EDGAR 10-K Filing

Company CIK: 1399306
Filing Year: 2024
Filename: 1399306_10-K_2024_0001399306-24-000005.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
Company Overview
BrewBilt Brewing is a licensed commercial craft brewer in Northern California. The Company began building its first processing brewery in 2021 and started delivering its craft beers in July of 2022.
1. BrewBilt Brewing production facility in Grass Valley, CA
In December 2023, the Company opened the BrewBilt BrewHaus taproom and restaurant in Nevada City, CA. The establishment seats 140 people and serves lunch and dinner six days a week, plus brunch on Sundays, along with the full lineup of BrewBilt beers and guest wines, ciders, kombuchas, and non-alcoholic beverages.
Inspired by European brewing tradition and American craft innovation, BrewBilt Brewing produces distinctly satisfying beers using small-batch California malt. In addition to the flavor benefits of this superior product, BrewBilt’s intentional material sourcing reduces the Company’s carbon footprint and sustains local agriculture. Our facility and experienced staff ferment our lagers in stacked horizontal lagering tanks and give them plenty of cold aging time to achieve optimal taste and clarity. Our packaging process utilizes a counter-pressure Codi canning line to ensure the lowest possible level of packaged oxygen, maximizing product stability and continuity over its shelf-life.
2. BrewBilt BrewHaus. Credit: Gold Country Photos
BrewBilt Brewing is devoted to the modern execution of traditional styles utilizing hand-crafted, industry-leading equipment combined with an artful approach and a passion for quality. A focus on regionally sourced local malt, premium hops, and pristine water gives us a dynamic palette for distinctly satisfying beers.
BrewBilt has strong relationships with suppliers of raw materials, equipment, and services globally, as well as an aggressive referral network of satisfied customers. An Advisory Board consisting of successful business leaders provides valuable product feedback and business expertise to management.
After growing the Company’s self-distribution network to almost 300 customers in its first 18 months of sales, BrewBilt Brewing signed with Mussetter Distributing in January 2024 to expand sales to ten counties in Northern California.
Market Opportunity - National
Overall U.S. beer volume sales were down 3% in 2022, while craft brewer volume sales remained on par with 2021, raising small and independent brewers’ share of the U.S. beer market by volume to 13.2%.
Retail dollar sales of craft increased 5%, to $28.4 billion, and now account for 24.6% of the $115 billion U.S. beer market (previously $100 billion). The primary reasons for the larger dollar sales increase were price increases and the continued shift back in beer volume to bars and restaurants from packaged sales.
As a premium craft brewer targeting draft sales to bars and restaurants, BrewBilt Brewing is well poised to benefit from recent trends in the beer industry. BrewBilt provides a “super premium” product made with the highest quality local malt and no adjunct ingredients. As core craft beer drinkers mature and purchase lower volumes of higher priced beers, BrewBilt is perfectly positioned to serve that market with our exceptionally crafted lagers and ales.
Market Opportunity - California
As a licensed brewer in the largest beer market in the country, BrewBilt has already demonstrated an ability to differentiate from the competition based on uncompromising beer quality, superior customer service, and a targeted sales strategy executed by a seasoned team with decades of beer sales experience.
The Company’s recent partnership with Mussetter Distributing has opened up thousands of potential new customers. While BrewBilt Brewing made exceptional headway in its first 18 months of self-distributing, a wholesaler partnership allows the Company to distribute its products to larger customers in a far wider geographic area including Solano, Yolo, Sacramento, El Dorado, Placer, Nevada, Yuba, Sierra, Butte, and Sutter Counties.
Rank State Output
1. California $8.8 billion
2. Pennsylvania $5.1 billion
3. Texas $4.6 billion
4. Florida $4.1 billion
5. New York $3.9 billion
3. Economic Input - Top Five States (2021)
Employees
As of the date of this filing, BrewBilt Brewing has 22 employees. Our suppliers include various consultants for new business development and marketing, 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 6,457 square foot commercial facility located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945.
On August 26, 2022, the Company entered into a commercial lease with 4-Corners LLC to establish a taproom as part of its brewery revenue. BrewBilt BrewHaus taproom opened its doors to customers in December 2023. The space is located at 300 Spring St, Nevada City, CA 95959, and the lease has a term of five years, from September 1, 2022 through August 31, 2027.
The Company currently does not own any real property.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
The Company was served a complaint in the County of Nevada, State of California (Case No. CU0000567). BrewBilt Brewing Co. is listed as a named defendant in this matter. The complaint involves the termination of employee Branford Samuels who was employed as a fabricator for BrewBilt Manufacturing Inc. and, it is not uncommon for named defendants in a civil matter to be listed, but never served the complaint, and eventually they are dismissed from the matter without further steps being taken by a plaintiff(s). California Rules of Court rule 3.110(b) states in relevant part that, “[t]he complaint must be served on all named defendants and proofs of service on those defendants must be filed with the court within 60 days of filing of the complaint.” The subject complaint was filed by plaintiff on February 7, 2023. Therefore, at this time it is speculative whether BrewBilt Brewing Co. has any threat of material litigation or pending material litigation. To the extent that one considers being a named defendant of a complaint as a threatened or pending matter, we have not devoted substantial attention to this matter, and do not anticipate doing so in the future with the facts known to us. Although though the underlying events giving rising to the claim/cause of action occurred prior to the date of December 31, 2022, at this time, it is our current opinion that there are no unasserted possible claims or assessments of such that are probable as it relates to BrewBilt Brewing Co. In other words, with facts known to us at this time, we opine that it is not “probable” (Standard 8(a)) that there are assertable legal claims against BrewBilt Brewing Co. that must be disclosed in accordance with Statement of Financial Accounting Standards No. 5 as they do not also likely satisfy Standard 8(b): “The amount of loss can be reasonably estimated.”

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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 0.0027 0.0001 1.5020 0.3303
Second Quarter 0.0002 0.0001 0.3904 0.1465
Third Quarter 0.0002 0.0001 0.2402 0.0250
Fourth Quarter 0.0001 0.0001 0.0189 0.0015
Record Holders
As of December 31, 2023, there were 9,469,083,427 shares of the registrant’s $0.0001 par value common stock issued and outstanding, which were held by 37 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
On October 5, 2023, 164 shares of Convertible Preferred Series A stock were converted to 440,340,000 common shares in accordance with the conversion terms.
On October 16, 2023, the holder of a convertible note converted $3,420 of interest into 190,000,000 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $15,200.
On October 25, 2023, 745 shares of Convertible Series A shares at $268.50 per share were issued to Peter and Kacie Callaham in connection with a promissory note.
On October 25, 2023, 745 shares of Convertible Series A shares at $268.50 per share were issued to Richard and Catherine Beckley in connection with a promissory note.
On October 26, 2023, 500 Preferred Series B Control shares were transferred from former CEO Jef Lewis to newly appointed CEO Bennett Buchanan.
On December 15, 2023, 745 shares of Convertible Series A shares at $268.50 per share were issued to Donna Murtaugh in connection with a promissory note.
Recent issuances of unregistered securities subsequent to our fiscal year ended of December 31, 2023
On January 8, 2024, 1,614 shares of Convertible Preferred Series A stock at $268.50 per share were issued pursuant to a related party replacement promissory note.
On January 15, 2024, 373 shares of Convertible Preferred Series A stock at $268.50 per share were retired pursuant to a related party replacement promissory note.
On January 19, 2024, 745 shares of Convertible Preferred Series A stock at $268.50 per share were issued pursuant to a promissory note.
On February 14, 2024, 1,490 shares of Convertible Preferred Series A stock at $268.50 per share were issued pursuant to a promissory note.
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.
Year Ended December 31, 2023 Compared with the Year Ended December 31, 2022
Revenues:
The Company’s revenues were $503,505 for the year ended December 31, 2023 compared to $124,684 for the year ended December 31, 2022. Revenues in 2023 comprised of $429,523 in beer sales, $73,391 in taproom sales and $591 in merchandise sales. Of the $429,523 in beer sales, $494 was from related parties. The company began selling beer in Q3 2022, so the increase in 2023 is due to having a full year of revenues reported in 2023 versus six months in 2022. The opening of the taproom in December 2023 also contributed to an increase in revenues in 2023.
Cost of Sales:
The Company’s cost of sales was $506,768 for the year ended December 31, 2023, compared to $175,632 for the year ended December 31, 2022. Cost of sales in 2023 included raw materials, beer packaging, selling expenses, depreciation of the brewing equipment, direct labor expenses, overhead expenses and food and beverage costs for the taproom. Although the total cost of sales are higher in 2023 due to a full year of brewery sales, the relative costs decreased due to an increase in beer production which has resulted in volume discounts on packaging and materials. In addition, there are costs that remain constant regardless of the amount of beer that is produced, such as rent, depreciation and direct labor.
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 years ended December 31, 2023 and December 31, 2022, were $2,964,310 and $3,010,128, respectively. Salaries and wages increased in 2023 due to the hiring of new employees, however, there were significant decreases in advertising expenses, business licenses and consulting fees.
Other Income (Expense):
Other income (expense) for the years ended December 31, 2023 and December 31, 2022 was $(15,487,714) and $(5,249,903), respectively. Other income (expense) consisted of derivative valuation gains and losses, gains or losses on settlement and extinguishment of debt, 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 expense primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities and an increase in interest expenses. In addition, there was an increase in losses on conversion of preferred shares, convertible note default penalties and related party interest expenses.
Net Loss:
Net loss from continuing operations for the year ended December 31, 2023 was $18,455,287 compared to $8,310,979 for the year ended December 31, 2022. The increase in net loss can be explained by the increase in derivative expenses, losses on conversion of debt and the increase in interest expenses.
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 $ 208,070 $ 92,581
Current Liabilities 17,419,790 5,867,700
Working Capital (Deficit) $ (17,211,720 ) $ (5,775,119 )
The overall working capital deficit increased from $5,775,119 at December 31, 2022 to $17,211,720 at December 31, 2023 due to an increase in derivative liabilities, accrued expenses, notes payable and related party liabilities.
December 31, December 31,
Cash Flows (used in) provided by Operating Activities (940,548 ) (871,590 )
Cash Flows (used in) provided by Investing Activities (459,607 ) (735,679 )
Cash Flows (used in) provided by Financing Activities 1,482,033 1,593,466
Net Increase (decrease) in Cash During Period 81,878 (13,803 )
During the year ended December 31, 2023 cash used in operating activities was $940,548 compared to $871,590 for the year ended December 31, 2022. The increase in the cash used in operating activities is primarily attributed to the fair value change in derivative liabilities, penalties on notes payable and an increase in loss on conversions.
During the year ended December 31, 2023 cash used in investing activities was $459,607 compared to $735,679 for the year ended December 31, 2022. The decrease in cash used in investing activities is due to brewing equipment delivered and put in to use in Q2 2022.
During the year ended December 31, 2023, cash provided for financing activities was $1,482,033 compared to $1,593,466, for the year ended December 31, 2022. The decrease in cash provided by financing activity primarily resulted from a decrease in proceeds from convertible debt and an increase in payments on notes and finance leases in 2023.
As of December 31, 2023, the Company had a cash balance and current asset total of $114,502 and $208,070 respectively, compared with $32,624 and $92,581 of cash and current assets, respectively, as of December 31, 2022. The increase in assets was due to funds received from related party promissory notes issued in 2023 and increases in inventory and prepaid expenses.
As of December 31, 2023, the Company had total current liabilities of $17,419,790 compared with $5,867,700 as of December 31, 2022. The increase in current liabilities was primarily attributed to an increase in derivative liabilities, accrued expenses, notes payable and related party liabilities.
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, 2023 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, 2023 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, 2023 and December 31, 2022
Consolidated Statements of Operations for the years ended December 31, 2023 and 2022
Consolidated Statements of Shareholders’ Deficit for the years ended December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022
Notes to the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of BrewBilt Brewing Company
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, 2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, 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 matter communicated below is a matter 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 the critical audit matter 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Convertible Notes Payable
As discussed in Note 7, the Company borrows funds through the use of convertible notes payable that contain conversion prices that fluctuates with the Company’s stock price. Due to the variable nature of the conversion price, the embedded conversion features may require bifurcation from the host contract. Significant judgment is exercised by the Company in determining the proper treatment for these convertible note agreements.
We evaluated management’s conclusions regarding their convertible notes payable by testing the assumptions used to account for the conversion features and testing the completeness and accuracy of the convertible note payable amounts.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2018.
