EDGAR 10-K Filing

Company CIK: 1399306
Filing Year: 2022
Filename: 1399306_10-K_2022_0001399306-22-000007.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
General Overview
BrewBilt Brewing Company (formerly Simlatus Corporation) is the parent company of wholly-owned subsidiaries Satel Group Inc. and BrewBilt Brewing LLC.
BrewBilt Brewing is an independent craft beer manufacturer offering its own line of lagers and ales with a particular focus on traditional European lagers. BrewBilt Brewing will also offer contract brewing services for other breweries in need of additional capacity as well as private label ales for restaurants and bars desiring their own house beer.
Satel Group is the premier provider of DirecTV to high-rise apartments, condominiums and large commercial office buildings in the San Francisco metropolitan area and offers Internet services across the Bay Area.
BrewBilt Brewing LLC is the entity pursuing the Type 23 Small Beer Manufacturer license from the California Alcoholic Beverage Control Board (ABC). We expect this license to be issued once brewery construction is nearing completion. BrewBilt Brewing LLC has already received our Brewers Notice from the Alcohol and Tobacco Tax and Trade Bureau (TTB).
BrewBilt Brewing Company works closely with BrewBilt Manufacturing Inc., which is also located in Grass Valley, California and led by CEO Jef Lewis. BrewBilt Manufacturing custom designs and handcrafts brewing and fermentation equipment and will supply all necessary equipment to BrewBilt Brewing for our craft beer production.
BrewBilt Brewing’s ties with BrewBilt Manufacturing provide strong relationships with local suppliers of raw materials, equipment and services in California, an aggressive referral network of satisfied customers nationwide, and an Advisory Board consisting of successful business leaders who provide valuable product feedback and business expertise to management. The craft brewing and spirits industries continue to grow worldwide. California is where American craft brewing began and now has over 950 operating breweries - being centrally located in this booming market was a large draw for BrewBilt Brewing to locate its facility in the Sierra foothills.
In March of 2021, BrewBilt Brewing began design and permitting for the construction of its brewing facility in Grass Valley, California. This facility was leased by BrewBilt and is being upgraded with substantial tenant improvements to include a 20 BBL brewhouse, 20 and 40 BBL fermentation tanks, cold-storage space, and a state-of-the-art canning line. In July of 2021, BrewBilt took the opportunity to expand again by leasing additional space adjacent to the original lease.
Competition and Marketing
As a craft brewery with plans to distribute statewide (and beyond) BrewBilt Brewing faces competition from the hundreds of existing craft breweries in California and thousands nationwide.
Despite uncertainty in the market, there’s an all-time high of 8,764 craft breweries, suggesting that the craft brewing industry is poised to rebound from last year’s devastating global pandemic that saw beer volume, retail dollars and jobs drop precipitously.
“2020 was obviously a challenging year for many small brewers, but also one that proved their resilient and entrepreneurial nature,” said Bart Watson, chief economist of the Brewers Association (BA), in a statement. “In a year where U.S. draught sales were down more than 40%, small brewers found new ways to connect with their customers and keep their businesses running.”
Brian Sudano, managing partner at Beverage Marketing Corporation (BMC), New York, concurs that the craft beer industry was disproportionately impacted by the pandemic because of the near shutdown of its entire on-premise business including taprooms.
“As the market has slowly opened up, craft beer has returned to growth but has not recovered totally to where it would be if the pandemic did not take place. However, it is slowly returning to pre-pandemic growth levels,” Sudano says. “In 2020, craft beer declined approximately 6%, total beer was flat and FMBs including hard seltzer grew 67%. For 2021, craft accelerated to high single digit growth, FMBs including hard seltzer in mid-teens, and total beer to decline low single digits.”
For the 52 weeks ending Sept. 5, beer sales in multi-outlets were $43.8 billion, a 3% year-over-year (YoY) increase, according to data from Information Resources Inc. (IRI), Chicago. Craft beer generated dollar sales were slightly north of $5 billion, a 1.4% increase, IRI data shows.
During the same timeframe, beer and craft beer cases sales numbers were slightly down at 1.4% and 0.8%, respectively, with sales in excess of 1.6 billion for beer overall and 128.8 million for craft beer, according to IRI data.
More than a year and a half later, the BA’s Watson is cautiously optimistic about the state of the craft beer industry.
“The rough version is that craft brewers appear to have made up about half of their volume lost in 2020 (versus 2019) in the first half of 2021,” he explains. “The second quarter was stronger than the first, and while it’s probably unlikely craft will fully get back to 2019 volume levels, it’s probably going to get close, barring further economic and consumer confidence setbacks due to the delta variant.”
“Craft brewers have long been innovative, and it’s tougher than ever to summarize what they are doing,” Watson explains. “Within beer, we are seeing continued growth in IPAs, but also in lower ABV beers (including lagers and other low ABV ales), and fuller flavored but non-hoppy styles such as sours or fruit beers.
In its September “Breweries in the US” report, Los Angeles-based IBISWorld notes that the $7.3 billion craft beer industry has medium revenue volatility, with annual growth down 1.8%, and a profit margin of $305.7 million for the five-year period through 2021.
When it comes to craft beer production, India pale ales (IPAs) are No. 1 at 30.2%. Rounding out the list are Belgian witbiers, 23.3%; seasonal, 10.5%; lagers, 9.1%; pale ales, 7.7%; and amber ales, 5.5%.
Similarly, IRI’s Client Insights Consultant Cara Piotrowski says the top-selling craft beers are IPAs, wheat ales, seasonals, pilsners/pale lagers, amber/dark lagers and bocks. “IPAs continue to drive most growth with wild/sour ales and Belgian ales also contributing to growth from a style perspective,” she adds.
When comparing year to date (YTD) case sales pre-pandemic versus 2019 YTD for the week ending Sept. 26, craft beer volume grew 7.1%, signaling a recovery.
From a pre-pandemic perspective, beer YTD is up 6.5% in case volume; craft, is up 7.1% and FMBs are up 13.6%. The trends are better if we look at the latest 52-week period versus two years ago: beer, up 7.3%; craft, up 8.5%; and FMBs, up 14%.
IBISWorld’s September “Breweries in the US” report states, “Over the five years to 2026, the industry is anticipated to fully rebound from the setbacks incurred amid the COVID-19 pandemic and experience sustained growth. Continual rises in expenditures on alcoholic beverages and decreases in excise taxes on beer will likely further entice prospective operators to try their hand in the industry. Ultimately, industry revenue is forecast to rise an annualized 2.4% to $8.2 billion over the five years to 2026.”
The craft beer industry is becoming saturated with full bodied ales with prominent hop and/or fruit flavors. As the craft beer market matures and the novelty of these styles wane, drinkers are demanding more refreshing, lower alcohol brews. Consumer demand for lighter bodied lagers has steadily increased over the last couple years (9.5% growth in 2021), and BrewBilt Brewing is distinguishing itself and meeting that demand with its modern execution of traditional styles using local ingredients processed with industry-leading equipment and techniques.
BrewBilt is also setting itself apart with its contract brewing services. Contract brewing, once stigmatized in the industry, is now seen as an attractive option for existing breweries in need of additional capacity as well as new breweries looking to avoid the significant startup costs associated with a lease and brewing equipment. Contract brewing is currently only 1.3% of US beer production volume, so as both new and established breweries turn to this option, BrewBilt will be well poised to meet the demand without significant competition.
Recent U.S. Brewery Count
2018 to 2020 % Change
Craft 4,803 5,713 6,661 7,618 8,391 8,764 4.4%
Regional Craft Breweries 230 -8.3%
Microbreweries 2,684 3,319 3,956 4,518 1,821 1,854 1.8%
Taprooms
3,159 3,471 9.9%
Brewpubs 1,941 2,208 2,503 2,870 3,171 3,219 1.5%
Large/Non-Craft 104 8.1%
Total U.S. Breweries 4,847 5,780 6,767 7,722 8,502 8,884 4.5%
Historical Craft Brewery Production by Category
U.S. Craft Brewery Count by Category
Historical U.S. Brewery Count
Slide the bar at the top of the graph to see number of breweries from 1873 to present day.
Satel Group Inc., the global Internet audience continues to grow steadily, with the worldwide base of broadband Internet users (including fixed and wireless) in the 3.2 billion range as 2016 began. This vast base of high-speed Internet users encourages businesses to innovate in order to offer an ever-evolving array of online services. Sectors that are growing very rapidly online include the sale of entertainment products, event tickets, travel, apparel, and consumer electronics.
Although telecom companies provide voice and data services to consumers and businesses, the nature of these services differs significantly between the two customer segments. While residential customers mainly use wireless services, businesses use wire line to get high-capacity broadband and advanced communications services. Also, telecom companies rent their facilities or networks-providing wholesale data and communication access-to other carriers of communication services.
Key companies in the US include AT&T (T), Verizon (VZ), and Sprint (S) which are the large integrated, publicly trade telecom companies that provide wireless and wire line services, while T-Mobile (TMUS) is a listed national wireless operator. Wire line players-like CenturyLink (CTL), Frontier Communications (FTR), and Windstream Holdings (WIN)-are some of the other key regional telecom companies in the US. A wire line network includes interlinked connection and redistribution systems that supports information-like voice and data-to travel electronically. Traditional, local, and long distance telephone systems that supported voice calls, messaging, and fax were the primary wire line services that transmitted services over a network of copper wires and switches. The wires and switches connected calls between users mostly using a copper infrastructure connecting traditional landlines and pay phones. Now, with the backbone of the network being fiber optics, they support a broadband network capable of delivering VoIP (Voice over Internet Protocol), Internet, TV services, and managed private communications. Broadband infrastructure is recognized as a critical resource for economic development. Most countries, across the globe have strategic plans in place-like the National Broadband Plan-to expand and develop their Broadband network to support a broad range of enhanced communications and entertainment services.
The company’s internet service is less expensive than AT&T, Google, and Comcast, which currently offer “Gigabit‟ as their top Internet service, while most customers buy a much slower and less expensive service under a 100 MB. Satel’s application of HPNA technology using coaxial cable to deliver Internet, provides download speeds of 200Mb-500Mb, with unlimited downloads for a cost less than those fees charged by other carriers for the same speeds. The company believes that there is a good and marketable monthly Internet service in the $40-$45 range. Satel can also combine local, off air channels, whereas the other OTT providers do not.
We will continue to market our product to new building owners and management companies using our direct B2B campaign as well as to contact those architects, engineering firms and other decision makers involved with new high rise construction in the Bay Area. Our CEO, Richard Hylen, has established long-term relationships with owners, builders, management companies, managers, and other service providers to introduce our product and create our initial sales contact. Our CEO has extensive experience in marketing both entertainment and Internet services and believes that the marketing of our products directly to consumers would not have the same potential for increased sales that it would have without the ongoing support of established building managers.
Employees
BrewBilt Brewing has four employees and eight suppliers, in addition to legal and accounting support. Satel Group Inc. has 6 employees, 1 consultant, and 10 suppliers, in addition to legal and accounting support.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
BrewBilt Brewing operates out of a 4,000 square foot commercial facility located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945.
Satel Group maintains an office and equipment at 330 Townsend Street, Suite 135, San Francisco, California 94107. The office is ground floor space of 1,000 sq. ft. with a large equipment repair room, 1 executive office, Inventory Room and Reception area. The Company currently does not own any real property.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer, or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURE
None.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Common Stock
Our common stock is currently quoted on the OTC Markets. Our common stock has been quoted on the OTC Markets since October 17, 2007 trading under the symbol “SBRT”. On January 15, 2008, our symbol was changed to “SBTR” and on December 15, 2009, our symbol was changed to “GRPR” to reflect our Company’s name change. On April 21, 2016, our symbol was changed to “SIML” to reflect our Company’s name change to Simlatus Corporation. On July 9, 2021, our symbol was changed to “BRBL” to reflect our Company’s name change to BrewBilt Brewing. Because we are quoted on the OTC Markets, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.
The following table sets forth, for the periods indicated over the last two years, the high and low closing bid quotations, as reported by the OTC Markets, and represents prices between dealers, does not include retail markups, markdowns, or commissions, and may not represent actual transactions:
For the Year Ended December 31
High Low High Low
First Quarter 1.0645 0.0675 0.0010 0.0010
Second Quarter 0.1649 0.0875 0.0320 0.0007
Third Quarter 0.1128 0.0105 0.0010 0.0002
Fourth Quarter 0.0160 0.0034 0.0007 0.0001
Record Holders
As of December 31, 2021, there were 220,877,962 shares of the registrant’s $0.0001 par value common stock issued and outstanding, which were held by 30 shareholders of record.
Dividends
We have not paid dividends on our common stock, and do not anticipate paying dividends on our common stock in the foreseeable future.
Securities authorized for issuance under equity compensation plans
We have no compensation plans under which our equity securities are authorized for issuance.
