EDGAR 10-K Filing

Company CIK: 1399306
Filing Year: 2023
Filename: 1399306_10-K_2023_0001399306-23-000009.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. Inspired by European brewing tradition and American craft innovation, BrewBilt Brewing produces satisfying beers using small-batch California malt for a better-quality beer. 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 line to ensure the lowest possible level of packaged oxygen, maximizing product stability and continuity over its shelf-life.
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. Inspired by European brewing tradition and American craft innovation, we aim to create beers that reflect a sense of place and our shared brewing philosophy for your ultimate drinking pleasure.
BrewBilt has strong relationships with suppliers of raw materials, equipment, and services globally, in addition an aggressive referral network of satisfied customers nationwide. An Advisory Board consisting of successful business leaders that provide valuable product feedback and business expertise to management.
Our Market Opportunity
The beer market in the United States grew to 109 billion U.S. dollars in revenue in 2021 after declining in 2019 due to the outbreak of the COVID-19 pandemic. The market will not surpass pre-pandemic levels until 2023 and is expected to be valued at 146 billion dollars by 2025. This statistic shows the trend in retail dollar value of craft beer sales in the United States from 2011 to 2021, where retail sales of craft beer increased in 2021 after 2020 saw a large reduction in sales due to the corona-virus pandemic. Dollar sales of craft beer amounted to 26.9 billion U.S. dollars in 2021 and the production volume of craft beer in the United States from 2010 to 2021, by type of brewery. In 2021, regional craft breweries produced approximately 16 million barrels of craft beer, allowing sales volume of craft beer in the United States to grow by 7.9 percent in 2021. Craft beer production increased from 9.1 million barrels in 2009 to 24.8 million in 2021, and the craft beer volume share of beer production in the United States from 2013 to 2021. In 2021, the craft brewer volume share of total beer production in the United States amounted to 13.1 percent.
California had the largest output for the craft beer industry in 2021, offering $10.7 billion in total impact. Pennsylvania finished in second during the year, with a $6.1 billion impact. They were followed by Texas ($5.9 billion), New York ($5.4 billion), and Florida ($4.2 billion). The overall beer market in the United States has a value of $103.5 billion. Although the craft beer segment has a 12.3% share of the total beer volume in the country, it represents 23.6% of the total dollar sales that were achieved in 2021.
Adults in the United States consume an average of 19.8 gallons of beer each year, according to the National Beer Wholesalers Association. About 36% of registered breweries in the United States are listed as a brewpub. That means the products they create for consumers are meant for direct sales that occur on their premises. The average brewery with this classification will produce about 1,000 barrels of beer each year. 95% of the breweries which are operating in the United States today produced less than 15,000 barrels of beer each year. That classifies the operation as a microbrewery if 75% or more of the beer the company produces is sold off-site. About 40% of the sales that occur each year for the craft beer industry happen during the months of June, July, or August. Almost 90% of adults over the age of 21 in the United States live within 10 miles of at least one brewery. Most of these operations qualify as a craft beer producer. There are more than 950 different craft breweries operating in California right now, making it the largest source of products for the industry today.
BrewBilt Brewing Market Statistics:
The company has developed over 200 customers since delivering its first craft beers in July of 2022. The customer retention rate is over 80%, with an average of 25 new customers per month.
The company has 50% sales in retail customers and 50% sales in draft customers. The retail customers include Albertson/Safeway Grocery Stores, Grocery Outlet, and IGA owned/Operated grocery stores.
Albertson owns 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019. The company is the second-largest supermarket chain in North America after Kroger. Albertsons ranked 53rd in the 2018 Fortune 500 list of the largest United States corporations by total revenue.
Grocery Outlet Holding Corp. is an American discount closeout retailer consisting exclusively of supermarket locations that offer deeply discounted, overstocked, and closeout products from name brand and private label suppliers. The company has stores in California, Oregon, Washington, Idaho, Nevada, Pennsylvania, and New Jersey. There are 448 Grocery Outlet retail stores in the United States as of March 27, 2023. The state with the greatest number of Grocery Outlet locations in the US is California, with 259 retail stores, which is about 58% of all Grocery Outlet retail stores in the US.
IGA, Inc., is an American chain of grocery stores that operates in more than 41 countries. Unlike the chain store business model, IGA operates as a franchise through stores that are owned separately from the brand. Many of these stores operate in small-town markets and belong to families that manage them.
BrewBilt Brewing sales have increased each month on average of 20% with an emphasis in expanding its customer base to over 500 customers by third quarter of 2023.
The company produces 4 core craft beers and a variety of seasonal craft beers. Through a strategic marketing and advertising campaign, the company has found success through social media outlets, direct sales and trade shows.
Employees
As of the date of this filing, BrewBilt Brewing has 9 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 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 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 1.802 0.315 396.198 13.507
Second Quarter 0.481 0.120 60.060 15.015
Third Quarter 0.330 0.016 36.010 2.958
Fourth Quarter 0.026 0.001 5.676 0.991
Record Holders
As of December 31, 2022, there were 207,723,162 shares of the registrant’s $0.0001 par value common stock issued and outstanding, which were held by 35 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 4, 2022, the Company cancelled 3,259 shares of Convertible Preferred stock in exchange for 87,504,150 common shares that were issued as collateral on a promissory note.
On October 7, 2022, the Company issued 1,000,000 shares of common stock, valued at $14,100, in connection with a Promissory Note.
On October 14, 2023, the Company issued 9,084 common shares due to rounding in connection with the reverse stock split.
On October 21, 2022, the Company issued 1,118 shares of Convertible Preferred stock in connection with an agreement for marketing advisory services and platform fees for a period of one year in the amount of $300,000. The stock is valued at $300,183, and a loss of $183 was reported on the statement of operations.
On November 25, 2022, 3,325,741 shares of common stock were purchased for $7,418 pursuant to an Equity Purchase Agreement.
During the three months ended December 31, 2022, 740 shares of Convertible Preferred Series A stock were converted to 29,188,824 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $105,629.
During the three months ended December 31, 2022, the holders of convertible notes converted a total of $221,582 of principal, interest, and fees into 53,019,434 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $286,138.
During the three months ended December 31, 2022, warrant holders exercised the warrants and the Company issued 16,174,864 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
Recent issuances of unregistered securities subsequent to our fiscal year ended of December 31, 2022
On January 9, 2023, the holder of a convertible note converted a total of $33,005 of principal, interest, and fees into 9,430,000 shares of our common stock.
On January 12, 2022, the holder of a convertible note converted a total of $31,750 of principal and fees into 9,071,428 shares of our common stock.
On January 12, 2023, 150 shares of Convertible Preferred Series A stock was converted into 201,375,000 shares of common stock.
On January 13, 2023, 17,078,560 shares of common stock were purchased for $13,226 pursuant to an Equity Purchase Agreement.
On January 17, 2023, 113 shares of Convertible Preferred Series A stock was converted into 15,170,250 shares of common stock.
On January 19, 2023, 80 shares of Convertible Preferred Series A stock was converted into 16,523,076 shares of common stock.
On January 20, 2023, the holder of a convertible note converted a total of $26,814 of principal, interest, and fees into 17,875,900 shares of our common stock.
On January 24, 2023, 83 shares of Convertible Preferred Series A stock was converted into 20,259,546 shares of common stock.
On January 24, 2023, 32 shares of Convertible Preferred Series A stock was converted into 6,609,230 shares of common stock.
On January 26, 2023, the holder of a convertible note converted a total of $27,750 of principal, interest, and fees into 25,227,272 shares of our common stock.
On January 30, 2023, the holder of a convertible note converted a total of $16,443 of principal, interest, and fees into 17,400,000 shares of our common stock.
On January 30, 2023, 83 shares of Convertible Preferred Series A stock was converted into 20,259,546 shares of common stock.
On January 31, 2023, 1,000 shares of Convertible Preferred Series A stock was converted into 895,000,000 shares of common stock.
On February 2, 2023, the holder of a convertible note converted a total of $19,656 of principal, interest, and fees into 20,800,000 shares of our common stock.
On February 2, 2023, 150 shares of Convertible Preferred Series A stock was converted into 50,343,750 shares of common stock.
On February 3, 2023, 51,217,581 shares of common stock were purchased for $10,978 pursuant to an Equity Purchase Agreement.
On February 3, 2023, 81 shares of Convertible Preferred Series A stock was converted into 19,771,363 shares of common stock.
On February 8, 2023, 123 shares of Convertible Preferred Series A stock was converted into 55,042,500 shares of common stock.
On February 8, 2023, 135 shares of Convertible Preferred Series A stock was converted into 60,412,500 shares of common stock.
On February 10, 2023, 93 shares of Convertible Preferred Series A stock was converted into 86,105,172 shares of common stock.
On February 13, 2023, 123 shares of Convertible Preferred Series A stock was converted into 55,042,500 shares of common stock.
On February 13, 2023, 90 shares of Convertible Preferred Series A stock was converted into 69,042,857 shares of common stock.
On February 15, 2023, a warrant holder 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.
On February 17, 2023, 33 shares of Convertible Preferred Series A stock was converted into 35,442,000 shares of common stock.
On February 17, 2023, 47 shares of Convertible Preferred Series A stock was converted into 50,478,000 shares of common stock.
On February 17, 2023, 61 shares of Convertible Preferred Series A stock was converted into 163,785,000 shares of common stock.
On February 17, 2023, 689 shares of Convertible Preferred Series A stock was converted into 1,849,965,000 shares of common stock.
On February 23, 2023, the holder of a convertible note converted a total of $27,675 of principal, interest, and fees into 102,500,000 shares of our common stock.
On February 24, 2023, the holder of a convertible note converted a total of $27,388 of interest and fees into 109,550,642 shares of our common stock.
On March 1, 2023, 200 shares of Convertible Preferred Series A stock was converted into 214,800,000 shares of common stock.
On March 2, 2023, the holder of a convertible note converted a total of $58,347 of principal, interest, and fees into 216,100,000 shares of our common stock.
On March 2, 2023, 100 shares of Convertible Preferred Series A stock was converted into 134,250,000 shares of common stock.
On March 7, 2023, 91 shares of Convertible Preferred Series A stock was converted into 244,335,000 shares of common stock.
On March 8, 2023, the holder of a convertible note converted a total of $20,830 of principal, interest, and fees into 77,149,592 shares of our common stock.
On March 13, 2023, the holder of a convertible note converted a total of $58,347 of principal, interest, and fees into 216,100,000 shares of our common stock.
On March 16, 2023, 101 shares of Convertible Preferred Series A stock was converted into 271,185,000 shares of common stock.
On March 21, 2023, the holder of a convertible note converted a total of $58,347 of principal, interest, and fees into 216,100,000 shares of our common stock.
On March 21, 2023, 106 shares of Convertible Preferred Series A stock was converted into 284,610,000 shares of common stock.