The Woodlands, Texas
April 5, 2024
BREWBILT BREWING COMPANY
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
ASSETS
Current Assets
Cash $ 114,502 $ 32,624
Accounts receivable 20,017 17,247
Inventory, net 51,706 26,434
Prepaid expenses 11,888 1,500
Other current assets 9,957 14,776
Total current assets 208,070 92,581
Property, plant and equipment, net 1,807,274 1,468,933
Finance lease assets 58,330 -
Finance lease assets - related party 41,836 51,088
Operating right-of-use assets 287,970 357,150
Security deposit 9,677 6,500
Total assets $ 2,413,157 $ 1,976,252
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable $ 372,880 $ 298,642
Accrued wages 884,852 1,185,363
Accrued expenses 209,616 61,571
Accrued interest 557,361 330,154
Convertible notes payable in default 1,793,583 66,490
Convertible notes payable, net of discount - 925,440
Current finance lease liabilities 19,551 -
Current finance lease liabilities - related party 9,895 9,252
Current operating lease liabilities 78,920 69,180
Deferred revenue 6,270 -
Derivative liabilities 12,180,445 2,398,176
Loans payable, net of discount 588,294 145,322
Related party liabilities, net of discount 718,123 378,110
Total Current liabilities 17,419,790 5,867,700
Non-current finance lease liabilities 38,779 -
Non-current finance lease liabilities - related party 31,941 41,836
Non-current operating lease liabilities 209,050 287,970
Non-current related party note payable, net of discount 1,492,396 977,396
Total liabilities 19,191,956 7,174,902
Series A convertible preferred stock: 10,100,000 shares authorized, par value $0.0001 (1)
57,749 shares issued and outstanding at December 31, 2023
50,256 shares issued and outstanding at December 31, 2022 15,505,607 13,493,736
Convertible preferred stock payable 1,833,188 599,829
Convertible preferred stock receivable (100,151 ) -
Stockholders’ deficit:
Series B preferred stock: 5,000 shares authorized, par value $0.0001
1,000 shares issued and outstanding at December 31, 2023
1,000 shares issued and outstanding at December 31, 2022 - -
Common stock: 100,000,000,000 shares authorized, par value $0.0001 (1)
9,469,083,427 shares issued and outstanding at December 31, 2023
207,723,162 shares issued and outstanding at December 31, 2022 946,908 20,772
Additional paid in capital 14,532,450 11,728,527
Accumulated deficit (49,496,801 ) (31,041,514 )
Total stockholders’ deficit (34,017,443 ) (19,292,215 )
Total liabilities and stockholders’ deficit $ 2,413,157 $ 1,976,252
(1) Preferred and common share amounts and per share amounts in the financial statements reflect the one-for-three hundred reverse stock split that was made effective on September 30, 2022.
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended
December 31,
Sales $ 503,011 $ 123,622
Sales - related party 1,062
Cost of sales 506,768 175,632
Gross profit (loss) (3,263 ) (50,948 )
Operating expenses:
Depreciation 51,750 23,314
G&A expenses 613,043 1,213,620
Professional fees 32,957 56,081
Salaries and wages 2,266,560 1,717,113
Total operating expenses 2,964,310 3,010,128
Loss from operations (2,967,573 ) (3,061,076 )
Other income (expense):
Interest income
Debt forgiveness - 9,940
Gain on settlement of debt 25,000 76,171
Loss on cashless warrant exercise (22,066 ) -
Loss on conversion of debt (42,323 ) (807,032 )
Loss on conversion of preferred shares (30,530 ) (398,766 )
Loss on conversion of preferred shares - related party (1,501,362 ) (778,787 )
Loss on settlement of debt - related party - (875,042 )
Derivative income (expense) (11,407,349 ) (557,424 )
Interest expense (2,087,444 ) (1,748,452 )
Interest expense - related party (421,703 ) (170,519 )
Total other income (expense) (15,487,714 ) (5,249,903 )
Net loss before income taxes from continuing operations (18,455,287 ) (8,310,979 )
Income tax expense - -
Net loss from continuing operations (18,455,287 ) (8,310,979 )
Discontinued operations (Note 3)
Loss from operation of discontinued operations - (233,700 )
Total loss from discontinued operations, net of tax - (233,700 )
Net loss $ (18,455,287 ) $ (8,544,679 )
Deemed dividend from related party note payable (2,100,313 ) -
Deemed dividend from note payable (700,248 ) -
Net loss attributable to common shareholders $ (21,255,848 ) $ (8,544,679 )
Per share information
Weighted average number of common shares outstanding, basic (1) 6,992,319,312 35,838,546
Net loss per common share, basic, for continued operations $ (0.0030 ) $ (0.2319 )
Net loss per common share, basic, for discontinued operations $ - $ (0.0065 )
Net loss per common share, basic, attributable to common shareholders $ (0.0030 ) $ (0.2384 )
Per share information
Weighted average number of common shares outstanding, diluted (1) 6,992,319,312 35,838,546
Net loss per common share, diluted, for continued operations $ (0.0030 ) $ (0.2319 )
Net loss per common share, diluted, for discontinued operations $ - $ (0.0065 )
Net loss per common share, diluted, attributable to common shareholders $ (0.0030 ) $ (0.2384 )
(1) Common share amounts and per share amounts in the financial statements reflect the one-for-three hundred reverse stock split that was made effective on September 30, 2022.
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
Convertible Preferred Stock Preferred Stock
Additional
Total
Series A (1) Shares Shares Series B Common Stock (1) Paid-In Accumulated Shareholders’
Shares Amount Receivable Payable Shares Amount Shares Amount Capital Deficit Equity (Deficit)
Balances for December 31, 2021 30,746 $ 8,255,301 $ - $ 5,000,000 1,500 $ - 736,260 $ 74 $ 5,550,295 $ (22,496,835 ) $ (16,946,466 )
Preferred shares issued and cancelled in connection with sale and settlement of wholly owned subsidiary 2,406 646,011 - - (500 ) - - - (77,601 ) - (77,601 )
Deconsolidation of wholly owned subsidiary - - - - - - - - 350,636 - 350,636
Conversion of debt to common stock - - - - - - 58,284,179 5,828 1,788,390 - 1,794,218
Common stock issued in connection with promissory note - - - - - - 1,000,000 14,000 - 14,100
Common stock issued pursuant to equity purchase agreement - - - - - - 3,577,833 24,747 - 25,105
Common stock issued pursuant to securities purchase agreement - - - - - - 100,000 20,990 - 21,000
Convertible preferred stock converted to common stock (1,874 ) (503,169 ) - - - - 40,061,283 4,006 897,870 - 901,876
Convertible preferred shares to be issued to settle accrued wages - - - 400,065 - - - - (65 ) - (65 )
Convertible preferred shares to be issued pursuant to director agreements - - - 199,764 - - - - -
Convertible preferred shares issued for services 1,211 325,154 - - - - - - -
Convertible preferred shares issued in connection with promissory note 107,400 - - - - - - - - -
Convertible preferred stock payable converted to preferred stock 18,622 5,000,007 - (5,000,000 ) - - - - (7 ) - (7 )
Convertible preferred shares issued to directors to guarantee lease agreement 2,236 600,366 - - - - - - - - -
Convertible preferred shares issued to settle debt 59,876 - - - - - - - - -
Convertible preferred shares cancelled pursuant to settlement agreement (455 ) (122,168 ) - - - - - - - - -
Convertible preferred shares cancelled, and common shares issued as collateral to promissory note (3,259 ) (875,042 ) - - - - 87,504,150 8,750 1,645,079 - 1,653,829
Cashless warrant exercise - - - - - - 16,450,296 1,645 (1,645 ) - -
Warrant discounts - - - - - - - - 508,340 - 508,340
Imputed interest - - - - - - - - 79,851 - 79,851
Derivative settlements - - - - - - - - 927,383 - 927,383
Rounding due to reverse stock split - - - - - - 9,161 (1 ) - -
Net loss - - - - - - - - - (8,544,679 ) (8,544,679 )
Balances for December 31, 2022 50,256 $ 13,493,736 $ - $ 599,829 1,000 $ - 207,723,162 $ 20,772 $ 11,728,527 $ (31,041,514 ) $ (19,292,215 )
Common stock issued pursuant to equity purchase agreement - - - - - - 68,296,141 6,830 17,373 - 24,203
Conversion of debt to common stock - - - - - - 3,558,396,834 355,839 232,860 - 588,699
Convertible preferred shares issued to settle officer accrued wages and interest 3,150 845,775 - - - - - - (116 ) - (116 )
Convertible preferred stock converted to common stock (2,140 ) (574,590 ) - - - - 2,450,742,290 245,074 360,046 - 605,120
Convertible preferred stock converted to common stock - related party (1,900 ) (510,150 ) - - - - 3,110,125,000 311,013 1,700,499 - 2,011,512
Convertible preferred stock issued pursuant to director and officer agreements 1,677 450,275 - - - - - - (275 ) - (275 )
Convertible preferred stock to be issued pursuant to director and officer agreements - - - 800,000 - - - - - - -
Warrant discount on related party promissory notes - - - - - - - - 400,000 - 400,000
Deemed dividend from convertible preferred stock issuable with a related party note payable - - - 1,000,000 - - - - (1,000,000 ) - (1,000,000 )
Forgiveness of a related party note payable - - - - - - - - 124,328
124,328
Convertible preferred stock cancelled from debt extinguishment - - (100,151 ) (566,641 ) - - - - 666,792 - 666,792
Deemed dividend from convertible preferred stock issued with a note payable 2,608 700,248 - - - - - - (700,248 ) - (700,248 )
Deemed dividend from convertible preferred stock issued with a related party note payable 4,098 1,100,313 - - - - - - (1,100,313 ) - (1,100,313 )
Cashless warrant exercise - - - - - - 73,800,000 7,380 (7,380 ) - -
Loss on cashless warrant exercise - - - - - - - - 22,066 - 22,066
Derivative settlements - - - - - - - - 1,907,625 - 1,907,625
Imputed interest - - - - - - - - 180,666 - 180,666
Net loss - - - - - - - - - (18,455,287 ) (18,455,287 )
Balances for December 31, 2023 57,749 $ 15,505,607 $ (100,151 ) $ 1,833,188 1,000 $ - 9,469,083,427 $ 946,908 $ 14,532,450 $ (49,496,801 ) $ (34,017,443 )
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended
December 31,
Cash flows from operating activities:
Net loss from continued operations (18,455,287 ) (8,310,979 )
Net loss from discontinued operations - (233,700 )
Net loss (18,455,287 ) (8,544,679 )
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount 1,313,469 1,597,746
Depreciation 205,569 105,410
Stock based compensation 1,250,000 1,342,683
Gain on settlement of debt (25,000 ) (76,171 )
Preferred stock issued for services - 325,183
Imputed interest 180,666 79,851
Forgiveness of debt - (9,940 )
Loss on cashless warrant exercise 22,066 -
Loss on conversion of debt 42,323 807,032
Loss on conversion of preferred shares 30,530 398,766
Loss on conversion of preferred shares - related party 1,501,362 778,787
Loss on extinguishment of debt - related party - 875,042
Change in fair value of derivative liability 11,407,349 557,424
Penalties on notes payable 481,908 -
Decrease (increase) in operating assets and liabilities:
Accounts receivable (2,770 ) (17,247 )
Inventory (25,272 ) (14,858 )
Other current assets 4,819 (14,776 )
Prepaid expenses (10,388 ) 3,536
Security deposits (3,177 ) (6,500 )
Accrued interest 419,336 257,496
Accounts payable 93,238 72,508
Accrued expenses 636,993 171,242
Advances from related parties (14,552 ) 224,782
Deferred revenue 6,270 -
Net cash used in continuing operating activities (940,548 ) (1,086,683 )
Net cash used in discontinued operating activities - 215,093
Net cash used in operating activities (940,548 ) (871,590 )
Cash flows from investing activities:
Property, plant and equipment, additions (459,607 ) (1,185,679 )
Deposit on equipment, related party - 450,000
Net cash used in investing activities (459,607 ) (735,679 )
Cash flows from financing activities:
Proceeds from convertible debt - 1,430,370
Payments on convertible debt - (68,997 )
Proceeds from promissory notes 620,750 125,000
Payments on promissory notes (59,220 ) -
Proceeds from related party notes 915,000 95,470
Payments on related party notes - (12,000 )
Payments on finance lease (9,448 ) (1,482 )
Payments on related party finance lease (9,252 ) -
Proceeds from sale of stock 24,203 25,105
Net cash provided by financing activities 1,482,033 1,593,466
Net increase (decrease) in cash 81,878 (13,803 )
Cash, beginning of period 32,624 46,427
Cash, end of period $ 114,502 $ 32,624
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ - $ -
Cash paid for interest $ - $ -
Schedule of non-cash investing & financing activities:
Preferred stock issued against related party debt $ - $ 646,011
Deconsolidation of wholly owned entity $ - $ 350,636
Preferred shares cancelled $ - $ 122,168
Operating lease adoption recognition $ - $ 212,040
Fixed assets acquired with capitalized finance lease $ 67,778 $ 52,570
Debt converted to common stock $ 546,376 $ 987,186
Preferred stock converted to common stock $ 574,590 $ 503,169
Preferred stock converted to common stock - related parties $ 510,150 $ -
Preferred stock converted to common stock and related party note payable $ - $ 875,042
Preferred stock cancelled from related party debt extinguishment $ 666,792 $ -
Deemed dividend from preferred stock issued with a related party note payable $ 1,100,313 $ -
Deemed dividend from preferred stock payable with a related party note payable $ 1,000,000 $ -
Deemed dividend from preferred stock issued with a note payable $ 700,248 $ -
Warrant discount on related party note payable $ 400,000 $ -
Discount from derivative $ 282,545 $ 1,169,882
Settlement of debt by a related party $ 124,328 $ -
Related party exchange of accrued wages for note payable $ - $ 114,354
Related party exchange of accrued wages for preferred stock $ 845,775 $ -
Derivative settlements $ 1,907,625 $ 927,383
Warrant discount from debt $ - $ 508,340
Cashless warrant exercise $ 7,380 $ 1,645
Fixed assets acquired with debt $ 31,694 $ -
Preferred stock issued to settle debt $ - $ 60,000
Fixed assets acquired with related party accounts payable $ 33,909 $ 287,758
Convertible note payable exchanged for accrued interest $ - $ 16,800
Preferred stock payable converted to preferred stock $ - $ 5,000,007
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
BrewBilt Brewing Company, a Florida Corporation, wholly owns BrewBilt Brewing LLC, a California Limited Liability Corporation located in the Sierra Foothills of Northern California. BrewBilt Brewing LLC is a Type 23 licensed brewery with the California Alcoholic Beverage Control Board (ABC). The Company began building its first processing brewery in 2021 and started delivering its craft beers in July of 2022.