Performance graph
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Recent Sales of Unregistered Securities
During the three months ended December 31, 2021, 532 shares of Convertible Preferred Series A stock were converted to 41,863,625 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $155,479.
During the three months ended December 31, 2021, the holders of convertible notes converted a total of $350,772 of principal and fees into 64,532,390 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $172,123 and settled $317,799 worth of derivative liabilities which was recorded to additional paid in capital.
During the three months ended December 31, 2021, a warrant holder exercised the warrants and the Company issued 1,613,555 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
Recent issuances of unregistered securities subsequent to our fiscal year ended of December 31, 2021
On January 3, 2022, the holder of a convertible note converted a total of $52,500 of principal and fees into 10,500,000 shares of our common stock.
On January 4, 2022, the holder of a convertible note converted a total of $40,079 of principal, interest, and fees into 9,192,541 shares of our common stock.
On January 4, 2022, 66 shares of Convertible Preferred Series A stock was converted in to 10,740,000 shares of common stock.
On January 13, 2022, the holder of a convertible note converted a total of $23,100 of principal into 11,000,000 shares of our common stock.
On January 13, 2022, the holder of a convertible note converted a total of $36,000 of principal into 12,000,000 shares of our common stock.
On January 14, 2022, the holder of a convertible note converted a total of $22,000 of principal into 11,000,000 shares of our common stock.
On January 20, 2022, 52 shares of Convertible Preferred Series A stock was converted in to 6,981,000 shares of common stock.
On January 21, 2022, the holder of a convertible note converted a total of $40,500 of principal into 13,500,000 shares of our common stock.
On January 24, 2022, a warrant holder exercised the warrants and the Company issued 917,764 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
On January 31, 2022, a warrant holder exercised the warrants and the Company issued 9,711,786 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
On February 1, 2022, the holder of a convertible note converted a total of $21,300 of principal into 12,529,412 shares of our common stock.
On February 3, 2022, the holder of a convertible note converted a total of $16,288 of principal and interest into 9,580,882 shares of our common stock.
On February 8, 2022, 63 shares of Convertible Preferred Series A stock was converted in to 11,276,667 shares of common stock.
On February 14, 2022, the holder of a convertible note converted a total of $27,000 of principal into 16,875,000 shares of our common stock.
On February 14, 2022, the holder of a convertible note converted a total of $28,350 of principal and interest into 17,718,750 shares of our common stock.
On February 25, 2022, the holder of a convertible note converted a total of $23,000 of principal into 17,692,308 shares of our common stock.
On March 1, 2022, the holder of a convertible note converted a total of $21,200 of principal into 17,666,667 shares of common stock.
On March 4, 2022, the Company issued 93 shares of Convertible Preferred Series A stock pursuant to a service agreement.
On March 7, 2022, the holder of a convertible note converted a total of $19,500 of principal into 17,272,273 shares of common stock.
On March 8, the Company issued 18,622 shares of Convertible Preferred Series A stock pursuant to a licensing agreement.
On March 8, 2022, 78 shares of Convertible Preferred Series A stock was converted in to 20,943,000 shares of common stock.
On March 11, 2022, the holder of a convertible note converted a total of $15,050 of principal and $950 of interest into 20,000,000 shares of common stock.
On March 16, 2022, the holder of a convertible note converted a total of $2,988 of interest into 4,458,955 shares of common stock.
On March 17, 2022, the holder of a convertible note converted a total of $13,400 of principal into 20,937,500 shares of common stock.
On March 17, 2022, 78 shares of Convertible Preferred Series A stock was converted in to 20,943,000 shares of common stock.
On March 21, 2022, the holder of a convertible note converted a total of $13,400 of principal into 20,937,500 shares of common stock.
On March 22, 2022, the holder of a convertible note converted a total of $13,400 of principal into 20,937,500 shares of common stock.
On March 23, 2022, 60 shares of Convertible Preferred Series A stock was converted in to 26,850,000 shares of common stock.
On March 24, 2022, the holder of a convertible note converted a total of $3,550 of principal and $2,188 of interest into 8,964,844 shares of common stock.
Issuer Repurchases of Equity Securities
None.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. You should read this report completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Results for the Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020
Revenues:
The Company’s revenues were $307,171 for the year ended December 31, 2021 compared to $342,283 for the year ended December 31, 2020. The company has a strong relationship with DirecTV and has focused its efforts on expanding services outside of the San Francisco metropolitan area. For the year ended December 31, 2021, the Company had one major customer who represented approximately 53% of total revenue. The decrease in revenue is due to a decrease in customer sales and a reduction in sales efforts due to COVID-19.
Cost of Sales:
The Company’s cost of sales was $11,415 for the year ended December 31, 2021, compared to $7,821 for the year ended December 31, 2020. This is due to a higher number of audio/video equipment sales that were sold during the period ending December 31, 2021 compared to December 31, 2020.
Operating Expenses:
Operating expenses consisted primarily of consulting fees, professional fees, salaries and wages, share based compensation, office expenses and fees associated with preparing reports and SEC filings relating to being a public company. Operating expenses for the year ended December 31, 2021, and December 31, 2020, were $7,538,628 and $1,097,216, respectively. The increase was primarily attributable to an increase in share based compensation, employee wages and general and administrative expenses.
Other Income (Expense):
Other income (expense) for the year ended December 31, 2021 and December 31, 2020 was $383,880 and $(10,695,568), respectively. Other income (expense) consisted of derivative valuation gains and losses, gains or losses on settlement of debt and conversion of debt, and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The increase in other income primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities.
Net Loss:
Net loss for the year ended December 31, 2021 was $6,858,992 compared to $11,458,322 for the year ended December 31, 2020. The decrease in net loss can be explained by the changes in the loss in the fair value of derivative liabilities.
Impact of Inflation
We believe that the rate of inflation has had a negligible effect on our operations.
Liquidity and Capital Resources
December 31,
December 31,
Current Assets $ 527,665 $ 154,551
Current Liabilities 4,364,451 9,588,260
Working Capital (Deficit) $ (3,836,786 ) $ (9,433,709 )
The overall working capital (deficit) decreased from $(9,433,709) at December 31, 2020 to $(3,836,786) at September 30, 2021 due to the change in value of derivative liabilities, an increase in fixed assets and related party deposits paid for brewery equipment.
December 31, December 31,
Cash Flows (used in) provided by Operating Activities $ (529,635 ) $ (151,660 )
Cash Flows provided by Investing Activities (559,119 ) -
Cash Flows (used for) provided by Financing Activities 1,013,160 261,020
Net Increase (decrease) in Cash During Period $ (75,594 ) $ 109,360
During the year ended December 31, 2021 cash (used in) provided by operating activities was $(529,635) compared to $(151,660) for the year ended December 31, 2020. The increase in the cash used in operating activities is primarily attributed to the change in fair value of derivative liabilities, stock based compensation and loss on conversion.
During the year ended December 31, 2021 cash (used in) provided by investing activities was $(559,119) compared to $0 for the year ended December 31, 2020. This increase in cash used in investing activities is due to a related party deposit paid to begin fabrication of a brewery system and fixed asset additions.
During the year ended December 31, 2021, cash (used for) provided by financing activities was $1,013,160 compared to $261,020, for the year ended December 31, 2020. The increase in cash used by financing activity primarily resulted from an increase in proceeds from notes payable during the year ended December 31, 2021.
As of December 31, 2021, the Company had a cash balance and current asset total of $59,261 and $527,665 respectively, compared with $134,855 and $154,551 of cash and current assets, respectively, as of December 31, 2020. The increase in assets was due to the related party deposit of $450,000 for brewery equipment.
As of December 31, 2021, the Company had total current liabilities of $4,364,451 compared with $9,588,260 as of December 31, 2020. The decrease in current liabilities was primarily attributed to a decrease in derivative liabilities and accounts payable.
Going Concern
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related parties through capital investment and borrowing funds.
As of December 31, 2021, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our December 31, 2021 audited financial statements that they have substantial doubt that we will be able to continue as a going concern.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Significant Accounting Policies
Our discussion and analysis of our results of operations and liquidity and capital resources are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, allowance for doubtful accounts, warranty liabilities, share-based payments, income taxes and litigation. We base our estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results that differ from our estimates could have a significant adverse effect on our operating results and financial position. We believe that the significant accounting policies and assumptions as detailed in Note 1 to the financial statements contained herein may involve a higher degree of judgment and complexity than others.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not hold any assets or liabilities requiring disclosure under this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BREWBILT BREWING COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 2738)
Consolidated Balance Sheets at December 31, 2021 and December 31, 2020
Consolidated Statements of Operations for the years ended December 31, 2021 and 2020
Consolidated Statements of Shareholders’ Deficit for the years ended December 31, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
Notes to the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of BrewBilt Brewing Company and subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BrewBilt Brewing Company and subsidiaries (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Derivative Liabilities
As discussed in Note 9, the Company borrows funds through the use of convertible notes payable that contain a conversion price that fluctuates with the stock price. Due to the fluctuation of the conversion price, the embedded conversion feature requires bifurcation from the host contract and is recorded as a liability subject to market adjustments as of each reporting period. Significant judgment is exercised by the Company in determining derivative liability values for these convertible note agreements, including the use of a specialist engaged by management.
We evaluated management’s conclusions regarding their derivative liability and reviewed support for the significant inputs used in the valuation model, as well as assessing the model for reasonableness.
Convertible Preferred Stock
As discussed in Note 11, the Company has issued and outstanding certain Preferred Shares that contain a fixed value and convertible into common stock at the closing market price on the date of conversion. Auditing management’s evaluation of the convertible preferred shares involves significant judgements and estimates in determining the proper classification of the preferred shares that include both debt and equity qualities. To evaluate the appropriateness and accuracy of the classification of the convertible preferred shares, we evaluated management’s assessment of the debt and equity like characteristics.
We evaluated management’s appropriateness and accuracy of the classification of the convertible preferred shares and evaluated management’s assessment of the debt and equity like characteristics.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2018.
Houston, Texas
April 04, 2022
BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
ASSETS
Current Assets
Cash $ 59,261 $ 134,855
Accounts receivable 1,793 5,563
Inventory, net 11,575 4,133
Prepaid expenses 5,036 -
Related party deposit 450,000 -
Other current asset - 10,000
Total current assets 527,665 154,551
Property, plant and equipment, net 99,424 -
Financial lease assets - related party 26,815 31,178
Operating right-of-use assets 188,770 -
Security deposit 5,162 5,162
Total assets $ 847,836 $ 190,891
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable $ 475,429 $ 522,418
Accrued wages 1,026,073 321,530
Accrued expenses 31,764 29,416
Accrued interest 245,656 148,233
Convertible notes payable in default 47,990 203,167
Convertible notes payable, net of discount 545,887 29,771
Current financing lease liabilities - related party 4,666 3,988
Current operating lease liabilities 36,369 -
Derivative liabilities 1,598,253 7,996,994
Loans payable 87,420 87,420
Related party liabilities 264,944 245,323
Total Current liabilities 4,364,451 9,588,260
Non-current financing lease liabilities - related party 22,149 27,190
Non-current operating lease liabilities 152,401 -
Total liabilities 4,539,001 9,615,450
Series A convertible preferred stock: 100,000 shares authorized, par value $0.0001; 30,746 shares issued and outstanding at December 31, 2021; 41,572 shares issued and outstanding at December 31, 2020 (1) 8,255,301 11,162,005
Series C convertible preferred stock, 0 shares authorized, par value $0.0001; 0 shares issued and outstanding at December 31, 2021; 35,583 shares issued and outstanding at December 31, 2020 - 355,830
Convertible preferred stock payable 5,000,000 754,249
Stockholders’ deficit:
Series B preferred stock: 5,000 shares authorized, par value $0.0001; 1,500 shares issued and outstanding at December 31, 2021; 500 shares issued and outstanding at December 31, 2020 - -
Common stock: 2,000,000,000 shares authorized, par value $0.0001; 220,877,962 shares issued and outstanding at December 31, 2021; 32,644,913 shares issued and outstanding at December 31, 2020 (1) 22,088 3,264
Additional paid in capital 5,528,281 (6,062,064 )
Accumulated deficit (22,496,835 ) (15,637,843 )
Total stockholders’ deficit (16,946,466 ) (21,696,643 )
Total liabilities and stockholders’ deficit $ 847,836 $ 190,891
(1) Preferred and common share amounts and per share amounts in the financial statements reflect the one-for-one hundred and fifty reverse stock split that was made effective on June 11, 2021.