On March 29, 2023, 112 shares of Convertible Preferred Series A stock was converted into 300,720,000 shares of common stock.
Issuer Repurchases of Equity Securities
None.

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

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. You should read this report completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Year Ended December 31, 2022 Compared with the Year Ended December 31, 2021
Revenues:
The Company’s revenues were $124,684 for the year ended December 31, 2022 compared to $43,090 for the year ended December 31, 2021. Revenues in 2022 comprised of $96,750 in beer related sales, $27,650 in audio/visual component sales and $284 in merchandise sales. Of the $96,750 in beer sales, $1,062 was from related parties. The increase in revenue is from beer sales that started in the third quarter of 2022.
Cost of Sales:
The Company’s cost of sales was $175,632 for the year ended December 31, 2022, compared to $11,415 for the year ended December 31, 2021. Cost of sales in 2022 included raw materials, beer packaging, selling expenses, depreciation of the brewing equipment and overhead expenses. The increase is due to the addition of beer sales which have higher costs associated with the production of the product.
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, 2022 and December 31, 2021, were $3,010,128 and $6,930,374, respectively. Although there were increases in salaries and wages in 2022, there was a decrease in share based compensation which was primarily attributable to the decrease in operating expenses.
Other Income (Expense):
Other income (expense) for the years ended December 31, 2022 and December 31, 2021 was $(5,249,903) and $404,811, 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 extinguishment of debt and interest expenses.
Net Loss:
Net loss from continuing operations for the year ended December 31, 2022 was $8,310,979 compared to $6,493,888 for the year ended December 31, 2021. The increase in net loss can be explained by the increase in operating and other expenses during the year ended December 31, 2022. Net loss from discontinued operations for the year ended December 31, 2022 was $233,700 compared to $365,104 for the year ended December 31, 2021. The net loss was higher in 2021 since the reporting period was for one year, whereas the net loss for 2022 is for a period of six months due to the sale of Satel which occurred on July 1, 2022.
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 $ 92,581 $ 527,665
Current Liabilities 5,867,700 4,364,451
Working Capital (Deficit) $ (5,775,119 ) $ (3,836,786 )
The overall working capital (deficit) increased from $(3,836,786) at December 31, 2021 to $(5,775,119) at December 31, 2022 due to the reclassing of $450,000 in related party deposits to fixed assets and an increase of derivative liabilities, accrued liabilities and convertible debt.
December 31, December 31,
Cash Flows (used in) provided by Operating Activities (871,590 ) (542,469 )
Cash Flows (used in) provided for Investing Activities (735,679 ) (559,119 )
Cash Flows (used in) provided for Financing Activities 1,593,466 1,013,160
Net Increase (decrease) in Cash During Period (13,803 ) (88,428 )
During the year ended December 31, 2022 cash (used in) provided by operating activities was $(871,590) compared to $(542,469) for the year ended December 31, 2021. The increase in the cash used in operating activities is primarily attributed to the change in fair value of derivative liabilities, amortization of debt discounts, and loss on debt extinguishment.
During the year ended December 31, 2022 cash (used in) provided for investing activities was $(735,679) compared to $(559,119) for the year ended December 31, 2021. In the year ended December 31, 2022, the company recognized brewing equipment of $1,135,801, other property and equipment of $11,771, reclassified $450,000 of related party deposits, recorded $287,758 of related party accounts payable and incurred $325,865 in leasehold improvements.
During the year ended December 31, 2022, cash (used in) provided for financing activities was $1,593,466 compared to $1,013,160, for the year ended December 31, 2021. The increase in cash used by financing activity primarily resulted from an increase in proceeds from notes payable and promissory notes during the year ended December 31, 2022.
As of December 31, 2022, the Company had a cash balance and current asset total of $32,624 and $92,581 respectively, compared with $46,427 and $527,665 of cash and current assets, respectively, as of December 31, 2021. The decrease in assets was due to the reclassification of related party deposits for brewery equipment that was delivered and put into use in Q2 2022.
As of December 31, 2022, the Company had total current liabilities of $5,867,700 compared with $4,364,451 as of December 31, 2021. The increase in current liabilities was primarily attributed to an increase in derivative liabilities, accrued liabilities, 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, 2022, 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, 2022 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, 2022 and December 31, 2021
Consolidated Statements of Operations for the years ended December 31, 2022 and 2021
Consolidated Statements of Shareholders’ Deficit for the years ended December 31, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021
Notes to the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of BrewBilt Brewing Company and subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BrewBilt Brewing Company and subsidiaries (the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of two years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, 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 Matter
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 8, 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.
Houston, Texas
May 2, 2023
BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONDENSED BALANCE SHEETS
December 31, December 31,
ASSETS
Current Assets
Cash $ 32,624 $ 46,427
Accounts receivable 17,247 -
Inventory, net 26,434 11,576
Prepaid expenses 1,500 5,036
Related party deposit - 450,000
Other current assets 14,776 -
Current assets of discontinued operations - 14,626
Total current assets 92,581 527,665
Property, plant and equipment, net 1,468,933 99,424
Finance lease assets - related party 51,088 -
Operating right-of-use assets 357,150 188,770
Security deposit 6,500 -
Non-current assets of discontinued operations - 31,977
Total assets $ 1,976,252 $ 847,836
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable $ 298,642 $ 226,134
Accrued wages 1,185,363 864,863
Accrued expenses 61,571 3,611
Accrued interest 330,154 240,579
Convertible notes payable in default 66,490 47,990
Convertible notes payable, net of discount 925,440 545,887
Current finance lease liabilities - related party 9,252 -
Current operating lease liabilities 69,180 36,369
Derivative liabilities 2,398,176 1,598,253
Loans payable, net of discount 145,322 14,500
Related party liabilities 378,110 57,858
Current liabilities of discontinued operations - 728,407
Total Current liabilities 5,867,700 4,364,451
Non-current finance lease liabilities - related party 41,836 -
Non-current operating lease liabilities 287,970 152,401
Non-current related party note payable 977,396 -
Non-current liabilities of discontinued operations - 22,149
Total liabilities 7,174,902 4,539,001
Series A convertible preferred stock: 10,10,000 shares authorized, par value $0.0001 (1)
50,256 shares issued and outstanding at December 31, 2022
30,746 shares issued and outstanding at December 31, 2021 13,493,736 8,255,301
Convertible preferred stock payable 599,829 5,000,000
Stockholders’ deficit:
Series B preferred stock: 5,000 shares authorized, par value $0.0001
1,000 shares issued and outstanding at December 31, 2022
1,500 shares issued and outstanding at December 31, 2021 - -
Common stock: 20,000,000,000 shares authorized, par value $0.0001 (1)
207,723,162 shares issued and outstanding at December 31, 2022
736,260 shares issued and outstanding at December 31, 2021 20,772
Additional paid in capital 11,728,527 5,550,295
Accumulated deficit (31,041,514 ) (22,496,835 )
Total stockholders’ deficit (19,292,215 ) (16,946,466 )
Total liabilities and stockholders’ deficit $ 1,976,252 $ 847,836
(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
(Formerly known as Simlatus Corporation)
CONDENSED STATEMENTS OF OPERATIONS
Years ended
December 31,
Sales $ 123,622 $ 43,090
Sales - related party 1,062 -
Cost of sales 175,632 11,415
Gross profit (loss) (50,948 ) 31,675
Operating expenses:
Depreciation 23,314 9,695
G&A expenses 1,213,620 5,360,058
Professional fees 56,081 62,058
Salaries and wages 1,717,113 1,498,563
Total operating expenses 3,010,128 6,930,374
Loss from operations (3,061,076 ) (6,898,699 )
Other income (expense):
Interest income -
Debt forgiveness 9,940 -
Gain (loss) on extinguishment of debt (875,042 ) -
Gain (loss) on settlement of debt 76,171 -
Loss on conversion of debt (807,032 ) (513,973 )
Loss on conversion of debt of preferred shares (1,177,553 ) (1,603,865 )
Derivative income (expense) (557,424 ) 3,646,815
Interest expense (1,918,971 ) (1,124,166 )
Total other income (expense) (5,249,903 ) 404,811
Net profit (loss) before income taxes from continuing operations (8,310,979 ) (6,493,888 )
Income tax expense - -
Net profit (loss) from continuing operations (8,310,979 ) (6,493,888 )
Discontinued operations (Note 3)
Loss from operation of discontinued operations (233,700 ) (365,104 )
Total profit (loss) from discontinued operations, net of tax (233,700 ) (365,104 )
Net profit (loss) $ (8,544,679 ) $ (6,858,992 )
Per share information
Weighted average number of common shares outstanding, basic (1) 35,838,546 301,091
Net income (loss) per common share, basic, for continued operations $ (0.2319 ) $ (21.5678 )
Net income (loss) per common share, basic, for discontinued operations $ (0.0065 ) $ (1.2126 )
Per share information
Weighted average number of common shares outstanding, diluted (1) 35,838,546 301,091
Net income (loss) per common share, diluted, for continued operations $ (0.2319 ) $ (21.5678 )
Net income (loss) per common share, diluted, for discontinued operations $ (0.0065 ) $ (1.2126 )
(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
(Formerly known as Simlatus Corporation)
CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(1)
(1)
Convertible Preferred Stock Preferred Stock
Additional Accumulated Total
Series A (1) Series C Shares Series B Common Stock (1) Paid-In Earnings Shareholders’
Shares Amount Shares Amount Payable Shares Amount Shares Amount Capital (Deficit) Equity (Deficit)
Balances for December 31, 2020 41,572 $ 11,162,005 35,583 $ 355,830 $ 754,249 $ - 108,816 $ 11 $ (6,058,811 ) $ (15,637,843 ) $ (21,696,643 )
Conversion of debt to common stock - - - - - - - 354,067 1,446,493 - 1,446,528
Convertible preferred stock converted to common stock (14,192 ) (3,810,486 ) (35,583 ) (355,830 ) - - - 249,473 5,770,156 - 5,770,181
Convertible preferred stock payable converted to preferred stock 2,809 754,249 - - (754,249 ) - - - - - - -
Convertible preferred stock to be issued pursuant to agreement - - - - 5,000,000 - - - - - - -
Preferred stock issued for services 149,992 - - - 1,000 - - - 785,236 - 785,236
Common stock issued for services - - - - - - - - 87,500 - 87,500
Cashless warrant exercise - - - - - - - 23,093 (3 ) - -
Imputed interest - - - - - - - - - 34,179 - 34,179
Derivative settlements - - - - - - - - - 3,218,753 - 3,218,753
Warrant discounts - - - - - - - - - 266,333 - 266,333
Rounding due to reverse stock split (2 ) (459 ) - - - - - - -