The Company opened the BrewBilt BrewHaus taproom and restaurant in Nevada City, CA in December 2023. The establishment seats 140 people and serves lunch and dinner six days a week, plus brunch on Sundays, along with the full lineup of BrewBilt beers and guest wines, ciders, kombuchas, and non-alcoholic beverages.
BrewBilt Brewing is devoted to the modern execution of traditional styles utilizing hand-crafted, industry-leading equipment combined with an artful approach and a passion for quality. A focus on regionally sourced local ingredients gives the company its dynamic palette for distinctly satisfying beers. Inspired by European brewing tradition and American craft innovation, BrewBilt Brewing creates craft beers that reflect a sense of place in order to share their brewing philosophy for the ultimate drinking pleasure.
Among all craft breweries, BrewBilt Brewing is unique in its exclusive use of small-batch craft malt that is grown in the nearby Sacramento Valley. In addition to the flavor benefits of this superior product, BrewBilt’s intentional material sourcing reduces the Company’s carbon footprint and sustains local agriculture. Even after brewing with these grains, BrewBilt implements eco-friendly practices such as upcycling the spent grain to local ranchers to use as high-quality animal feed.
Brewbilt Brewing Company was formerly Simlatus Corporation. Simlatus wholly owned the subsidiary Satel Group Inc. On July 1, 2022, the Company agreed to sell Satel and it is no longer associated with Brewbilt Brewing Company.
Settlement and Sale Transaction
On July 1, 2022, the Company executed a Settlement and Sale Agreement with our Chairman, Richard Hylen. The Company agreed to sell the wholly owned subsidiary, Satel Group, Inc. to Mr. Hylen in exchange for the debt that the Company owes him. As of June 30, 2022, this debt is inclusive of unpaid wages and interest of $264,096 and personal loans made to Satel in the amount of $304,314. The Company issued 2,406 shares of Series A Convertible Preferred stock at $268.50 per share, with a fair value of $646,011.
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 U.S. GAAP 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 regularly evaluates estimates and assumptions related to the valuation of assets and liabilities.
Management bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from managements estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates include:
■ Liability for legal contingencies.
■ Useful life of assets.
■ Deferred income taxes and related valuation allowances.
■ Impairment of fixed assets.
■ Obsolescence of inventory.
■ Stock-based compensation calculated using the lattice pricing model.
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.
Discontinued Operations
In accordance with the Financial Accounting Standards Board, ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the results of operations of a component of an entity or a group or component of an entity that represents a strategic shift that has, or will have, a major effect on the reporting company’s operations that has either been disposed of or is classified as held-for-sale are required to be reported as discontinued operations in a company’s consolidated financial statements. In order to be considered a discontinued operation, both the operations and cash flows of the discontinued component must have been (or will be) eliminated from the ongoing operations of the company and the company will not have any significant continuing involvement in the operations of the discontinued component after the disposal transaction. As a result of the Settlement and Sale Agreement to sell Satel Group Inc., the accompanying consolidated financial statements reflect the activity related to the sale of its previously wholly owned subsidiary as discontinued operations.
Advertising Costs
The Company expenses the cost of advertising and promotional materials when incurred. On September 27, 2022, the Company entered into a Platform Services Contract with SRAX for marketing advisory services and platform fees for a period of one year in the amount of $300,000, to be paid in Series A Convertible Preferred stock. The fees are non-refundable and therefore the Company recorded the full amount to the statement of operations. Total advertising costs were $37,345 and $371,294 for the years ended December 31, 2023 and December 31, 2022, 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
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.
If the conditions for revenue recognition are not met, the Company defers the revenue and related cost of sales until all conditions are met. As of December 31, 2023 and December 31, 2022, the Company has deferred revenue of $6,270 and $0, respectively.
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 a due date basis. The allowance for doubtful accounts at December 31, 2023 and December 31, 2022 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.
Basic and Diluted Loss Per Share
In accordance with ASC Topic 280 - “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on September 30, 2022. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. During the years ended December 31, 2023 and 2022, the number of diluted shares that have been excluded are 139,978,097,143 and 1,453,956,515 respectively.
Inventories
Inventories consist of raw materials, beer cans and labels, keg collars and toppers, inbound freight charges, purchasing and receiving costs, direct labor, depreciation, overhead, and finished goods. 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. As of December 31, 2023 and December 31, 2022, the Company has inventory of $51,706 and $26,434, respectively.
Impairment of Long-Lived Assets
The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the years ended December 31, 2023 and December 31, 2022, there were no impairment losses recognized for long-lived assets.
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, 2023 and December 31, 2022 for each fair value hierarchy level:
Schedule of financial assets and liabilities measured at fair value on a recurring basis
December 31, 2023 Derivative Liabilities Total
Level I $ - $ -
Level II $ - $ -
Level III $ 12,180,445 $ 12,180,445
December 31, 2022 Derivative Liabilities Total
Level I $ - $ -
Level II $ - $ -
Level III $ 2,398,176 $ 2,398,176
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, 2023 and December 31, 2022, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.
Debt issuance costs and debt discounts
Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying consolidated balance sheets.
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 years ending December 31, 2023, 2022, 2021, 2020, 2019, and 2018, which are still open for examination.
Recent Accounting Pronouncements
Although there were new accounting pronouncements issued or proposed by the FASB for the year ended December 31, 2023, 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, 2023, the Company has a shareholders’ deficit of $49,496,801 since its inception, working capital deficit of $17,211,720, 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 achieve 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 business objectives for its production and marketing for the next 12 months. The Company has arranged financing and intends to utilize the cash received to fund the production and marketing of more beers. 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 funding 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. DISCONTINUED OPERATIONS - SATEL GROUP, INC. DISPOSITION
On July 1, 2022, the Company and Richard Hylen (the “Buyer”) entered into a Settlement and Sale Agreement for the sale of the Company’s wholly owned subsidiary, Satel Group Inc. in exchange for the debt owed to the buyer.
Satel Group Inc. is the premier provider of DirecTV to high-rise apartments, condominiums, and large commercial office buildings in the San Francisco metropolitan area. Satel’s revenues supported BrewBilt Brewing Company during construction of the brewing facility and ramp-up of craft beer revenues.
As of June 30, 2022, the debt is inclusive of unpaid wages of $254,272 and interest owed on the unpaid wages of $9,824 for a total amount of $264,096. Further, the buyer has personal loans made to Satel in the amount of $304,314. The company valued the liabilities at $646,011 and exchanged this with Preferred Series A stock at $268.50 per share for a total of 2,406 shares.
In accordance with ASC 205-20, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. The disposition of Satel met the criteria in paragraph 205-20-45-1E and was reported as a discontinued operation.
During the years ended December 31, 2023 and December 31, 2022, discontinued operations consisted of the following:
Schedule of Major Classes of Assets and Liabilities Disposed of
December 31,
Revenue $ - $ 93,420
Operating expenses - 302,171
Interest expense - 24,949
Net loss $ - $ (233,700 )
4. PREPAID EXPENSES
Prepaid fees represent amounts paid in advance for future contractual benefits to be received. Expenses paid in advance are recorded as a prepaid asset and then amortized to the statements of operations when services are rendered, or over the life of the contract using the straight-line method.
As of December 31, 2023 and December 31, 2022, prepaid expenses consisted of the following:
Schedule of Prepaid Expenses
December 31, December 31,
Prepaid advertising expenses $ 1,270 $ 1,500
Prepaid insurance 5,214 -
Prepaid rent 4,329 -
Prepaid transfer agent fees 1,075 -
Prepaid Expenses $ 11,888 $ 1,500
5. 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 as of December 31, 2023 and December 31, 2022:
Schedule of Property, Plant and Equipment
December 31, December 31,
Brewing Equipment $ 1,245,702 $ 1,185,271
Computer Equipment 2,933 2,933
Furniture and Fixtures 33,514 -
Leasehold Improvements 793,923 394,352
Vehicles 31,694 -
Property, plant, and equipment, gross 2,107,766 1,582,556
Less accumulated depreciation (300,492 ) (113,623 )
Property, plant, and equipment, net $ 1,807,274 $ 1,468,933
During the year ended December 31, 2023, the Company received $60,431 in brewing equipment, recorded Taproom leaseholder improvements of $399,571, purchased $33,514 in furniture and fixtures for the office and the Taproom, and purchased a vehicle for $31,694. During the years ended December 31, 2023 and December 31, 2022, the Company recorded depreciation on fixed assets of $186,869 and $103,928, respectively.
6. ACCRUED EXPENSES
As of December 31, 2023 and December 31, 2022, accrued expenses were comprised of the following:
Schedule of Accrued Expenses
December 31, December 31,
Accrued expenses
Credit cards $ 19,223 $ 11,881
CRV payable
Customer keg deposits 6,090 2,580
Payroll liabilities 168,566 34,035
Sales tax payable 6,945
Other short-term liabilities 8,000 12,000
Total accrued expenses $ 209,616 $ 61,571
Accrued interest
Interest on notes payable $ 278,684 $ 96,796
Interest on accrued wages 278,677 233,358
Total accrued interest $ 557,361 $ 330,154
Accrued wages $ 884,852 $ 1,185,363
7. CONVERTIBLE NOTES PAYABLE
As of December 31, 2023 and December 31, 2022, convertible notes payable were comprised of the following:
Schedule of Convertible Notes Payable
Original Due Interest Conversion December 31,
Note Date Date Rate Rate
1800 Diagonal #1* 10/10/2022 10/10/2023 22% Variable - 44,250
1800 Diagonal #2* 11/2/2022 11/2/2023 22% Variable 81,375 54,250
1800 Diagonal #3* 11/28/2022 11/28/2023 22% Variable 66,375 44,250
1800 Diagonal #4* 1/10/2023 1/10/2024 22% Variable 76,877 -
Coventry* 10/7/2022 10/7/2023 18% Variable 139,638 -
Emunah Funding #4* 10/20/2017 7/20/2018 24% Variable 2,990 2,990
FirstFire Global* 3/8/2021 3/8/2022 16% Variable 31,000 31,000
Fourth Man #13 1/10/2022 1/10/2023 16% Variable - 48,000
Fourth Man #14* 12/22/2022 12/22/2023 16% Variable 81,130 52,000
Jefferson St Capital #2* 3/5/2019 10/18/2019 0% Variable 5,000 5,000
Mammoth* 3/3/2022 12/3/2022 18% Variable 27,500 27,500
Mast Hill Fund #1* 1/27/2022 1/27/2023 16% Variable 322,596 248,787
Mast Hill Fund #2* 3/3/2022 3/3/2023 16% Variable 80,619 63,000
Mast Hill Fund #3* 4/1/2022 4/1/2023 16% Variable 441,541 381,144
Mast Hill Fund #4 7/13/2022 7/13/2023 12% Variable - 125,000
Mast Hill Fund #5* 9/6/2022 9/6/2023 16% Variable 51,496 125,000
Mast Hill Fund #6 10/14/2022 10/14/2023 16% Variable 282,446 245,000
Pacific Pier Capital #1* 5/20/2022 5/20/2023 16% Variable 71,800 60,000
Pacific Pier Capital #2* 11/3/2022 11/3/2023 16% Variable 31,200 20,000
1,793,583 1,577,171
Less debt discount
- (585,241 )
Notes payable, net of discount $ 1,793,583 $ 991,930
* As of December 31, 2023 and December 31, 2022, the balance of notes payable that are in default is $1,793,583 and $66,490, respectively.
Diagonal Lending LLC (formerly Sixth Street Lending LLC)
On October 10, 2022, the Company issued a convertible note to 1800 Diagonal Lending LLC for $44,250, of which $40,000 was received in cash, and $4,250 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on October 10, 2023, 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 closing prices during the 20-day trading period on the trading day prior to the conversion date. On April 17, 2023, a default penalty of $22,125 was accessed by the note holder for failure of timely filing of the company’s Form 10-K. Pursuant to the default, the Company recorded a debt discount from the derivative equal to $42,003 due to this conversion feature, which, in addition to the transaction fees, has been amortized to the statement of operations. During the year ended December 31, 2023, the Company issued 1,170,858,667 common shares upon the conversion of principal in the amount of $66,375, and interest of $3,876. As of December 31, 2023, 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 November 2, 2022, the Company issued a convertible note to 1800 Diagonal Lending LLC for $54,250, of which $50,000 was received in cash, and $4,250 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, 2023, 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 closing prices during the 20-day trading period on the trading day prior to the conversion date. On April 17, 2023, a default penalty of $27,125 was accessed by the note holder for failure of timely filing of the company’s Form 10-K. Pursuant to the default, the Company recorded a debt discount from the derivative equal to $50,000 due to this conversion feature, which, in addition to the transaction fees, has been amortized to the statement of operations. As of December 31, 2023, the note has a principal and accrued interest balance of $81,375 and $15,122, respectively. 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 November 28, 2022, the Company issued a convertible note to 1800 Diagonal Lending LLC for $44,250, of which $40,000 was received in cash, and $4,250 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 28, 2023, 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 closing prices during the 20-day trading period on the trading day prior to the conversion date. On April 17, 2023, a default penalty of $22,125 was accessed by the note holder for failure of timely filing of the company’s Form 10-K. Pursuant to the default, the Company recorded a debt discount from the derivative equal to $40,000 due to this conversion feature, which, in addition to the transaction fees, has been amortized to the statement of operations. As of December 31, 2023, the note has a principal and accrued interest balance of $66,375 and $12,019, respectively. 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 10, 2023, the Company received funding pursuant to a promissory note with 1800 Diagonal Lending LLC in the amount of $61,600, of which, $50,750 was received in cash and $10,850 was recorded as debt issuance fees, which will be amortized over the life of the note. The note bears interest of 12% (increases to 22% per annum upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on January 10, 2024. The principal amount and the guaranteed interest are due and payable in ten equal monthly payments of $6,899, commencing on March 1, 2023 and continuing on the 1st day of each month thereafter. On April 17, 2023, the Company defaulted on the promissory note, and pursuant to the terms, the note became convertible. The company reclassed $49,280 in principal, $5,914 in accrued interest and assessed a default penalty of $27,597 to convertible notes payable. The note is convertible into common stock at 75% of the lowest trading price of the 10-trading day period ending on the latest complete day prior to the date of conversion. Pursuant to the default, the Company recorded a debt discount from the derivative equal to $76,877 due to this conversion feature, which, in addition to the transaction fees, has been amortized to the statement of operations. As of December 31, 2023, the note has a principal and accrued interest balance of $76,877 and $14,440, respectively. 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.
