UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
File Number

| (Exact name of registrant as specified in its charter) |
| (State
or other jurisdiction of Incorporation) |
(IRS
Employer Identification Number) | |
(Address of principal executive offices) |
||
(Registrants Telephone Number) |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
o
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | Accelerated filer | o |
| o (Do not check if a smaller reporting company) | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]{
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
o
On
June 30,
Indicate the number of shares outstanding of each of the registrants classes of common stock as of the latest practicable date.
As of
Documents incorporated by reference: None
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
This
annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to common shares refer to the common shares in our capital stock.
Please note that throughout this Annual Report, and unless otherwise noted, the words we,,BRBL, our, us, the Company, refers to BrewBilt Brewing Company.
PART I
ITEM 1. BUSINESS
BrewBilt
Brewing
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
your ultimate drinking pleasure.



4
Adults
in the United States consume an average of 19.8 gallons of beer each year 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 5 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. 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. 6
The
company produces 4 core craft beers and
7 Employees As
of the date of this filing, BrewBilt Brewing has 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. ITEM
1B. UNRESOLVED STAFF COMMENTS None. ITEM
2. PROPERTIES BrewBilt
Brewing operates out of a The
Company currently does not own any real property. ITEM
3. LEGAL PROCEEDINGS ITEM
4. MINE SAFETY DISCLOSURE None. PART
II ITEM
5. MARKET FOR THE COMPANYS 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 Companys name change. On April 21, 2016, our symbol was changed to SIML
to reflect our Companys name change to Simlatus Corporation. On July 9, 2021, our symbol was changed to BRBL to
reflect our Companys 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: Record
Holders As
of December 31, 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, During
the three months ended December 31, During
the three months ended December 31, Recent
issuances of unregistered securities subsequent to our fiscal year ended of December 31, On
January On
January On
January On
January 13, On
January On
January On
January 20, 2023, the holder of a convertible note converted a total of $ 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. 11 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 On
February 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 On
February On
March 1, On
March 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, On
March On
March On
March 21, On
March On
March Issuer
Repurchases of Equity Securities None. 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. ITEM
7. MANAGEMENTS 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. Revenues: The
Companys revenues were $
Cost
of Sales: The
Companys cost of sales was $175,632 for the year ended December 31, 2022, compared to $11,415 for the year ended December 31,
2021 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 Other
Income (Expense): Other
income (expense) for the 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 Impact
of Inflation We
believe that the rate of inflation has had a negligible effect on our operations. Liquidity
and Capital Resources The
overall working capital (deficit)

California had the largest output for the 








For the Year Ended December 31
2022
2021
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
December 31,
December 31,
2022
2021
Current Assets
$ 92,581
$ 527,665
Current Liabilities
5,867,700
4,364,451
Working Capital (Deficit)
$ (5,775,119 )
$ (3,836,786 )
December 31,
December 31,
2022
2021
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,
14
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,
As
of December 31,
As
of December 31,
Going Concern
The ability of the Company to continue as a going concern is dependent on the Companys 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,
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, managements 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not hold any assets or liabilities requiring disclosure under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BREWBILT
BREWING COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents


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,
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. Managements 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 Companys management. Our responsibility is to express an opinion on the Companys 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 Companys 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
The
critical audit
As
discussed in Note
We
evaluated managements conclusions regarding their
| /s/
|
| We have served as the Companys auditor since 2018. |
19
| BREWBILT BREWING COMPANY |
| (Formerly known as Simlatus Corporation) |
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses | ||||||||
| Related party deposit | ||||||||
| Other current assets | ||||||||
| Current assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Finance lease assets - related party | ||||||||
| Operating right-of-use assets | ||||||||
| Security deposit | ||||||||
| Non-current assets of discontinued operations | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued wages | ||||||||
| Accrued expenses | ||||||||
| Accrued interest | ||||||||
| Convertible notes payable in default | ||||||||
| Convertible notes payable, net of discount | ||||||||