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended
December 31,
Sales $ 307,171 $ 342,283
Cost of materials 11,415 7,821
Gross profit 295,756 334,462
Operating expenses:
Depreciation 9,695 -
G&A expenses 5,557,692 433,998
Professional fees 62,058 77,287
Salaries and wages 1,909,183 585,931
Total operating expenses 7,538,628 1,097,216
Loss from operations (7,242,872 ) (762,754 )
Other income (expense):
Debt forgiveness - 118,548
Gain (loss) on conversion of debt (513,973 ) (72,051 )
Loss on conversion of debt of preferred shares (1,603,865 ) (191,349 )
Derivative income (expense) 3,646,815 (9,404,359 )
Interest expense (1,145,097 ) (1,146,357 )
Total other income (expense) 383,880 (10,695,568 )
Net profit (loss) before income taxes (6,858,992 ) (11,458,322 )
Income tax expense - -
Net profit (loss) $ (6,858,992 ) $ (11,458,322 )
Per share information
Weighted average number of common shares outstanding, basic (1) 90,327,379 9,483,059
Net income (loss) per common share, basic $ (0.0759 ) $ (1.21 )
Weighted average number of common shares outstanding, diluted (1) 90,327,379 9,483,059
Net income (loss) per common share, diluted $ (0.0759 ) $ (1.21 )
(1) Common share amounts and per share amounts in the financial statements reflect the one-for-one hundred and fifty reverse stock split that was made effective on June 11, 2021.
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
\(1)
(1)
Convertible Preferred Stock Preferred Stock
Additional Accumulated Total
Series A (1) Series C Shares Series B Common Stock (1) Paid-In Earnings Shareholders’
Shares Amount Shares Amount Payable Shares Amount Shares Amount Capital (Deficit) Equity (Deficit)
Balances for December 31, 2019 39,902 $ 10,713,687 35,583 $ 355,830 $ - $ - 30,162 $ 3 $ (12,857,402 ) $ (4,179,521 ) $ (17,036,920 )
Conversion of debt to common stock - - - - - - - 24,495,581 2,449 1,075,266 - 1,077,715
Convertible preferred stock converted to common stock (1,890 ) (507,576 ) - - - - - 8,119,147 698,111 - 698,923
Convertible preferred stock issued to settle debt 3,560 955,894 - - - - - - - - - -
Convertible preferred shares to be issued to settle debt - - - - 754,249 - - - - - - -
Related party debt settled to additional paid in capita - - - - - - - - - 31,269 - 31,269
Imputed interest - - - - - - - - - 14,136 - 14,136
Derivative settlements - - - - - - - - - 4,976,556 - 4,976,556
Common shares issued due to reverse stock split rounding - - - -
- - - - - -
Net loss - - - - - - - - - - (11,458,322 ) (11,458,322 )
Balances for December 31, 2020 41,572 $ 11,162,005 35,583 $ 355,830 $ 754,249 $ - 32,644,913 $ 3,264 $ (6,062,064 ) $ (15,637,843 ) $ (21,696,643 )
Conversion of debt to common stock - - - - - - - 106,219,740 10,622 1,435,906 - 1,446,528
Convertible preferred stock converted to common stock (14,192 ) (3,810,486 ) (35,583 ) (355,830 ) - - - 74,842,217 7,486 5,762,695 - 5,770,181
Convertible preferred stock payable converted to preferred stock 2,809 754,249 - - (754,249 ) - - - - - - -
Preferred stock issued for services 149,992 - - - 1,000 - - - 785,236 - 785,236
Convertible preferred shares to be issued pursuant to agreement - - - - 5,000,000 - - - - - - -
Cashless warrant exercise - - - - - - - 6,927,827 (692 ) - -
Common stock issued for services - - - - - - - 233,333 87,477 - 87,500
Imputed interest - - - - - - - - - 34,179 - 34,179
Derivative settlements - - - - - - - - - 3,218,753 - 3,218,753
Warrant discounts - - - - - - - - - 266,333 - 266,333
Rounding due to reverse stock split (2 ) (459 ) - - - - - 9,932 -
Net loss - - - - - - - - - - (6,858,992 ) (6,858,992 )
Balances for December 31, 2021 30,746 $ 8,255,301 - $ - $ 5,000,000 1,500 $ - 220,877,962 $ 22,088 $ 5,528,281 $ (22,496,835 ) $ (16,946,466 )
(1) Preferred and common share amounts and per share amounts in the financial statements reflect the
one-for-one hundred and fifty reverse stock split that was made effective on June 11, 2021.
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended
December 31,
Cash flows from operating activities:
Net loss $ (6,858,992 ) $ (11,458,322 )
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible debt discount 851,216 705,157
Depreciation 9,695 -
Stock based compensation 6,022,728 -
Debt forgiveness - (118,548 )
Imputed interest 34,179 14,136
Loss on conversion of debt 513,973 72,051
Loss on conversion of preferred shares to common stock 1,603,865 191,349
Change in fair value of derivative liability (3,646,815 ) 9,404,359
Penalties on notes payable 107,022 197,939
Decrease (increase) in operating assets and liabilities:
Accounts receivable 3,770 2,178
Inventory (7,442 ) (3,708 )
Other current assets 10,000 (10,000 )
Prepaid expenses (5,036 ) 7,268
Accrued interest 152,679 (71,942 )
Accounts payable (46,989 ) 168,166
Accrued expenses 706,891 625,962
Advances from related parties 19,621 122,924
Deferred revenue - (629 )
Net cash (used in) provided by operating activities (529,635 ) (151,660 )
Cash flows from investing activities:
Property, plant and equipment, additions (109,119 ) -
Deposit on equipment - related party (450,000 ) -
Net cash (used in) provided by investing activities (559,119 ) -
Cash flows from financing activities:
Proceeds from convertible debt 1,013,160 190,100
Proceeds from loans payable - 72,920
Payments on promissory notes - (2,000 )
Net cash (used in) provided for financing activities 1,013,160 261,020
Net increase (decrease) in cash (75,594 ) 109,360
Cash, beginning of period 134,855 25,495
Cash, end of period $ 59,261 $ 134,855
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ - $ -
Cash paid for interest $ - $ -
Schedule of non-cash investing & financing activities:
Stock issued for debt conversion $ 932,554 $ 1,005,664
Discount from derivative $ 466,827 $ 400,393
Preferred stock converted to common stock $ 4,166,316 $ 698,830
Derivative settlements $ 3,218,753 $ 4,976,556
Warrant discounts $ 266,333 $ -
Cashless warrant exercise $ 692 $ -
Lease adoption recognition $ 203,216 $ 31,178
Preferred stock payable converted to preferred stock $ 754,249 $ -
Settlement of debt by related party $ - $ 507,481
Conversion of debt in to preferred shares $ - $ 212,055
Conversion of accrued liabilities into preferred shares $ - $ 743,839
Conversion of accrued liabilities into preferred shares payable $ - $ 754,249
Debt exchanged for payment of accounts payable $ - $ 15,600
Rounding of shares due to reverse stock split $ 459 $ -
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
BrewBilt Brewing Company (formerly Simlatus Corporation) is the parent company of wholly-owned subsidiaries Satel Group Inc. and BrewBilt Brewing LLC.
Satel Group is the premier provider of DirecTV to high-rise apartments, condominiums and large commercial office buildings in the San Francisco metropolitan area and is now expanding both their DirecTV and Internet services across the Bay Area. Satel’s revenues will support BrewBilt Brewing Company during construction of the brewing facility and ramp-up of craft beer revenues.
BrewBilt Brewing is an independent craft beer manufacturer offering its own line of lagers and ales with a particular focus on traditional European lagers. BrewBilt Brewing will also offer contract brewing services for other breweries in need of additional capacity as well as private label ales for restaurants and bars desiring their own house beer.
BrewBilt Brewing LLC is the entity pursuing the Type 23 Small Beer Manufacturer license from the California Alcoholic Beverage Control Board (ABC). We expect this license to be issued once brewery construction is nearing completion. BrewBilt Brewing LLC has already received our Brewers Notice from the Alcohol and Tobacco Tax and Trade Bureau (TTB).
BrewBilt Brewing Company works closely with BrewBilt Manufacturing Inc., which is also located in Grass Valley, California and led by CEO Jef Lewis. BrewBilt Manufacturing custom designs and handcrafts brewing and fermentation equipment and will supply all necessary equipment to BrewBilt Brewing for our craft beer production.
BrewBilt Brewing’s ties with BrewBilt Manufacturing provide strong relationships with local suppliers of raw materials, equipment and services in California, an aggressive referral network of satisfied customers nationwide, and an Advisory Board consisting of successful business leaders who provide valuable product feedback and business expertise to management. The craft brewing and spirits industries continue to grow worldwide. California is where American craft brewing began and now has over 950 operating breweries - being centrally located in this booming market was a large draw for BrewBilt Brewing to locate its facility in the Sierra foothills.
In March of 2021, BrewBilt Brewing began design and permitting for the construction of its brewing facility in Grass Valley, California. This facility was leased by BrewBilt and is being upgraded with substantial tenant improvements to include a 20 BBL brewhouse, 20 and 40 BBL fermentation tanks, cold-storage space, and a state-of-the-art canning line. In July of 2021, BrewBilt took the opportunity to expand again by leasing additional space adjacent to the original lease.
Reincorporation Merger Transaction
On March 24, 2021 Simlatus filed a PRE14C disclosing the merger between BrewBilt Brewing and Simlatus. Our Board of Directors and the holders of a majority of the voting power of our stockholders approved an Agreement and Plan of Merger pursuant to which the Company merged with and into BrewBilt Brewing Company, a Florida corporation and wholly-owned subsidiary of the Company, which resulted in the Company’s reincorporation from the State of Nevada to the State of Florida and change in the Company’s name to BrewBilt Brewing Company (the “Reincorporation Merger”). On March 16, 2021, the date we received the consent of the holders of a majority of the voting power of our stockholders, there were 61,373,100 shares of common stock outstanding, 33,020 shares of our Series A Preferred Stock outstanding, 1,500 shares of our Series B Preferred Stock outstanding, and 35,583 shares of our Series C Preferred Stock outstanding. The Series A Preferred Stock and Series C Preferred Stock are non-voting. Each share of Series B Preferred Stock has the right to cast a number of votes equal to four times the votes of all of the shares of our outstanding common stock with respect to any and all matters presented to the holders of common stock for their action.
Following the Reincorporation Merger, BrewBilt Brewing Company has a greater number of authorized shares of common stock available for issuance than the Company previously had available for issuance. Although at present the Company has no commitments or agreements to issue additional shares of common stock, it desires to have additional shares available to provide additional flexibility to use its capital stock for business and financial purposes in the future.
We obtained the approval of Jeffrey Lewis, Chief Executive Officer; Bennett Buchanan, Director; Samuel Berry, Chief Operations Officer; and Richard Hylen, Chairman of the Board, to the actions described in the Information Statement. Messrs. Lewis, Berry and Hylen collectively hold 683 shares of our common stock, 6,519 shares of Series A Preferred Stock, and all 1,500 shares of our Series B Preferred Stock, or approximately 99% of the voting power of our stockholders.
On April 19, 2021 in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of Convertible Series A Preferred stock. In addition, the Company reduced the number of authorized shares to 100,000 with a par value of $0.0001. The financial statements have been retroactively adjusted to take this into account for all periods presented.
On April 19, 2021, in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of common stock. In addition, the Company reduced the number of authorized shares to 200,000,000 with a par value of $0.0001. The reverse split was effective on June 11, 2021, and the financial statements have been retroactively adjusted to take this into account for all periods presented. The Company issued 9,932 common shares due to rounding in connection with the reverse stock split.
The Reincorporation Merger transaction was completed on June 11, 2021.
Financial Statement Presentation
The audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Reclassification
Certain prior period amounts have been reclassified to conform to current period presentation.
Fiscal Year End
The Company has selected December 31 as its fiscal year end.
Use of Estimates
The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.
Advertising Costs
The Company expenses the cost of advertising and promotional materials when incurred. Total advertising costs were $40,958 and $900, for the years ended December 31, 2021 and December 31, 2020, respectively.
Leases
In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.
Revenue Recognition and Related Allowances
During the year ended December 31, 2021, the Company’s main revenue stream is from selling DirecTV services to corporate and residential customers. 53% of the Company’s revenue is from commissions, 18% is from corporate service subscribers, 11% is from residential service subscribers, and 4% was from installations and equipment. In addition, the Company’s sales for audio/video systems represented 14% of revenues.
On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
● identification of the contract, or contracts, with a customer;
● identification of the performance obligations in the contract;
● determination of the transaction price;
● allocation of the transaction price to the performance obligations in the contract; and
● recognition of revenue when, or as, we satisfy a performance obligation.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’s evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at December 31, 2021 and December 31, 2020 is $0.
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses are carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the fiscal year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.
Loss Per Share
Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on June 11, 2021.
Inventories
Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.
In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.