Net loss - - - - - - - - - - (6,858,992 ) (6,858,992 )
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 )
(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
(Formerly known as Simlatus Corporation)
CONDENSED STATEMENTS OF CASH FLOWS
Years ended
December 31,
Cash flows from operating activities:
Net loss from continued operations $ (8,310,979 ) $ (6,493,888 )
Net loss from discontinued operations (233,700 ) (365,104 )
Net loss (8,544,679 ) (6,858,992 )
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible debt discount 1,597,746 851,216
Depreciation 105,410 9,695
Stock based compensation 1,342,683 6,022,728
Preferred stock issued for services 325,183 -
Imputed interest 79,851 34,179
Forgiveness of debt (9,940 ) -
Loss on conversion of debt 807,032 513,973
Loss on conversion of preferred shares 1,177,553 1,603,865
Gain on settlement of debt (76,171 ) -
Loss on extinguishment of debt 875,042 -
Change in fair value of derivative liability 557,424 (3,646,815 )
Penalties on notes payable - 107,022
Decrease (increase) in operating assets and liabilities:
Accounts receivable (17,247 ) -
Inventory (14,858 ) (7,442 )
Other current assets (14,776 ) 10,000
Prepaid expenses 3,536 (5,036 )
Security deposits (6,500 ) -
Accrued interest 257,496 131,748
Accounts payable 72,508 (45,407 )
Accrued expenses 171,242 546,944
Advances from related parties 224,782 (36,761 )
Other current liabilities - (10,000 )
Net cash used in continuing operating activities (1,086,683 ) (779,083 )
Net cash used in discontinued operating activities 215,093 236,614
Net cash (used in) provided by operating activities (871,590 ) (542,469 )
Cash flows from investing activities:
Property, plant and equipment, additions (1,185,679 ) (109,119 )
Deposit on equipment - related party 450,000 (450,000 )
Net cash (used in) provided by investing activities (735,679 ) (559,119 )
Cash flows from financing activities:
Payments on convertible debt (68,997 ) -
Proceeds from convertible debt 1,430,370 1,013,160
Proceeds from promissory notes 125,000 -
Payments on related party promissory notes (12,000 ) -
Proceeds from related party loans 95,470 -
Payments on finance lease (1,482 ) -
Proceeds from sale of stock 25,105 -
Net cash (used in) provided for financing activities 1,593,466 1,013,160
Net increase (decrease) in cash (13,803 ) (88,428 )
Cash, beginning of period 46,427 134,855
Cash, end of period $ 32,624 $ 46,427
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 in connection with deconsolidation $ 646,011 $ -
Deconsolidation of wholly owned entity $ 350,636 $ -
Debt converted to common stock $ 987,186 $ -
Preferred shares converted to common shares and related party note payable $ 875,042 $ -
Preferred shares cancelled $ 122,168 $ -
Stock issued for debt conversion $ - $ 932,555
Discount from derivative $ 1,169,882 $ 466,827
Preferred stock converted to common stock $ 503,169 $ 4,166,316
Preferred stock issued to settle convertible debt $ 60,000 $ -
Related party exchange of accrued wages for note payable $ 114,354 $ -
Derivative settlements $ 927,383 $ 3,218,753
Warrant discount from debt $ 508,340 $ 266,333
Cashless warrant exercise $ 1,645 $ 3
Convertible note payable exchanged for accrued interest $ 16,800 $ -
Lease adoption recognition $ 212,040 $ 203,216
Preferred stock payable converted to preferred stock $ 5,000,007 $ 754,249
Fixed assets exchanged for related party accounts payable $ 287,758 $ -
Rounding of shares due to reverse stock split $ - $ 459
Fixed assets acquired with capitalized finance lease $ 52,570 $ -
The accompanying notes are an integral part of these financial statements
BREWBILT BREWING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
BrewBilt Brewing Company (formerly Simlatus Corporation) is the parent company of wholly owned subsidiaries Satel Group Inc. and BrewBilt Brewing LLC. On July 1, 2022, the Company sold Satel Group Inc. to Richard Hylen in exchange for the debt owed to him by the Company. Located in the Sierra Foothills of Northern California, BrewBilt Brewing produces its own line of premium craft beers. BrewBilt Brewing LLC is a Type-23 licensed manufacturer with the California Alcoholic Beverage Control Board (ABC).
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 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 and in order to share their brewing philosophy for the ultimate drinking pleasure.
BrewBilt Brewing brews on a state-of-the-art 20-bbl brewhouse built for us by our sister company BrewBilt Manufacturing. The company specializes in fermenting their lagers in stacked horizontal lagering tanks and to produce cold aging time in order to achieve optimal taste and clarity. The craft beer is carefully packaged using the new counter-pressure Codi-Line to ensure the lowest possible level of oxygen which, in-turn, maximizes product quality and shelf life.
BrewBilt Brewing’s production staff are industry veterans who use American made, professional-grade brewing equipment and ingredients to deliver outstanding craft beer to North America and Europe.
The company serves major grocery chains, restaurants, and various hospitality chains.
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 Convertible Preferred Series A 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 finite-lived intangibles.
■ 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 Convertible Preferred Series A stock. The fees are non-refundable and therefore the Company recorded the full amount to the statement of operations. Total advertising costs were $371,294 and $40,824, for the years ended December 31, 2022 and December 31, 2021, 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, 2022 and 2021, the Company has deferred revenue of $0 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, 2022 and December 31, 2021 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 (see Note 16). 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.
Inventories
Inventories consist of raw materials, beer cans and labels, keg collars and toppers, inbound freight charges, purchasing and receiving costs, 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, 2022 and December 31, 2021, the Company has inventory of $26,434 and $11,576, 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, 2022, and 2021, 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, 2022 and December 31, 2021 for each fair value hierarchy level:
Schedule of financial assets and liabilities measured at fair value on a recurring basis
December 31, 2022 Derivative Liabilities Total
Level I $ - $ -
Level II $ - $ -
Level III $ 2,398,176 $ 2,398,176
December 31, 2021 Derivative Liabilities Total
Level I $ - $ -
Level II $ - $ -
Level III $ 1,598,253 $ 1,598,253
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 managements opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of December 31, 2022 and December 31, 2021, 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, 2022, 2021, 2020, 2019 and 2018, which are still open for examination.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The guidance requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires the consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of the new standard.
Although there were new accounting pronouncements issued or proposed by the FASB for the year ended December 31, 2022 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, 2022, the Company has a shareholders’ deficit of $19,292,215 since its inception, working capital deficit of $5,775,119, 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 financing if necessary, in private or public equity offering(s) to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.
These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.
3. 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.
The major classes of assets and liabilities disposed of, reflected in our condensed balance sheet as of December 31 2021, respectively, are presented below:
Schedule of Major Classes of Assets and Liabilities Disposed of
Current Assets
Cash $ 12,834
Accounts receivable 1,792
Total current assets of discontinued operations 14,626
Financial lease assets - related party 26,815
Security deposit 5,162
Total non-current assets of discontinued operations 31,977
Total assets of discontinued operations $ 46,603
Current Liabilities:
Accounts payable $ 249,295
Accrued wages 161,210
Accrued expenses 28,153
Accrued interest 5,077
Current financing lease liabilities - related party 4,666
Loans payable 72,920
Related party liabilities 207,086
Total current liabilities of discontinued operations 728,407
Non-current financing lease liabilities - related party 22,149
Total liabilities of discontinued operations $ 750,556
During the year ended December 31, 2022 and December 31, 2021, discontinued operations consisted of the following:
December 31
Revenue $ 93,420 $ 264,081
Operating expenses 302,171 608,254
Interest expense 24,949 20,931
Net loss $ (233,700 ) $ (365,104 )
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, 2022 and December 31, 2021, prepaid expenses consisted of the following:
Schedule of Prepaid Expenses
December 31, December 31,
Prepaid accounting fees $ 1,500 $ -
Prepaid leaseholder improvements - 5,000
Prepaid postage -
Prepaid Expenses $ 1,500 $ 5,036
5. RELATED PARTY DEPOSITS
During the years ending December 31, 2022 and December 31, 2021, the Company paid deposits of $398,042 and $450,000, respectively, to BrewBilt Manufacturing for fabrication of a brewery system. During the year ended December 31, 2022, equipment in the amount of $1,135,801 was completed and delivered to the Company. In addition to the deposits paid, the Company made payments of $88,531, and ordered additional brewing materials and supplies in the amount of $1,366. As of December 31, 2022, the Company has an outstanding accounts payable balance to BrewBilt Manufacturing of $200,593.
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.
6. 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, 2022 and December 31, 2021:
Schedule of Property, Plant and Equipment
December 31, December 31,
Property and Equipment $ 1,185,271 $ 37,699
Computer Equipment 2,933 2,933
Leasehold Improvements 394,352 68,487
Property, plant, and equipment, gross 1,582,556 109,119
Less accumulated depreciation (113,623 ) (9,695 )
Property, plant, and equipment, net $ 1,468,933 $ 99,424
During the year ended December 31, 2022, the majority of the brewing equipment fabricated by BrewBilt Manufacturing was completed and delivered to the company. The equipment that has been delivered and put into use has a cost of $1,135,801. In addition, the Company purchased pallets and kegs from other vendors in the amount of $11,771, and recorded $325, 865 in leaseholder improvements. During the years ended December 31, 2022 and December 31, 2021, the company recorded depreciation expenses of $103,928 and $9,696, respectively.
7. ACCRUED EXPENSES
As of December 31, 2022 and December 31, 2021, accrued expenses were comprised of the following:
Schedule of Accrued Expenses
December 31, December 31,
Accrued expenses
Credit cards $ 11,881 $ 3,356
CRV payable -
Customer keg deposits 2,580 -
Payroll tax liabilities 34,035 -
Sales tax payable
Other short-term liabilities 12,000 -
Total accrued expenses $ 61,571 $ 3,611
Accrued interest
Interest on notes payable $ 96,796 $ 88,114
Interest on accrued wages 233,358 152,465
Total accrued interest $ 330,154 $ 240,579
Accrued wages $ 1,185,363 $ 864,863
During the year ended December 31, 2021, the Company had accrued expenses, wages, and interest of $28,153, $5,077, and $161,210, respectively, for Satel Group, Inc., which has been reported as current liabilities to discontinued operations on the balance sheet (see Note 3).
