Name of each exchange on which registered
N/A		N/A		N/A

		Page
PART I: FINANCIAL INFORMATION
ITEM 1:	FINANCIAL STATEMENTS	31
	Condensed Consolidated Balance Sheets	32
	Condensed Consolidated Statements of Operations	43
	Condensed Consolidated Statement of Deficiency in Shareholders’ Equity	54
	Condensed Consolidated Statements of Cash Flows	65
	Notes to the Condensed Consolidated Financial Statements	76
ITEM 2:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2322
ITEM 3:	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2524
ITEM 4:	CONTROLS AND PROCEDURES	2524
PART II: OTHER INFORMATION		26
ITEM 1	LEGAL PROCEEDINGS	2625
ITEM 1A:	RISK FACTORS	2625
ITEM 2:	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26
ITEM 3:	DEFAULTS UPON SENIOR SECURITIES	26
ITEM 4:	MINE SAFETY DISCLOSURES	26
ITEM 5:	OTHER INFORMATION	26
ITEM 6:	EXHIBITS	2827
SIGNATURES		28


	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	118,751		$	42,639
Accounts Receivable, net		359,657			11,430
Prepaid Expenses		19,114			5,449
Inventory		479,230			304,012
Other receivables		9,544			7,132
Total current assets		986,296			370,662

Non-current assets:
Deposit	$	56,366		$	34,915
Goodwill		9,448,852			—
Investment in Salt Tequila USA, LLC		250,000			—
Right of use asset, net		130,101			162,008
Property and equipment, net		64,269			37,729
Total non-current assets		9,948,049			234,652

Total assets	$	10,935,884		$	605,314

Liabilities and Deficiency in Stockholders' Equity

Liabilities:
Current liabilities
Accounts payable and accrued expenses	$	1,118,582		$	703,885
Right of use liability - current		89,950			81,502
Due to related parties		517,875			429,432
Bridge loan payable, net		—			2,200,000
Related party notes payable		—			1,505,100
Convertible Loan Payable		100,000			2,202,664
Notes payable, current portion		539,611			875,000
Royalty payable		90,000			39,000
Revenue financing arrangements		12,710			45,467
Shareholder advances		88,000			46,250
Accrued interest payable	��	805,602			1,604,498
Accrued interest payable - related parties		—			546,362
Total current liabilities		3,362,330			10,279,160

Long-term Liabilities:
Related party notes payable - noncurrent		64,200			—
Right of use liability - noncurrent		40,151			82,238
Total long-term liabilities		104,351			82,238

Total liabilities		3,466,681			10,361,398

Common stock, (mezzanine shares) 12,605,283 shares, contingently convertible to notes payable at June 30, 2020		9,248,720			—


Deficiency in stockholders' equity:
Common Stock, $0.001 par, 100,000,000 shares authorized, 57,002,247 and 44,021,382 shares
issued 57,002,247 and 43,885,090 outstanding, at June 30, 2020 and December 31, 2019, respectively		57,002			44,021
Additional paid in capital		34,898,641			22,095,403
Treasury Stock, $0.001 par, 136,292 shares at cost		—			(50,000	)
Accumulated deficit		(36,735,159	)		(31,845,508	)
Total deficiency in stockholders' equity		(1,779,517	)		(9,756,084	)

Total liabilities, mezzanine shares and deficiency in stockholders' equity	$	10,935,884		$	605,314

	Three months ended June 30, 2020			Three months ended June 30, 2019			Six months ended June 30, 2020			Six months ended June 30, 2019
Net revenues	$	612,308		$	42,775		$	724,311		$	48,105
Cost of goods sold		(287,773	)		(48,215	)		(394,987	)		(74,418	)
Gross margin		324,535			(5,440	)		329,324			(26,313	)

Operating expenses:
Contracted services		165,697			179,714			423,678			430,770
Salary and wages		365,013			16,378			606,689			412,262
Other general and administrative		156,258			79,456			1,189,671			301,843
Sales and marketing		24,230			27,164			47,242			32,652
Total operating expenses		711,198			302,712			2,267,280			1,177,527

Loss from operations		(386,663	)		(308,152	)		(1,937,956	)		(1,203,840	)

Other income/(expense):
Interest income		205			—			16,356			—
Interest expense		(21,854	)		89,763			(1,935,491	)		(420,524	)
Gain from debt extinguishment		34,962			—			34,962			—
Total other income/(expense)		13,313			89,763			(1,884,172	)		(420,524	)