These levels are:
Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020 for each fair value hierarchy level:
Schedule of financial assets and liabilities measured at fair value on a recurring basis
December 31, 2021
Derivative Liabilities
Total
Level I
$ -
$ -
Level II
$ -
$ -
Level III
$ 1,598,253
$ 1,598,253
December 31, 2020
Derivative Liabilities
Total
Level I
$ -
$ -
Level II
$ -
$ -
Level III
$ 7,996,994
$ 7,996,994
In management’s opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of December 31, 2021 and December 31, 2020, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.
Income Taxes
The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
As of the date of this filing, the Company is not current in filing their tax returns. The last return filed by the Company was December 31, 2017, and the Company has not accrued any potential penalties or interest from that period forward. The Company will need to file returns for the year ending December 31, 2021, 2020, 2019 and 2018, which are still open for examination.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The guidance requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires the consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of the new standard.
Although there were new accounting pronouncements issued or proposed by the FASB during the year ended December 31, 2021 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.
2. GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2021, the Company has a shareholders’ deficit of $16,946,466 since its inception, working capital deficit of $3,836,786, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.
The Company does not have sufficient cash to fund its desired research and development objectives for its augmented/virtual reality product development for the next 12 months. The Company has arranged financing and intends to utilize the cash received to fund the research and development project. This financing may be insufficient to fund expenditures or other cash requirements required to complete the product design for the augmented/virtual reality markets. There can be no assurance the Company will be successful in completing any new product development. The Company plans to seek additional financing if necessary, in private or public equity offering(s) to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.
These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.
3. RELATED PARTY DEPOSITS
During the year ended December 31, 2021, the Company paid a deposit of $450,000 to BrewBilt Manufacturing to begin fabrication of a brewery system. The Company anticipates the system will be complete within six to nine months.
4. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost or fair value as of the date of acquisition. Expenditures for repairs and maintenance are expensed as incurred. Major renewals and betterments that extend the life of the property are capitalized. Depreciation is computed using the straight-line method based upon the estimated useful lives of the underlying assets as follows:
Schedule of Use Life of Assets
Kegs years
Computer software and equipment to 5 years, or the term of a software license, whichever is shorter
Office equipment and furniture to 7 years
Machinery and equipment to 20 years
Leasehold improvements Lesser of the remaining term of the lease or estimated useful life of the asset
Property, plant, and equipment consisted of the following at December 31, 2021 and December 31, 2020:
Schedule of Property, Plant and Equipment
December 31, December 31,
Leasehold Improvements $ 68,487 $ -
Machinery and Equipment 40,632 -
Property, plant, and equipment, gross 109,119 -
Less accumulated depreciation (9,695 ) -
Property, plant and equipment, net $ 99,424 $ -
5. ACCRUED EXPENSES
As of December 31, 2021 and December 31, 2020, accrued expenses were comprised of the following:
Schedule of Accrued Expenses
December 31, December 31,
Accrued expenses
Credit cards $ 10,192 $ 407
Customer deposits 18,307 18,307
Employee liabilities - 7,612
Sales tax payable
Short-term loans 3,000 3,000
Total accrued expenses $ 31,764 $ 29,416
Accrued interest
Interest on notes payable $ 88,114 $ 44,855
Interest on short-term loans 1,214 5,826
Interest on accrued wages 156,328 97,552
Total accrued interest $ 245,656 $ 148,233
Accrued wages $ 1,026,073 $ 321,530
6. CONVERTIBLE NOTES PAYABLE
As of December 31, 2021 and December 31, 2020, notes payable were comprised of the following:
Schedule of Convertible Notes Payable
Original Due Interest Conversion December 31, December 31,
Note Date Date Rate Rate
BHP Capital NY #6 5/30/2019 2/29/2020 18% Variable - 27,500
BHP Capital NY #7 7/22/2019 7/22/2020 8% Variable - 37,950
BHP Capital NY #9 12/20/2019 12/20/2020 12% Variable - 11,075
Emunah Funding #4* 10/20/2018 7/20/2019 24% Variable 2,990 2,990
Emunah Funding #8 1/31/2019 1/31/2020 24% Variable - 33,652
FirstFire Global 3/8/2021 3/8/2022 12% 0.09 149,000 -
Fourth Man #9 8/3/2020 8/3/2021 8% Variable - 27,500
Fourth Man #10 12/15/2020 12/15/2021 8% Variable - 33,000
Fourth Man #11 3/5/2021 3/5/2022 12% 0.09 26,000 -
Fourth Man #12 9/27/2021 9/27/2022 12% 0.015 111,000 -
Jefferson St Capital #2* 3/5/2019 10/18/2019 0% Variable 5,000 5,000
Jefferson St Capital #6 6/21/2019 3/21/2020 18% Variable - 27,500
Jefferson St Capital #7 8/20/2019 5/20/2020 18% Variable - 38,500
Jefferson St Capital #8 12/20/2019 12/20/2020 12% Variable - 19,000
Labrys Fund #2 7/28/2021 7/28/2022 12% 0.03 140,000 -
Optempus Invest #4* 11/2/2020 11/2/2021 10% Variable 20,000 20,000
Optempus Invest #5* 11/5/2020 11/5/2021 10% Variable 20,000 20,000
Optempus Invest #6 12/31/2020 12/31/2021 6% Variable 20,000 20,000
Power Up Lending #5 6/15/2020 6/15/2021 10% Variable - 13,100
Power Up Lending #6 6/24/2020 6/24/2021 10% Variable - 33,000
Power Up Lending #7 7/9/2021 7/9/2022 10% Variable 78,750 -
Power Up Lending #8 8/2/2021 8/2/2022 10% Variable 53,750 -
Power Up Lending #9 8/24/2021 8/24/2022 10% Variable 78,750 -
Power Up Lending #10 9/8/2021 9/8/2022 10% Variable 43,750 -
Power Up Lending #11 10/8/2021 10/8/2022 10% Variable 43,750 -
792,740 369,767
Less debt discount
(198,863 ) (136,829 )
Notes payable, net of discount
$ 593,877 $ 232,938
* As of December, 2021, the balance of notes payable that are in default is $47,990.
BHP Capital NY, Inc.
On May 30, 2019, the Company issued a convertible note to BHP Capital NY for $27,500, which includes $16,667 paid Auctus Fund pursuant to a settlement agreement, $5,000 to settle outstanding accounts payable, transaction fee interest of $3,000, and cash consideration of $2,833. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on February 29, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 953,144 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $6,063, and conversion fees of $750. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On July 22, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $37,950, of which $33,500 was received in cash and $4,450 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on July 22, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $37,950 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 2,362,756 common shares upon the conversion of principal in the amount of $37,950, accrued interest of $5,344, and conversion fees of $2,400. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 20, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $19,000 of which $15,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 12% (increases to 22% per annum upon an event of default), matures on December 20, 2020, and is convertible into the lower of 1) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $19,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 1,309,076 common shares upon the conversion of principal in the amount of $7,925, interest of $2,375 and conversion fees of $500. During the year ended December 31, 2021, the Company issued 704,648 common shares upon the conversion of principal in the amount of $11,075, accrued interest of $52, and conversion fees of $500. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Emunah Funding LLC
On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matured on July 20, 2018, and is convertible into common stock at 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,440 due to this conversion feature, which has been amortized to the statement of operations. On October 26, 2018, the principal amount of $40,000 was reassigned to Fourth Man, LLC. Pursuant to the default terms of the note, the Company entered a late filing penalty of $1,000. Prior to the period ended December 31, 2020, the note has converted $13,450 of principal and $4,918 of interest into 48 shares of common stock. As of December 31, 2021, the note has a principal balance of $2,990 and accrued interest of $1,797. This note is currently in default.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On January 31, 2019, the Company received funding pursuant to convertible note issued to Emunah Funding LLC for $33,000, which includes $5,000 to settle outstanding accounts payable, $4,500 in transaction fees and cash consideration of $23,500. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on January 31, 2020, and is convertible into common stock at 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered late filing penalties of $50,652. During the year ended December 31, 2020, the Company made cash payments of $50,000. During the year ended December 31, 2021, the Company issued 2,003,195 common shares upon the conversion of principal in the amount of $33,652, and accrued interest of $11,819. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
FirstFire Global Opportunity Fund LLC
On March 8, 2021, the Company received funding pursuant to a convertible note issued to FirstFire Global Opportunities Fund LLC for $300,000 of which $242,900 was received in cash and $57,100 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on March 8, 2022, and is convertible into common shares at a fixed rate of $0.005. The Company recorded a debt discount from the derivative equal to $300,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered a penalty of $84,000. During the year ended December 31, 2021, the Company issued 40,500,000 common shares upon the conversion of principal in the amount of $235,000, and conversion fees of $5,000. As of December 31, 2021, the note has a principal balance of $149,000 and accrued interest of $36,000.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Fourth Man LLC
On August 3, 2020, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $27,500 of which $25,000 was received in cash and $2,500 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on August 3, 2021, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 1,615,983 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $1,088, and conversion fees of $500. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 15, 2020, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $33,000 of which $27,600 was received in cash and $5,400 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on December 15, 2021, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 1,900,885 common shares upon the conversion of principal in the amount of $33,000, accrued interest of $1,624 and conversion fees of $1,000. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On March 5, 2021, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $140,000 of which $113,420 was received in cash and $26,580 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on March 5, 2022 and is convertible into common shares at a fixed rate of $0.00436. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, and $115,452 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2021 of $24,548. During the year ended December 31, 2021, the Company issued 25,242,685 common shares upon the conversion of principal in the amount of $114,000, accrued interest of $271 and conversion fees of $7,000. As of December 31, 2021, the note has a principal balance of $26,000 and accrued interest of $12,267.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On September 27, 2021, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $111,000 of which $91,000 was received in cash and $20,000 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on September 27, 2022 and is convertible into common shares at a fixed rate of $0.00436. The Company recorded a debt discount from the derivative equal to $111,000 due to this conversion feature, and $28,890 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2021 of $82,110. As of December 31, 2021, the note has a principal balance of $111,000 and accrued interest of $3,408.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Jefferson Street Capital LLC
On March 5, 2019, the Company accepted and agreed to a Debt Purchase Agreement, whereby Jefferson Street Capital LLC acquired $30,000 of debt from an Emunah Funding LLC convertible note in exchange for $29,000, and the Company recorded a gain on settlement of debt of $1,000. The note bears no interest, matures on October 18, 2019, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading days ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $29,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 71 common shares upon the conversion of principal in the amount of $24,000 and $1,000 in conversion fees. As of December 31, 2021, the note has a principal balance of $5,000. This note is currently in default.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On June 21, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $27,500, which includes transaction fee interest of $4,000, and cash consideration of $23,500. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on March 21, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 846,995 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $3,352, and conversion fees of $1,500. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 20, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $38,500, of which $32,000 was received in cash and $6,500 was recorded as transaction fees. The note bears interest at 10% (increases to 18% per annum upon an event of default), matures on May 20, 2020, and is convertible into the lower of 1) 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of the note, and 2) 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $38,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 6,132,125 common shares upon the conversion of principal in the amount of $38,500, accrued interest of $5,997, and conversion fees of $2,250. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 20, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $19,000, of which $15,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 12% (increases to 22% per annum upon an event of default), matures on December 20, 2020, and is convertible into the lower of 1) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $19,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered a penalty of $23,002, which increased the principal balance to $42,022. During the year ended December 31, 2021, the Company issued 8,466,073 common shares upon the conversion of principal in the amount of $42,022, accrued interest of $4,022, and conversion fees of $1,500. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Labrys Fund, LP
On February 8, 2021, the Company received funding pursuant to a convertible note issued to Labrys Fund, LP for $140,000 of which $112,920 was received in cash and $27,080 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on February 8, 2022, and is convertible into common shares at a fixed rate of $0.09. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 6,762,140 common shares upon the conversion of principal in the amount of $140,000, accrued interest of $8,648, and conversion fees of $3,500. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On July 28, 2021, the Company received funding pursuant to a convertible note issued to Labrys Fund, LP for $140,000 of which $112,920 was received in cash and $27,080 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on July 28, 2022, and is convertible into common shares at a fixed rate of $0.03. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, and $59,836 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2021 of $80,164. As of December 31, 2021, the note has a principal balance of $140,000 and accrued interest of $16,800.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Optempus Investments, LLC
On November 2, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 2, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2021, the note has a principal balance of $20,000 and accrued interest of $2,711.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On November 5, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 5, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2021, the note has a principal balance of $20,000 and accrued interest of $2,675.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On December 31, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000. The Company received a cash payment of $10,000 on January 8, 2021, and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on December 31, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2021, the note has a principal balance of $20,000 and accrued interest of $1,200.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Power Up Lending Group Ltd.