| Current finance lease liabilities - related party | ||||||||
| Current operating lease liabilities | ||||||||
| Derivative liabilities | ||||||||
| Loans payable, net of discount | ||||||||
| Related party liabilities | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total Current liabilities | ||||||||
| Non-current finance lease liabilities - related party | ||||||||
| Non-current operating lease liabilities | ||||||||
| Non-current related party note payable | ||||||||
| Non-current liabilities of discontinued operations | ||||||||
| Total liabilities | ||||||||
| Series A convertible preferred stock: shares authorized,
par value $ (1)
shares issued and outstanding at December 31, 2022 shares issued and outstanding at December 31, 2021 | ||||||||
| Convertible preferred stock payable | ||||||||
| Stockholders deficit: | ||||||||
| Series B preferred stock: shares authorized, par value $ shares issued and outstanding at December 31, 2022 shares issued and outstanding at December 31, 2021 | ||||||||
| Common stock: shares authorized,
par value $ (1) shares issued and outstanding at December 31, 2022 shares issued and outstanding at December 31, 2021 | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders deficit | $ | $ | ||||||
| (1) |
| The accompanying notes are an integral part of these financial statements |
20
| BREWBILT BREWING COMPANY |
| (Formerly known as Simlatus Corporation) |
| Years ended | ||||||||
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| Sales | $ | $ | ||||||
| Sales - related party | ||||||||
| Cost of sales | ||||||||
| Gross profit (loss) | ( | ) | ||||||
| Operating expenses: | ||||||||
| Depreciation | ||||||||
| G&A expenses | ||||||||
| Professional fees | ||||||||
| Salaries and wages | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest income | ||||||||
| Debt forgiveness | ||||||||
| Gain (loss) on extinguishment of debt | ( | ) | ||||||
| Gain (loss) on settlement of debt | ||||||||
| Loss on conversion of debt | ( | ) | ( | ) | ||||
| Loss on conversion of debt of preferred shares | ( | ) | ( | ) | ||||
| Derivative income (expense) | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ||||||
| Net profit (loss) before income taxes from continuing operations | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net profit (loss) from continuing operations | ( | ) | ( | ) | ||||
| Discontinued operations (Note 3) | ||||||||
| Loss from operation of discontinued operations | ( | ) | ( | ) | ||||
| Total profit (loss) from discontinued operations, net of tax | ( | ) | ( | ) | ||||
| Net profit (loss) | $ | ( | ) | $ | ( | ) | ||
| Per share information | ||||||||
| Weighted average number of common shares outstanding, basic (1) | ||||||||
| Net income (loss) per common share, basic, for continued operations | $ | ( | ) | $ | ( | ) | ||
| Net income (loss) per common share, basic, for discontinued operations | $ | ( | ) | $ | ( | ) | ||
| Per share information | ||||||||
| Weighted average number of common shares outstanding, diluted (1) | ||||||||
| Net income (loss) per common share, diluted, for continued operations | $ | ( | ) | $ | ( | ) | ||
| Net income (loss) per common share, diluted, for discontinued operations | $ | ( | ) | $ | ( | ) | ||
(1)
The accompanying notes are an integral part of these financial statements
21
| 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 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||
| Conversion of debt to common stock | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred stock converted to common stock | ( | ) | ( | ) | ( | ) | ( | ) | — | |||||||||||||||||||||||||||||||||||||||
| Convertible preferred stock payable converted to preferred stock | — | ( | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred stock to be issued pursuant to agreement | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock issued for services | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Cashless warrant exercise | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Imputed interest | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Derivative settlements | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Warrant discounts | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Rounding due to reverse stock split | ( | ) | ( | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Balances for December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||
| Preferred shares issued and cancelled in connection with sale and settlement of wholly owned subsidiary | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Deconsolidation of wholly owned subsidiary | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of debt to common stock | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued in connection with promissory note | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued pursuant to equity purchase agreement | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued pursuant to securities purchase agreement | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred stock converted to common stock | ( | ) | ( | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred shares to be issued to settle accrued wages | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Convertible preferred shares to be issued pursuant to director agreements | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred shares issued for services | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred shares issued in connection with promissory note | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred stock payable converted to preferred stock | — | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Convertible preferred shares issued to directors to guarantee lease agreement | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred shares issued to settle debt | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible preferred shares cancelled pursuant to settlement agreement | ( | ) | ( | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Convertible preferred shares cancelled and common shares issued as collateral to promissory note | ( | ) | ( | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Cashless warrant exercise | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Warrant discounts | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Imputed interest | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Derivative settlements | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Rounding due to reverse stock split | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Balances for December 31, 2022 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||