8. CONVERTIBLE NOTES PAYABLE
As of December 31, 2022 and December 31, 2021, notes payable were comprised of the following:
Schedule of Convertible Notes Payable
Original Due Interest Conversion December 31, December 31,
Note Date Date Rate Rate
1800 Diagonal #1 10/10/2022 10/10/2023 10% Variable 44,250 -
1800 Diagonal #2 11/2/2022 11/2/2023 10% Variable 54,250 -
1800 Diagonal #3 11/28/2022 11/28/2023 10% Variable 44,250 -
Emunah Funding #4* 10/20/2017 7/20/2018 24% Variable 2,990 2,990
FirstFire Global* 3/8/2021 3/8/2022 16% 0.18 31,000 149,000
Fourth Man #11 3/5/2021 3/5/2022 12% 0.12 - 26,000
Fourth Man #12 9/27/2021 9/27/2022 12% 0.12 - 111,000
Fourth Man #13 1/10/2022 1/10/2023 12% 0.45 48,000 -
Fourth Man #14 12/22/2022 12/22/2023 12% 0.0009 52,000 -
Jefferson St Capital #2* 3/5/2019 10/18/2019 0% Variable 5,000 5,000
Mast Hill Fund #1 1/27/2022 1/27/2023 12% 0.9 248,787 -
Mast Hill Fund #2 3/3/2022 3/3/2023 12% 0.3 63,000 -
Mast Hill Fund #3 4/1/2022 4/1/2023 12% 0.18 381,144 -
Mast Hill Fund #4 7/13/2022 7/13/2023 12% 0.06 125,000 -
Mast Hill Fund #5 9/6/2022 9/6/2023 12% 0.06 125,000 -
Mast Hill Fund #6 10/14/2022 10/14/2023 12% 0.0035 245,000 -
Mammoth* 3/3/2022 12/3/2022 18% Variable 27,500 -
May Davis Partners 3/14/2022 12/14/2022 0% Variable - -
Labrys Fund #2 7/28/2021 7/28/2022 12% - 140,000
Optempus Invest #4 11/2/2020 11/2/2021 10% Variable - 20,000
Optempus Invest #5 11/5/2020 11/5/2021 10% Variable - 20,000
Optempus Invest #6 12/31/2020 12/31/2021 6% Variable - 20,000
Pacific Pier Capital #1 5/20/2022 5/20/2023 12% 0.105 60,000 -
Pacific Pier Capital #2 11/3/2022 11/3/2023 12% 0.0015 20,000 -
Power Up Lending #7 7/9/2021 7/9/2022 10% Variable - 78,750
Power Up Lending #8 8/2/2021 8/2/2022 10% Variable - 53,750
Power Up Lending #9 8/24/2021 8/24/2022 10% Variable - 78,750
Power Up Lending #10 9/8/2021 9/8/2022 10% Variable - 43,750
Power Up Lending #11 10/8/2021 10/8/2022 10% Variable - 43,750
1,577,171 792,740
Less debt discount
(585,241 ) (198,863 )
Notes payable, net of discount
$ 991,930 $ 593,877
* As of December 31, 2022, the balance of notes payable that are in default is $66,490.
Diagonal Lending LLC (formerly Sixth Street Lending LLC)
On January 11, 2022, the Company issued a convertible note to 1800 Diagonal LLC for $53,750, of which $50,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on January 11, 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 trading prices during the 20 day trading period on the trading day prior to the conversion date. On July 10, 2022, the Company recorded a debt discount from the derivative equal to $53,750 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 724,580 common shares upon the conversion of principal in the amount of $53,750 and interest of $2,688. As of December 31, 2022, 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 February 10, 2022, the Company issued a convertible note to 1800 Diagonal LLC for $48,750, of which $45,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on February 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 trading prices during the 20 day trading period on the trading day prior to the conversion date. On August 8, 2022, the Company recorded a debt discount from the derivative equal to $48,750 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 947,917 common shares upon the conversion of principal in the amount of $48,750 and interest of $2,438. As of December 31, 2022, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On March 21, 2022, the Company issued a convertible note to 1800 Diagonal LLC for $53,750, of which $50,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on March 21, 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 trading prices during the 20 day trading period on the trading day prior to the conversion date. On September 7, 2022, the Company agreed to settle the principal amount of $53,750 and accrued interest of $2,503 for a cash payment of $71,500. The settlement resulted in a loss of $15,247, and transaction fees of $3,750 have been amortized to the statement of operations. As of December 31, 2022, 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 October 10, 2022, the Company issued a convertible note to 1800 Diagonal 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 trading prices during the 20 day trading period on the trading day prior to the conversion date. As of December 31, 2022, $955 of the transaction fees have been amortized to the statement of operations and the note has a principal and accrued interest balance of $44,250 and $994, respectively.
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 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 trading prices during the 20 day trading period on the trading day prior to the conversion date. As of December 31, 2022, $687 of the transaction fees have been amortized to the statement of operations and the note has a principal and accrued interest balance of $54,250 and $877, respectively.
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 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 trading prices during the 20 day trading period on the trading day prior to the conversion date. As of December 31, 2022, $384 of the transaction fees have been amortized to the statement of operations and the note has a principal and accrued interest balance of $44,250 and $400, respectively.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Emunah Funding LLC
On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matured on July 20, 2018, and is convertible into common stock at 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,440 due to this conversion feature, which has been amortized to the statement of operations. On October 26, 2018, the principal amount of $40,000 was reassigned to Fourth Man, LLC. Pursuant to the default terms of the note, the Company entered a late filing penalty of $1,000. Prior to the period ended December 31, 2020, the note has converted $13,450 of principal and $4,918 of interest into .16 shares of common stock. As of December 31, 2022, the note has a principal balance of $2,990 and accrued interest of $2,515. 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 a fixed rate of $0.18. The Company recorded a debt discount from the derivative equal to $300,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered a penalty of $84,000. During the year ended December 31, 2021, the Company issued 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, 2022, the note has a principal balance of $31,000 and accrued interest of $7,093. 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 March 5, 2021, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $140,000 of which $113,420 was received in cash and $26,580 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on March 5, 2022 and is convertible into common shares at a fixed rate of $0.45. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 84,142 common shares upon the conversion of principal in the amount of $114,000, accrued interest of $271 and conversion fees of $7,000. During the year ended December 31, 2022, the Company issued 30,642 common shares upon the conversion of principal in the amount of $26,000, accrued interest of $12,329 and conversion fees of $1,750. As of December 31, 2022, 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 27, 2021, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $111,000 of which $91,000 was received in cash and $20,000 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on September 27, 2022 and is convertible into common shares at a fixed rate of $0.45. The Company recorded a debt discount from the derivative equal to $111,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 1,105,168 common shares upon the conversion of principal in the amount of $111,000, accrued interest of $13,320 and conversion fees of $10,500. As of December 31, 2022, 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 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 a fixed rate of $0.45. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, and $136,164 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $3,836. 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. As of December 31, 2022, the note has a principal balance of $48,000 and accrued interest of $16,800.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
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 a fixed rate of $0.0009. The Company recorded a debt discount from the derivative equal to $52,000 due to this conversion feature, and $1,282 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $50,718. As of December 31, 2022, the note has a principal balance of $52,000 and accrued interest of $6,240.
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, 2022, 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.
Labrys Fund, LP
On July 28, 2021, the Company received funding pursuant to a convertible note issued to Labrys Fund, LP for $140,000 of which $112,920 was received in cash and $27,080 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on July 28, 2022, and is convertible into common shares at a fixed rate of $9. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2021, the note had a principal balance of $140,000 and accrued interest of $16,800. On January 27, 2022, $157,500 was paid to Labrys Fund, pursuant to a note issued to Mast Hill Fund L.P. which settled the principal amount of $140,000, accrued interest of $16,800, and $750 was recorded to statement of operations as a loss on settlement of debt. As of December 31, 2022, 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.
Maguire and Associates, LLC
On April 1, 2022, the Company accepted and agreed to a Note Purchase Agreement, whereby Maguire and Associates LLC acquired $60,000 in principal and $9,940 of accrued interest from three convertible notes issued to Optempus Investments, LLC. On April 1, 2022, the Company agreed to convert the principal balance of $60,000 into Convertible Series A shares. On April 1, 2022, the company issued 223 shares of Convertible Series A shares to Maguire and Associates, LLC, valued at $59,875, and recorded a gain on conversion of debt of $125 to the statement of operations. Maguire and Associates, LLC agreed to forgive the accrued interest amount of $9,940, which was recorded to the statement of operations. As of December 31, 2022, the note has been fully satisfied.
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 $27,500 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2022, the note has a principal balance of $27,500 and accrued interest of $4,109. 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 $157,500 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, matures on January 27, 2023, and is convertible into common shares at a fixed rate of $0.90. The Company recorded a debt discount from the derivative equal to $258,484 due to this conversion feature, and $239,363 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $19,121. 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, 2022, the note has a principal balance of $248,787 and accrued interest of $9,404.
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, matures on March 3, 2023 and is convertible into common shares at a fixed rate of $0.30. The Company recorded a debt discount from the derivative equal to $63,000 due to this conversion feature, and $52,299 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $10,701. As of December 31, 2022, the note has a principal balance of $63,000 and accrued interest of $6,276.
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, matures on April 1, 2023 and is convertible into common shares at a fixed rate of $0.18. The Company recorded a debt discount from the derivative equal to $425,000 due to this conversion feature, and $319,042 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $105,958. 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. As of December 31, 2022, the note has a principal balance of $381,144 and accrued interest of $1,812.
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, matures on July 13, 2023 and is convertible into common shares at a fixed rate of $0.06. The Company recorded a debt discount from the derivative equal to $125,000 due to this conversion feature, and $58,570 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $66,430. As of December 31, 2022, the note has a principal balance of $125,000 and accrued interest of $7,027.
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, matures on September 6, 2023 and is convertible into common shares at a fixed rate of $0.06. The Company recorded a debt discount from the derivative equal to $125,000 due to this conversion feature, and $39,726 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $85,274. As of December 31, 2022, the note has a principal balance of $125,000 and accrued interest of $4,767.
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, matures on October 14, 2023 and is convertible into common shares at a fixed rate of $0.0035. The Company recorded a debt discount from the derivative equal to $245,000 due to this conversion feature, and $47,356 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $192,644. As of December 31, 2022, the note has a principal balance of $245,000 and accrued interest of $6,283.
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.
May Davis Partners Acquisition Company, LLC
On March 14, 2022, the Company received funding pursuant to a convertible note issued to May Davis Partners 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 14, 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 $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 5,188,679 common shares upon the conversion of principal in the amount of $27,500. As of December 31, 2022, 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.
Optempus Investments, LLC
On November 2, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 2, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. On April 1, 2022, Optempus Investments, LLC entered into a Note Purchase Agreement with Maguire and Associates LLC, whereby the principal amount of $20,000 and accrued interest of $3,796 was reassigned to Maguire & Associates. As of December 31, 2022, 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 5, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 5, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. On April 1, 2022, Optempus Investments, LLC entered into a Note Purchase Agreement with Maguire and Associates LLC, whereby the principal amount of $20,000 and accrued interest of $3,760 was reassigned to Maguire & Associates. As of December 31, 2022, 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 31, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000. The Company received a cash payment of $10,000 on January 8, 2021, and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on December 31, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. On April 1, 2022, Optempus Investments, LLC entered into a Note Purchase Agreement with Maguire and Associates LLC, whereby the principal amount of $20,000 and accrued interest of $2,384 was reassigned to Maguire & Associates. As of December 31, 2022, 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.