On May 18, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $16,000, of which $15,600 was paid to settle accounts payable, and $400 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on May 18, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $16,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 1,855,556 common shares upon the conversion of principal in the amount of $16,000 and accrued interest of $700. As of December 31, 2021, the note has an accrued interest balance of $100.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On June 15, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,000, of which $40,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 15, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $43,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 3,322,222 common shares upon the conversion of principal in the amount of $29,900. During the year ended December 31, 2021, the Company issued 1,062,963 common shares upon the conversion of principal in the amount of $13,100 and accrued interest of $2,150. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On June 24, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $33,000, of which $30,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 24, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 1,394,444 common shares upon the conversion of principal in the amount of $33,000 and accrued interest of $1,650. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On July 9, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $78,750, of which $75,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on July 9, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of December 31, 2021, $1,798 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $78,750 and accrued interest of $3,776.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 2, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $53,750, of which $50,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on August 2, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of December 31, 2021, $1,551 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $53,750 and accrued interest of $2,224.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 24, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $78,750, of which $75,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on August 24, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of December 31, 2021, $1,325 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $78,750 and accrued interest of $2,783.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On September 8, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,750, of which $40,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on September 8, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of December 31, 2021, $1,172 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $43,750 and accrued interest of $1,366.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On October 8, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,750, of which $40,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on October 8, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of December 31, 2021, $863 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $43,750 and accrued interest of $1,007.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Redstart Holdings Corp.
On January 25, 2021, the Company received funding pursuant to a convertible note issued to Redstart Holdings Corp. for $63,500 of which $60,000 was received in cash and $3,500 was recorded as transaction fees. The note bears interest of 10% (increases to 22% per annum upon an event of default), matures on January 25, 2022, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $64,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 6,271,704 common shares upon the conversion of principal in the amount of $63,500 and accrued interest of $3,175. As of December 31, 2021, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Convertible Note Conversions
During the year ended December 31, 2021, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:
Schedule of Conversion of Common Stock for Convertible Notes
Principal Interest Fee Total Conversion Shares
Date Conversion Conversion Conversion Conversion Price Issued Issued to
1/5/2021 $ 13,000 $ - $ - $ 13,000 $ 0.01350 962,962 Power Up
1/7/2021 10,000 - 10,750 0.01500 716,667 Jefferson St
1/11/2021 2,150 - 2,250 0.02250 100,000 Power Up
1/11/2021 15,000 - - 15,000 0.02250 666,667 Power Up
1/12/2021 11,075 11,627 0.01650 704,648 BHP
1/14/2021 18,000 1,650 - 19,650 0.02700 727,778 Power Up
1/15/2021 - 6,300 - 6,300 0.01500 420,000 Emunah
1/20/2021 30,000 5,000 1,200 36,200 0.01800 2,011,111 BHP
1/22/2021 - 3,300 - 3,300 0.01500 220,000 Emunah
1/26/2021 27,500 1,088 29,088 0.01800 1,615,983 Fourth Man
2/8/2021 5,400 2,105 - 7,505 0.02250 333,571 Emunah
2/8/2021 7,950 1,200 9,494 0.02700 351,645 BHP
2/9/2021 7,550 - 7,569 0.02250 336,381 Emunah
2/11/2021 27,500 6,063 34,313 0.03600 953,144 BHP
2/16/2021 20,702 - 20,797 0.03000 693,242 Emunah
3/8/2021 17,500 3,352 21,602 0.16575 130,329 Jefferson St
6/23/2021 10,000 - 10,500 0.03000 350,000 Fourth Man
7/21/2021 10,000 - 10,750 0.01950 551,282 Jefferson St
8/5/2021 23,000 1,624 25,124 0.01620 1,550,885 Fourth Man
8/9/2021 48,351 8,377 1,750 58,478 0.02250 2,599,000 Labrys
8/9/2021 15,000 - - 15,000 0.01730 867,052 Redstart
8/11/2021 20,000 - - 20,000 0.01440 1,388,889 Redstart
8/17/2021 20,000 - - 20,000 0.00870 2,298,851 Redstart
8/18/2021 91,649 1,750 93,671 0.02250 4,163,140 Labrys
8/23/2021 8,500 3,175 - 11,675 0.00680 1,716,912 Redstart
8/23/2021 10,000 - 10,750 0.00657 1,637,471 Jefferson St
8/25/2021 18,500 5,997 25,247 0.00640 3,943,372 Jefferson St
9/15/2021 15,000 - 15,500 0.00542 2,861,098 Jefferson St
9/22/2021 25,000 1,750 27,021 0.00541 4,994,547 Fourth Man
9/28/2021 11,000 4,022 15,522 0.00853 1,820,723 Jefferson St
10/11/2021 31,500 - - 31,500 0.00750 4,200,000 FirstFire
10/20/2021 38,750 - 1,000 39,750 0.00750 5,300,000 FirstFire
10/20/2021 29,000 - 1,750 30,750 0.00541 5,683,918 Fourth Man
11/2/2021 16,022 - 16,522 0.00437 3,784,252 Jefferson St
11/4/2021 40,250 - 1,000 41,250 0.00750 5,500,000 FirstFire
11/10/2021 25,000 - 1,750 26,750 0.00436 6,135,321 Fourth Man
11/22/2021 36,500 - 1,000 37,500 0.00500 7,500,000 FirstFire
11/29/2021 35,000 - 1,750 36,750 0.00436 8,428,899 Fourth Man
12/9/2021 44,000 - 1,000 45,000 0.00500 9,000,000 FirstFire
12/16/2021 44,000 - 1,000 45,000 0.00500 9,000,000 FirstFire
Total conversions 877,299 55,255 25,900 958,454
106,219,740
Loss on conversion - - - 488,073
$ 877,299 $ 55,255 $ 25,900 $ 1,446,528
106,219,740
7. LEASES
The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity.
The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the January 1, 2019 adoption date.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms of month-to-month and two years.
The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.
The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, we will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight-line basis over the term of the lease.
Operating Leases
On February 1, 2017, Simlatus Corp. entered into a standard office lease for approximately 1,700 square feet of office space at 175 Joerschke Drive, Suite A, Grass Valley, CA 95945. The lease has a term of 1 year, from February 1, 2017 through January 31, 2018, with a monthly rent of $1,400. On February 1, 2018, the Company entered into a month-to-month lease with a monthly rent of $1,400. The lease was terminated on December 31, 2021.
On January 31, 2018, Satel Group, Inc. entered into a standard office lease for approximately 1,006 square feet of office space at 330 Townsend Street, Suite 135, San Francisco, CA 94107. The lease has a term of 2 years, from December 1, 2018 through November 30, 2019, with a monthly rent of $5,781 and applicable common area maintenance expenses. On December 1, 2019, the Company entered into a month-to-month lease with a monthly rent of $5,781. On December 1, 2020, the Company reduced the amount of space leased resulting in a reduced monthly rent of $3,169.
On March 1, 2021, BrewBilt Brewing entered into a commercial lease with Lave Systems for approximately 4,000 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of two years, from March 1, 2021 through February 28, 2023, with a monthly rent of $4,000. Lease payments shall increase on March 1, 2022 based upon the CPI published in the Wall Street Journal. On March 1, 2021, the Company recorded of ROU assets of $89,567 and lease liabilities of $89,567 in recognition of this lease.
On July 18, 2021, BrewBilt Brewing terminated its commercial lease with Lave Systems and entered into a new lease agreement with the Jon and Andrea Straatemeir Trust. On August 1, 2021, the company entered into a commercial lease for approximately 6,547 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of five years, from August 1, 2021 through July 31, 2026, with a monthly rent of $4,000.
ROU assets and lease liabilities related to our operating leases are as follows:
Schedule of ROU assets and lease liabilities related to our operating leases
December 31, 2021
Right-of-use assets $ 188,770
Current operating lease liabilities 36,369
Non-current operating lease liabilities 152,401
Schedule of Future minimum lease payments
Years Ending
December 31, Operating Leases
$ 48,000
48,000
48,000
48,000
28,000
Total 220,000
Less imputed Interest 31,230
Total liability $ 188,770
Other information related to leases is as follows:
Schedule of information related to Operating leases
Lease Type
Weighted Average Remaining Term
Weighted Average Interest Rate
Operating Leases
4.5 years
%
Financing Leases
On December 22, 2020, the President, Richard Hylen, and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 January 5, 2027, with monthly payments of $268 and $260, respectively.
On December 22, 2020, the Company entered into a vehicle lease in the amount of $19,314. The lease has a term of 6 years, from February 5, 2021 January 5, 2027, with a monthly payment of $268.
On December 22, 2020, the Company entered into a vehicle lease in the amount of $18,689. The lease has a term of 6 years, from February 5, 2021 January 5, 2027, with a monthly payment of $260.
The Company evaluated the leases in accordance with ASC 842 and determined that its leases meet the definition of a finance lease.
Financing lease assets and liabilities related to our financing leases are as follows:
Schedule of Financing lease assets and liabilities related to our financing leases
December 31, 2021
Right-of-use assets $ 26,815
Current financing lease liabilities 4,666
Non-current financing lease liabilities 22,149
The following is a schedule, by years, of future minimum lease payments required under the finance leases:
Schedule of Future minimum lease payments
Years Ending
December 31, Finance Leases
$ 6,334
6,334
6,334
6,334
6,334
Total 31,670
Less imputed Interest 4,855
Total liability $ 26,815
Other information related to leases is as follows:
Schedule of information related to Finance leases
Lease Type
Weighted Average Remaining Term
Weighted Average Interest Rate
Finance Leases
years
%
8. LOANS PAYABLE
On October 1, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before October 1, 2020. During the period ended December 31, 2021 and December 31, 2020, the Company recorded payments of $0 and $2,000, respectively.
As of December 31, 2021 and December 31, 2020, the principal balance owed to Direct Capital Group was $14,500 and $16,500, respectively.
On May 3, 2020, the Company, was granted a loan (the “Loan”) from Bank of America. in the amount of $72,920, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.
The Loan, which was in the form of a Note dated May 3, 2020 issued by the Borrower, matures on May 3, 2022, and bears interest at a rate of 1% per annum, payable monthly commencing on November 3, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. During the year ended December 31, 2021 and 2020, the Company recorded accrued interest of $1,215 and $485, respectively, on the PPP loan.
9. DERIVATIVE LIABILITIES
During the year ended December 31, 2021 the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at December 31, 2021 based on the lattice model.
The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended December 31, 2021:
Schedule of derivative liability activity
Notes Warrants Stock Payable Total
Balance, beginning of period $ 3,933,475 $ 27,343 $ 4,036,176 $ 7,996,994
Initial recognition of derivative liability 3,916,274 2,554,276 - 6,470,550
Derivative settlements (3,085,456 ) (133,297 ) - (3,218,753 )
Loss (gain) on derivative liability valuation (4,605,248 ) (2,397,923 ) (2,647,367 ) (9,650,538 )
Balance, end of period $ 159,045 $ 50,399 $ 1,388,809 $ 1,598,253
Convertible Notes
The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of December 31, 2021:
Schedule of Company’s derivative liabilities upon management assumption
Valuation date
Expected dividends 0%
Expected volatility 187.11%-249.88%
Expected term .07 - .74 years
Risk free interest .06%-.27%
Warrants
On January 2, 2019, the Company executed a Common Stock Purchase Warrant for 12,146 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.016 per share and expire on December 31, 2023.
On January 31, 2019, the Company executed a Common Stock Purchase Warrant for 14,667 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.016 per share and expire on January 30, 2024.
On March 26, 2019, the Company executed a Common Stock Purchase Warrant for 10,958 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.017 per share and expire on March 25, 2024.
On April 9, 2019, the Company executed a Common Stock Purchase Warrant for 3,667. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.10 per share and expire on April 8, 2024.
On April 9, 2019, the Company executed a Common Stock Purchase Warrant for 3,667 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.10 per share and expire on April 8, 2024.
On April 23, 2019, the Company executed a Common Stock Purchase Warrant for 700 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.25 per share and expire on April 22, 2024.
On May 30, 2019, the Company executed a Common Stock Purchase Warrant for 4,167 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.04 per share and expire on May 29, 2024.
On May 30, 2019, the Company executed a Common Stock Purchase Warrant for 4,167 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.04 per share and expire on May 29, 2024.
On May 30, 2019, the Company executed a Common Stock Purchase Warrant for 4,167 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.04 per share and expire on May 29, 2024.
On June 13, 2019, the Company entered into a Securities Exchange Agreement with Fourth Man Fund, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated July 3, 2018, July 17, 2018, October 3, 2018, and August 22, 2018, representing 597 shares of common stock, exchanged for 10,167 shares of Preferred Series C stock at $10 per share. The exchange extinguished $734,381 worth of derivative liabilities.
On June 13, 2019, the Company entered into a Securities Exchange Agreement with Emunah Funding, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated October 20, 2017, November 6, 2017, November 30, 2017, January 11, 2018, May 15, 2018, and October 31, 2018, representing 866 shares of common stock, exchanged for 35,583 shares of Preferred Series C stock at $10 per share. The exchange extinguished $1,095,620 worth of derivative liabilities.