Coventry Enterprises LLC
On October 7, 2022, the Company received funding pursuant to a promissory note with Coventry Enterprises LLC in the amount of $125,000. The note bears interest of 10% (increases to 18% per annum upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on October 7, 2023. On March 7, 2023, the Company defaulted on the promissory note, and pursuant to the terms, the note became convertible. The company reclassed $125,000 in principal, $12,500 in accrued interest and assessed a default penalty of $25,000 to convertible notes payable. The conversion price of this note is 90% per share of the lowest per-share VWAP during the 20 trading days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $73,665 due to this conversion feature which has been amortized to the statement of operations. During the year ended December 31, 2023, the Company issued 523,333,333 common shares upon the conversion of principal and interest in the amount of $33,420. As of December 31, 2023, the note has a principal and accrued interest balance of $139,638 and $13,245, respectively. 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.
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 $400. 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 the lower of 1) 50% of the lowest trading price of the 20-trading day period ending on the latest complete day prior to the date of conversion; or 2) the most favorable common stock conversion price. 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 .16 shares of common stock. As of December 31, 2023, the note has a principal balance of $2,990 and accrued interest of $3,232. 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.
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 the lower of 1) a fixed rate of $0.005 or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $242,900 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 135,000 common shares upon the conversion of principal in the amount of $235,000, and conversion fees of $5,000. During the year ended December 31, 2022, the Company issued 5,620,000 common shares upon the conversion of principal in the amount of $118,000, accrued interest of $36,000 and conversion fees of $2,500. As of December 31, 2023, the note has a principal balance of $31,000 and accrued interest of $12,053. 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.
Fourth Man LLC
On January 10, 2022, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $140,000 of which $115,440 was received in cash and $24,560 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on January 10, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.45; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $115,440 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 17,343,765 common shares upon the conversion of principal in the amount of $92,000 and conversion fees of $7,000. During the year ended December 31, 2023, the Company issued 143,849,342 common shares upon the conversion of principal in the amount of $48,000, interest of $33,638 and conversion fees of $5,250. As of December 31, 2023, 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 22, 2022, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $52,000 of which $40,000 was received in cash and $12,000 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on December 22, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.0009; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $40,000 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 $29,130. As of December 31, 2023, the note has a principal balance of $81,130 and accrued interest of $6,489. 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.
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 .24 common shares upon the conversion of principal in the amount of $24,000 and $1,000 in conversion fees. As of December 31, 2023, 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.
Mammoth Corporation
On March 3, 2022, the Company received funding pursuant to a convertible note issued to Mammoth Corporation for $27,500, of which $25,000 was received in cash and $2,500 was recorded as transaction fees. The note bears interest at 0% (18% per annum upon an event of default), matures on December 3, 2022, and converts into 50% multiplied by the average of the three lowest common stock trading prices during the 30-day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2023, the note has a principal balance of $27,500 and accrued interest of $9,059. 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.
Mast Hill Fund, LP
On January 27, 2022, the Company issued a convertible note to Mast Hill Fund, L.P. for $279,000, of which $75,550 was received in cash, $45,900 was recorded as transaction fees, and $157,550 was paid to Labrys Fund, L.P. to settle the principal amount of $140,000 and accrued interest of $16,800. The company recorded a loss on settlement of debt of $750. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on January 27, 2023, and is convertible into common shares at the lower of 1) a fixed rate of $0.90; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $212,584 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 $73,809. During the year ended December 31, 2022, the Company issued 933,000 common shares upon the conversion of principal in the amount of $30,213, accrued interest of $20,517, and conversion fees of $5,250. As of December 31, 2023, the note has a principal balance of $322,596 and accrued interest of $47,958. 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 March 3, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $63,000 of which $51,300 was received in cash and $11,700 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on March 3, 2023, and is convertible into common shares at the lower of 1) a fixed rate of $0.30; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $51,300 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 $17,619. As of December 31, 2023, the note has a principal balance of $80,619 and accrued interest of $15,845. 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 April 1, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $425,000 of which $351,550 was received in cash and $73,450 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on April 1, 2023, and is convertible into common shares at the lower of 1) a fixed rate of $0.18; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $351,545 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 $113,062. During the year ended December 31, 2022, the Company issued 25,380,509 common shares upon the conversion of principal in the amount of $43,856, accrued interest of $36,225, and conversion fees of $8,750. During the year ended December 31, 2023, the Company issued 27,305,900 common shares upon the conversion of principal in the amount of $52,664, accrued interest of $3,655, and conversion fees of $3,500. As of December 31, 2023, the note has a principal balance of $441,541 and accrued interest of $47,157. 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 July 13, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $125,000 of which $103,250 was received in cash and $21,750 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on July 13, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.06; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $103,250 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2023, the Company issued 433,949,592 common shares upon the conversion of principal in the amount of $125,000, accrued interest of $9,201, and conversion fees of $8,750. As of December 31, 2023, 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 September 6, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $125,000 of which $103,250 was received in cash and $21,750 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on September 6, 2023, and is convertible into common shares at the lower of 1) a fixed rate of $0.06; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $103,250 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 $31,805. During the year ended December 31, 2023, the Company issued 432,200,000 common shares upon the conversion of principal in the amount of $105,309, accrued interest of $7,885, and conversion fees of $3,500. As of December 31, 2023, the note has a principal balance of $51,496 and accrued interest of $2,460. 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 October 14, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $245,000 of which $202,270 was received in cash and $42,730 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on October 14, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.0035; or 2) the most favorable common stock conversion rate. The Company recorded a debt discount from the derivative equal to $202,270 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 $64,512. During the year ended December 31, 2023, the Company issued 714,400,000 common shares upon the conversion of principal in the amount of $27,066, accrued interest of $25,286, and conversion fees of $3,500. As of December 31, 2023, the note has a principal balance of $282,446 and accrued interest of $14,903. 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.
Pacific Pier Capital LLC
On May 20, 2022, the Company received funding pursuant to a convertible note issued to Pacific Pier Capital LLC for $60,000 of which $47,760 was received in cash and $12,240 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on May 21, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.105; or 2) the most favorable common stock conversion rate. Due to the default on May 20, 2023, the company recorded a default penalty of $16,800. The Company recorded a debt discount from the derivative equal to $47,760 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2023, the Company issued 112,500,000 common shares upon the conversion of principal in the amount of $5,000, and conversion fees of $1,750. As of December 31, 2023, the note has a principal balance of $71,800 and accrued interest of $15,817. 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 November 3, 2022, the Company received funding pursuant to a convertible note issued to Pacific Pier Capital LLC for $20,000 of which $15,000 was received in cash and $5,000 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on November 3, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.0015; or 2) the most favorable common stock conversion rate. The Company recorded a debt discount from the derivative equal to $15,000 due to this conversion feature, which has been amortized to the statement of operations. Due to the default on November 4, 2023, the company recorded a default penalty of $11,200. As of December 31, 2023, the note has a principal balance of $31,200 and accrued interest of $2,991. 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.
Convertible Note Conversions
During the year ended December 31, 2023, 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
1/9/2023 $ 28,874 $ 2,381 $ 1,750 $ 33,005 0.00350 9,430,000 Mast Hill
1/12/2023 30,000 - 1,750 31,750 0.00350 9,071,428 Fourth Man
1/20/2023 23,790 1,274 1,750 26,814 0.00150 17,875,900 Mast Hill
1/26/2023 18,000 8,000 1,750 27,750 0.00110 25,227,272 Fourth Man
1/30/2023 6,515 8,178 1,750 16,443 0.00095 17,400,000 Mast Hill
2/2/2023 17,789 1,750 19,656 0.00095 20,800,000 Mast Hill
2/23/2023 25,230 1,750 27,675 0.00027 102,500,000 Mast Hill
2/24/2023 - 25,638 1,750 27,388 0.00025 109,550,642 Fourth Man
3/2/2023 56,423 1,750 58,347 0.00027 216,100,000 Mast Hill
3/8/2023 19,042 1,750 20,830 0.00027 77,149,592 Mast Hill
3/13/2023 48,912 7,685 1,750 58,347 0.00027 216,100,000 Mast Hill
3/21/2023 56,397 1,750 58,347 0.00027 216,100,000 Mast Hill
5/2/2023 14,235 16,486 1,750 32,471 0.00010 324,700,000 Mast Hill
5/3/2023 10,362 19,638 - 30,000 0.00009 333,333,333 Coventry
5/4/2023 10,000 - - 10,000 0.00006 166,666,667 1800 Diagonal
6/28/2023 5,000 - 1,750 6,750 0.00006 112,500,000 Pacific Pier
6/29/2023 18,075 3,876 - 21,951 0.00006 365,858,667 1800 Diagonal
7/28/2023 23,300 - - 23,300 0.00006 388,333,333 1800 Diagonal
7/28/2023 12,832 8,800 1,750 23,382 0.00006 389,700,000 Mast Hill
7/31/2023 15,000 - - 15,000 0.00006 250,000,000 1800 Diagonal
10/16/2023 - 3,420 - 3,420 0.00002 190,000,000 Coventry
Total conversions 439,776 106,600 26,250 572,626
3,558,396,834
Conversion fees
(26,250 )
Loss on conversion - - - 42,323
$ 439,776 $ 106,600 $ 26,250 $ 588,699
3,558,396,834
8. 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 from 2.5 years to 4.75 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 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. On August 1, 2021, the Company recorded ROU assets of $203,216 and lease liabilities of $203,216 in recognition of this lease.
On August 26, 2022, the company entered into a commercial lease with 4-Corners LLC to establish a Tap Room as part of its brewery revenue. The space is located at 300 Spring St, Nevada City, CA 95959, and the lease has a term of five years, from September 1, 2022 through August 31, 2027. The rent is $3,000 per month from September 1, 2022 through December 31, 2022, $3,500 per month from January 1, 2023 through August 31, 2023, $3,800 per month from September 1, 2023 through August 31, 2024, $4,400 per month from September 1, 2024 through August 31, 2025, $4,700 per month from September 1, 2025 through August 31, 2026, and $4,914 per month from September 1, 2026 through August 31, 2027. On September 1, 2022, the Company recorded ROU assets of $212,040 and lease liabilities of $212,040 in recognition of this lease.
The Lease Agreement requires a personal guarantee from Jeffrey Lewis and Bennett Buchanan, both Director(s) of the Company, and the Company agreed to issue $300,000 in Series A Convertible Preferred shares each to Mr. Lewis and Mr. Buchanan as collateral for the personal guarantee. On August 25, 2022, the Company issued 1,118 shares of Series A Convertible Preferred stock to Jeffrey Lewis and Bennett Buchanan at $268.50 per share, for a total value of $600,366.
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, 2023
Right-of-use assets $ 287,970
Current operating lease liabilities 78,920
Non-current operating lease liabilities 209,050
The following is a schedule, by years, of future minimum lease payments required under the operating leases:
Schedule of Future minimum lease payments
Years Ending
December 31, Operating Leases
$ 96,000
102,000
85,256
39,312
Total 322,568
Less imputed Interest 34,598
Total liability $ 287,970
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 3.14 years 7%
Finance Leases
The Company evaluated the leases in accordance with ASC 842 and determined that its leases meet the definition of a finance lease.
On February 22, 2023, the Company entered into a Lease Agreement with American Keg Company to lease 132 kegs. The agreement is for a period of 36 months, with a monthly payment of $592. At the end of the lease the Company will own the kegs with a $1 per keg buyout. The Company recorded ROU assets of $19,259 and lease liabilities of $19,259 in recognition of this lease.
On April 26, 2023, the Company entered into a Lease Agreement with American Keg Company to lease 96 kegs. The agreement is for a period of 36 months, with a monthly payment of $502. At the end of the lease the Company will own the kegs with a $1 per keg buyout. The Company recorded ROU assets of $16,326 and lease liabilities of $16,236 in recognition of this lease.
On May 10, 2023, the Company entered into a Lease Agreement with PNC Equipment Finance to lease a 2023 Doosan lift truck. The agreement is for a period of 60 months, with a monthly payment of $250. At the end of the lease the Company will own the equipment with a $1 buyout. The Company recorded ROU assets of $12,705 and lease liabilities of $12,705 in recognition of this lease.
On September 20, 2023, the Company entered into a Lease Agreement with American Keg Company to lease 136 kegs. The agreement is for a period of 36 months, with a monthly payment of $600. At the end of the lease the Company will own the kegs with a $1 per keg buyout. The Company recorded ROU assets of $19,488 and lease liabilities of $19,488 in recognition of this lease.