| (1) |
22
| BREWBILT BREWING COMPANY |
| (Formerly known as Simlatus Corporation) |
| CONDENSED STATEMENTS OF CASH FLOWS |
| Years ended | ||||||||
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss from continued operations | $ | ( | ) | $ | ( | ) | ||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of convertible debt discount | ||||||||
| Depreciation | ||||||||
| Stock based compensation | ||||||||
| Preferred stock issued for services | ||||||||
| Imputed interest | ||||||||
| Forgiveness of debt | ( | ) | ||||||
| Loss on conversion of debt | ||||||||
| Loss on conversion of preferred shares | ||||||||
| Gain on settlement of debt | ( | ) | ||||||
| Loss on extinguishment of debt | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Penalties on notes payable | ||||||||
| Decrease (increase) in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Other current assets | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Security deposits | ( | ) | ||||||
| Accrued interest | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Advances from related parties | ( | ) | ||||||
| Other current liabilities | ( | ) | ||||||
| Net cash used in continuing operating activities | ( | ) | ( | ) | ||||
| Net cash used in discontinued operating activities | ||||||||
| Net cash (used in) provided by operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Property, plant and equipment, additions | ( | ) | ( | ) | ||||
| Deposit on equipment - related party | ( | ) | ||||||
| Net cash (used in) provided by investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments on convertible debt | ( | ) | ||||||
| Proceeds from convertible debt | ||||||||
| Proceeds from promissory notes | ||||||||
| 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 | ||||||||
| Net increase (decrease) in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| 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 | $ | $ | ||||||
| Deconsolidation of wholly owned entity | $ | $ | ||||||
| Debt converted to common stock | $ | $ | ||||||
| Preferred shares converted to common shares and related party note payable | $ | $ | ||||||
| Preferred shares cancelled | $ | $ | ||||||
| Stock issued for debt conversion | $ | $ | ||||||
| Discount from derivative | $ | $ | ||||||
| Preferred stock converted to common stock | $ | $ | ||||||
| Preferred stock issued to settle convertible debt | $ | $ | ||||||
| Related party exchange of accrued wages for note payable | $ | $ | ||||||
| Derivative settlements | $ | $ | ||||||
| Warrant discount from debt | $ | $ | ||||||
| Cashless warrant exercise | $ | $ | ||||||
| Convertible note payable exchanged for accrued interest | $ | $ | ||||||
| Lease adoption recognition | $ | $ | ||||||
| Preferred stock payable converted to preferred stock | $ | $ | ||||||
| Fixed assets exchanged for related party accounts payable | $ | $ | ||||||
| Rounding of shares due to reverse stock split | $ | $ | ||||||
| Fixed assets acquired with capitalized finance lease | $ | 52,570 | $ | — | ||||
| The accompanying notes are an integral part of these financial statements |
23
BREWBILT BREWING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December
31,
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
BrewBilt
Brewing is devoted to
BrewBilt
Brewing
BrewBilt
Brewings
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 Companys financial statements in conformity with
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 companys operations that has either been disposed of or is classified as held-for-sale are required to be reported as discontinued operations in a companys 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.
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 managements 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,
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.
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.
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.
26
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 managements 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 Companys financial instruments that are measured at fair value on a recurring basis as of December
31,
| December 31, 2022 | Derivative Liabilities | Total | ||||||
| Level I | $ | $ | ||||||
| Level II | $ | $ | ||||||
| Level III | $ | $ | ||||||
| December 31, 2021 | Derivative Liabilities | Total | ||||||
| Level I | $ | $ | ||||||
| Level II | $ | $ | ||||||
| Level III | $ | $ | ||||||
In
managements 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
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.
27
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
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
2. GOING CONCERN
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of December 31,
The
Company does not have sufficient cash to fund its desired
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 Companys wholly owned subsidiary, Satel Group Inc. in exchange for the debt owed to the buyer.