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 20, 2023 and is convertible into common shares at a fixed rate of $0.105. The Company recorded a debt discount from the derivative equal to $60,000 due to this conversion feature, and $36,986 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $23,014. As of December 31, 2022, the note has a principal balance of $60,000 and accrued interest of $7,200.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
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 a fixed rate of $0.0015. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, and $3,178 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2022 of $16,822. As of December 31, 2022, the note has a principal balance of $20,000 and accrued interest of $2,400.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Power Up Lending Group Ltd.
On July 9, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $78,750, of which $75,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on July 9, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $78,750 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 147,034 common shares upon the conversion of principal in the amount of $78,750 and accrued interest of $3,938. As of December 31, 2022, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 2, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $53,750, of which $50,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on August 2, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $53,750 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 115,313 common shares upon the conversion of principal in the amount of $53,750 and accrued interest of $1,600. As of December 31, 2022, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
On August 24, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $78,750, of which $75,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on August 24, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $78,750 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 258,484 common shares upon the conversion of principal in the amount of $78,750 and accrued interest of $3,938. As of December 31, 2022, 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 8, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,750, of which $40,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on September 8, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $43,750 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 239,258 common shares upon the conversion of principal in the amount of $43,750 and accrued interest of $2,188. As of December 31, 2022, 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 October 8, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,750, of which $40,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on October 8, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $43,750 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 249,833 common shares upon the conversion of principal in the amount of $43,750 and accrued interest of $2,188. As of December 31, 2022, the note has been fully satisfied.
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.
Convertible Note Conversions
During the year ended December 31, 2022, 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
1/3/2022 $ 51,500 $ - $ 1,000 $ 52,500 $ 1.500 35,000 FirstFire
1/4/2022 26,000 12,329 1,750 40,079 1.308 30,642 Fourth Man #11
1/13/2022 23,100 - - 23,100 0.630 36,667 Power Up #7
1/13/2022 - 36,000 - 36,000 0.900 40,000 FirstFire
1/14/2022 22,000 - - 22,000 0.600 36,667 Power Up #7
1/21/2022 40,500 - - 40,500 0.900 45,000 FirstFire
2/1/2022 21,300 - - 21,300 0.510 41,765 Power Up #7
2/3/2022 12,350 3,938 - 16,288 0.510 31,936 Power Up #7
2/14/2022 27,000 - - 27,000 0.480 56,250 Power Up #8
2/14/2022 26,750 1,600 - 28,350 0.480 59,063 Power Up #8
2/25/2022 23,000 - - 23,000 0.390 58,974 Power Up #9
3/1/2022 21,200 - - 21,200 0.360 58,889 Power Up #9
3/7/2022 19,500 - - 19,500 0.330 59,091 Power Up #9
3/11/2022 15,050 - 16,000 0.240 66,667 Power Up #9
3/16/2022 - 2,988 - 2,988 0.201 14,863 Power Up #9
3/17/2022 13,400 - - 13,400 0.192 69,792 Power Up #10
3/21/2022 13,400 - - 13,400 0.192 69,792 Power Up #10
3/22/2022 13,400 - - 13,400 0.192 69,792 Power Up #10
3/24/2022 3,550 2,188 - 5,738 0.192 29,883 Power Up #10
4/12/2022 20,100 - - 20,100 0.192 104,688 Power Up #11
4/12/2022 20,000 - 1,750 21,750 0.192 113,281 Fourth Man #12
4/14/2022 19,200 - - 19,200 0.183 104,918 Power Up #11
4/19/2022 4,450 2,188 - 6,638 0.165 40,227 Power Up #11
4/25/2022 20,000 - 1,750 21,750 0.165 131,818 Fourth Man #12
5/24/2022 25,000 - 1,750 26,750 0.165 162,121 Fourth Man #12
6/9/2022 29,000 - 1,750 30,750 0.165 186,364 Fourth Man #12
7/18/2022 18,900 - - 18,900 0.093 203,226 1800 Diagonal #1
7/21/2022 14,600 - - 14,600 0.072 202,778 1800 Diagonal #1
7/22/2022 14,600 - - 14,600 0.072 202,778 1800 Diagonal #1
7/26/2022 5,650 2,688 - 8,338 0.072 115,799 1800 Diagonal #1
8/10/2022 - 13,250 1,750 15,000 0.060 250,000 Mast Hill #1
8/10/2022 17,000 - 1,750 18,750 0.072 260,417 Fourth Man #12
8/18/2022 13,600 - - 13,600 0.054 251,852 1800 Diagonal #2
9/1/2022 16,400 - - 16,400 0.054 303,704 1800 Diagonal #2
9/1/2022 - 13,320 1,750 15,070 0.060 251,167 Fourth Man #12
9/2/2022 16,400 - - 16,400 0.054 303,704 1800 Diagonal #2
9/6/2022 2,350 2,438 - 4,788 0.054 88,657 1800 Diagonal #2
9/7/2022 10,019 6,471 1,750 18,240 0.060 304,000 Mast Hill #1
9/16/2022 20,194 1,750 22,740 0.060 379,000 Mast Hill #1
9/27/2022 19,500 - 1,750 21,250 0.054 393,519 Fourth Man #13
10/17/2022 28,000 - 1,750 29,750 0.006 4,958,333 Fourth Man #13
10/17/2022 27,500 - - 27,500 0.005 5,188,679 May Davis
10/21/2022 - 16,076 1,750 17,826 0.003 5,093,009 Mast Hill #3
11/28/2022 16,000 - 1,750 17,750 0.005 3,349,056 Fourth Man #13
11/30/2022 26,000 - 1,500 27,500 0.005 5,500,000 FirstFire
12/2/2022 - 9,861 1,750 11,611 0.004 3,317,500 Mast Hill #3
12/6/2022 6,474 8,296 1,750 16,520 0.004 4,720,000 Mast Hill #3
12/9/2022 18,137 1,750 20,300 0.004 5,800,000 Mast Hill #3
12/15/2022 28,500 - 1,750 30,250 0.004 8,642,857 Fourth Man #13
12/21/2022 19,245 1,580 1,750 22,575 0.004 6,450,000 Mast Hill #3
Total conversions 849,820 137,367 35,750 1,022,936
58,284,180
Conversion fees
(35,750 )
Loss on conversion - - - 807,032
$ 849,820 $ 137,367 $ 35,750 $ 1,794,218
58,284,180
9. 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 3.5 years to 4.83 years.
The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.
The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, we will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight-line basis over the term of the lease.
Operating Leases
On February 1, 2017, Simlatus Corp. entered into a standard office lease for approximately 1,700 square feet of office space at 175 Joerschke Drive, Suite A, Grass Valley, CA 95945. The lease has a term of 1 year, from February 1, 2017 through January 31, 2018, with a monthly rent of $1,400. On February 1, 2018, the Company entered into a month-to-month lease with a monthly rent of $1,400. The lease was terminated on December 31, 2021.
On March 1, 2021, BrewBilt Brewing entered into a commercial lease with Lave Systems 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 two years, from March 1, 2021 through February 28, 2023, with a monthly rent of $4,000. Lease payments shall increase on March 1, 2022 based upon the CPI published in the Wall Street Journal. On March 1, 2021, the Company recorded ROU assets of $89,567 and lease liabilities of $89,567 in recognition of this lease.
On July 18, 2021, BrewBilt Brewing terminated its commercial lease with Lave Systems and entered into a new lease agreement with the Jon and Andrea Straatemeir Trust. On August 1, 2021, the company entered into a commercial lease for approximately 6,547 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of five years, from August 1, 2021 through July 31, 2026, with a monthly rent of $4,000.
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 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 Convertible Preferred Series A 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 Convertible Preferred Series A 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, 2022
Right-of-use assets $ 357,150
Current operating lease liabilities 69,180
Non-current operating lease liabilities 287,970
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
$ 91,200
96,000
102,000
85,256
39,312
Total 413,768
Less imputed Interest 56,618
Total liability $ 357,150
Other information related to leases is as follows:
Schedule of information related to Operating leases
Lease Type Weighted Average
Remaining Term Weighted Average
Interest Rate
Operating Leases 4.21 years 7%
Financing Leases
The Company evaluated the leases in accordance with ASC 842 and determined that its leases meet the definition of a finance lease.
On December 22, 2020, Satel’s President, Richard Hylen, and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 to January 5, 2027, with monthly payments of $268 and $260, respectively.
In connection with the Satel Group, Inc. Settlement and Sale Agreement, dated July 1, 2022, financing lease assets of $26,815, current financing lease liabilities of $4,666, and non-current financing lease liabilities of $22,149 were reported as non-current assets of discontinued operations, current liabilities of discontinued operations, and non-current liabilities of discontinued operations, respectively, on the December 31, 2021 balance sheet (see Note 3).
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.
Financing lease assets and liabilities related to our financing lease are as follows:
Schedule of Financing lease assets and liabilities related to our financing leases
December 31, 2022
Right-of-use assets $ 51,088
Current financing lease liabilities 9,252
Non-current financing lease liabilities 41,836
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
$ 12,417
12,417
12,417
12,417
10,348
Total 60,016
Less imputed Interest 8,928
Total liability $ 51,088
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 4.83 years 7%
10. LOANS PAYABLE
On October 1, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before October 1, 2020. As of December 31, 2022 and December 31, 2021, the principal balance owed to Direct Capital Group was $14,500 and $14,500, respectively.
On May 3, 2020, the Company, was granted a loan (the “Loan”) from Bank of America. in the amount of $72,920, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.
The Loan, which was in the form of a Note dated May 3, 2020 issued by the Borrower, matures on May 3, 2022, and bears interest at a rate of 1% per annum, payable monthly commencing on November 3, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. As of June 30, 2022 and year ended December 31, 2021, the Company recorded accrued interest of $1,576 and $1,215, respectively, on the PPP loan.
Pursuant to the Satel Group, Inc.. Settlement and Sale Agreement, the Loan Payable amount of $72,920 and accrued interest of $1,576 was reclassified to current liabilities of discontinued operations on the balance sheet (see Note 3).
On June 29, 2022, the Company entered into a Promissory Note with Maguire and Associates LLC in the amount of $25,000. The note bears no interest and is due on or before December 31, 2022.
On October 7, 2022, the Company received funding pursuant to a promissory note 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 is 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. As of December 31, 2022, the company has amortized $5,822 of the debt issuance fees to the statement of operations. As of December 31, 2022, the note has a principal balance of $125,000, debt issuance fees of $19,178 and accrued interest of $12,500.