During the year ended December 31, 2023, the Company depreciated $9,448 of the finance right of use assets.
Finance lease assets and liabilities related to our finance lease are as follows:
Schedule of Financing lease assets and liabilities related to our financing leases
December 31, 2023
Right-of-use assets $ 58,330
Current finance lease liabilities 19,551
Non-current finance lease liabilities 38,779
The following is a schedule, by years, of future minimum lease payments required under the finance lease:
Schedule of Future minimum lease payments
Years Ending
December 31, Finance Lease
$ 23,331
23,331
13,285
3,001
1,500
Total 64,448
Less imputed Interest 6,118
Total liability $ 58,330
Other information related to the lease is as follows:
Schedule of information related to Finance leases
Lease Type Weighted Average
Remaining Term Weighted Average
Interest Rate
Finance Lease 2.88 years 7%
Finance Lease - Related Party
The Company evaluated the leases in accordance with ASC 842 and determined that its leases meet the definition of a finance lease.
On November 6, 2022, the Company entered into a van lease agreement with an employee in the amount of $62,086. The lease has a term of 5 years, from November 2022 to October 2027, with a monthly payment of $1,035. During the year ended December 31, 2023, the Company depreciated $9,252 of the right of use asset.
Related party finance lease assets and liabilities related to our finance lease are as follows:
Schedule of Financing lease assets and liabilities related party related to our financing leases
December 31, 2023
Right-of-use assets - related party $ 41,836
Current finance lease liabilities - related party 9,895
Non-current finance lease liabilities - related party 31,941
The following is a schedule, by years, of future minimum lease payments required under the related party finance lease:
Schedule of Future minimum lease payment, related party
Years Ending Related Party
December 31, Finance Lease
$ 12,417
12,417
12,417
10,348
Total 47,599
Less imputed Interest 5,763
Total liability $ 41,836
Other information related to the lease is as follows:
Lease Type Weighted Average
Remaining Term Weighted Average
Interest Rate
Finance Lease 3.83 years 7%
9. LOANS PAYABLE
As of December 31, 2023 and December 31, 2022, loans payable were comprised of the following:
December 31,
Auto loan 28,794 -
Promissory notes 550,000 130,822
Short term loan 9,500 14,500
Loans payable, net of discount $ 588,294 $ 145,322
On January 10, 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 January 10, 2020. As of December 31, 2022, the note had a balance of $14,500, which was paid during the year ended December 31, 2023. As of December 31, 2023, the note has been fully satisfied.
On June 29, 2022, the Company entered into a Promissory Note with Maguire & Associates LLC in the amount of $25,000. The note bears no interest and is due on or before December 31, 2022. The note was secured with the issuance of 400 shares of Convertible Series A Preferred stock, valued at $107,400. On January 1, 2023, the note went into default and Maguire & Associates accepted the shares as full payment. The company recorded a gain on settlement of debt of $25,000 to the statement of operations. As of December 31, 2023, the liability has been fully satisfied.
On October 7, 2022, the Company received funding pursuant to a promissory note with Coventry Enterprises LLC in the amount of $125,000, of which, $100,000 was received in cash and $25,000 was recorded as debt issuance fees, which will be amortized over the life of the note. The note bears interest of 10% (increases to 18% per annum upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on October 7, 2023. The principal amount and the guaranteed interest are due and payable in seven equal monthly payments of $19,642.85, commencing on March 7, 2023, and continuing on the 7th day of each month thereafter. In addition, the Company agreed to issue 1,000,000 shares of common stock in connection with the note. On March 7, 2023, the Company defaulted on the note, and pursuant to the terms, the note became convertible. The company reclassed $125,000 in principal and $12,500 in accrued interest to convertible notes payable and amortized the debt issuance fees of $25,000 to the statement of operations.
On January 10, 2023, the Company entered into a Promissory Note with 1800 Diagonal Lending LLC, in the amount of $61,600, of which, $50,750 was received in cash and $10,850 was recorded as debt issuance fees, which will be amortized over the life of the note. The note bears interest of 12% (increases to 22% per annum upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on January 10, 2024. The principal amount and the guaranteed interest are due and payable in ten equal monthly payments of $6,899, commencing on March 1, 2023, and continuing on the 1st day of each month thereafter. During the year ended December 31, 2023, the company recorded principal and interest payments of 13,798. On April 17, 2023, the note went into default due to a late filing, and pursuant to the terms, the note became convertible. The company reclassified $49,280 in principal and $5,914 in accrued interest to convertible notes payable and amortized the debt issuance fees of $10,850 to the statement of operations.
On March 3, 2023, the Company purchased a vehicle and entered into a loan agreement in the amount of $31,694, with an annual interest rate of 13.39%. The loan is for a period of 74 months with a monthly payment of $626. As of December 31, 2023, the balance on the loan is $28,794.
On July 11, 2023, the Company entered into a Promissory Note with Micah Berry in the amount of $150,000. The full balance of this note, including all accrued interest, is due and payable 183 days from the issuance date, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 1,118 shares of Series A Convertible Preferred shares with a stated value of $300,183. The Company will also pay Mr. Berry 2% of net profits generated by the BrewBilt Taproom, for 60 months, commencing upon the first day of Taproom business. The payments will be monthly and due on the first day of the following month. As of December 31, 2023, the note has a principal balance of $150,000 and accrued interest of $5,796.
On October 20, 2023, the Company entered into a Promissory Note with Peter and Kacie Callaham in the amount of $200,000. The full balance of this note, including guaranteed interest of $20,000, is due and payable on October 20, 2024. The note includes the issuance of 745 shares of Series A Convertible Preferred shares with a stated value of $200,033. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 60 months, commencing on December 1, 2023. As of December 31, 2023, the note has a principal balance of $200,000 and accrued interest of $20,000.
On October 20, 2023, the Company entered into a Promissory Note with Richard and Catherine Beckley in the amount of $200,000. The full balance of this note, including guaranteed interest of $20,000, is due and payable on October 20, 2024. The note includes the issuance of 745 shares of Series A Convertible Preferred shares with a stated value of $200,033. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 60 months, commencing on December 1, 2023. As of December 31, 2023, the note has a principal balance of $200,000 and accrued interest of $20,000.
During the year ended December 31, 2023, Direct Capital Group, Inc. advanced the company $19,000 and the company repaid $9,500. The remaining loan balance bears no interest and is due on demand.
10. DERIVATIVE LIABILITIES
During the year ended December 31, 2023, 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, 2023 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, 2023:
Schedule of derivative liability activity
Notes Warrants Stock Payable Total
Balance, beginning of period $ 329,690 $ 133,397 $ 1,935,089 $ 2,398,176
Initial recognition of derivative liability 950,412 - - 950,412
Derivative settlements (1,907,508 ) (117 ) - (1,907,625 )
Loss (gain) on derivative liability valuation 9,481,916 (126,645 ) 1,384,211 10,739,482
Balance, end of period $ 8,854,510 $ 6,635 $ 3,319,300 $ 12,180,445
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, 2023:
Schedule of Company’s derivative liabilities upon management assumption
Valuation date
Expected dividends 0%
Expected volatility 183.59%-480.26%
Expected term .09 - .73 years
Risk free interest 4.74%-5.60%
Warrants
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 245.79%-505.6%
Expected term .09 - 4.73 years
Risk free interest 3.71%-5.61%
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 275.02%-382.74%
Expected term year
Risk free interest 4.64%-5.46%
11. WARRANTS
Common Stock
A summary of warrant activity for the year ended December 31, 2023 is as follows:
Weighted-Average
Weighted-Average Remaining Aggregate
Warrants Shares Exercise Price Contractual Term Intrinsic Value
Outstanding at December 31, 2022 (*) 66,817,958 $ 0.530 4.83 $ -
Granted - - - -
Exercised (388,563 ) - - -
Forfeited or expired - -
Outstanding at December 31, 2023 66,429,395 $ 0.532 3.83 $ -
Exercisable at December 31, 2023 66,429,395 $ 0.532 3.83 $ -
(*) The opening shares and exercise price were adjusted to reflect a reverse split at a ratio of 1-for-300 on September 30 2022.
The aggregate intrinsic value in the preceding tables represents the total pre-tax intrinsic value, based on options with an exercise price that is higher than the Company’s market stock price of $0.0001 on December 31, 2023.
Convertible Preferred Stock - Related Parties
On June 30, 2023, in connection with a related party senior secured promissory note, the Company granted 2,000 warrants exercisable into an equivalent number of Series A convertible preferred stock at a strike price of $100 with a contractual term of five (5) years. At issuance date, the warrants have an intrinsic value of $337,000, resulting from the difference between the stated price of $268.50 and the strike price of $100.
On July 24, 2023, in connection with a related party senior secured promissory note, the Company granted 1,000 warrants exercisable into an equivalent number of Series A convertible preferred stock at a strike price of $100 with a contractual term of five (5) years. At issuance date, the warrants have an intrinsic value of $168,500, resulting from the difference between the stated price of $268.50 and the strike price of $100.
On July 24, 2023, in connection with a related party senior secured promissory note, the Company granted 1,000 warrants exercisable into an equivalent number of Series A convertible preferred stock at a strike price of $100 with a contractual term of five (5) years. At issuance date, the warrants have an intrinsic value of $168,500, resulting from the difference between the stated price of $268.50 and the strike price of $100.
12. RELATED PARTY TRANSACTIONS
As of December 31, 2023 and December 31, 2022, related party transactions were comprised of the following:
Schedule of Related Party Transactions
December 31, December 31,
Assets:
Financial lease assets $ 41,836 $ 51,088
Current liabilities:
Accrued wages $ 884,852 $ 1,185,363
Accrued interest on wages $ 278,677 $ 233,358
Current finance lease liabilities $ 9,895 $ 9,252
Related party liabilities:
Accounts payable $ 99,439 $ 200,593
Advances 191,003 177,517
Note payable interest 107,025 -
Note payable, net of discount 320,656 -
Total related party liabilities $ 718,123 $ 378,110
Non-current liabilities:
Financial lease liabilities $ 31,941 $ 41,836
Notes payable, net of discount $ 1,492,396 $ 977,396
Financial lease
On November 6, 2022, the Company entered into a van lease agreement with an employee in the amount of $62,086. The lease has a term of 5 years, from November 2022 to October 2027, with a monthly payment of $1,035 (See Note 8).
Officer and Director Agreements
Jef Lewis
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, the Company and Jef Lewis entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.
On September 5, 2023, the Company accepted the resignation of Jef Lewis as the Company’s Chief Executive Officer, Secretary and Treasurer. Following his resignation, Mr. Lewis continues to serve as a member of the Company’s Board of Directors. Pursuant to the Directors Agreement, the Company will (i) compensate Mr. Lewis $36,000 per annum, and (ii) issue Mr. Lewis 559 shares of the Company’s Preferred Series A Stock with an aggregate stated value of $150,000.
In addition, the Company issued 1,965 shares of the Series A Convertible Preferred Stock with a stated value of $527,603 as payment for unpaid wages and accrued interest of $527,500 and recorded $103 to additional paid in capital.
Bennett Buchanan
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, the Company and Bennett Buchanan entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.
On September 5, 2023, the Company appointed Mr. Buchanan, a director of the Company and the Company’s COO prior to his appointment, to serve as the Company’s Chief Executive Officer, Secretary and Treasurer. In connection with his appointment, the Company entered into an Employment Agreement with Mr. Buchanan dated September 5, 2023 (the “Employment Agreement”). Pursuant to the Employment Agreement, the Company will (i) compensate Mr. Buchanan $250,000 per annum, and (ii) issue Mr. Buchanan 559 shares of the Company’s Preferred Series A Stock with an aggregate stated value of $150,000. Unpaid salary will accrue interest at a rate of 6% per annum and may be converted into shares of the Company’s Preferred Series A Stock, which will be subject to repurchase by the Company on demand by Mr. Buchanan. The Employment Agreement has a term ending December 31, 2024, subject to the right of either party to terminate the Employment Agreement at any time on 90 days written notice.
In addition, the Company issued 1,185 shares Series A Convertible Preferred Stock with a stated value of $318,172 as payment for unpaid wages and accrued interest of $318,159 and recorded $13 to additional paid in capital.
Richard Hylen
On January 1, 2023, 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 $50,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
Sam Berry
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
Adam Eisenburg
On July 24, 2023, the Company entered into a Directors Agreement with Adam Eisenberg for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
Accounts payable
BrewBilt Manufacturing, Inc, which is led by Director Jef Lewis, is supplying all necessary equipment to the company for its craft beer production.
During the years ended December 31, 2023 and December 31, 2022, equipment in the amount of $33,909 and $1,135,801, respectively, was completed and delivered to the Company. As of December 31, 2023 and December 31, 2022, the Company has an outstanding accounts payable balance to BrewBilt Manufacturing of $99,439 and $200,593, respectively, which has been recorded as related party liabilities on the balance sheet.
All fabricated equipment is non-refundable. Any equipment purchased by BrewBilt Manufacturing on behalf of the company would potentially be refundable based on the individual manufacturers’ return policy.
Related party advances and imputed interest
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, 2023, related parties advanced the company $77,976, the company repaid $64,489 of the advances to related parties, and imputed interest of $34,056 was recorded to the statement of operations with a corresponding increase to additional paid in capital. As of December 31, 2023 and December 31, 2022, the Company has an outstanding balance owed to related parties of $191,003 and $177,517, respectively, which has been recorded as related party liabilities on the balance sheet.