28
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. Satels 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 entitys 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:
| Current Assets | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Total current assets of discontinued operations | ||||
| Financial lease assets - related party | ||||
| Security deposit | ||||
| Total non-current assets of discontinued operations | ||||
| Total assets of discontinued operations | $ | |||
| Current Liabilities: | ||||
| Accounts payable | $ | |||
| Accrued wages | ||||
| Accrued expenses | ||||
| Accrued interest | ||||
| Current financing lease liabilities - related party | ||||
| Loans payable | ||||
| Related party liabilities | ||||
| Total current liabilities of discontinued operations | ||||
| Non-current financing lease liabilities - related party | ||||
| Total liabilities of discontinued operations | $ |
During the year ended December 31, 2022 and December 31, 2021, discontinued operations consisted of the following:
| December 31 | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | 93,420 | $ | 264,081 | ||||
| Operating expenses | 302,171 | 608,254 | ||||||
| Interest expense | 24,949 | 20,931 | ||||||
| Net loss | $ | (233,700 | ) | $ | (365,104 | ) | ||
29
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:
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Prepaid accounting fees | $ | $ | ||||||
| Prepaid leaseholder improvements | ||||||||
| Prepaid postage | ||||||||
| $ | $ | |||||||
5. RELATED PARTY DEPOSITS
During
the years ending December 31, 2022 and December 31, 2021, the Company paid
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.
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:
| Kegs | 5 years |
| Computer software and equipment | 2 to 5 years, or the term of a software license, whichever is shorter |
| Office equipment and furniture | 3 to 7 years |
| Machinery and equipment | 3 to 20 years |
| Leasehold improvements | Lesser of the remaining term of the lease or estimated useful life of the asset |
30
Property,
plant, and equipment consisted of the following
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Property and Equipment | $ | $ | ||||||
| Computer Equipment | ||||||||
| Leasehold Improvements | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
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 $
As
of December 31,
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Accrued expenses | ||||||||
| Credit cards | $ | $ | ||||||
| CRV payable | ||||||||
| Customer keg deposits | ||||||||
| Payroll tax liabilities | ||||||||
| Sales tax payable | ||||||||
| Other short-term liabilities | ||||||||
| Total accrued expenses | $ | $ | ||||||
| Accrued interest | ||||||||
| Interest on notes payable | $ | $ | ||||||
| Interest on accrued wages | ||||||||
| Total accrued interest | $ | $ | ||||||
| Accrued wages | $ | $ | ||||||
During
the year ended December 31, 2021, the Company had accrued expenses, wages, and interest of $
31
As
of December 31,
| Original | Due | Interest | Conversion | December 31, | December 31, | |||||||||||
| Note Date | Date | Rate | Rate | 2022 | 2021 | |||||||||||
| 1800 Diagonal #1 | Variable | |||||||||||||||
| 1800 Diagonal #2 | Variable | |||||||||||||||
| 1800 Diagonal #3 | Variable | |||||||||||||||
| Emunah Funding #4* | Variable | |||||||||||||||
| FirstFire Global* | 0.18 | |||||||||||||||
| Fourth Man #11 | 0.12 | |||||||||||||||
| Fourth Man #12 | 0.12 | |||||||||||||||
| Fourth Man #13 | 0.45 | |||||||||||||||
| Fourth Man #14 | 0.0009 | |||||||||||||||
| Jefferson St Capital #2* | Variable | |||||||||||||||
| Mast Hill Fund #1 | 0.9 | |||||||||||||||
| Mast Hill Fund #2 | 0.3 | |||||||||||||||
| Mast Hill Fund #3 | 0.18 | |||||||||||||||
| Mast Hill Fund #4 | 0.06 | |||||||||||||||
| Mast Hill Fund #5 | 0.06 | |||||||||||||||
| Mast Hill Fund #6 | 0.0035 | |||||||||||||||
| Mammoth* | Variable | |||||||||||||||
| May Davis Partners | Variable | |||||||||||||||
| Labrys Fund #2 | 9 | |||||||||||||||
| Optempus Invest #4 | Variable | |||||||||||||||
| Optempus Invest #5 | Variable | |||||||||||||||
| Optempus Invest #6 | Variable | |||||||||||||||
| Pacific Pier Capital #1 | 0.105 | |||||||||||||||
| Pacific Pier Capital #2 | 0.0015 | |||||||||||||||
| Power Up Lending #7 | Variable | |||||||||||||||
| Power Up Lending #8 | Variable | |||||||||||||||
| Power Up Lending #9 | Variable | |||||||||||||||
| Power Up Lending #10 | Variable | |||||||||||||||
| Power Up Lending #11 | Variable | |||||||||||||||
| Less debt discount | ( | ) | ( | ) | ||||||||||||
| Notes payable, net of discount | $ | $ | ||||||||||||||
| * |
On
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.
32
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
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
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.