Provision for income taxes		—			—			—			—

Net loss	$	(373,350	)	$	(218,389	)	$	(3,822,129	)	$	(1,624,364	)

Net loss per share (basic and diluted)	$	(0.01	)	$	(0.01	)	$	(0.07	)	$	(0.04	)

Weighted average number of common shares outstanding		56,908,703			41,807,563			51,113,403			41,603,074

	March 31, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	1,225,406		$	380,000
Accounts Receivable, net		803,052			484,858
Prepaid Expenses		148,456			173,414
Inventory		868,663			798,273
Other receivables		93,424			90,919
Assets of discontinued operations		357,893			316,572
Total current assets		3,496,894			2,244,036

Non-current assets:
Deposits	$	275,694		$	77,686
Goodwill		5,672,823			5,672,823
Investment in Salt Tequila USA, LLC		250,000			250,000
Right of use asset, net		1,161,476			80,479
Quart Vin License, net		211,762			219,512
Property and equipment, net		641,291			681,352
Total non-current assets		8,213,045			6,981,852

Total assets	$	11,709,940		$	9,225,888

Liabilities and Deficiency in Stockholders’ Equity

Liabilities:
Current liabilities
Accounts payable and accrued expenses	$	1,090,986		$	1,521,818
Right of use liability - current		270,771			57,478
Due to related parties		252,904			368,904

Related party notes payable		1,331,762			1,333,333
Convertible Loan Payable		100,000			100,000
Notes payable, current portion		837,477			999,736

Shareholder advances		416,201			—
Accrued interest payable		469,001			442,748
Liabilities of discontinued operations		592,882			591,642
Total current liabilities		5,361,984			5,415,659

Long-term Liabilities:
Related party notes payable - noncurrent		332,940			666,667
Notes payable - noncurrent		1,240,044			1,240,044
Liability to issue shares in APA		1,980,000			1,980,000
Right of use liability - noncurrent		890,939			25,521
Total long-term liabilities		4,443,923			3,912,232

Total liabilities		9,805,907			9,327,891

Common stock, (mezzanine shares) 0 and 12,605,283 shares, contingently convertible to notes payable at March 31, 2021 and December 31, 2020		—			9,248,720

Stockholders’ equity:
Common Stock, $0.001 par, 150,000,000 shares authorized, 80,104,839 and 63,471,129 shares issued and outstanding, at March 31, 2021 and December 31, 2020.		80,105			63,471
Additional paid in capital		67,855,882			52,175,541

Accumulated deficit		(66,031,954	)		(61,589,735	)
Total deficiency in stockholders’ equity		1,904,033			(9,350,724	)

Total liabilities, mezzanine shares and deficiency in stockholders’ equity	$	11,709,940		$	9,225,888

																Total
	Common Stock				Treasury Stock						Additional		Accumulated			Stockholders'
	Shares		Amount		Shares			Amount			Paid-In Capital		Deficit			Equity (Deficit)

Balances at December 31, 2018		40,165,002		40,165		272,585		$	(100,000	)	$	18,938,480	$	(26,709,776	)	$(7,831,132)

Issuance of Common stock for cash		27,258		27		—			—			19,973		—		$20,000
Issuance of Common stock for services		1,363		1		—			—			999		—		1,000
Share-based compensation		—		—		—			—			—		—		-
Net loss		—		—		—			—			—		(703,624	)	(703,624)

Balances at March 31, 2019		40,193,623		40,193		272,585		$	(100,000	)	$	18,959,452	$	(27,413,400	)	$(8,513,755)

Issuance of Common stock for cash		483,837		484		—			—			354,516		—		$355,000
Issuance of Common stock for services		—		—		—			—			—		—		-
Issuance of series B convertible preferred stock		—		—		—			—			—		—		-
Issuance of Common stock from treasury		—		—		—			—			—		—		-
Warrants issued in connection with debt modification		—		—		—			—			—		—		-
Share-based compensation		—		—		—			—			—		—		-
Net loss		—		—		—			—			—		(921,520	)	(921,520)

Balances at June 30, 2019		40,677,460		40,677		272,585		$	(100,000	)	$	19,313,968	$	(28,334,920	)	$(9,080,275)

		Common Stock				Treasury Stock						Additional		Accumulated		Total Stockholders'
		Shares		Amount		Shares			Amount			Paid-In Capital		Deficit		Equity (Deficit)
Balances at December 31, 2019		44,021,389		44,021		136,293		$	(50,000	)	$	22,095,403	$	(31,845,506	)	$(9,756,084)