On June 21, 2019, the Company executed a Common Stock Purchase Warrant for 6,667 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.025 per share and expire on June 20, 2024.
On July 22, 2019, the Company executed a Common Stock Purchase Warrant for 11,195 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.023 per share and expire on July 22, 2024.
On July 22, 2019, the Company executed a Common Stock Purchase Warrant for 11,195 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.023 per share and expire on July 22, 2024.
On July 22, 2019, the Company executed a Common Stock Purchase Warrant for 11,195 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.023 per share and expire on July 22, 2024.
On August 7, 2019, the Company executed a Common Stock Purchase Warrant for 14,667 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.015 per share and expire on August 7, 2024.
On August 12, 2019, the Company executed a Common Stock Purchase Warrant for 7,822 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.015 per share and expire on August 7, 2024.
On August 20, 2019, the Company executed a Common Stock Purchase Warrant for 23,333 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.01 per share and expire on August 7, 2024.
On October 9, 2019, the Company executed a Common Stock Purchase Warrant for 114,583 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0016 per share and expire on October 9, 2024.
On February 8, 2021, the Company executed a Common Stock Purchase Warrant for 933,333 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on February 8, 2024.
On February 8, 2021, the Company executed a Common Stock Purchase Warrant for 15,385 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.00468 per share and expire on February 8, 2026.
On March 5, 2021, the Company executed a Common Stock Purchase Warrant for 933,333 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on March 5, 2024.
On March 8, 2021, the Company executed a Common Stock Purchase Warrant for 3,333,333 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on March 9, 2024.
On July 28, 2021, the Company executed a Common Stock Purchase Warrant for 6,222,222 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0225 per share and expire on July 28, 2024.
On September 27, 2021, the Company executed a Common Stock Purchase Warrant for 9,876,522 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.01125 per share and expire on September 27, 2024.
The Company evaluated all outstanding warrants to determine whether these instruments may be tainted. All warrants outstanding were considered tainted. The Company valued the embedded derivatives within the warrants based on the independent report of the valuation specialist.
The fair value at the valuation dates were based upon the following management assumptions:
Schedule of Company's derivative liabilities upon management assumption
Valuation date
Expected dividends 0%
Expected volatility 513.48%-586.99%
Expected term 2.01 - 4.11 years
Risk free interest 0.73%-1.12%
Stock Payable
The payables to be issued in stock are at 100% of the lowest closing market price with a 15 day look back. The fair value at the valuation dates were based upon the following management assumptions:
Schedule of Company's derivative liabilities upon management assumption
Valuation date
Expected dividends 0%
Expected volatility 236.32%
Expected term year
Risk free interest 0.39%
10. RELATED PARTY TRANSACTIONS
The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. During the year ended December 31, 2021 the Company made payments of $76,746 to amounts due to related parties, and $96,367 was advanced to the Company by related parties. As of December 31, 2021 and December 31, 2020, the Company owed related parties $264,944 and $245,323, respectively. During the year ended December 31, 2021, the Company recorded imputed interest of $34,179 to the statement of operations with a corresponding increase to additional paid in capital.
On December 22, 2020, the President, Richard Hylen, and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 January 5, 2027, with monthly payments of $268 and $260, respectively.
During the year ended December 31, 2021, the Company paid a deposit of $450,000 to BrewBilt Manufacturing, Inc. to begin fabrication of a brewery system. The Company anticipates the system will be complete within six to nine months.
11. CONVERTIBLE PREFERRED STOCK
Series A Convertible Preferred Stock
On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create Series A Convertible Preferred Stock, with a par value of $0.001 and 10,000,000 shares authorized.
On January 3, 2017, the Company filed an Amendment to Certificate of Designation with the Nevada Secretary of State defining the rights and preferences of the Series A Convertible Preferred shares. Series A Convertible Preferred stock shall be convertible into common shares at the rate of the closing market price on the day of the conversion notice equal to the dollar amount of the value of the Series A Convertible Preferred shares, and holders shall have no voting rights on corporate matters, unless and until they convert their Series A Convertible Preferred shares into Common shares, at which time they will have the same voting rights as all Common Shareholders have; their consent shall not be required for taking any corporate action.
On October 26, 2018, the Company issued 3,259 Series A Convertible Preferred shares to Donna Murtaugh, to settle liabilities of $875,000 owed to her pursuant to the Asset Purchase Agreement dated March 9, 2016.
As of November 13, 2018, 23,263 shares of Series A Convertible Preferred stock were transferred into the Company in connection with the reverse merger.
On November 13, 2018, the Company granted 7,244 Series A Convertible Preferred shares to Richard Hylen, valued at $1,945,000, pursuant the Merger Agreement.
On January 9, 2019, the Company entered into an Asset Purchase Agreement Proscere Bioscience Inc., a Florida Corporation. Pursuant to the Asset Purchase Agreement, Proscere Bioscience assigned and transferred all of its right, title, and interest to its fixed assets and “know how” to Simlatus Corporation. These assets and “know how” pursuant to the 5 year Exclusive Distribution & License Agreement dated January 9, 2019 are valued at $3,000,000. As consideration for the assets and “know how” Simlatus Corporation issued 11,173 shares of Convertible Preferred Series A stock. At that time, Proscere Bioscience became a wholly subsidiary of Simlatus Corporation.
On March 19, 2019, Richard Hylen entered into a Debt Settlement Agreement with Xillient, LLC to settle $362,261 in outstanding debt owed to Xillient, LLC for $200,000. Mr. Hylen transferred 745 of his Convertible Preferred Series A that are valued at $200,000. The liability amount of $362,261 was reclassed to additional paid in capital due to the contributed capital by a related party.
On April 10, 2019, the Board of Directors repurchased and returned to treasury 168 Convertible Preferred Series A shares valued at $45,000 in the name of Optempus Investments, LLC. The company authorized and paid the payment of $45,000 to Optempus Investments, LLC for the repurchase of 168 Convertible Preferred Series A shares. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Convertible Preferred Series A Stock is convertible to common stock at market price the day of conversion.
On June 3, 2019, the Board of Directors repurchased and returned to treasury 121 Convertible Preferred Series A shares valued at $32,505 in the name of Optempus Investments, LLC. The company authorized and paid the payment of $32,505 to Optempus Investments, LLC for the repurchase of 121 Convertible Preferred Series A shares. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Convertible Preferred Series A Stock is convertible to common stock at market price the day of conversion.
On June 21, 2019, 289 Convertible Preferred Series A shares held in treasury were retired.
During the year ended December 31, 2019, 4,749 shares of Convertible Series A Preferred stock were converted to 14,336 common shares in accordance with the conversion terms.
On November 27, 2020, the Company and a note holder agreed to convert the principal and interest balance of $212,054 to 790 shares of Convertible Series A Preferred stock.
On December 28, 2020, the Company converted wages and accrued interest owed to Richard Hylen and Mike Schatz to Convertible Series A Preferred stock. The Company issued 652 shares valued at $174,930 in exchange of wages and interest of $174,930 owed to Richard Hylen. The Company issued 2,119 shares valued at $568,899 to settle wages and interest of $568,899 owed to Mike Schatz.
During the year ended December 31, 2020, 1,890 shares of Convertible Series A Preferred stock were converted to 8,119,147 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,349, which was recorded to the statement of operations.
On April 19, 2021 in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of Convertible Series A Preferred stock. At the time the reverse split is effective, the stated value of each share will be $268.50. In addition, the Company reduced the number of authorized shares to 100,000 with a par value of $0.0001. The financial statements have been retroactively adjusted to take this into account for all periods presented.
During the year ended December 31, 2021, 14,192 shares of Convertible Series A Preferred stock were converted to 74,175,550 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $1,759,694, which was recorded to the statement of operations.
During the year ended December 31, 2021, the Company issued 93 shares each of Convertible Series A Preferred stock to Richard Hylen, Jef Lewis, and Bennett Buchanan and 279 shares of Convertible Series A Preferred stock to Sam Berry, pursuant to employee, consulting, and director agreements (Note 15). These shares were issued at a value at $149,992 and resulted in a gain of conversion of $6, which was recorded to the statement of operations.
The Series A Convertible Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception. Each share of the Convertible Series A Preferred Stock has a fixed value of $268.50 per share, has no voting rights, and is convertible into common stock at closing market price on the date of conversion. The Company has recorded $8,255,301, which represents 30,747 Series A Convertible Preferred Stock at $268.50 per share, issued and outstanding as of December 31, 2021, outside of permanent equity and liabilities.
Series C Convertible Preferred Stock
On June 13, 2019, the Company’s Board of Directors authorized the creation of 45,750 shares of Series C Convertible Preferred Stock with a par value of $0.0001, and on June 13, 2019, a Certificate of Designation was filed with the Nevada Secretary of State. The Convertible Preferred Series C shall have no voting rights as to corporate matters unless, and until, they are converted into common shares, at which time, they will have the same voting rights as all common stock shareholders. Convertible Preferred Series C shares cannot be sold, assigned, hypothecated, or otherwise disposed of, without first obtaining the consent of the majority Convertible Preferred Series C shareholders. Convertible Preferred Series C shares shall have a value of $10 per share and shall convert into common shares at the rate of the closing market price on the day of conversion notice equal to the dollar amount of the value of the Convertible Preferred Series C share. At no time may the shareholder convert their shares into more than 4.99% of the issued and outstanding.
On June 13, 2019, the Company entered into a Securities Exchange Agreement with Fourth Man Fund, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated July 3, 2018, July 17, 2018, October 3, 2018, and August 22, 2018, representing 89,540 shares of common stock, exchanged for 10,167 shares of Convertible Preferred Series C stock at $10 per share. The exchange extinguished $734,381 worth of derivative liabilities.
On June 13, 2019, the Company entered into a Securities Exchange Agreement with Emunah Funding, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated October 20, 2017, November 6, 2017, November 30, 2017, January 11, 2018, May 15, 2018, and October 31, 2018, representing 129,952 shares of common stock, exchanged for 35,583 shares of Convertible Preferred Series C stock at $10 per share. The exchange extinguished $1,095,620 worth of derivative liabilities.
During the year ended December 31, 2019, 10,167 shares of Convertible Series C preferred stock were converted to 28,015 common shares in accordance with the conversion terms.
During the year ended December 31, 2021, 35,583 shares of Convertible Series C Preferred stock valued at $355,830 were converted to 666,667 common shares in accordance with the conversion terms. The issuances resulted in a gain on conversion of $155,830, which was recorded to the statement of operations.
The Convertible Series C Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception.
On June 11, 2021, in connection with the Merger Agreement, the Company eliminated Series C Convertible Preferred stock class.
Preferred Stock Payable
On December 28, 2020, the Company received resignation letters from Baron Tennelle, Dusty Vereker, and Robert Stillwaugh. The Company agreed to issue Preferred Series A shares to settle unpaid wages and interest owed to those individuals.
The Company agreed to issue 353 Preferred Series A shares to Baron Tennelle in exchange for accrued wages of $90,000 and interest of $4,745. The Company agreed to issue 337 Preferred Series A shares to Dusty Vereker in exchange for accrued wages of $86,250 and interest of $4,350. The Company agreed to issue 2,119 Preferred Series A shares to Robert Stillwaugh in exchange for accrued wages of $427,708 and interest of $141,190.
The shares were issued on January 7, 2021 and the Company reclassed $754,249 from Preferred Stock Payable to Convertible Series A Preferred Stock.
On November 1, 2021, the Company entered into a Licensing Agreement with Maguire & Associates and agreed to issue 18,622 shares of Convertible Preferred Series A stock valued at $5,000,000.
12. PREFERRED STOCK
On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create Series B Preferred Stock, with a par value of $0.001 and 10,000,000 shares authorized.
On July 1, 2015, the Company’s Board of Directors authorized the creation of shares of Series B Voting Preferred Stock and on July 27, 2015 a Certificate of Designation was filed with the Nevada Secretary of State. The holder of the shares of the Series B Voting Preferred Stock has the right to vote those shares of the Series B Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series B Voting Preferred Stock is equal to and counted as 4 times the votes of all of the shares of the Company’s (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval.
On November 9, 2018, Mike Schatz returned 250 Preferred Series B Control Shares, valued at par value, pursuant to his new employee agreement dated November 1, 2018.
On November 9, 2018, Robert Stillwaugh returned 250 Preferred Series B Control Shares, valued at par value, pursuant to his new employee agreement dated November 1, 2018.
On November 9, 2018, newly appointed President, Richard Hylen was issued 500 Preferred Series B Control Shares, pursuant to his employee agreement dated November 1, 2018.
On January 20, 2021, newly appointed President, Jef Lewis and Satel’s President Richard Hylen were each issued 500 Preferred Series B Control Shares each, pursuant to their employee agreements dated January 1, 2021. The Company determined the Control shares have a value of $785,230 which was recorded as stock based compensation on the statement of operations and an offsetting entry to additional paid in capital.