33
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
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.
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.
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.
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,
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
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 $
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.
36
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 $
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.
37
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.
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.
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.
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
May
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.
39
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 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 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 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 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 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,
| Principal | Interest | Fee | Total | Conversion | Shares | |||||||||||||||||||||
| Date | Conversion | Conversion | Conversion | Conversion | Price | Issued | Issued to | |||||||||||||||||||
| 1/3/2022 | $ | $ | $ | $ | $ | FirstFire | ||||||||||||||||||||
| 1/4/2022 | Fourth Man #11 | |||||||||||||||||||||||||
| 1/13/2022 | Power Up #7 | |||||||||||||||||||||||||
| 1/13/2022 | FirstFire | |||||||||||||||||||||||||
| 1/14/2022 | Power Up #7 | |||||||||||||||||||||||||
| 1/21/2022 | FirstFire | |||||||||||||||||||||||||
| 2/1/2022 | Power Up #7 | |||||||||||||||||||||||||
| 2/3/2022 | Power Up #7 | |||||||||||||||||||||||||
| 2/14/2022 | Power Up #8 | |||||||||||||||||||||||||
| 2/14/2022 | Power Up #8 | |||||||||||||||||||||||||
| 2/25/2022 | Power Up #9 | |||||||||||||||||||||||||
| 3/1/2022 | Power Up #9 | |||||||||||||||||||||||||
| 3/7/2022 | Power Up #9 | |||||||||||||||||||||||||
| 3/11/2022 | Power Up #9 | |||||||||||||||||||||||||
| 3/16/2022 | Power Up #9 | |||||||||||||||||||||||||
| 3/17/2022 | Power Up #10 | |||||||||||||||||||||||||
| 3/21/2022 | Power Up #10 | |||||||||||||||||||||||||
| 3/22/2022 | Power Up #10 | |||||||||||||||||||||||||
| 3/24/2022 | Power Up #10 | |||||||||||||||||||||||||
| 4/12/2022 | Power Up #11 | |||||||||||||||||||||||||
| 4/12/2022 | Fourth Man #12 | |||||||||||||||||||||||||
| 4/14/2022 | Power Up #11 | |||||||||||||||||||||||||
| 4/19/2022 | Power Up #11 | |||||||||||||||||||||||||
| 4/25/2022 | Fourth Man #12 | |||||||||||||||||||||||||
| 5/24/2022 | Fourth Man #12 | |||||||||||||||||||||||||
| 6/9/2022 | Fourth Man #12 | |||||||||||||||||||||||||
| 7/18/2022 | 1800 Diagonal #1 | |||||||||||||||||||||||||
| 7/21/2022 | 1800 Diagonal #1 | |||||||||||||||||||||||||
| 7/22/2022 | 1800 Diagonal #1 | |||||||||||||||||||||||||
| 7/26/2022 | 1800 Diagonal #1 | |||||||||||||||||||||||||
| 8/10/2022 | Mast Hill #1 | |||||||||||||||||||||||||
| 8/10/2022 | Fourth Man #12 | |||||||||||||||||||||||||
| 8/18/2022 | 1800 Diagonal #2 | |||||||||||||||||||||||||
| 9/1/2022 | 1800 Diagonal #2 | |||||||||||||||||||||||||
| 9/1/2022 | Fourth Man #12 | |||||||||||||||||||||||||
| 9/2/2022 | 1800 Diagonal #2 | |||||||||||||||||||||||||
| 9/6/2022 | 1800 Diagonal #2 | |||||||||||||||||||||||||
| 9/7/2022 | Mast Hill #1 | |||||||||||||||||||||||||
| 9/16/2022 | Mast Hill #1 | |||||||||||||||||||||||||
| 9/27/2022 | Fourth Man #13 | |||||||||||||||||||||||||
| 10/17/2022 | Fourth Man #13 | |||||||||||||||||||||||||
| 10/17/2022 | May Davis | |||||||||||||||||||||||||
| 10/21/2022 | Mast Hill #3 | |||||||||||||||||||||||||
| 11/28/2022 | Fourth Man #13 | |||||||||||||||||||||||||
| 11/30/2022 | FirstFire | |||||||||||||||||||||||||
| 12/2/2022 | Mast Hill #3 | |||||||||||||||||||||||||
| 12/6/2022 | Mast Hill #3 | |||||||||||||||||||||||||
| 12/9/2022 | Mast Hill #3 | |||||||||||||||||||||||||
| 12/15/2022 | Fourth Man #13 | |||||||||||||||||||||||||
| 12/21/2022 | Mast Hill #3 | |||||||||||||||||||||||||
| Total conversions | ||||||||||||||||||||||||||
| Conversion fees | ( | ) | ||||||||||||||||||||||||
| Loss on conversion | — | — | — | |||||||||||||||||||||||
| $ | 849,820 | $ | 137,367 | $ | 35,750 | $ | 1,794,218 | 58,284,180 | ||||||||||||||||||
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
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 entitys 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
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:
| December 31, 2022 | ||||
| Right-of-use assets | $ | |||
| Current operating lease liabilities | ||||
| Non-current operating lease liabilities | ||||
43
The following is a schedule, by years, of future minimum lease payments required under the operating leases:
| Years Ending | ||||
| December 31, | Operating Leases | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total | ||||
| Less imputed Interest | ||||
| Total liability | $ | |||
Other information related to leases is as follows:
| Lease Type | Weighted Average Remaining Term | Weighted Average Interest Rate | ||
| Operating Leases | 4.21 years |
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,
On
November 6, 2022, the Company entered into a van lease agreement with an employee in the amount of $
Financing
lease assets and liabilities related to our financing
| December 31, 2022 | ||||
| Right-of-use assets | $ | |||
| Current financing lease liabilities | ||||
| Non-current financing lease liabilities | ||||
44
The
following is a schedule, by years, of future minimum lease payments required under the finance
| Years Ending | |||||
| December 31, | Finance Lease | ||||