Related party notes payable
On June 30, 2023, the Company entered into a senior secured promissory note with Adam Eisenberg in the amount of $200,000. The full balance of this note, including all accrued interest, is due and payable six months from the issuance date, and will accumulate interest at a rate of 8% per annum (increases to 22% in event of default), and is compounded daily. The note is secured with the issuance of 1,490 shares of Series A preferred stock with a stated value of $400,000. The Company recorded a deemed dividend in the amount of $400,000 as the noteholder is a related party. As of December 31, 2023, the note has an accrued interest balance of $8,309.
The convertible promissory note also includes the granting of 2,000 warrants convertible into an equivalent number of the Company’s Series A convertible preferred stock, at a strike price of $100 per share, immediately exercisable, with a contractual term of five years.
The Company will also pay Mr. Eisenberg a perpetual royalty fee set at 2% of the net profits generated by the BrewBilt Taproom, commencing on the first day of the Taproom business. The payments will be monthly and due on the first day of the following month.
The Company recorded a total amount of $200,000 as a debt discount to the note for all of the embedded features in the promissory note, which is presented as an offset to the principal balance of the promissory note. During the year ended December 31, 2023, the debt discount has been amortized to the statement of operations. As a result, the carrying balance of the note is $200,000 as of December 31, 2023.
On July 24, 2023, the Company entered into a senior secured promissory note with Adam Eisenberg in the amount of $100,000. The full balance of this note, including all accrued interest, is due and payable on May 24, 2024, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 745 shares of Series A Convertible Preferred stock with a stated value of $200,032. The Company recorded a deemed dividend in the amount of $200,032 as the noteholder is a related party. As of December 31, 2023, the note has an accrued interest balance of $3,569.
The convertible promissory note also includes the granting of 1,000 warrants convertible into an equivalent number of the Company’s Series A convertible preferred stock, at a strike price of $100 per share, immediately exercisable, with a contractual term of five years.
The Company will also pay Mr. Eisenberg a perpetual royalty fee set at 1% of the net profits generated by the BrewBilt Taproom, commencing on the first day of the Taproom business. The payments will be monthly and due on the first day of the following month.
The Company recorded a total amount of $100,000 as a debt discount to the note for all of the embedded features in the promissory note, which is presented as an offset to the principal balance of the promissory note. During the year ended December 31, 2023, $60,328 of the debt discount has been amortized to the statement of operations. As a result, the carrying balance of the note is $60,328 as of December 31, 2023.
On July 24, 2023, the Company entered into a senior secured promissory note with Steven Eisenberg, who is the father of director Adam Eisenberg, in the amount of $100,000. The full balance of this note, including all accrued interest, is due and payable on May 24, 2024, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 745 shares of Series A Convertible Preferred stock with a stated value of $200,032. The Company recorded a deemed dividend in the amount of $200,032 as the noteholder is a related party. As of December 31, 2023, the note has an accrued interest balance of $3,569.
The convertible promissory note also includes the granting of 1,000 warrants convertible into an equivalent number of the Company’s Series A convertible preferred stock, at a strike price of $100 per share, immediately exercisable, with a contractual term of five years.
The Company will also pay Mr. Eisenberg a perpetual royalty fee set at 1% of the net profits generated by the BrewBilt Taproom, commencing on the first day of the Taproom business. The payments will be monthly and due on the first day of the following month.
The Company recorded a total amount of $100,000 as a debt discount to the note for all of the embedded features in the promissory note, which is presented as an offset to the principal balance of the promissory note. During the year ended December 31, 2023, $60,328 of the debt discount has been amortized to the statement of operations. As a result, the carrying balance of the note is $60,328 as of December 31, 2023.
Non-current related party notes payable and imputed interest
On March 31, 2022, the Company elected not to renew an employee agreement with Mike Schatz and converted accrued wages and interest of $114,355 to an interest free promissory note. This note will be repaid commencing on April 1, 2022, in monthly installments of no less than $2,000 until the principal amount is satisfied and paid in full. During the year ended December 31, 2023, the Company recorded imputed interest of $15,353, which was recorded to the statement of operations with a corresponding increase to additional paid in capital. The balance at December 31, 2023 is $102,355 and is reported as non-current related party liabilities on the balance sheet.
On October 4, 2022, the Company entered in a Promissory Note with Donna Murtaugh, a former related party that is a holder of Convertible Preferred Series A shares. The shareholder agreed to cancel 3,259 shares of Series A Convertible Preferred stock in exchange for a Promissory Note in the amount of $875,041. The Company agreed to issue 87,504,150 shares of common stock as collateral in the event the note is not paid by the due date of December 31, 2025. During the year ended December 31, 2023, the Company recorded imputed interest of $131,256 to the statement of operations, with a corresponding increase to additional paid in capital. The balance of the note as of December 31, 2023 is $875,041 and is reported as non-current related party liabilities on the balance sheet.
On April 14, 2023, the Company entered into a Promissory Note with Bennett Buchanan and Rachel Diamond in the amount of $295,000, of which, $215,000 was received in cash and $80,000 was recorded as debt issuance fees, which has been amortized to the statement of operations. The note will accumulate interest at a rate of 12% per annum, compounded daily and the full balance of the note, including all accrued interest is due and payable on December 31, 2024.
The note is secured with $1,000,000 in Series A Convertible Preferred stock. The transfer agent has reserved 3,725 shares which will be issued to Mr. Buchanan in the event of default, and the company recorded $1,000,000 to Preferred convertible shares payable. The Company recorded a deemed dividend in the amount of $1,000,000 as the noteholder is a related party.
On September 20, 2023, the Company entered into a Promissory Note with Bennett Buchanan and Rachel Diamond in the amount of $165,000, of which, $150,000 was received in cash and $15,000 was recorded as debt issuance fees, which will be amortized over the life of the note. The note will accumulate interest at a rate of 12% per annum, compounded daily, and the full balance of the note, including all accrued interest is due and payable on December 31, 2024.
The note includes the issuance of 373 Preferred Series A Stock, with a stated value of $100,151. The Company recorded a deemed dividend in the amount of $100,151 as the noteholder is a related party.
On December 27, 2023, the Company entered into a replacement Promissory Note with Bennett Buchanan and Rachel Diamond in the amount of $365,000. The note replaces the promissory notes dated April 14, 2023 for $295,000 and September 20, 2023 for $165,000. The full balance of this note, including guaranteed interest of $68,328, is due and payable on June 27, 2025... Upon the extinguishment of the promissory notes dated April 14, 2023 and September 20, 2023, the remaining debt discounts were amortized to the statement of operations. The principal amount of $95,000 and accrued interest of $29,328 was forgiven as part of the debt extinguishment and were recorded to additional paid in capital. The balance at December 31, 2023 is $365,000 and is reported as non-current related party liabilities on the balance sheet.
The replacement note includes the issuance of 1,614 shares of Series A Convertible Preferred shares with a stated value of $433,359. As part of the terms of the note, 373 shares of Series A Convertible stock issued will be retired. The shares were returned on January 15, 2024, and the company recorded $100,151 as preferred shares receivable on the balance sheet as of December 31, 2023. In addition, the $1,000,000 in Series A Convertible Preferred shares reserved as collateral were cancelled by the transfer agent and a debit to preferred shares payable was recorded. The difference between the shares cancelled and the new shares issuable was recorded as a credit to additional paid in capital.
The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 120 months, commencing on February 1, 2024. In addition, the Company will pay 2% of net profits generated from any future Taproom(s) that the company opens outside of Nevada City, CA
On December 14, 2023, the Company entered into a Promissory Note with Donna Murtaugh in the amount of $150,000. The full balance of this note, including guaranteed interest of $23,250, is due and payable on June 15, 2025. The note includes the issuance of 745 shares of Series A Convertible Preferred shares with a stated value of $200,033. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 120 months, commencing on February 1, 2024. The balance at December 31, 2023 is $150,000 and is reported as non-current related party liabilities on the balance sheet.
Other related party transactions
During the year ended December 31, 2023, Jef Lewis converted 1,211 Series A Convertible Preferred shares, valued at $325,153 in to 1,260,160,000 shares of common stock. The common stock was valued at $1,456,522 based on the market price on the date of the conversions, and the company recorded a loss on conversion of $1,131,369 to the statement of operations.
During the year ended December 31, 2023, Bennett Buchanan converted 689 Series A Convertible Preferred shares, valued at $184,997 into 1,849,965,000 shares of common stock. The common stock was valued at $554,990 based on the market price on the date of the conversion, and the company recorded a loss on conversion of $369,993 to the statement of operations.
13. CONVERTIBLE PREFERRED STOCK
Series A Convertible Preferred Stock
During the year ended December 31, 2023, 2,608 Series A Convertible Preferred shares were issued with a stated value of $700,248, in connection with a promissory note.
During the year ended December 31, 2023, 2,140 Series A Convertible Preferred shares, with a stated value of $574,590, were converted into 2,450,742,290 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $30,530, which was recorded to the statement of operations.
Series A Convertible Preferred Stock - Related Parties
On July 25, 2023, the company issued 1,490 Convertible Preferred Series A shares to Adam Eisenberg with a stated value of $400,065 in connection with a promissory note, and reclassified preferred stock payable of $400,000 to Series A Convertible Preferred stock and $65 to additional paid in capital.
On July 25, 2023, 559 Convertible Preferred Series A shares were issued to Adam Eisenberg with a stated value of $150,092 pursuant to a Directors Agreement.
On July 25, 2023, 745 Series A Convertible Preferred shares were issued to Adam Eisenberg with a stated value of $200,032 in connection with a promissory note.
On August 23, 2023, 745 Series A Convertible Preferred shares were issued to Steven Eisenberg with a stated value of $200,032 in connection with a promissory note.
On September 6, 2023, the company issued 1,965 Series A Convertible Preferred shares to Jef Lewis with a stated value of $527,603 as payment for unpaid wages and accrued interest of $527,500 and recorded $103 to additional paid in capital.
On September 6, 2023, 559 Series A Convertible Preferred shares were issued to Jef Lewis with a stated value of $150,092 pursuant to a Directors Agreement.
On September 6, 2023, the company issued 1,185 Series A Convertible Preferred shares to Bennett Buchanan with a stated value of $318,172 as payment for unpaid wages and accrued interest of $318,159 and recorded $13 to additional paid in capital.
On September 6, 2023, 559 Series A Convertible Preferred shares were issued to Bennett Buchanan with a stated value of $150,091 pursuant to an Employee Agreement.
On September 23, 2023, 373 Series A Convertible Preferred shares were issued to Bennett Buchanan with a stated value of $100,151 in connection with a promissory note. On December 27, 2023, the promissory note was cancelled and replaced with a new promissory note. Pursuant to the terms, the 373 shares of Series A Convertible stock will be retired. The shares were retired and cancelled subsequent to the year, and as of December 31, 2023, the company has recorded $100,151 to Convertible Preferred Stock Receivable.
On December 15, 2023, 745 Series A Convertible Preferred shares were issued to Donna Murtaugh with a stated value of $200,033 in connection with a promissory note.
During the year ended December 31, 2023, Jef Lewis converted 1,211 Series A Convertible Preferred shares, valued at $325,153 in to 1,260,160,000 shares of common stock. The common stock was valued at $1,456,522 based on the market price on the date of the conversions, and the company recorded a loss on conversion of $1,131,369 to the statement of operations.
During the year ended December 31, 2023, Bennett Buchanan converted 689 Series A Convertible Preferred shares, valued at $184,997 into 1,849,965,000 shares of common stock. The common stock was valued at $554,990 based on the market price on the date of the conversion, and the company recorded a loss on conversion of $369,993 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 $15,505,607 which represents 57,749 Series A Convertible Preferred Stock at $268.50 per share, issued and outstanding as of December 31, 2023, outside of permanent equity and liabilities.
Convertible Preferred Stock Payable
On January 1, 2023, the company agreed to issue $150,000 of Convertible Series A shares each to Jef Lewis, Sam Berry, and Bennett Buchanan, and $50,000 in shares to Richard Hylen for total fees of $500,000, pursuant to Directors Agreements.
On January 1, 2023, the company agreed to issue $150,000 of Convertible Series A shares each to Jef Lewis and Bennett Buchanan, for total fees of $300,000, pursuant to Employee Agreements.
On June 30, 2023, the company agreed to issue $400,000 of Convertible Series A shares to Adam Eisenberg in connection with a Promissory Note. On July 24, 2023, the company issued 1,490 shares with a stated value of $400,065 and reclassified preferred stock payable of $400,000 to Series A Convertible Preferred Stock and $65 to additional paid in capital.
In connection with a Promissory Note with Bennet Buchanan dated April 14, 2023, the company recorded $1,000,000 to Preferred convertible shares payable which will be issued in the event the note goes into default. On December 27, 2023, the promissory note was cancelled and replaced with a new promissory note. Pursuant to the terms, the shares payable held as collateral will not be issued, and the transaction was voided. The terms of the new note include the issuance of 1,614 Series A convertible preferred shares, which were issued subsequent to December 31, 2023, and $433,359 was recorded to Convertible Preferred Stock payable. The replacement note resulted in a $566,641 reduction to convertible preferred stock payable.
Convertible Preferred Stock Receivable
On September 23, 2023, 373 Series A Convertible Preferred shares were issued to Bennett Buchanan with a stated value of $100,151 in connection with a promissory note. On December 27, 2023, the promissory note was cancelled and replaced with a new promissory note. Pursuant to the terms, the 373 shares of Series A Convertible stock will be retired. The shares were retired subsequent to the year, and as of December 31, 2023, the company has recorded $100,151 to Convertible Preferred Stock receivable.
14. 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, 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.