On June 11, 2021, the Company filed a Certificate of Amendment with the Florida Secretary of State to decrease the number of authorized Preferred Series B from 10,000 to 5,000 with a par value of $0.0001.
As of December 31, 2021, 5,000 Series B Preferred shares were authorized, of which 1,500 shares were issued and outstanding.
13. COMMON STOCK
As of November 13, 2018, 19 shares of common stock were transferred into the Company in connection with the reverse merger.
On November 13, 2018, the Company issued 682 shares of restricted common stock to Richard Hylen as collateral, pursuant to the Asset Purchase Agreement dated November 13, 2018. The shares are valued at $4,298,450 based on the market price of the Company’s common stock on the date of the agreement.
During the year ended December 31, 2018, the holders of convertible notes converted a total of $10,448 of principal and interest into 19 shares of common stock. The issuance extinguished $115,941 worth of derivative liabilities which was recorded to additional paid in capital.
On April 16, 2019, the Company issued 3 common shares at to Hanson & Associates to settle outstanding stock payable liabilities pursuant to a Consulting Agreement dated April 1, 2017. The stock was valued at $24,953 on the date of issuance, which extinguished $24,953 in derivative liabilities.
On June 13, 2019, the Company filed a Certificate of Amendment with the Nevada Secretary of State to increase the number of authorized common shares from 900,000,000 to 975,000,000 with a par value of $0.00001.
On July 23, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 975,000,000 to 1,500,000,000 shares at par value $0.00001 per share.
On September 16, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 1,500,000,000 to 5,000,000,000 shares at par value $0.00001 per share.
On October 17, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 5,000,000,000 to 10,000,000,000 shares at par value $0.00001 per share.
On December 18, 2019, the Company approved the authorization of a 1 for 1,000 reverse stock split of the Nevada warrant holders exercised the warrants and the Company issued 789 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
During the year ended December 31, 2019, the holders of convertible notes converted a total of $866,299 of principal and interest, and $16,500 in note fees, into 14,128 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $86,719 and settled $1,784,469 worth of derivative liabilities which was recorded to additional paid in capital.
On March 27, 2020, 23 shares of common stock were issued due to rounding in conjunction with the reverse stock split.
On June 5, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to decrease the number of authorized Common Shares from 10,000,000,000 to 2,000,000,000 shares at par value $0.00001 per share.
On June 11, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 2,000,000,000 to 5,000,000,000 shares at par value $0.00001 per share.
On August 14, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 5,000,000,000 to 10,000,000,000 shares at par value $0.00001 per share.
During the year ended December 31, 2020, 1,890 shares of Convertible Series A Preferred stock were converted to 8,119,146 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,349, which was recorded to the statement of operations.
During the year ended December 31, 2020, the holders of convertible notes converted a total of $1,005,664 of principal and interest, and $30,935 in note fees, into 24,495,581 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $41,116 and settled $4,976,556 worth of derivative liabilities which was recorded to additional paid in capital.
On March 8, 2021, the Company issued 233,333 common shares in stock based compensation, valued at $87,500.
On April 19, 2021, in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of common stock. In addition, the Company reduced the number of authorized shares to 200,000,000 with a par value of $0.0001. The reverse split was effective on June 11, 2021, and the financial statements have been retroactively adjusted to take this into account for all periods presented. During the year ended December 31, 2021, the Company issued 9,932 common shares due to rounding in connection with the reverse stock split.
On August 3, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 200,000,000 to 500,000,000 shares at par value $0.0001 per share.
On August 11, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 500,000,000 to 1,000,000,000 shares at par value $0.0001 per share.
On September 2, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 1,000,000,000 to 2,000,000,000 shares at par value $0.0001 per share.
During the year ended December 31, 2021, warrant holders exercised the warrants and the Company issued 6,927,827 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
During the year ended December 31, 2021, 14,192 shares of Convertible Series A Preferred stock were converted to 74,175,550 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $1,759,694, which was recorded to the statement of operations.
During the year ended December 31, 2021, the holders of convertible notes converted a total of $877,299 of principal, $55,255 of interest, and $25,900 in note fees, into 106,219,740 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $513,973 and settled $3,085,456 worth of derivative liabilities which was recorded to additional paid in capital.
As of December 31, 2021, 2,000,000,000 common shares, par value $0.0001, were authorized, of which 220,877,962 shares were issued and outstanding.
14. INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
The deferred tax asset and the valuation allowance consist of the following at December 31, 2021:
Schedule of Deferred tax Assets
December 31, 2021
Net tax loss carry-forwards $ 1,599,332
Statutory rate 21 %
Expected tax recovery 335,860
Change in valuation allowance (335,860 )
Income tax provision $ -
Components of deferred tax asset:
Non capital tax loss carry-forwards $ 335,860
Less: valuation allowance (335,860 )
Net deferred tax asset $ -
As of the date of this filing, the Company is not current in filing their tax returns. The last return filed by the Company was December 31, 2017, and the Company has not accrued any potential penalties or interest from that period forward. The Company will need to file returns for the year ending December 31, 2018, 2019, 2020 and 2021 which are still open for examination.
15. COMMITMENTS AND CONTINGENCIES
Distribution and Licensing Agreements
On November 1, 2021, the Company entered into a Distribution Agreement with South Pacific Traders Oy for the exclusive right to distribute the company’s products in the European Community and the United Kingdom. The term of the agreement is for a period of five years.
On November 1, 2021, the Company entered into an IP Purchase and License Agreement with Maguire & Associates LLC to provide for the marketing of products and services into the European Community based on the inventions of the IP/License Rights to develop and commercialize for the sole benefit BrewBilt Brewing. The agreement is for a period of five years. Pursuant to the agreement, the Company will issue 18,622 Series A shares valued at $5,000,000.
Employee and Director Agreements
On January 1, 2021, the Company dismissed Richard Hylen as CEO, and appointed him as the Chairman and Secretary of the company, and the President of Satel Group Inc., a wholly owned subsidiary of the company, and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements replaced all previous agreements. Mr. Hylen will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares of the company. On January 20, 2021, the Company issued 93 shares, valued at $25,000.
On January 1, 2021, the Company appointed Jef Lewis as a Director and the Chief Executive Officer, President and Treasurer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares on January 20, 2021. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares. On January 20, 2021, the Company issued 93 shares of Convertible Series A stock valued at $25,000.
On January 1, 2021, the Company appointed Samuel Berry as a Director and the Chief Operations Officer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $100,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. The company issued to the employee $50,000 of Preferred Series A shares at a value of $268.50 per share. As Director the undersigned is hereby granted $25,000 of Preferred Series A shares of the company, pursuant with the Certificate of Designation for conversion rights of said shares. On January 20, 2021, the Company issued 279 shares of Convertible Preferred Series A shares, pursuant to these agreements.
On March 1, 2021, the Company appointed Bennett Buchanan as a Director and of the company and pursuant with the Employment Agreement and Director Agreement dated March 3, 2021. Pursuant to the Employment Agreement, Mr. Buchanan will be employed on at-will basis and receive an annual salary of $100,000 payable in monthly installments, with unpaid amounts accruing interest at the rate of 6% per annum. Unpaid salary may be converted by Mr. Buchanan into shares of Convertible Series A Preferred Stock of the Company. On March 4, 2021, the Company issued 93 shares of Convertible Series A Preferred Stock, valued at $25,000, pursuant to the Employment Agreement.
On April 1, 2021, the company renewed an Employee Agreement with Mike Schatz. The employee will receive an annual salary of $125,000 to be paid in equal monthly installments. Any unpaid amounts will accrue annual interest of 6% and may be converted to common stock of the company at fair market value on the date of conversion.
Lease
On July 18, 2021, BrewBilt Brewing terminated its commercial lease with Lave Systems and entered into a new lease agreement with the Jon and Andrea Straatemeir Trust. On August 1, 2021, the company entered into a commercial lease for approximately 6,547 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of five years, from August 1, 2021 through July 31, 2026, with a monthly rent of $4,000.
Legal Matters
As of the date of this filing, the Company knows of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer, or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
16. SUBSEQUENT EVENTS
Director Agreements
On January 1, 2022, the Company entered into a Directors Agreement with Jef Lewis for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.
On January 1, 2022, the Company entered into a Directors Agreement with Sam Berry for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.
On January 1, 2022, the Company entered into a Directors Agreement with Bennett Buchanan for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.
On January 1, 2022, the Company entered into a Directors Agreement with Richard Hylen for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.
Convertible Notes and Agreements
On January 10, 2022, the Company entered in a Convertible Promissory Note with Fourth Man LLC, in the amount of $140,000. The note is unsecured, bears interest at 10% per annum, and matures on January 10, 2023.
On January 11, 2022, the Company entered in a Convertible Promissory Note with Sixth Street Lending LLC, in the amount of $53,750. The note is unsecured, bears interest at 10% per annum, and matures on January 11, 2023.
On January 27, 2022, the Company entered in a Convertible Promissory Note with Mast Hill Fund, L.P. in the amount of $279,000 to pay off two notes with Power Up Lending Group Ltd. The note is unsecured, bears interest at 12% per annum, and matures on January 27, 2023.
On February 10, 2022, the Company entered in a Convertible Promissory Note with Sixth Street Lending LLC, in the amount of $48,750. The note is unsecured, bears interest at 10% per annum, and matures on February 10, 2023.
On March 3, 2022, the Company entered in a Convertible Promissory Note with Mast Hill Fund, L.P., in the amount of $63,000. The note is unsecured, bears interest at 12% per annum, and matures on March 3, 2023.
On March 3, 2022, the Company entered in a Convertible Promissory Note with Mammoth Corporation, in the amount of $27,500. The note is unsecured, bears interest at 0% per annum, and matures on December 3, 2023.
Subsequent Stock Filings and Issuances
On January 14, 2022, the Company filed a Certificate of Amendment with the Florida Secretary of State to increase the number of authorized common shares from 2,000,000,000 to 5,000,000,000 with a par value of $0.0001.
On January 3, 2022, the holder of a convertible note converted a total of $52,500 of principal and fees into 10,500,000 shares of our common stock.
On January 4, 2022, the holder of a convertible note converted a total of $40,079 of principal, interest, and fees into 9,192,541 shares of our common stock.
On January 4, 2022, 66 shares of Convertible Preferred Series A stock was converted in to 10,740,000 shares of common stock.
On January 13, 2022, the holder of a convertible note converted a total of $23,100 of principal into 11,000,000 shares of our common stock.
On January 13, 2022, the holder of a convertible note converted a total of $36,000 of principal into 12,000,000 shares of our common stock.
On January 14, 2022, the holder of a convertible note converted a total of $22,000 of principal into 11,000,000 shares of our common stock.
On January 20, 2022, 52 shares of Convertible Preferred Series A stock was converted in to 6,981,000 shares of common stock.
On January 21, 2022, the holder of a convertible note converted a total of $40,500 of principal into 13,500,000 shares of our common stock.
On January 24, 2022, a warrant holder exercised the warrants and the Company issued 917,764 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
On January 31, 2022, a warrant holder exercised the warrants and the Company issued 9,711,786 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
On February 1, 2022, the holder of a convertible note converted a total of $21,300 of principal into 12,529,412 shares of our common stock.
On February 3, 2022, the holder of a convertible note converted a total of $16,288 of principal and interest into 9,580,882 shares of our common stock.
On February 8, 2022, 63 shares of Convertible Preferred Series A stock was converted in to 11,276,667 shares of common stock.
On February 14, 2022, the holder of a convertible note converted a total of $27,000 of principal into 16,875,000 shares of our common stock.
On February 14, 2022, the holder of a convertible note converted a total of $28,350 of principal and interest into 17,718,750 shares of our common stock.
On February 25, 2022, the holder of a convertible note converted a total of $23,000 of principal into 17,692,308 shares of our common stock.
On March 1, 2022, the holder of a convertible note converted a total of $21,200 of principal into 17,666,667 shares of common stock.
On March 4, 2022, the Company issued 93 shares of Convertible Preferred Series A stock pursuant to a service agreement.
On March 7, 2022, the holder of a convertible note converted a total of $19,500 of principal into 17,727,273 shares of common stock.
On March 8, the Company issued 18,622 shares of Convertible Preferred Series A stock pursuant to a licensing agreement.
On March 8, 2022, 78 shares of Convertible Preferred Series A stock was converted in to 20,943,000 shares of common stock.
On March 11, 2022, the holder of a convertible note converted a total of $15,050 of principal and $950 of interest into 20,000,000 shares of common stock.
On March 16, 2022, the holder of a convertible note converted a total of $2,988 of interest into 4,458,955 shares of common stock.
On March 17, 2022, the holder of a convertible note converted a total of $13,400 of principal into 20,937,500 shares of common stock.