11. DERIVATIVE LIABILITIES
During the year ended December 31, 2022, 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, 2022 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, 2022:
Schedule of derivative liability activity
Notes Warrants Stock Payable Total
Balance, beginning of period $ 159,045 $ 50,399 $ 1,388,809 $ 1,598,253
Initial recognition of derivative liability 3,463,970 2,975,566 - 6,439,536
Derivative settlements (760,989 ) (166,394 ) - (927,383 )
Loss (gain) on derivative liability valuation (2,532,336 ) (2,726,174 ) 546,280 (4,712,230 )
Balance, end of period $ 329,690 $ 133,397 $ 1,935,089 $ 2,398,176
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, 2022:
Schedule of Company’s derivative liabilities upon management assumption
Valuation date
Expected dividends 0%
Expected volatility 242.28%-280.09%
Expected term .09 - .99 years
Risk free interest 4.12%-4.76%
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 232.80%-517.58%
Expected term 1.01 - 4.98 years
Risk free interest 4.11%-.4.73%
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 256.11%
Expected term 1 year
Risk free interest 4.73%
12. WARRANTS
A summary of warrant activity for the year ended December 31, 2022 is as follows:
Weighted-Average
Weighted-Average Remaining Aggregate
Warrants Shares Exercise Price Contractual Term Intrinsic Value
Outstanding at December 31, 2021 (*) 14,510 $ 2,323 2.66 $ -
Granted 67,456,898 0.0285 4.99 -
Exercised (653,448 ) - - -
Forfeited or expired - - -
Outstanding at December 31, 2022 66,817,960 $ 0.5267 4.83 $ -
Exercisable at December 31, 2022 66,817,960 $ 0.52671 4.83 $ -
(*) The opening shares and exercise price were adjusted to reflect a reverse split at a ratio of 1-for-300 on September 22, 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 $0.002 on December 31, 2022.
13. RELATED PARTY TRANSACTIONS
As of December 31, 2022 and December 31, 2021, related party transactions were comprised of the following:
Schedule of Related Party Transactions
December 31, December 31,
Assets
Related party deposits $ - $ 450,000
Related party financial lease assets $ 51,088 $ -
Current liabilities
Related party accounts payable $ 200,593 $ -
Related party advances 177,517 57,858
Total related party liabilities $ 378,110 $ 57,858
Related party financial lease liabilities $ 9,252 $ -
Non-current liabilities
Related party financial lease liabilities $ 41,836 $ -
Related party notes payable $ 977,396 $ -
Related party deposits and accounts payable
BrewBilt Manufacturing, Inc, which is led by CEO Jef Lewis, is supplying all necessary equipment to the company for its craft beer production.
During the years ending December 31, 2022 and December 31, 2021, the Company paid deposits of $398,042 and $450,000, respectively, to BrewBilt Manufacturing for fabrication of a brewery system. During the year ended December 31, 2022, equipment in the amount of $1,135,801 was completed and delivered to the Company. In addition to the deposits paid, the Company made payments of $88,531, and ordered additional brewing materials and supplies in the amount of $1,366. As of December 31, 2022, the Company has an outstanding accounts payable balance to BrewBilt Manufacturing of $200,593.
The Company anticipates the remaining equipment in the amount of $132,992 will be completed and delivered by Q3 2023.
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 sales
During the year ended December 31, 2022, BrewBilt Manufacturing purchased beer products from the company totaling $1,062.
Finance leases
On December 22, 2020, the President, Richard Hylen, and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 January 5, 2027, with monthly payments of $268 and $260, respectively. Pursuant to the Settlement and Sale Agreement with Satel Group, Inc., the Company reclassified the lease asset and lease liabilities to assets and liabilities of discontinued operations on the balance sheet (see Note 3).
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.
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, 2021 related parties advanced $96,367 to the Company, and the Company made payments of $76,746 to amounts due to related parties. Pursuant to the Settlement and Sale Agreement with Satel Group, Inc., the Company reclassified related party liabilities of $207,086 due to Richard Hylen to current liabilities of discontinued operations on the balance sheet (see Note 3).
During the year ended December 31, 2022, the Company made payments of $13,538 to amounts due to related parties, and $133,197 was advanced to the Company by related parties.
During the year ended December 31, 2022, in connection with related party advances, the Company recorded imputed interest of $32,014 to the statement of operations with a corresponding increase to additional paid in capital.
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, 2022, the Company made payments of $12,000 and recorded imputed interest of 16,192, which was recorded to the statement of operations with a corresponding increase to additional paid in capital. The balance at December 31, 2022 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 a former related party that is a holder of Convertible Preferred Series shares. The shareholder agreed to cancel 3,259 shares of Convertible Preferred Series A stock in exchange for a Promissory Note in the amount of $875,042. 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, 2022, the Company recorded imputed interest of $31,645 to the statement of operations, with a corresponding increase to additional paid in capital. The balance of the note at December 31, 2022 is $875,042 and is reported as non-current related party liabilities on the balance sheet.
Other related party transactions
On January 1, 2022, the company agreed to issue 186 Convertible Series A shares each to Jef Lewis, Richard Hylen, Sam Berry, and Bennett Buchanan for total fees of $200,000, pursuant to Directors Agreements. As of the date of this report, the shares have not been issued.
On August 25, 2022, the Company issued 1,118 shares of Convertible Preferred Series A stock to Jeffrey Lewis and Bennett Buchanan at $268.50 per share, for a total value of $600,366 to be guarantors of the tap room lease.
During the year ended December 31, 2022, the Company issued 2,406 shares of Convertible Series A stock to Richard Hylen, valued at $646,011, in connection with the Settlement and Sale Agreement with Satel Group, Inc.
14. CONVERTIBLE PREFERRED STOCK
Series A Convertible Preferred Stock
On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create Series A Convertible Preferred Stock, with a par value of $0.001 and 10,000,000 shares authorized.
On January 3, 2017, the Company filed an Amendment to Certificate of Designation with the Nevada Secretary of State defining the rights and preferences of the Series A Convertible Preferred shares. Series A Convertible Preferred stock shall be convertible into common shares at the rate of the closing market price on the day of the conversion notice equal to the dollar amount of the value of the Series A Convertible Preferred shares, and holders shall have no voting rights on corporate matters, unless and until they convert their Series A Convertible Preferred shares into Common shares, at which time they will have the same voting rights as all Common Shareholders have; their consent shall not be required for taking any corporate action.
On April 19, 2021 in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of Convertible Series A Preferred stock. At the time the reverse split is effective, the stated value of each share will be $268.50. In addition, the Company reduced the number of authorized shares to 100,000 with a par value of $0.0001. The financial statements have been retroactively adjusted to take this into account for all periods presented.
During the year ended December 31, 2021, 14,192 shares of Convertible Series A Preferred stock were converted to 247,252 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $1,759,694, which was recorded to the statement of operations.
During the year ended December 31, 2021, the Company issued 93 shares each of Convertible Series A Preferred stock to Richard Hylen, Jef Lewis, and Bennett Buchanan and 279 shares of Convertible Series A Preferred stock to Sam Berry, pursuant to employee, consulting, and director agreements (Note 17). These shares were issued at a value at $149,992 and resulted in a gain of conversion of $6, which was recorded to the statement of operations.
On November 1, 2021, the Company entered into a Licensing Agreement with Maguire & Associates and agreed to issue 18,622 shares of Convertible Preferred Series A stock valued at $5,000,000. The shares were issued on March 8, 2022 and $5,000,007 was reclassified to Series A Convertible Preferred Stock, and $7 was recorded to additional paid in capital.
On March 4, 2022, the Company issued 93 shares of Series A Convertible Preferred stock for $25,000 in advertising services provided by Jef Freeman. The shares were valued at $24,971, and $29 was recorded to additional paid in capital.
On April 1, 2022, the Company issued 223 shares of Series A Convertible Preferred stock to settle $60,000 in convertible debt. The shares were valued at $59,876, and a gain on conversion of debt of $124 was recorded to the statement of operations and $78,789 in derivative liabilities were reclassed to additional paid in capital.
On June 29, 2022, the Company issued 400 shares of Convertible Series A Preferred stock, valued at $107,400, in connection with a promissory note.
On July 1, 2022, the Company issued 2,406 shares of Convertible Series A Preferred stock, valued at $646,011, to Richard Hylen in connection with the sale of the company’s wholly owned subsidiary, Satel Inc.
On August 25, 2022, the Company issued 1,118 shares of Convertible Preferred Series A stock each to Jeffrey Lewis and Bennett Buchanan at $268.50 per share, for a total value of $600,366 as guarantors of the tap room lease.
On September 2, 2022, the holder of 455 shares of Convertible Preferred Series A stock agreed to cancel the shares in connection with a settlement agreement. The shares were cancelled in exchange for a cash payment of $30,000. Upon execution of the agreement, the Company made a payment of $10,000 and the balance of $20,000 will be paid in $4,000 monthly installments with no interest. The cancelled shares were valued at $122,168, and the company recorded a gain on settlement of debt of $92,168 to the statement of operations.
On October 4, 2022, the Company cancelled 3,259 shares of Convertible Preferred stock in exchange for 87,504,150 common shares that were issued as collateral on a promissory note. The stock was valued at $1,653,828, and a loss of $778,787 was recorded to the statement of operations.
On October 21, 2022, the Company issued 1,118 shares of Convertible Preferred stock in connection with an agreement for marketing advisory services and platform fees for a period of one year in the amount of $300,000. The stock was valued at $300,183, and a loss of $183 was recorded to the statement of operations.
During the year ended December 31, 2022, 1,874 shares of Convertible Series A Preferred stock were converted to 40,061,283 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $398,707, which was recorded to the statement of operations.
The Series A Convertible Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception. Each share of the Convertible Series A Preferred Stock has a fixed value of $268.50 per share, has no voting rights, and is convertible into common stock at closing market price on the date of conversion. The Company has recorded $13,493,736 which represents 50,256 Series A Convertible Preferred Stock at $268.50 per share, issued and outstanding as of December 31, 2022, outside of permanent equity and liabilities.
Series C Convertible Preferred Stock
On June 13, 2019, the Company’s Board of Directors authorized the creation of 45,750 shares of Series C Convertible Preferred Stock with a par value of $0.0001, and on June 13, 2019, a Certificate of Designation was filed with the Nevada Secretary of State. The Convertible Preferred Series C shall have no voting rights as to corporate matters unless, and until, they are converted into common shares, at which time, they will have the same voting rights as all common stock shareholders. Convertible Preferred Series C shares cannot be sold, assigned, hypothecated, or otherwise disposed of, without first obtaining the consent of the majority Convertible Preferred Series C shareholders. Convertible Preferred Series C shares shall have a value of $10 per share and shall convert into common shares at the rate of the closing market price on the day of conversion notice equal to the dollar amount of the value of the Convertible Preferred Series C share. At no time may the shareholder convert their shares into more than 4.99% of the issued and outstanding.
During the year ended December 31, 2021, 35,583 shares of Convertible Series C Preferred stock valued at $355,830 were converted to 2,222 common shares in accordance with the conversion terms. The issuances resulted in a gain on conversion of $155,830, which was recorded to the statement of operations.