Issuance of common stock for convertible debt		—		—		—			—			145,579		—		145,579
Incremental beneficial conversion for preferred A		—		—		—			—			240,770		(240,770	)	-
Issuance of warrants on convertible instruments		—		—		—			—			2,486,706		(828,903	)	1,657,803
Issuance of common stock for services		817,753		818		(136,293	)		50,000			549,182		—		600,000
Issuance of common stock for acquisition		11,913,200		11,913		—			—			9,161,251		—		9,173,164
Net loss		—		—		—			—			—		(3,446,630	)	(3,446,630)

Balances at March 31, 2020		56,752,342		56,752		—		$	—		$	34,678,891	$	(36,361,809	)	$(1,626,167)

Issuance of warrants		—		—		—			—			77,434		—		77,434
Issuance of common stock for services		—		—		—			—					—		-
Issuance of common stock for cash		249,912		250		—			—			142,316		—		142,566
Net loss		—		—		—			—					(373,350	)	(373,350)

Balances at June 30, 2020		57,002,254		57,002		—		$	—		$	34,898,641	$	(36,735,159	)	$(1,779,517)

	Three months ended March 31,
	2021			2020
Net revenues	$	2,417,701		$	112,003
Cost of goods sold		(1,742,875	)		(107,214	)
Gross margin		674,826			4,789

Operating expenses:
Contracted services		276,511			257,981
Salary and wages		2,020,447			241,676
Other general and administrative		2,727,513			1,031,264
Sales and marketing		41,878			23,012
Total operating expenses		5,066,349			1,553,933

Loss from operations		(4,391,523	)		(1,549,144	)

Other income/(expense):

Interest income		114			16,151
Interest expense		(92,211	)		(1,913,637	)
Gain from debt extinguishment		1,319			—
Total other income/(expense)		(90,778	)		(1,897,486	)

Provision for income taxes		—			—

Net loss from continuing operations		(4,482,301	)		(3,446,630	)

Net income from discontinued operations, net of tax		40,082			—

Net loss	$	(4,442,219	)	$	(3,446,630	)

Earnings//(Loss)per share (basic diluted)
Continuing operations		(0.06	)		(0.08	)

Weighted average number of common shares outstanding		73,927,596			44,021,393

	Three months ended March 31,
	2021			2020
Net loss	$	(4,442,219	)	$	(3,446,630	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		40,061			2,294
ROU asset, net		36,445			20,192
Gain from debt extinguishment		—			(763	)
Interest on notes payable converted to common stock		—			231,692
Interest expense due to the issuance of warrants		—			1,657,805
Non-cash warrant expense		1,186,596			—
Share-based compensation		731,035			600,000
Other noncash changes		(362,515	)		(14,400	)
Changes in working capital items:
Accounts receivable, net		(318,194	)		(80,198	)
Inventory, net		(70,391	)		(153,836	)
Prepaid expenses and other current assets		22,453			2,467
Deposits		—			190
Accounts payable and accrued expenses		(430,831	)		226,187
Royalty payable		—			6,000
Accrued Interest payable		26,253			24,140
Net cash used in operating activities - continuing operations		(3,581,308	)		(924,860	)

Net cash used in operating activities - discontinued operations		(40,082	)

Cash Flows from Investing Activities:
Capital Expenditures		—			(2,419	)
Investment in Salt Tequila USA, LLC		—			(150,000	)
Net cash used in investing activities - continuing operations		—			(79,977	)

Net cash used in investing activities - discontinued operations		—			72,442

Cash Flows from Financing Activities:
Proceeds from issuance of Common stock		4,530,624			1,500,000
Cash advance from shareholder		416,201			240,000
Repayment of cash advance		(107,966	)		(120,000	)
Principal repayment of debt		(333,333	)		(18,000	)
ROU liability, net		(38,731	)		(19,788	)
Net cash provided by financing activities - continuing operations		4,466,796			1,582,212

Net cash provided by financing activities - discontinued operations		—			—

Net Change in Cash and Cash Equivalents		845,406			577,375

Cash and Cash Equivalents, beginning of year		380,000			42,639

Cash and Cash Equivalents, end of year	$	1,225,406		$	620,014

Supplemental Disclosure of Cash Flow Information:
Cash paid for Interest	$	—		$	—