| 2023 | $ | ||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| Total | |||||
| Less imputed Interest | |||||
| Total liability | $ | ||||
Other
information related to
| Lease Type | Weighted Average Remaining Term | Weighted Average Interest Rate | ||
| Finance Lease | 4.83 years | 7% |
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.
On
May 3, 2020, the Company, was granted a loan (the Loan) from Bank of America. in the amount of $
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.
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.
45
During
the year ended December 31,
The
following table represents the Companys derivative liability activity for the embedded conversion features for the year ended
December 31,
| Notes | Warrants | Stock Payable | Total | |||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||
| Initial recognition of derivative liability | ||||||||||||||||
| Derivative settlements | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss (gain) on derivative liability valuation | ( | ) | ( | ) | ( | ) | ||||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||
Convertible Notes
The
fair value at the commitment date for the convertible notes and the revaluation dates for the Companys derivative liabilities
were based upon the following management assumptions as of December 31,
Valuation date
Expected dividends
Expected volatility
-
Expected term
-
Risk free interest
-
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:
| Valuation date | ||
| Expected dividends | ||
| Expected volatility | - | |
| Expected term | – | |
| Risk free interest | -. |
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:
| Valuation date | ||
| Expected dividends | ||
| Expected volatility | ||
| Expected term | ||
| Risk free interest |
46 12.
WARRANTS A
summary of warrant activity for the year ended December 31, 2022 is as follows: 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 Companys 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:
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. 47 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 $ 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 $ 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. On
March 31, On
October 4, 2022, the Company entered in 48 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, 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 $ 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. During
the year ended December 31, 2021, 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 On
November 1, 2021, the Company entered into a Licensing Agreement with Maguire & Associates and agreed to issue 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 $ 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 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 shares of Convertible Series A Preferred stock, valued at $107,400, in connection with a promissory
note. 49 On
July 1, 2022, the Company issued shares of Convertible Series A Preferred stock, valued at $646,011, to Richard Hylen in connection
with the sale of the companys 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 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 shares of Convertible Preferred stock in exchange for 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, shares of Convertible Series A Preferred stock were converted to 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, Series
C Convertible Preferred Stock On
June 13, 2019, the Companys Board of Directors authorized the creation of 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. 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 $ On
July 1, 2015, the Companys 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. 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 Satels 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 51 On
July 1, 2022, the Company cancelled Preferred Series B Control shares held by Richard Hylen in connection with the sale of the companys
wholly owned subsidiary, Satel Inc. As
of December 31,
Weighted-Average
Weighted-Average
Remaining
Aggregate
Warrants
Shares
Exercise Price
Contractual Term
Intrinsic Value
Outstanding at December 31, 2021 (*)
$
2.66
$ —
Granted
4.99
—
Exercised
( )
—
—
Forfeited or expired
—
—
Outstanding at December 31, 2022
$
4.83
$ —
Exercisable at December 31, 2022
$
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
December 31,
December 31,
2022
2021
Assets
Related party deposits
$
$
Related party financial lease assets
$
$
Current liabilities
Related party accounts payable
$
$
Related party advances
Total related party liabilities
$
$
Related party financial lease liabilities
$
$
Non-current liabilities
Related party financial lease liabilities
$
$
Related party notes payable
$
$
On
March 8, 2021, the Company issued common shares in stock based compensation, valued at $ On
August 3, 2021, the Company Board of Directors and the Majority Stockholders owning a majority of the Companys voting securities,
approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares
from to shares at par value $ per share. On
August 11, 2021, the Company Board of Directors and the Majority Stockholders owning a majority of the Companys voting
securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized
Common Shares from to shares at par value $ per share. On
September 2, 2021, the Company Board of Directors and the Majority Stockholders owning a majority of the Companys voting
securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized
Common Shares from to shares at par value $ per share. During
the year ended December 31, 2021, warrant holders exercised the warrants and the Company issued During
the year ended December 31, 2021, shares of Convertible Series A Preferred stock were converted to During
