SPLASH BEVERAGE GROUP, INC.

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, (“TapouT”), filed a 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, under which the Company became a successor in interest on July 1, 2013, pursuant to an amendment to the Licensing Agreement.

TapouT 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. TapouT 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, TapouT 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 approximately $1,700,000 for termination of the Licensing Agreement. The Company 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. The parties have had multiple mediation sessions and are continuing their efforts to seek an amicable resolution. If these mediation efforts do not yield a settlement agreement, then the Company anticipates that litigation shall continue.

The Company is in the process of resolving alleged and potential claims from investors that are referred to as the “Uptime Investor Claims.” A settlement agreement is in place, and revisions to the same are being negotiated by the Company’s counsel after alleged defaults occurred under the original agreement. There is a chance that the subsequent revised agreements are not finalized and litigation could ensue, however the Company will exhaust all efforts to finalize the revised agreements as quickly as possible.

The Company intends to take all necessary steps to continue to vigorously defend against the action. The parties meet regularly on this matter in an attempt to settle the matter prior to the court date, but to date no settlement offer has been agreed upon.

On April 14, 2026, the Company was served with a Notice of Claim for Wages made by Miguel Ramirez, a former employee of the Company, demanding back wages in the amount of $32,154.70 and asserting that additional penalties of $12,480 and other remedies of $5,000 are payable in connection with the claim. The claim was filed with the State of Nevada's Department of Business and Industry, Office of the Labor Commissioner. The Company intends to investigate the claim.

The Company is party to various credit facilities, loan agreements, notes, leases, guarantees, settlement arrangements and other financing and contractual obligations (collectively, the “Obligations”), certain of which contain affirmative and negative covenants, financial maintenance requirements, performance obligations, cross-default provisions and other restrictions customary for obligations of this type. From time to time, the Company may be in default, or may be deemed to be in default, under one or more of its Obligations, including as a result of covenant breaches, payment defaults, failures to satisfy performance or reporting requirements, breaches of contractual terms, non-compliance with settlement obligations, cross-default triggers, or other events of default. There can be no assurance that the Company will be able to comply with all such covenants and obligations in the future or that any such defaults will not occur.

While any such defaults or breaches may arise under individual Obligations, the aggregate principal amount and associated liabilities of such Obligations, taken together, may be material to the Company. The existence of any actual or alleged default or breach could permit lenders, counterparties or other stakeholders to accelerate repayment, terminate commitments, enforce settlement terms, exercise remedies against collateral, pursue damages or other contractual remedies, or otherwise initiate enforcement or legal proceedings, including pursuant to cross-default or cross-acceleration provisions in other agreements. There can be no assurance that any such counterparties would not exercise such rights or that the Company would be able to cure any such defaults, obtain waivers, or otherwise avoid the exercise of remedies.

Any such events, whether individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, liquidity, results of operations and ability to continue as a going concern. In addition, the Company may be required to seek waivers, amendments, forbearance arrangements, refinancings or other accommodations from its creditors or counterparties, which may not be available on favorable terms, or at all, and there can be no assurance that the Company will be able to obtain any such relief on acceptable terms or within required timeframes.

The Company owes an estimated $4.7 million to certain creditors for past due amounts. The Company is in discussions with these creditors and is seeking to negotiate an acceptable resolution and settlement of these balances. However, no assurances can be made that a resolution will be met, in which case we may face litigation from these creditors.