On July 1, 2022, the Company cancelled 500 Preferred Series B Control shares held by Richard Hylen in connection with the sale of the company’s wholly owned subsidiary, Satel Inc.
Pursuant to an Employee Agreement dated September 5, 2023, 500 Preferred Series B Control shares will be transferred from former CEO Jef Lewis to newly appointed CEO Bennett Buchanan. The shares were transferred on October 26, 2023.
As of December 31, 2023, 5,000 Series B Preferred shares were authorized, of which 1,000 shares were issued and outstanding.
15. COMMON STOCK
On February 1, 2023, the Company filed a Certificate of Amendment with the Florida Secretary of State to increase the number of authorized common shares from 20,000,000,000 to 30,000,000,000 with a par value of $0.0001.
On February 27, 2023, the Company filed a Certificate of Amendment with the Florida Secretary of State to increase the number of authorized common shares from 30,000,000,000 to 100,000,000,000 with a par value of $0.0001.
During the year ended December 31, 2023, 68,296,141 shares of common stock were purchased for $24,203 pursuant to an Equity Purchase Agreement.
During the year ended December 31, 2023, 2,140 Series A Convertible Preferred shares, with a stated value of $574,590, were converted into 2,450,742,290 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $30,530, which was recorded to the statement of operations.
During the year ended December 31, 2023, Jef Lewis converted 1,211 Series A Convertible Preferred shares, valued at $325,153 in to 1,260,160,000 shares of common stock. The common stock was valued at $1,456,522 based on the market price on the date of the conversions, and the company recorded a loss on conversion of $1,131,369 to the statement of operations.
During the year ended December 31, 2023, Bennett Buchanan converted 689 Series A Convertible Preferred shares, valued at $184,997 into 1,849,965,000 shares of common stock. The common stock was valued at $554,990 based on the market price on the date of the conversion, and the company recorded a loss on conversion of $369,993 to the statement of operations.
During the year ended December 31, 2023, warrant holders exercised the warrants and the Company issued 73,800,000 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms. The issuance resulted in a loss on conversion of $22,066 and settled $117 worth of derivative liabilities which was recorded to additional paid-in capital.
During the year ended December 31, 2023, the holders of convertible notes converted a total of $546,376 of principal and interest, into 3,558,396,834 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $42,323, including fees of $26,250, and settled $1,907,508 worth of derivative liabilities which was recorded to additional paid in capital.
As of December 31, 2023, 100,000,000,000 common shares, par value $0.0001, were authorized, of which 9,469,083,427 shares were issued and outstanding.
16. 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 statements 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, 2023:
Schedule of Deferred tax Assets
December 31, 2023
Net tax loss carry-forwards $ 5,718,383
Statutory rate 21 %
Expected tax recovery 1,200,860
Change in valuation allowance (1,200,860 )
Income tax provision $ -
Components of deferred tax asset:
Noncapital tax loss carry-forwards $ 1,200,860
Less: valuation allowance (1,200,860 )
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, 2021, 2022 and 2023 which are still open for examination.
17. 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 has issued 18,622 Series A shares valued at $5,000,000.
On November 30, 2023, the Company entered into a Distribution Agreement with Mussetter Distribution for the to distribute the company’s beer products. The agreement will remain in effect until terminated by either party.
Hops Agreement
On October 4, 2023, the company entered into an agreement with Hollingbery & Son, Inc. for the purchase of hops in the amount of $31,765. A deposit of 10% is due at harvest and the remaining balance within 30 days of delivery of the product.
Director Agreements
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, 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 $50,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On July 24, 2023, the Company entered into a Directors Agreement with Adam Eisenberg for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share. On July 25, 2023, the Company issued 559 shares of Series A Convertible Preferred stock with a stated value of $150,092.
On September 5, 2023, the Company accepted the resignation of Jef Lewis as the Company’s Chief Executive Officer, Secretary and Treasurer. Following his resignation, the Company and Mr. Lewis entered into a new Directors Agreement. Pursuant to the Agreement, the Company will compensate Mr. Lewis $36,000 per annum, and issue 559 shares of Series A Convertible Preferred stock with a stated value of $150,092.
Employee Agreements
On January 1, 2023, the Company and Jef Lewis entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock. On September 5, 2023, the Company accepted the resignation of Jef Lewis as the Company’s Chief Executive Officer, Secretary and Treasurer.
On January 1, 2023, the Company and Bennett Buchanan entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.
On September 5, 2023, the Company appointed Mr. Buchanan to serve as the Company’s Chief Executive Officer, Secretary and Treasurer. In connection with his appointment, the Company entered into a new Employment Agreement. Pursuant to the Agreement, the Company will compensate Mr. Buchanan $250,000 per annum, and issue 559 shares of Series A Convertible Preferred stock with a stated value of $150,091. Unpaid salary will accrue interest at a rate of 6% per annum and may be converted into shares of the Company’s Series A Convertible Preferred stock, which will be subject to repurchase by the Company on demand by Mr. Buchanan. The Employment Agreement has a term ending December 31, 2024, subject to the right of either party to terminate the Employment Agreement at any time on 90 days written notice.
Leases
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.
On August 26, 2022, the company entered into a commercial lease with 4-Corners LLC to establish a Tap Room as part of its brewery revenue. The space is located at 300 Spring St, Nevada City, NV 95959, and the lease has a term of five years, from September 1, 2022 through August 31, 2027. The rent is $3,000 per month from September 1, 2022 through December 31, 2022, $3,500 per month from January 1, 2023 through August 31, 2023, $3,800 per month from September 1, 2023 through August 31, 2024, $4,400 per month from September 1, 2024 through August 31, 2025, $4,700 per month from September 1, 2025 through August 31, 2026, and $4,914 per month from September 1, 2026 through August 31, 2027.
On November 6, 2022, the Company entered into a van lease agreement with an employee in the amount of $62,086. The lease has a term of 5 years, from November 2022 to October 2027, with a monthly payment of $1,035.
On February 22, 2023, the Company entered into a Lease Agreement with American Keg Company to lease 132 kegs. The agreement is for a period of 36 months, with a monthly payment of $592. At the end of the lease the Company will own the kegs with a $1 per key buyout.
On April 26, 2023, the Company entered into a Lease Agreement with American Keg Company to lease 96 kegs. The agreement is for a period of 36 months, with a monthly payment of $502. At the end of the lease the Company will own the kegs with a $1 per key buyout.
On May 10, 2023, the Company entered into a Lease Agreement with PNC Equipment Finance to lease a 2023 Doosan lift truck. The agreement is for a period of 60 months, with a monthly payment of $250. At the end of the lease the Company will own the equipment with a $1 buyout.
On September 20, 2023, the Company entered into a Lease Agreement with American Keg Company to lease 136 kegs. The agreement is for a period of 36 months, with a monthly payment of $600. At the end of the lease the Company will own the kegs with a $1 per key buyout.
18. SUBSEQUENT EVENTS
Finance Lease
On January 12, 2024, the Company entered into a Lease Agreement with Blefa Kegs, Inc. to lease 156 kegs. The agreement is for a period of 36 months, with a monthly payment of $690. At the end of the lease the Company will own the kegs with a $1 per keg buyout.
Promissory Notes
On January 8, 2024, the Company entered into a Promissory Note with Peter and Kacie Callaham in the amount of $200,000. The full balance of this note, including guaranteed interest of $30,000, is due and payable on July 8, 2025. The note includes the issuance of 745 shares of Series A Convertible Preferred shares with a stated value of $200,032.50. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 120 months, commencing on February 1, 2024.
On February 12, 2024, the Company entered into a Promissory Note with Micah Berry in the amount of $200,000. The full balance of this note, including accrued interest of 8% per annum, is due and payable on February 12, 2025. The note includes the issuance of 1,490 shares of Series A Convertible Preferred shares with a stated value of $400,065. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 60 months, commencing on April 1, 2024.
Subsequent Stock Issuances
On January 8, 2024, 1,614 shares of Convertible Series A shares at $268.50 per share were issued to Bennett Buchanan and Rachel Diamond in connection with a promissory note.
On January 15, 2024, 373 shares of Series A Convertible Preferred shares issued to Bennett Buchanan in connection with a related party promissory note were retired.
On January 19, 2024, 745 shares of Convertible Series A shares at $268.50 per share were issued to Peter and Kacie Callaham in connection with a promissory note.
On February 14, 2024, 1,490 shares of Convertible Series A shares at $268.50 per share were issued to Micah Berry in connection with a promissory note.
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, 2023. 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, 2023, 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, 2023, 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, 2023, 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. Managements 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, 2023, 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, 2023:
Name Age Position with the Company Position Held Since
Richard Hylen Chairman of the Board January 1, 2021
Bennett Buchanan Chief Executive Officer, President, Treasurer and Director September 5, 2023
Samuel Berry Chief Operating Officer and Director January 1, 2021
Jeffrey Lewis Director January 1, 2021
Adam Eisenberg Director July 24, 2023
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 77 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.
Bennett Buchanan: Mr. Buchanan is 39 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.
Samuel Berry: Mr. Berry is 45 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.
Jeffrey Lewis: Mr. Lewis is 50 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.
Adam Eisenberg: Mr. Eisenberg is 37 years old and is an IT Sales professional who has been selling enterprise IT solutions for government accounts for over 15 years. Adam started his career at Cisco Systems where he spent 10 years honing his sales, account management, and executive selling skill sets. Adam has also founded a Technology Advisory Consulting firm where he sits as the COO as well as started a sales region for ConvergeOne, a national technology integrator, which he turned into one of the most successful sales regions in the nation. Adam earned his degree in Business Administration from California Polytechnic State University-San Luis Obispo in 2007. He currently resides in the Lake Tahoe area and spends his free time mountain biking, snowboarding, and hiking.
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.
Audit Committee and Audit Committee Financial Expert
As of December 31, 2023, 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, 2023, the board of directors had not adopted a code of ethics due to the 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, 2023.

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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, 2023 and December 31, 2022. 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 - - - - - - 50,000 50,000
Chairman of the Board 100,000 - - - - - 127,601 227,601
Bennett Buchanan 250,000 - - - - - 450,000 700,000
President, Chief Executive Officer, Treasurer, and Director 100,000 - - - - - 350,183 450,183
Sam Berry 100,000 - - - - - 150,000 250,000
Chief Operating Officer and Director 100,000 - - - - - 50,000 150,000
Jeffrey Lewis 178,667 - - - - - 450,000 628,667
Director 200,000 - - - - - 350,183 550,183
Adam Eisenberg - - - - - - 150,000 150,000
Director - - - - - - - -
Narrative Disclosure to Summary Compensation Table
Richard Hylen
On January 1, 2022, the Company entered into a new Directors Agreement with My. Hylen for a term of one year. In exchange for serving in this capacity, the Company will issue $50,000 of Convertible Preferred Series A stock at a price of $268.50 per share.
During the six months ended June 30, 2022, the Company accrued wages of $100,000. On July 1, 2022, the Company executed a Settlement and Sale Agreement with our Chairman, Richard Hylen. The Company agreed to sell the wholly owned subsidiary, Satel Group, Inc. to Mr. Hylen in exchange for the debt that the Company owes him. As of June 30, 2022, this debt is inclusive of unpaid wages and interest of $264,096 and personal loans made to Satel in the amount of $304,314. The Company issued 2,406 shares of Convertible Preferred Series A stock at $268.50 per share, with a fair value of $646,011.
On January 1, 2023, 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 $50,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
Bennett Buchanan
On January 1, 2022, the Company entered into a new Directors Agreement with Mr. Buchanan for a term of one year. In exchange for serving in this capacity, the Company will issue $50,000 of Convertible Preferred Series A stock at a price of $268.50 per share.
On August 25, 2022, the Company issued 1,118 shares of Convertible Preferred Series A stock to Mr. Buchanan at $268.50 per share, for a total value of $300,183 as a guarantor of the tap room lease.
During the year ended December 31, 2022, the Company accrued wages of $100,000 pursuant to Mr. Buchanan’s employee agreement.
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, the Company and Bennett Buchanan entered into a new Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.
On September 5, 2023, the Company appointed Mr. Buchanan, a director of the Company and the Company’s COO prior to his appointment, to serve as the Company’s Chief Executive Officer, Secretary and Treasurer. In connection with his appointment, the Company entered into an Employment Agreement with Mr. Buchanan dated September 5, 2023 (the “Employment Agreement”). Pursuant to the Employment Agreement, the Company will (i) compensate Mr. Buchanan $250,000 per annum, and (ii) issue Mr. Buchanan 559 shares of the Company’s Preferred Series A Stock with an aggregate stated value of $150,000. Unpaid salary will accrue interest at a rate of 6% per annum and may be converted into shares of the Company’s Preferred Series A Stock, which will be subject to repurchase by the Company on demand by Mr. Buchanan. The Employment Agreement has a term ending December 31, 2024, subject to the right of either party to terminate the Employment Agreement at any time on 90 days written notice.
Sam Berry
On January 1, 2022, the Company entered into a new Directors Agreement with Mr. Berry for a term of one year. In exchange for serving in this capacity, the Company will issue $50,000 of Convertible Preferred Series A stock at a price of $268.50 per share.
During the year ended December 31, 2022, the Company accrued wages of $100,000 pursuant to Mr. Berry’s employee agreement.
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
During the year ended December 31, 2023, the Company accrued wages of $100,000 pursuant to Mr. Berry’s employee agreement.
Jef Lewis
On January 1, 2022, the Company entered into a new Directors Agreement with Mr. Lewis for a term of one year. In exchange for serving in this capacity, the Company will issue $50,000 of Convertible Preferred Series A stock at a price of $268.50 per share.