The Convertible Series C Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception.
On June 11, 2021, in connection with the Merger Agreement, the Company eliminated Series C Convertible Preferred stock class.
Preferred Stock Payable
On December 28, 2020, the Company received resignation letters from Baron Tennelle, Dusty Vereker, and Robert Stillwaugh. The Company agreed to issue Preferred Series A shares to settle unpaid wages and interest owed to those individuals.
The Company agreed to issue 353 Preferred Series A shares to Baron Tennelle in exchange for accrued wages of $90,000 and interest of $4,745. The Company agreed to issue 337 Preferred Series A shares to Dusty Vereker in exchange for accrued wages of $86,250 and interest of $4,350. The Company agreed to issue 2,119 Preferred Series A shares to Robert Stillwaugh in exchange for accrued wages of $427,708 and interest of $141,190.
The shares were issued on January 7, 2021 and the Company reclassed $754,249 from Preferred Stock Payable to Convertible Series A Preferred Stock.
On November 1, 2021, the Company entered into a Licensing Agreement with Maguire & Associates and agreed to issue 18,622 shares of Convertible Preferred Series A stock valued at $5,000,000. The shares were issued on March 8, 2022 at a value of $5,000,007, and $5,000,000 was reclassified to Series A Convertible Preferred Stock, and $7 was recorded to additional paid in capital.
On January 1, 2022, the company agreed to issue 186 Convertible Series A shares each to Jef Lewis, Richard Hylen, Sam Berry, and Bennett Buchanan for total fees of $200,000, pursuant to Directors Agreements. The shares have a value of $199,764, and $236 was recorded to additional paid in capital.
On March 31, 2022, the company agreed to issue 1,490 shares of Convertible Series A Preferred stock for compensation in the amount of $400,000, pursuant to an employee agreement with Mike Schatz. The shares have a value of $400,065, and $65 was credited to additional paid in capital.
15. 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.
As of December 31, 2022, 5,000 Series B Preferred shares were authorized, of which 1,000 shares were issued and outstanding.
16. COMMON STOCK
On March 8, 2021, the Company issued 778 common shares in stock based compensation, valued at $87,500.
On April 19, 2021, in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of common stock. In addition, the Company reduced the number of authorized shares to 200,000,000 with a par value of $0.0001. The reverse split was effective on June 11, 2021, and the financial statements have been retroactively adjusted to take this into account for all periods presented. During the year ended December 31, 2021, the Company issued 33 common shares due to rounding in connection with the reverse stock split.
On August 3, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 200,000,000 to 500,000,000 shares at par value $0.0001 per share.
On August 11, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 500,000,000 to 1,000,000,000 shares at par value $0.0001 per share.
On September 2, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 1,000,000,000 to 2,000,000,000 shares at par value $0.0001 per share.
During the year ended December 31, 2021, warrant holders exercised the warrants and the Company issued 23,093 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
During the year ended December 31, 2021, 14,192 shares of Convertible Series A Preferred stock were converted to 247,252 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $1,759,694, which was recorded to the statement of operations.
During the year ended December 31, 2021, the holders of convertible notes converted a total of $877,299 of principal, $55,255 of interest, and $25,900 in note fees, into 354,067 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $513,973 and settled $3,085,456 worth of derivative liabilities which was recorded to additional paid in capital.
On April 5, 2022, the Company filed a Certificate of Amendment with the Florida Secretary of State to increase the number of authorized common shares from 5,000,000,000 to 15,000,000,000 with a par value of $0.0001.
On May 20, 2022, the Company issued 100,000 shares of common stock, valued at $21,000, in connection with a Securities Purchase Agreement.
On September 22, 2022, the Company approved the authorization of a 1 for 300 reverse stock split of the Company’s outstanding shares of common stock. The reverse split was effective on September 30, 2022, and the financial statements have been retroactively adjusted to take this into account for all periods presented. The Company issued 9,161 common shares due to rounding in connection with the reverse stock split.
On September 29, 2022, the Company filed a Certificate of Amendment with the Florida Secretary of State to decrease the number of authorized common shares from 15,000,000,000 to 5,000,000,000 with a par value of $0.0001.
On October 4, 2022, the Company cancelled 3,259 shares of Convertible Preferred stock in exchange for 87,504,150 common shares that were issued as collateral on a promissory note. The stock was valued at $1,653,828, and a loss of $778,787 was recorded to the statement of operations.
On October 7, 2022, the Company issued 1,000,000 shares of common stock, valued at $14,100, in connection with a Promissory Note.
On November 15, 2022, the Company filed a Certificate of Amendment with the Florida Secretary of State to increase the number of authorized common shares from 5,000,000,000 to 20,000,000,000 with a par value of $0.0001.
During the year ended December 31, 2022, 3,577,833 shares of common stock were purchased for $25,105 pursuant to an Equity Purchase Agreement.
During the year ended December 31, 2022, 1,874 shares of Convertible Series A Preferred stock were converted to 40,061,283 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $398,707, which was recorded to the statement of operations.
During the year ended December 31, 2022, warrant holders exercised the warrants and the Company issued 16,450,296 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.
During the year ended December 31, 2022, the holders of convertible notes converted a total of $987,186 of principal and interest into 58,284,179 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $807,032 and settled $680,826 worth of derivative liabilities which was recorded to additional paid in capital.
As of December 31, 2022, 20,000,000,000 common shares, par value $0.0001, were authorized, of which 207,723,162 shares were issued and outstanding.
17. INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
The deferred tax asset and the valuation allowance consist of the following at December 31, 2022:
Schedule of Deferred tax Assets
December 31, 2022
Net tax loss carry-forwards $ 3,467,769
Statutory rate 21 %
Expected tax recovery 728,231
Change in valuation allowance (728,231 )
Income tax provision $ -
Components of deferred tax asset:
Non capital tax loss carry-forwards $ 728,231
Less: valuation allowance (728,231 )
Net deferred tax asset $ -
As of the date of this filing, the Company is not current in filing their tax returns. The last return filed by the Company was December 31, 2017, and the Company has not accrued any potential penalties or interest from that period forward. The Company will need to file returns for the year ending December 31, 2018, 2019, 2020 and 2021 which are still open for examination.
18. 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.
Director Agreements
On January 1, 2022, the Company entered into a new Directors Agreement with Jef Lewis for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.
On January 1, 2022, the Company entered into a new Directors Agreement with Sam Berry for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.
On January 1, 2022, the Company entered into a new Directors Agreement with Bennett Buchanan for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.
On January 1, 2022, the Company entered into a new Directors Agreement with Richard Hylen for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.
Lease
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.
19. SUBSEQUENT EVENTS
Officer and Director Agreements
On January 1, 2023, the Company and Jef Lewis 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 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 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 Convertible Preferred Series A 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 Convertible Preferred Series A 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 Convertible Preferred Series A 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 Convertible Preferred Series A stock at a price of $268.50 per share.
Keg Lease Agreement
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.
Notes Payable & Warrants
On January 10, 2023, the Company entered into a Promissory Note with 1800 Diagonal Lending LLC, in the amount of $61,600. The note bears interest of 10% (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 is due and payable in ten equal monthly payments of $6,899.20, commencing on March 1, 2023 and continuing on the 1st day of each month thereafter.
Subsequent Stock Filings and Issuances
On January 9, 2023, the holder of a convertible note converted a total of $33,005 of principal, interest, and fees into 9,430,000 shares of our common stock.
On January 12, 2023, the holder of a convertible note converted a total of $31,750 of principal and fees into 9,071,428 shares of our common stock.
On January 12, 2023, 150 shares of Convertible Preferred Series A stock was converted into 201,375,000 shares of common stock.
On January 13, 2023, 17,078,560 shares of common stock were purchased for $13,226 pursuant to an Equity Purchase Agreement.
On January 17, 2023, 113 shares of Convertible Preferred Series A stock was converted into 15,170,250 shares of common stock.
On January 19, 2023, 80 shares of Convertible Preferred Series A stock was converted into 16,523,076 shares of common stock.
On January 20, 2023, the holder of a convertible note converted a total of $26,814 of principal, interest, and fees into 17,875,900 shares of our common stock.
On January 24, 2023, 83 shares of Convertible Preferred Series A stock was converted into 20,259,546 shares of common stock.
On January 24, 2023, 32 shares of Convertible Preferred Series A stock was converted into 6,609,230 shares of common stock.
On January 26, 2023, the holder of a convertible note converted a total of $27,750 of principal, interest, and fees into 25,227,272 shares of our common stock.
On January 30, 2023, the holder of a convertible note converted a total of $16,443 of principal, interest, and fees into 17,400,000 shares of our common stock.
On January 30, 2023, 83 shares of Convertible Preferred Series A stock was converted into 20,259,546 shares of common stock.
On January 31, 2023, 1,000 shares of Convertible Preferred Series A stock was converted into 895,000,000 shares of 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 2, 2023, the holder of a convertible note converted a total of $19,656 of principal, interest, and fees into 20,800,000 shares of our common stock.
On February 2, 2023, 150 shares of Convertible Preferred Series A stock was converted into 50,343,750 shares of common stock.
On February 3, 2023, 51,217,581 shares of common stock were purchased for $10,978 pursuant to an Equity Purchase Agreement.
On February 3, 2023, 81 shares of Convertible Preferred Series A stock was converted into 19,771,363 shares of common stock.
On February 8, 2023, 123 shares of Convertible Preferred Series A stock was converted into 55,042,500 shares of common stock.
On February 8, 2023, 135 shares of Convertible Preferred Series A stock was converted into 60,412,500 shares of common stock.
On February 10, 2023, 93 shares of Convertible Preferred Series A stock was converted into 86,105,172 shares of common stock.
On February 13, 2023, 123 shares of Convertible Preferred Series A stock was converted into 55,042,500 shares of common stock.
On February 13, 2023, 90 shares of Convertible Preferred Series A stock was converted into 69,042,857 shares of common stock.
On February 15, 2023, a warrant holder 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.
On February 17, 2023, 33 shares of Convertible Preferred Series A stock was converted into 35,442,000 shares of common stock.
On February 17, 2023, 47 shares of Convertible Preferred Series A stock was converted into 50,478,000 shares of common stock.
On February 17, 2023, 61 shares of Convertible Preferred Series A stock was converted into 163,785,000 shares of common stock.
On February 17, 2023, 689 shares of Convertible Preferred Series A stock was converted into 1,849,965,000 shares of common stock.
On February 23, 2023, the holder of a convertible note converted a total of $27,675 of principal, interest, and fees into 102,500,000 shares of our common stock.
On February 24, 2023, the holder of a convertible note converted a total of $27,388 of interest and fees into 109,550,642 shares of our common stock.
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.
On March 1, 2023, 200 shares of Convertible Preferred Series A stock was converted into 214,800,000 shares of common stock.