the year ended December 31, 2021, the holders of convertible notes converted a total of $
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 to with a par value of $.
On
May 20, 2022, the Company issued shares of common stock, valued at $
52
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 to with a par value of $.
On October 4, 2022, the Company cancelled shares of Convertible Preferred stock in exchange for common shares that were issued as collateral on a promissory note. The stock was valued at $, and a loss of $778,787 was recorded to the statement of operations.
On
October 7, 2022, the Company issued shares of common stock, valued at $
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 to with a par value of $.
During
the year ended December 31, 2022, shares of common stock were purchased for $
During the year ended December 31, 2022, shares of Convertible Series A Preferred stock were converted to 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 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 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, common shares, par value $, were authorized, of which shares were issued and outstanding.
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Companys 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 Companys 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,
| December 31, 2022 | ||||
| Net tax loss carry-forwards | $ | |||
| Statutory rate | % | |||
| Expected tax recovery | ||||
| Change in valuation allowance | ( | ) | ||
| Income tax provision | $ | |||
| Components of deferred tax asset: | ||||
| Non capital tax loss carry-forwards | $ | |||
| Less: valuation allowance | ( | ) | ||
| Net deferred tax asset | $ | |||
53
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.
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 companys 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
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 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 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 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 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 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.
54
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 $
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 $
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 $
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 $
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
Subsequent Stock Filings and Issuances
On
January 9, 2023, the holder of a convertible note converted a total of $
On
January
55 On
January 12, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
January 13, 2023, shares of common stock were purchased for $ On
January 17, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
January 19, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
January 20, 2023, the holder of a convertible note converted a total of $ On
January 24, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
January 24, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
January 26, 2023, the holder of a convertible note converted a total of $ On
January 30, 2023, the holder of a convertible note converted a total of $ On
January 30, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
January 31, 2023, shares of Convertible Preferred Series A stock was converted into 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 to with a par value of $. On
On
On
On
On
On
56 On
February 10, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
February 13, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
February 13, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
February 15, 2023, a warrant holder exercised the warrants and the Company issued shares of common stock through a cashless
exercise of the warrants in accordance with the conversion terms. On
February On
February
On
February 17, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
February 17, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
February 23, 2023, the holder of a convertible note converted a total of $ On
February On
February On
March 1, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
March 2, 2023, the holder of a convertible note converted a total of $ On
March On
March On
March 8, On
March 13, 2023, the holder of a convertible note converted a total of $ On
March 16, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. 57 On
March 21, 2023, the holder of a convertible note converted a total of $ On
March 21, 2023, shares of Convertible Preferred Series A stock was converted into shares of common stock. On
March 29, 2023, shares of Convertible Preferred Series A stock was converted The
Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional subsequent events to
disclose.
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.
ITEM 9A. CONTROLS AND PROCEDURES.
Managements 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 Commissions 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,
Managements 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 Companys 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 Companys internal control over financial reporting as of December 31,
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 Companys 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,
| 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. |
| 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 companys 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,
This
annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control
over financial reporting.
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,
ITEM 9B. OTHER INFORMATION.
