SPLASH BEVERAGE GROUP INC

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except for the litigation disclosed below, we are not currently a party to any legal or arbitration proceeding the outcome of which, if ‘determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash flows, or financial condition.

On August 14, 2024, TapouT, LLC, a subsidiary of Authentic Brands Group, LLC (“ABG”), filed a Complaint (the “Complaint”) against the Company in the Supreme Count of New York for New York County (the “Court”). The Complaint pertains to breach of a certain licensing agreement dated December 8, 2011 (the “Licensing Agreement”), under which the Company became a successor in interest on July 1, 2013, pursuant to an amendment to the Licensing Agreement.

ABG alleges that as a result of an unpaid invoice they had exercised their right pursuant to section 22 of the Licensing Agreement to terminate the Licensing Agreement. ABG alleges that as a result of the aforementioned termination, pursuant to the Licensing Agreement, they are owed all unpaid fees and other amounts payable become immediately due. As a result, ABG have brought two causes of action, the first being breach of contract for the unpaid invoice and the second for accounts stated for all unpaid fees and other amounts payable. TapouT, LLC is seeking $1,400,000 for termination of the Licensing Agreement. The Company (Splash Beverage Group) does not view this as a reasonable amount given that the Company believes TapOut LLC did not fulfill their obligations pursuant the Licensing Agreement. The Company believes the case will be settled for a lower amount and has booked a legal reserve of $330,000 as the estimate for the potential liability.

On November 12, 2024, the Company filed a motion to compel mediation that is pending before the Court.

The Company intends to take all necessary steps to continue to vigorously defend against the action.