On March 17, 2022, 78 shares of Convertible Preferred Series A stock was converted in to 20,943,000 shares of common stock.
On March 21, 2022, the holder of a convertible note converted a total of $13,400 of principal into 20,937,500 shares of common stock.
On March 22, 2022, the holder of a convertible note converted a total of $13,400 of principal into 20,937,500 shares of common stock.
On March 23, 2022, 60 shares of Convertible Preferred Series A stock was converted in to 26,850,000 shares of common stock.
On March 24, 2022, the holder of a convertible note converted a total of $3,550 of principal and $2,188 of interest into 8,964,844 shares of common stock.
The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional subsequent events to disclose.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
There are no changes in or disagreements with accountants on accounting and/or financial disclosure.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
Management’s Report on Internal Control over Financial Reporting
This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 9A includes information concerning the controls and control evaluations referred to in those certifications.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the 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 Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. Our company intends to remediate the material weaknesses as set out below.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, using the criteria established in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2021, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
1. There is a lack of accounting resources - The Company has insufficient resources for data entry, reviews, and/or oversight from a financial expert with the appropriate level of knowledge and experience to accurately capture transactions in accordance with US GAAP and SEC rules and regulations. This lack of resources further results in inadequate segregation of duties. Additionally, the Company lacks an audit committee as well as a financial expert.
2. The Company lacks processes and procedures to ensure transactional evidence is properly retained - The Company needs to implement processes that ensure they are aware of, and maintain, evidence necessary to substantiate recorded transactions. The Company needs to retain formal executed documents and adequate support, as they are essential to accurate financial reporting.
3. Due to the Company not having formal Control procedures related to the approval of related party transactions.
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2021, based on criteria established in “Internal Control - Integrated Framework (2013)” issued by COSO.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of December 31, 2021, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION.
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
Identification of Directors and Executive Officers
The following table sets forth the name and age of our directors and executive officer as of December 31, 2021:
Name Age Position with the Company Position Held
Since
Richard Hylen Chairman of the Board, Secretary and President (Satel) January 1, 2021
Jef Lewis Chief Executive Officer, President, Treasurer and Director January 1, 2021
Samuel Berry Chief Operating Officer and Director January 1, 2021
Bennett Buchanan Director March 1, 2021
The Board of Directors has no nominating, audit, or compensation committee at this time.
Term of Office
Each director is elected by the Board of Directors and serves until his or her successor is elected and qualified, unless he or she resigns or is removed earlier. Each of our officers is elected by the Board of Directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is earlier removed from office or resigns.
Background and Business Experience
The business experience during the past five years of the person presently listed above as an Officer or Director of the Company is as follows:
Richard Hylen: Mr. Hylen is 75 years old. As the Founder of Satel Inc., the Managing Director of Turner Broadcasting Far East LTD, and a Senior Executive of Viacom’s San Francisco cable company, Richard has over 35 years of experience providing video and Internet using the most advanced technologies including: cable, fiber, satellite, wireless and CAT5 not only domestically, but to over 50 countries worldwide. His skill set encompasses successfully negotiating complicated licensing agreements with governmental entities, creating joint venture partnerships, developing strategic distribution relationships, financing, designing, installing, and managing advanced technologies to provide consumers with video and Internet services. Hylen used his extensive corporate management expertise combined with his technical knowledge to create Satel, recognized as one of the nation’s largest providers of DirecTV to high rise buildings in a major metropolitan market.
Jeffrey Lewis: Mr. Lewis is 48 years old. He is the founder, Chairman and CEO of BrewBilt Manufacturing, Inc., a multiple million dollar craft beer brewery manufacturing facility in Northern California. He has over 15 years of experience managing engineering, design, and fabrication teams that custom design and fabricate integrated stainless steel distillation and brewing systems for the craft beer beverage industries.
Samuel Berry: Mr. Berry is 43 years old and a graduate from Keene State College in New Hampshire with a Bachelor of Science, and a graduate from Florida International University with his Master of Science. Sam is a Director of BrewBilt Manufacturing Inc. and is experienced with the operations of a public craft beer manufacturing business. With over 15 years of business experience in management, he oversees the operations of BrewBilt Brewing.
Bennett Buchanan: Mr. Buchanan is 37 years old and the co-founder and brewer for the award-winning Old Bus Tavern brewpub in San Francisco. He has also honed his skills brewing on a production scale for the Fort Point Beer Company. Bennett holds a Bachelor of Science in Civil Engineering and a Master of Engineering Management from Cornell University.
Identification of Significant Employees
We have no significant employees.
Family Relationship
We currently do not have any officers or directors of our Company who are related to each other.
Involvement in Certain Legal Proceedings
During the past ten years no director, executive officer, promoter, or control person of the Company has been involved in the following:
(1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated;
(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of:
i. Any Federal or State securities or commodities law or regulation; or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated with a member.
Audit Committee and Audit Committee Financial Expert
As of December 31, 2021, the Company did not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its Board of Directors. All current members of the Board of Directors lack sufficient financial expertise for overseeing financial reporting responsibilities. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.
Code of Ethics
As of December 31, 2021, the board of directors had not adopted a code of ethics due to Company’s limited number of executive officers and employees that would be covered by such a code and the Company’s limited financial resources. We anticipate that we will adopt a code of ethics when we increase either the number of our directors and officers or the number of our employees.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors, and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during the year ending December 31, 2021 .

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our officer and director for the years ended December 31, 2021 and December 31, 2020. Our Board of Directors may adopt an incentive stock option plan for our executive officers that would result in additional compensation.
Summary Compensation Table
Nonqualified
Non-Equity Deferred
Stock Option Incentive Plan Compensation All Other
Name and
Salary Bonus Awards Awards Compensation Earnings Compensation Total
principal position Year ($) ($) ($) ($) ($) ($) ($) ($)
Richard Hylen 200,000 - - - - - 25,000 225,000
Chairman, Secretary, and President (Satel) 120,000 - - - - - - 120,000
Jef Lewis 200,000 - - - - - 25,000 225,000
President, Chief Executive Officer, Treasurer, and Director - - - - - - - -
Sam Berry 100,000 - - - - - 75,000 175,000
Chief Operating Officer and Director - - - - - - - -
Bennett Buchanan 83,333 - - - - - 25,000 108,333
Director - - - - - - - -
Baron Tennelle - - - - - - - -
Former Director 45,000 - - - - - - 45,000
Dusty Vereker - - - - - - - -
Former Director 45,000 - - - - - - 45,000
Narrative Disclosure to Summary Compensation Table
On January 1, 2021, the Company dismissed Richard Hylen as CEO, and appointed him as the Chairman and Secretary of the company, and the President of Satel Group Inc., a wholly owned subsidiary of the company, and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements replaced all previous agreements. Mr. Hylen will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares of the company. On January 20, 2021, the Company issued 93 shares, valued at $25,000.
On January 1, 2021, the Company appointed Jef Lewis as a Director and the Chief Executive Officer, President and Treasurer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares on January 20, 2021. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares. On January 20, 2021, the Company issued 93 shares of Convertible Series A stock valued at $25,000.
On January 1, 2021, the Company appointed Samuel Berry as a Director and the Chief Operations Officer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $100,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. The company issued to the employee $50,000 of Preferred Series A shares at a value of $268.50 per share. As Director the undersigned is hereby granted $25,000 of Preferred Series A shares of the company, pursuant with the Certificate of Designation for conversion rights of said shares. On January 20, 2021, the Company issued 279 shares of Convertible Preferred Series A shares, valued at $75,000.
On March 1, 2021, the Company appointed Bennett Buchanan as a Director and of the company and pursuant with the Employment Agreement and Director Agreement dated March 3, 2021. Pursuant to the Employment Agreement, Mr. Buchanan will be employed on at-will basis and receive an annual salary of $100,000 payable in monthly installments, with unpaid amounts accruing interest at the rate of 6% per annum. Unpaid salary may be converted by Mr. Buchanan into shares of Convertible Series A Preferred Stock of the Company. On March 4, 2021, the Company issued 93 shares of Convertible Series A Preferred Stock, valued at $25,000, pursuant to the Employment Agreement.
On November 1, 2018, the Board of Directors appointed Richard N. Hylen as the new Chief Executive Officer, Chairman of the Board, and President, Secretary, and Treasurer of the Company. Mr. Hylen will receive an annual salary of $120,000, which can be accumulated at 6% interest and converted to restricted common stock at fair market value at the time of conversion. During the year ended December 31, 2020, the Company recorded wages of $120,000 in connection with this agreement.
On January 9, 2019, the Board of Directors appointed Baron Tennelle as a Director of Simlatus and President of Proscere Bioscience, Inc., a wholly owned subsidiary of Simlatus, effective January 9, 2019. He will receive an annual salary of $45,000 paid out quarterly in either cash or stock at the current fair market value of the stock at time of conversion. During the year ended December 31, 2020, the Company recorded wages of $45,000 in connection with this agreement. On December 28, 2020, Mr. Tennelle resigned from his position with the Company.
On February 19, 2019, the Board of Directors appointed Dusty Vereker as a Director of the company, and Vice President of Proscere Bioscience. Her employment contract allows an annual salary of $45,000 to be paid quarterly in either cash or stock. Ms. Vereker’s Director Agreement allows for fees associated with meetings and conferences. During the year ended December 31, 2020, the Company recorded wages of $45,000 in connection with this agreement. On December 28, 2020, Ms. Vereker resigned from her position with the Company.
Outstanding Equity Awards at Fiscal Year-End
No executive officer received any equity awards, or holds exercisable or exercisable options, as of the year ended December 31, 2021.
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.
Compensation Committee
We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.
Compensation of Directors
Our directors receive no extra compensation for their service on our Board of Directors.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Security Ownership of Management
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of December 31, 2021, by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.
Shares Percent
Name and Address
Beneficially Owned
Title of Class of Owner Relationship to Company Owned (1) (1)
Common Stock Richard Hylen Chairman, Secretary, and President (Satel) 0.0003 %
Total
0.0003 %
1. The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.
2. The percentage shown is based on denominator of 220,877,962 shares of common stock issued and outstanding for the company as of December 31, 2021.
Changes in Control
There are no present arrangements or pledges of the Company’s securities, which may result in a change in control of the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related Party Transactions
None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manor:
● Disclosing such transactions in reports where required;
● Disclosing in any and all filings with the SEC, where required;
● Obtaining disinterested directors consent; and
● Obtaining shareholder consent where required.
The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. During the year ended December 31, 2021 the Company made payments of $76,746 to amounts due to related parties, and $96,367 was advanced to the Company by related parties. As of December 31, 2021 and December 31, 2020, the Company owed related parties $264,944 and $245,323, respectively. During the year ended December 31, 2021, the Company recorded imputed interest of $34,179 to the statement of operations with a corresponding increase to additional paid in capital.
On December 22, 2020, the President, Richard Hylen, and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 January 5, 2027, with monthly payments of $268 and $260, respectively.
During the year ended December 31, 2021, the Company paid a deposit of $450,000 to BrewBilt Manufacturing, Inc. to begin fabrication of a brewery system. The Company anticipates the system will be complete within six to nine months.
Director Independence
For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which shares of Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship, which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. According to the NASDAQ definition, we have no independent directors.
Review, Approval or Ratification of Transactions with Related Persons
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table shows the fees that were billed for the audit and other services provided by our auditors for the years ended December 31, 2021 and December 31, 2020:
Audit Fees $ 45,500 $ 44,600
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
Total $ 45,500 $ 44,600
Audit Fees
We incurred approximately $45,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for the year ended December 31, 2021.
We incurred approximately $44,600 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for the year ended December 31, 2020.
Audit-Related Fees
The aggregate fees billed during the years ended December 31, 2021 and 2020 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A was $0 and $0, respectively.
Tax Fees
The aggregate fees billed during the years ended December 31, 2021 and 2020 for professional services rendered by our principal accountant tax compliance, tax advice and tax planning were $0 and $0, respectively.
All Other Fees
The aggregate fees billed during the years ended December 31, 2021 and 2020 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A) was $0 and $0, respectively.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS.
Exhibit
Number Description of Exhibit
Filing
3.1 Articles of Incorporation
Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
3.1a Amended Articles of Incorporation
Filed with the SEC on November 11, 2009, on our Current Report on Form 8-K.
3.2 Bylaws
Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
31.01 Certification of Principal Executive Officer Pursuant to Rule 13a-14
Filed herewith.
31.02 Certification of Principal Financial Officer Pursuant to Rule 13a-14
Filed herewith.
32.01 Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act
Filed herewith
101.INS XBRL Instance Document
Furnished herewith.
101.SCH XBRL Taxonomy Extension Schema Document
Furnished herewith.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
Furnished herewith.
101.LAB XBRL Taxonomy Extension Labels Linkbase Document
Furnished herewith.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
Furnished herewith.
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
Furnished herewith.
* Filed Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.