On March 2, 2023, the holder of a convertible note converted a total of $58,347 of principal, interest, and fees into 216,100,000 shares of our common stock.
On March 2, 2023, 100 shares of Convertible Preferred Series A stock was converted into 134,250,000 shares of common stock.
On March 7, 2023, 91 shares of Convertible Preferred Series A stock was converted into 244,335,000 shares of common stock.
On March 8, 2023, the holder of a convertible note converted a total of $20,830 of principal, interest, and fees into 77,149,592 shares of our common stock.
On March 13, 2023, the holder of a convertible note converted a total of $58,347 of principal, interest, and fees into 216,100,000 shares of our common stock.
On March 16, 2023, 101 shares of Convertible Preferred Series A stock was converted into 271,185,000 shares of common stock.
On March 21, 2023, the holder of a convertible note converted a total of $58,347 of principal, interest, and fees into 216,100,000 shares of our common stock.
On March 21, 2023, 106 shares of Convertible Preferred Series A stock was converted into 284,610,000 shares of common stock.
On March 29, 2023, 112 shares of Convertible Preferred Series A stock was converted into 300,720,000 shares of common stock.
The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional subsequent events to disclose.

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

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
Management’s Report on Internal Control over Financial Reporting
This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 9A includes information concerning the controls and control evaluations referred to in those certifications.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022. 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, 2022, 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, 2022, 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, 2022, 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, 2022, 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, 2022:
Name Age Position with the Company Position Held Since
Richard Hylen Chairman of the Board January 1, 2021
Jef Lewis Chief Executive Officer, President, Treasurer and Director January 1, 2021
Samuel Berry Chief Operating Officer and Director January 1, 2021
Bennett Buchanan Director March 1, 2021
The Board of Directors has no nominating, audit, or compensation committee at this time.
Term of Office
Each director is elected by the Board of Directors and serves until his or her successor is elected and qualified, unless he or she resigns or is removed earlier. Each of our officers is elected by the Board of Directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is earlier removed from office or resigns.
Background and Business Experience
The business experience during the past five years of the person presently listed above as an Officer or Director of the Company is as follows:
Richard Hylen: Mr. Hylen is 76 years old. As the Founder of Satel Inc., the Managing Director of Turner Broadcasting Far East LTD, and a Senior Executive of Viacom’s San Francisco cable company, Richard has over 35 years of experience providing video and Internet using the most advanced technologies including: cable, fiber, satellite, wireless and CAT5 not only domestically, but to over 50 countries worldwide. His skill set encompasses successfully negotiating complicated licensing agreements with governmental entities, creating joint venture partnerships, developing strategic distribution relationships, financing, designing, installing, and managing advanced technologies to provide consumers with video and Internet services. Hylen used his extensive corporate management expertise combined with his technical knowledge to create Satel, recognized as one of the nation’s largest providers of DirecTV to high rise buildings in a major metropolitan market.
Jeffrey Lewis: Mr. Lewis is 49 years old. He is the founder, Chairman and CEO of BrewBilt Manufacturing, Inc., a multiple million dollar craft beer brewery manufacturing facility in Northern California. He has over 15 years of experience managing engineering, design, and fabrication teams that custom design and fabricate integrated stainless steel distillation and brewing systems for the craft beer beverage industries.
Samuel Berry: Mr. Berry is 44 years old and a graduate from Keene State College in New Hampshire with a Bachelor of Science, and a graduate from Florida International University with his Master of Science. Sam is a Director of BrewBilt Manufacturing Inc. and is experienced with the operations of a public craft beer manufacturing business. With over 15 years of business experience in management, he oversees the operations of BrewBilt Brewing.
Bennett Buchanan: Mr. Buchanan is 38 years old and the co-founder and brewer for the award-winning Old Bus Tavern brewpub in San Francisco. He has also honed his skills brewing on a production scale for the Fort Point Beer Company. Bennett holds a Bachelor of Science in Civil Engineering and a Master of Engineering Management from Cornell University.
Identification of Significant Employees
We have no significant employees.
Family Relationship
We currently do not have any officers or directors of our Company who are related to each other.
Audit Committee and Audit Committee Financial Expert
As of December 31, 2022, 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, 2022, 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, 2022.

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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, 2022 and December 31, 2021. 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 100,000 - - - - - 127,601 227,601
Chairman, Secretary, and President (Satel) 200,000 - - - - - 25,000 225,000
Jef Lewis 200,000 - - - - - 350,183 550,183
President, Chief Executive Officer, Treasurer, and Director 200,000 - - - - - 25,000 225,000
Sam Berry 100,000 - - - - - 50,000 150,000
Chief Operating Officer and Director 100,000 - - - - - 75,000 175,000
Bennett Buchanan 100,000 - - - - - 350,183 450,183
Director 83,333 - - - - - 25,000 108,333
Narrative Disclosure to Summary Compensation Table
Richard Hylen
On January 1, 2021, the Company dismissed Richard Hylen as CEO, and appointed him as the Chairman and Secretary of the company, and the President of Satel Group Inc., a wholly owned subsidiary of the company, and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements replaced all previous agreements. Mr. Hylen will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares of the company. On January 20, 2021, the Company issued 93 shares, valued at $25,000.
On January 1, 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.
Jef Lewis
On January 1, 2021, the Company appointed Jef Lewis as a Director and the Chief Executive Officer, President, and Treasurer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares on January 20, 2021. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares. On January 20, 2021, the Company issued 93 shares of Convertible Series A stock valued at $25,000.
On January 1, 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.
Sam Berry
On January 1, 2021, the Company appointed Samuel Berry as a Director and the Chief Operations Officer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $100,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. The company issued to the employee $50,000 of Preferred Series A shares at a value of $268.50 per share. As Director the undersigned is hereby granted $25,000 of Preferred Series A shares of the company, pursuant with the Certificate of Designation for conversion rights of said shares. On January 20, 2021, the Company issued 279 shares of Convertible Preferred Series A shares, valued at $75,000.
On 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.
Bennett Buchanan
On March 1, 2021, the Company appointed Bennett Buchanan as a Director and of the company and pursuant with the Employment Agreement and Director Agreement dated March 3, 2021. Pursuant to the Employment Agreement, Mr. Buchanan will be employed on at-will basis and receive an annual salary of $100,000 payable in monthly installments, with unpaid amounts accruing interest at the rate of 6% per annum. Unpaid salary may be converted by Mr. Buchanan into shares of Convertible Series A Preferred Stock of the Company. On March 4, 2021, the Company issued 93 shares of Convertible Series A Preferred Stock, valued at $25,000, pursuant to the Employment Agreement.
On 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.
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, 2022.
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, 2022, 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 (2)
Executive Officers and Directors:
Richard Hylen 0.00%
Jef Lewis 0.00%
Sam Berry 0.00%
Ben Buchanan 0.00%
All directors and officers as a group 0.00%
5% Holders
Donna Murtaugh 87,504,150 42.13%
All 5% holders as a group 87,504,150 42.13%
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 207,723,162 shares of common stock issued and outstanding for the company as of December 31, 2022.
Changes in Control
There are no present arrangements or pledges of the Company’s securities, which may result in a change in control of the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related Party Transactions
None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manor:
● Disclosing such transactions in reports where required;
● Disclosing in any and all filings with the SEC, where required;
● Obtaining disinterested directors consent; and
● Obtaining shareholder consent where required.
Related party deposits and accounts payable
BrewBilt Manufacturing, Inc, which is led by CEO Jef Lewis, is supplying all necessary equipment to the company for its craft beer production.
During the years ending December 31, 2022 and December 31, 2021, the Company paid deposits of $398,042 and $450,000, respectively, to BrewBilt Manufacturing for fabrication of a brewery system. During the year ended December 31, 2022, equipment in the amount of $1,135,801 was completed and delivered to the Company. In addition to the deposits paid, the Company made payments of $88,531, and ordered additional brewing materials and supplies in the amount of $1,366. As of December 31, 2022, the Company has an outstanding accounts payable balance to BrewBilt Manufacturing of $200,593.
The Company anticipates the remaining equipment in the amount of $132,992 will be completed and delivered by Q3 2023.
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 sales
During the year ended December 31, 2022, BrewBilt Manufacturing purchased beer products from the company totaling $1,062.
Finance leases
On December 22, 2020, the President, Richard Hylen, and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 January 5, 2027, with monthly payments of $268 and $260, respectively. Pursuant to the Settlement and Sale Agreement with Satel Group, Inc., the Company reclassified the lease asset and lease liabilities to assets and liabilities of discontinued operations on the balance sheet (see Note 3).
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.
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, 2021 related parties advanced $96,367 to the Company, and the Company made payments of $76,746 to amounts due to related parties. Pursuant to the Settlement and Sale Agreement with Satel Group, Inc., the Company reclassified related party liabilities of $207,086 due to Richard Hylen to current liabilities of discontinued operations on the balance sheet (see Note 3).
During the year ended December 31, 2022, the Company made payments of $13,538 to amounts due to related parties, and $133,197 was advanced to the Company by related parties.
During the year ended December 31, 2022, in connection with related party advances, the Company recorded imputed interest of $32,014 to the statement of operations with a corresponding increase to additional paid in capital.
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, 2022, the Company made payments of $12,000 and recorded imputed interest of 16,192, which was recorded to the statement of operations with a corresponding increase to additional paid in capital. The balance at December 31, 2022 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 a former related party that is a holder of Convertible Preferred Series shares. The shareholder agreed to cancel 3,259 shares of Convertible Preferred Series A stock in exchange for a Promissory Note in the amount of $875,042. 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, 2022, the Company recorded imputed interest of $31,645 to the statement of operations, with a corresponding increase to additional paid in capital. The balance of the note at December 31, 2022 is $875,042 and is reported as non-current related party liabilities on the balance sheet.
Other related party transactions
On January 1, 2022, the company agreed to issue 186 Convertible Series A shares each to Jef Lewis, Richard Hylen, Sam Berry, and Bennett Buchanan for total fees of $200,000, pursuant to Directors Agreements. As of the date of this report, the shares have not been issued.
On August 25, 2022, the Company issued 1,118 shares of Convertible Preferred Series A stock to Jeffrey Lewis and Bennett Buchanan at $268.50 per share, for a total value of $600,366 to be guarantors of the tap room lease.
During the year ended December 31, 2022, the Company issued 2,406 shares of Convertible Series A stock to Richard Hylen, valued at $646,011, in connection with the Settlement and Sale Agreement with Satel Group, Inc.
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, 2022 and December 31, 2021:
Audit Fees $ 66,700 $ 45,500
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
Total $ 66,700 $ 45,500
Audit Fees
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.
We incurred approximately $45,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for the year ended December 31, 2021.
Audit-Related Fees
The aggregate fees billed during the years ended December 31, 2022 and 2021 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, 2022 and 2021 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, 2022 and 2021 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.