Supplemental Disclosure of Non-Cash Investing and Financing Activities
Notes payable and accrued interest converted to common stock (12,605,283 shares)		—			9,248,721
Series A & B preferred stock and declared dividends converted to common stock		—			14,587,623
Liability issued for investment in SALT Tequila USA, LLC		—			100,000

	June 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
Property and equipment, at cost		206,006			88,758			2,076,710			718,884
Accumulated depreciation		(141,738	)		(51,029	)		(1,435,419	)		(37,532	)
Property and equipment, net		64,269			37,729			641,291			681,352

Numerator													2021			2020
Net loss from continuing applicable to common shareholders													$	(4,482,301	)	$	(3,446,630	)
	Three-months ended			Three-months ended			Six-months ended			Six-months ended
Numerator	June 30, 2020			June 30, 2019			June 30 2020			June 30, 2019
Net loss applicable to common shareholders	$	(373,350	)	$	(218,389	)	$	(3,822,129	)	$	(1,624,364	)
Earnings from discontinued applicable to common shareholders													$	40,082		$	—

Denominator
Weighted average number of common shares outstanding		56,908,703			41,807,563			51,113,403			41,603,563			73,927,596			44,021,393

Net loss per share (basic and diluted)	$	(0.01	)	$	(0.01	)	$	(0.07	)	$	(0.04	)
Net loss per share from continuing operations (basic diluted)													$	(0.06	)	$	(0.08	)

Net income per share from discontinued operations (basic diluted)													$	0.00		$	0.00

	Interest Rate		March 31, 2021			December 31, 2020
Notes Payable

In February 2014, we entered into a 12-month term loan agreement with an individual in the amount of $200,000. The note included warrants for 66,146 shares of common stock at $0.73 per share. The warrants expired on February 28, 2017 and none were exercised at that date. The note matured and remains in default.		15%		150,000			150,000


In March 2014, we entered into a short-term loan agreement with an entity in the amount of $200,000. The note included warrants for 272,584 shares of common stock at $0.94 per share. The warrants expired on February 28, 2017 and none were exercised at that date. The loan matured and remains in default.		8%		200,000			200,000

In May 2020, we entered into a two year loan with the SBA under the Paycheck Protection Program established by the CARES Act in the amount of $94,833. The note requires monthly payments of principal and interest starting in December 2020 and maturing in May 2021. See note 13.		1%		94,833			89,612

In June 2020, we entered into a six-month loan with an individual in the amount of $100,000. The loan matures in December 2020 with principal and interest due at maturity.		12%		—			100,000
In August 2020, we entered into a nine-month loan with a company in the amount of $112,000. The loan requires 9 amortized payments of principal and interest in the amount of $12,246 with the final payment due September 2020.		4.8%		25,238			62,719
Notes payable for license agreements due in 36 monthly payments of $10,000, interest imputed at 10%, maturing in January 2021.		10.0%		29,212			59,212
In December 2020, we entered into a 56 month loan with a company in the amount of $1,578,237. The loan requires payments of 3.75% of the previous months revenue.		Various		1,578,237			1,578,237


		Total notes payable	$	2,077,520		$	2,239,780

		Less current portion		(837,477	)		(999,736	)

		Long-term notes payable	$	1,240,044		$	1,240,044

Related Parties Notes Payable

	In December 2020, we entered into a 18 month loan with an individual in the amount of $2,000,000. The loan requires 18 monthly amortized payments of principal and interest in the amount of $144,444 with the final payment due June 2022.	2.0%	1,664,702	2,000,000


		Less current portion	(1,331,762)	(1,333,333)

		Long-term notes payable	$ 332,940	$ 666,667

	Interest	March 31,		December 31,
	Rate	2021		2020
Convertible Bridge Loans Payable

In May 2015, we entered into a 3-month term loan agreement with an individual in the amount of $100,000. The annual interest rate for this bridge loan was 32% for the first 90 days, and 4% thereafter, compounded monthly.	Variable	$	100,000	$	100,000

	Three-Months Ending				Six-Months Ending
Revenue	Q2 2020		Q2 2019		Q2 2020		Q2 2019
Beverages		412,729		42,775		524,732		48,105
Medical Devices		199,579		—		199,579		—

Total Revenues		612,308		42,775		724,311		48,105


Total assets		June 2020		December 2019
Beverages		1,172,224		605,314
Medical Devices		9,763,660		—

Total Assets		10,935,884		605,314