On August 25, 2022, the Company issued 1,118 shares of Convertible Preferred Series A stock to Mr. Lewis at $268.50 per share, for a total value of $300,183 as a guarantor of the tap room lease.
During the year ended December 31, 2022, the Company accrued wages of $200,000 pursuant to Mr. Lewis’ employee agreement.
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, the Company and Jef Lewis entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.
On September 5, 2023, the Company accepted the resignation of Jef Lewis as the Company’s Chief Executive Officer, Secretary and Treasurer. Following his resignation, Mr. Lewis continues to serve as a member of the Company’s Board of Directors. Pursuant to the Directors Agreement, the Company will (i) compensate Mr. Lewis $36,000 per annum, and (ii) issue Mr. Lewis 559 shares of the Company’s Preferred Series A Stock with an aggregate stated value of $150,000.
Adam Eisenberg
On July 24, 2023, the Company entered into a Directors Agreement with Adam Eisenberg for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
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, 2023.
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, 2023, 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
Beneficially Percent
Name of Beneficial Owner Owned (1) Owned (1)
Executive Officers and Directors:
Richard Hylen 0.00 %
Jef Lewis 1,260,160,000 13.31 %
Sam Berry 0.00 %
Ben Buchanan 1,849,965,000 19.54 %
Adam Eisenberg 0.00 %
All directors and officers as a group 3,110,125,003 32.85 %
5% Holders
0.00 %
All 5% holders as a group 0.00 %
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 9,469,083,427 shares of common stock issued and outstanding for the company as of December 31, 2023.
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
Financial lease
On November 6, 2022, the Company entered into a van lease agreement with an employee in the amount of $62,086. The lease has a term of 5 years, from November 2022 to October 2027, with a monthly payment of $1,035 (See Note 8).
Officer and Director Agreements
Jef Lewis
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, the Company and Jef Lewis entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.
On September 5, 2023, the Company accepted the resignation of Jef Lewis as the Company’s Chief Executive Officer, Secretary and Treasurer. Following his resignation, Mr. Lewis continues to serve as a member of the Company’s Board of Directors. Pursuant to the Directors Agreement, the Company will (i) compensate Mr. Lewis $36,000 per annum, and (ii) issue Mr. Lewis 559 shares of the Company’s Preferred Series A Stock with an aggregate stated value of $150,000.
In addition, the Company issued 1,965 shares of the Series A Convertible Preferred Stock with a stated value of $527,603 as payment for unpaid wages and accrued interest of $527,500 and recorded $103 to additional paid in capital.
Bennett Buchanan
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
On January 1, 2023, the Company and Bennett Buchanan entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.
On September 5, 2023, the Company appointed Mr. Buchanan, a director of the Company and the Company’s COO prior to his appointment, to serve as the Company’s Chief Executive Officer, Secretary and Treasurer. In connection with his appointment, the Company entered into an Employment Agreement with Mr. Buchanan dated September 5, 2023 (the “Employment Agreement”). Pursuant to the Employment Agreement, the Company will (i) compensate Mr. Buchanan $250,000 per annum, and (ii) issue Mr. Buchanan 559 shares of the Company’s Preferred Series A Stock with an aggregate stated value of $150,000. Unpaid salary will accrue interest at a rate of 6% per annum and may be converted into shares of the Company’s Preferred Series A Stock, which will be subject to repurchase by the Company on demand by Mr. Buchanan. The Employment Agreement has a term ending December 31, 2024, subject to the right of either party to terminate the Employment Agreement at any time on 90 days written notice.
In addition, the Company issued 1,185 shares Series A Convertible Preferred Stock with a stated value of $318,172 as payment for unpaid wages and accrued interest of $318,159 and recorded $13 to additional paid in capital.
Richard Hylen
On January 1, 2023, 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 $50,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
Sam Berry
On January 1, 2023, 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 $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
Adam Eisenburg
On July 24, 2023, the Company entered into a Directors Agreement with Adam Eisenberg for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.
Accounts payable
BrewBilt Manufacturing, Inc, which is led by Director Jef Lewis, is supplying all necessary equipment to the company for its craft beer production.
During the years ended December 31, 2023 and December 31, 2022, equipment in the amount of $33,909 and $1,135,801, respectively, was completed and delivered to the Company. As of December 31, 2023 and December 31, 2022, the Company has an outstanding accounts payable balance to BrewBilt Manufacturing of $99,439 and $200,593, respectively, which has been recorded as related party liabilities on the balance sheet.
All fabricated equipment is non-refundable. Any equipment purchased by BrewBilt Manufacturing on behalf of the company would potentially be refundable based on the individual manufacturers’ return policy.
Related party advances and imputed interest
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, 2023, related parties advanced the company $77,976, the company repaid $64,489 of the advances to related parties, and imputed interest of $35,047 was recorded to the statement of operations with a corresponding increase to additional paid in capital. As of December 31, 2023 and December 31, 2022, the Company has an outstanding balance owed to related parties of $191,003 and $177,517, respectively, which has been recorded as related party liabilities on the balance sheet.
Related party notes payable
On June 30, 2023, the Company entered into a senior secured promissory note with Adam Eisenberg in the amount of $200,000. The full balance of this note, including all accrued interest, is due and payable six months from the issuance date, and will accumulate interest at a rate of 8% per annum (increases to 22% in event of default), and is compounded daily. The note is secured with the issuance of 1,490 shares of Series A preferred stock with a stated value of $400,000. The Company recorded a deemed dividend in the amount of $400,000 as the noteholder is a related party. As of December 31, 2023, the note has an accrued interest balance of $8,309.
The convertible promissory note also includes the granting of 2,000 warrants convertible into an equivalent number of the Company’s Series A convertible preferred stock, at a strike price of $100 per share, immediately exercisable, with a contractual term of five years.
The Company will also pay Mr. Eisenberg a perpetual royalty fee set at 2% of the net profits generated by the BrewBilt Taproom, commencing on the first day of the Taproom business. The payments will be monthly and due on the first day of the following month.
The Company recorded a total amount of $200,000 as a debt discount to the note for all of the embedded features in the promissory note, which is presented as an offset to the principal balance of the promissory note. During the year ended December 31, 2023, the debt discount has been amortized to the statement of operations. As a result, the carrying balance of the note is $200,000 as of December 31, 2023.
On July 24, 2023, the Company entered into a senior secured promissory note with Adam Eisenberg in the amount of $100,000. The full balance of this note, including all accrued interest, is due and payable on May 24, 2024, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 745 shares of Series A Convertible Preferred stock with a stated value of $200,032. The Company recorded a deemed dividend in the amount of $200,032 as the noteholder is a related party. As of December 31, 2023, the note has an accrued interest balance of $3,569.
The convertible promissory note also includes the granting of 1,000 warrants convertible into an equivalent number of the Company’s Series A convertible preferred stock, at a strike price of $100 per share, immediately exercisable, with a contractual term of five years.
The Company will also pay Mr. Eisenberg a perpetual royalty fee set at 1% of the net profits generated by the BrewBilt Taproom, commencing on the first day of the Taproom business. The payments will be monthly and due on the first day of the following month.
The Company recorded a total amount of $100,000 as a debt discount to the note for all of the embedded features in the promissory note, which is presented as an offset to the principal balance of the promissory note. During the year ended December 31, 2023, $60,328 of the debt discount has been amortized to the statement of operations. As a result, the carrying balance of the note is $60,328 as of December 31, 2023.
On July 24, 2023, the Company entered into a senior secured promissory note with Steven Eisenberg, who is the father of director Adam Eisenberg, in the amount of $100,000. The full balance of this note, including all accrued interest, is due and payable on May 24, 2024, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 745 shares of Series A Convertible Preferred stock with a stated value of $200,032. The Company recorded a deemed dividend in the amount of $200,032 as the noteholder is a related party. As of December 31, 2023, the note has an accrued interest balance of $3,569.
The convertible promissory note also includes the granting of 1,000 warrants convertible into an equivalent number of the Company’s Series A convertible preferred stock, at a strike price of $100 per share, immediately exercisable, with a contractual term of five years.
The Company will also pay Mr. Eisenberg a perpetual royalty fee set at 1% of the net profits generated by the BrewBilt Taproom, commencing on the first day of the Taproom business. The payments will be monthly and due on the first day of the following month.
The Company recorded a total amount of $100,000 as a debt discount to the note for all of the embedded features in the promissory note, which is presented as an offset to the principal balance of the promissory note. During the year ended December 31, 2023, $60,328 of the debt discount has been amortized to the statement of operations. As a result, the carrying balance of the note is $60,328 as of December 31, 2023.
Non-current related party notes payable and imputed interest
On March 31, 2022, the Company elected not to renew an employee agreement with Mike Schatz and converted accrued wages and interest of $114,355 to an interest free promissory note. This note will be repaid commencing on April 1, 2022, in monthly installments of no less than $2,000 until the principal amount is satisfied and paid in full. During the year ended December 31, 2023, the Company recorded imputed interest of $15,353, which was recorded to the statement of operations with a corresponding increase to additional paid in capital. The balance at December 31, 2023 is $102,355 and is reported as non-current related party liabilities on the balance sheet.
On October 4, 2022, the Company entered in a Promissory Note with Donna Murtaugh, a former related party that is a holder of Convertible Preferred Series A shares. The shareholder agreed to cancel 3,259 shares of Series A Convertible Preferred stock in exchange for a Promissory Note in the amount of $875,041. The Company agreed to issue 87,504,150 shares of common stock as collateral in the event the note is not paid by the due date of December 31, 2025. During the year ended December 31, 2023, the Company recorded imputed interest of $131,256 to the statement of operations, with a corresponding increase to additional paid in capital. The balance of the note as of December 31, 2023 is $875,041 and is reported as non-current related party liabilities on the balance sheet.
On April 14, 2023, the Company entered into a Promissory Note with Bennett Buchanan and Rachel Diamond in the amount of $295,000, of which, $215,000 was received in cash and $80,000 was recorded as debt issuance fees, which has been amortized to the statement of operations. The note will accumulate interest at a rate of 12% per annum, compounded daily and the full balance of the note, including all accrued interest is due and payable on December 31, 2024.
The note is secured with $1,000,000 in Series A Convertible Preferred stock. The transfer agent has reserved 3,725 shares which will be issued to Mr. Buchanan in the event of default, and the company recorded $1,000,000 to Preferred convertible shares payable. The Company recorded a deemed dividend in the amount of $1,000,000 as the noteholder is a related party.
On September 20, 2023, the Company entered into a Promissory Note with Bennett Buchanan and Rachel Diamond in the amount of $165,000, of which, $150,000 was received in cash and $15,000 was recorded as debt issuance fees, which will be amortized over the life of the note. The note will accumulate interest at a rate of 12% per annum, compounded daily, and the full balance of the note, including all accrued interest is due and payable on December 31, 2024.
The note includes the issuance of 745 Preferred Series A Stock, with a stated value of $100,151. The Company recorded a deemed dividend in the amount of $100,151 as the noteholder is a related party.
On December 27, 2023, the Company entered into a replacement Promissory Note with Bennett Buchanan and Rachel Diamond in the amount of $365,000. The note replaces the promissory notes dated April 14, 2023 for $295,000 and September 20, 2023 for $165,000. The full balance of this note, including guaranteed interest of $68,328, is due and payable on June 27, 2025. The note includes the issuance of 1,614 shares of Series A Convertible Preferred shares with a stated value of $433,359. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 120 months, commencing on February 1, 2024. In addition, the Company will pay 2% of net profits generated from any future Taproom(s) that the company opens outside of Nevada City, CA. The balance at December 31, 2023 is $365,000 and is reported as non-current related party liabilities on the balance sheet.
As part of the terms of the replacement note, 745 shares of Series A Convertible stock issued will be retired. The shares were returned on January 15, 2024, and the company recorded $100,151 as preferred shares receivable on the balance sheet as of December 31, 2023. In addition, the $1,000,000 in Series A Convertible Preferred shares reserved as collateral were cancelled by the transfer agent and a credit to preferred shares payable was recorded.
On December 14, 2023, the Company entered into a Promissory Note with Donna Murtaugh in the amount of $150,000. The full balance of this note, including guaranteed interest of $23,250, is due and payable on June 15, 2025. The note includes the issuance of 745 shares of Series A Convertible Preferred shares with a stated value of $200,033. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 120 months, commencing on February 1, 2024. The balance at December 31, 2023 is $150,000 and is reported as non-current related party liabilities on the balance sheet.
Related party sales
During the year ended December 31, 2023, related parties purchased beer products from the company totaling $494.
Other related party transactions
During the year ended December 31, 2023, Jef Lewis converted 1,211 Series A Convertible Preferred shares, valued at $325,153 in to 1,260,160,000 shares of common stock. The common stock was valued at $1,456,522 based on the market price on the date of the conversions, and the company recorded a loss on conversion of $1,131,369 to the statement of operations.
During the year ended December 31, 2023, Bennett Buchanan converted 689 Series A Convertible Preferred shares, valued at $184,997 into 1,849,965,000 shares of common stock. The common stock was valued at $554,990 based on the market price on the date of the conversion, and the company recorded a loss on conversion of $369,993 to the statement of operations.
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, 2023 and December 31, 2022:
Audit Fees $ 81,226 $ 66,700
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
Total $ 81,226 $ 66,700
Audit Fees
We incurred approximately $81,226 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, 2023.
We incurred approximately $66,700 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, 2022.
Audit-Related Fees
The aggregate fees billed during the years ended December 31, 2023 and 2022 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, 2023 and 2022 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, 2023 and 2022 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.