None.
PART III
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,
| Name | Age | Position with the Company | Position Held Since | |||
| Richard Hylen | 76 | Chairman of the Board | January 1, 2021 | |||
| Jef Lewis | 49 | Chief Executive Officer, President, Treasurer and Director | January 1, 2021 | |||
| Samuel Berry | 44 | Chief Operating Officer and Director | January 1, 2021 | |||
| Bennett Buchanan | 38 | 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
Jeffrey
Lewis: Mr. Lewis is
Samuel
Berry: Mr. Berry is
Bennett
Buchanan: Mr. Buchanan is
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.
60 Audit
Committee and Audit Committee Financial Expert As
of December 31, 2022, Code
of Ethics As
of December 31, 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,
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, Summary
Compensation Table 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, 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. Berrys 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 $25,000, pursuant to the Employment Agreement. On
On
During
the year ended December 31, Outstanding
Equity Awards at Fiscal Year-End No
executive officer received any equity awards, or holds exercisable or exercisable options, as of the year ended December 31, Long-Term
Incentive Plans There
are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.
Nonqualified
Non-Equity
Deferred
Stock
Option
Incentive Plan
Compensation
All Other
Name and
Salary
Bonus
Awards
Awards
Compensation
Earnings
Compensation
Total
principal position
Year
($)
($)
($)
($)
($)
($)
($)
($)
Richard Hylen
2022
100,000
—
—
—
—
—
127,601
227,601
Chairman, Secretary, and President (Satel)
2021
200,000
—
—
—
—
—
25,000
225,000
Jef Lewis
2022
200,000
—
—
—
—
—
350,183
550,183
President, Chief Executive Officer, Treasurer, and Director
2021
200,000
—
—
—
—
—
25,000
225,000
Sam Berry
2022
100,000
—
—
—
—
—
50,000
150,000
Chief Operating Officer and Director
2021
100,000
—
—
—
—
—
75,000
175,000
Bennett Buchanan
2022
100,000
—
—
—
—
—
350,183
450,183
Director
2021
83,333
—
—
—
—
—
25,000
108,333
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.
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,
| Shares | ||||||
| Beneficially | Percent | |||||
| Name of Beneficial Owner | Owned (1) | Owned (2) | ||||
| Executive Officers and Directors: | ||||||
| Richard Hylen | 3 | 0.00% | ||||
| Jef Lewis | 0 | 0.00% | ||||
| Sam Berry | 0 | 0.00% | ||||
| Ben Buchanan | 0 | 0.00% | ||||
| All directors and officers as a group | 3 | 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 |
Changes in Control
There are no present arrangements or pledges of the Companys securities, which may result in a change in control of the Company.
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 Companys 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. |
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,
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,
65
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
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 Companys 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.
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 | 2021 | |||||||
| Audit Fees | $ | 66,700 | $ | 45,500 | ||||
| Audit-Related Fees | — | — | ||||||
| Tax Fees | — | — | ||||||
| All Other Fees | — | — | ||||||
| Total | $ | 66,700 | $ | 45,500 | ||||
66
Audit Fees
We incurred approximately $45,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for the year ended December 31, 2021.
Audit-Related Fees
The
aggregate fees billed during the years ended December 31,
Tax Fees
The
aggregate fees billed during the years ended December 31,
All Other Fees
The
aggregate fees billed during the years ended December 31,
PART IV
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. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated:
| /s/
Jef Lewis |
|
| Jef Lewis |
President, Chief Executive Officer, and Principal Financial Officer
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14
I, Jef Lewis, certify that:
1. I have reviewed this Annual Report on Form 10-K of BrewBilt Brewing Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
| Date:
|
||
| /s/ Jef Lewis | ||
| By: Jef Lewis | ||
| Its: Principal Executive Officer | ||
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14
I, Jef Lewis, certify that:
1. I have reviewed this Annual Report on Form 10-K of BrewBilt Brewing Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
| Date:
| ||
| /s/ Jef Lewis | ||
| By: Jef Lewis | ||
| Its: Principal Financial Officer | ||
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of BrewBilt Brewing Company (the Company) on Form 10-K for the period ending December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Jef Lewis, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| /s/ Jef Lewis | |
| By: Jef Lewis | |
| Principal Executive Officer and Principal Financial Officer | |
Dated: May 2, 2023 | |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.