BrewBilt Brewing Co - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number 000-53276

(BREWBILT LOGO)

BREWBILT BREWING COMPANY

(Name of small business issuer in its charter)

Florida	86-3424797
(State of incorporation)	(I.R.S. Employer Identification No.)

175 Joerschke Dr., Ste. A

Grass Valley, CA 95945

(Address of principal executive offices)

(530) 205-3437

(Registrant’s telephone number)

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. Yes x No o

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). Yes x No o

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

Non-accelerated Filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

Emerging growth company	o{

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 12, 2022, there were 1,744,338,663 shares of the registrant’s $0.0001 par value common stock issued and outstanding.

BREWBILT BREWING COMPANY

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
ITEM 4.	CONTROLS AND PROCEDURES	39

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	40
ITEM 1A.	RISK FACTORS	40
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	40
ITEM 4.	MINE SAFETY DISCLOSURES	40
ITEM 5.	OTHER INFORMATION	40
ITEM 6.	EXHIBITS	40

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of BrewBilt Brewing Company (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies, and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

Please note that throughout this Quarterly Report, and unless otherwise noted, the words “we,”,“BRBL,” “our,” “us,” the “Company,” refers to BrewBilt Brewing Company

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BREWBILT BREWING COMPANY

(Formerly known as Simlatus Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2022			2021
ASSETS		(unaudited)			(audited)
Current Assets
Cash	$	28,873		$	59,261
Accounts receivable		8,302			1,793
Inventory, net		36,526			11,575
Prepaid expenses		3,250			5,036
Related party deposit		—			450,000
Total current assets		76,951			527,665

Property, plant and equipment, net		1,351,824			99,424
Financial lease assets - related party		24,521			26,815
Operating right-of-use assets		170,891			188,770
Security deposit		5,162			5,162

Total assets	$	1,629,349		$	847,836

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	796,374		$	475,429
Accrued wages		1,231,635			1,026,073
Accrued expenses		51,434			31,764
Accrued interest		276,488			245,656
Convertible notes payable in default		64,990			47,990
Convertible notes payable, net of discount		489,095			545,887
Current financing lease liabilities - related party		4,826			4,666
Current operating lease liabilities		37,614			36,369
Derivative liabilities		2,298,217			1,598,253
Loans payable		112,420			87,420
Related party liabilities		389,003			264,944
Total Current liabilities		5,752,096			4,364,451

Non-current financing lease liabilities - related party		19,695			22,149
Non-current operating lease liabilities		133,277			152,401
Non-current related party note payable		110,355			—

Total liabilities		6,015,423			4,539,001

Series A convertible preferred stock: 100,000 shares authorized; par value $0.0001 49,127 shares issued and outstanding at June 30, 2022 30,746 shares issued and outstanding at December 31, 2021 (1)		13,190,600			8,255,301
Convertible preferred stock payable		599,829			5,000,000

Stockholders’ deficit:
Series B preferred stock: 5,000 shares authorized, par value $0.0001 1,500 shares issued and outstanding at June 30, 2022 1,500 shares issued and outstanding at December 31, 2021		—			—
Common stock: 15,000,000,000 shares authorized; par value $0.0001 1,226,211,935 shares issued and outstanding at June 30, 2022 220,877,962 shares issued and outstanding at December 31, 2021 (1)		122,621			22,088
Additional paid in capital		7,530,927			5,528,281
Accumulated deficit		(25,830,051	)		(22,496,835	)
Total stockholders’ deficit		(18,176,503	)		(16,946,466	)
Total liabilities and stockholders’ deficit	$	1,629,349		$	847,836

(1)

Preferred and common share amounts and per share amounts in the financial statements reflect the one-for-one hundred and fifty reverse stock split that was made effective on June 11, 2021.

The accompanying notes are an integral part of these financial statements

BREWBILT BREWING COMPANY

(Formerly known as Simlatus Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended						Six months ended
	June 30,						June 30,
	2022			2021			2022			2021
Sales	$	31,418		$	69,055		$	121,159		$	156,462
Cost of materials		20			1,484			9,795			3,975
Gross profit		31,398			67,571			111,364			152,487

Operating expenses:
Depreciation		15,895			563			23,542			563
G&A expenses		317,077			105,198			725,498			335,453
Professional fees		21,469			20,592			30,628			32,249
Salaries and wages		263,654			256,705			921,793			1,499,835
Total operating expenses		618,095			383,058			1,701,461			1,868,100

Loss from operations		(586,697	)		(315,487	)		(1,590,097	)		(1,715,613	)

Other income (expense):
Interest income		2			—			4			—
Debt forgiveness		9,940			—			9,940			—
Loss on settlement of debt		—			—			(750	)		—
Loss on conversion of debt		(148,790	)		(500	)		(130,554	)		(147,879	)
Loss on conversion of debt of preferred shares		(139,228	)		—			(275,982	)		(1,122,681	)
Derivative income (expense)		151,963			682,364			(406,403	)		2,188,995
Interest expense		(391,304	)		(228,415	)		(939,374	)		(385,017	)
Total other income (expense)		(517,417	)		453,449			(1,743,119	)		533,418

Net profit (loss) before income taxes		(1,104,114	)		137,962			(3,333,216	)		(1,182,195	)
Income tax expense		—			—			—			—
Net profit (loss)	$	(1,104,114	)	$	137,962		$	(3,333,216	)	$	(1,182,195	)

Per share information
Weighted average number of common shares outstanding, basic (1)		807,146,523			64,619,964			683,323,477			57,643,373
Net income (loss) per common share, basic	$	(0.0014	)	$	0.0021		$	(0.0049	)	$	(0.0205	)

Per share information
Weighted average number of common shares outstanding, diluted (1)		807,146,523			181,765,165			683,323,477			57,643,373
Net income (loss) per common share, diluted	$	(0.0014	)	$	0.0008		$	(0.0049	)	$	(0.0205	)

(1)

Common share amounts and per share amounts in the financial statements reflect the one-for-one hundred and fifty reverse stock split that was made effective on June 11, 2021.

The accompanying notes are an integral part of these financial statements

BREWBILT BREWING COMPANY

(Formerly known as Simlatus Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

					(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, 2021		30,746		$	8,255,301			—		$	—		$	5,000,000			1,500	$	—		220,877,962	$	22,088	$	5,528,281		$	(22,496,835	)	$	(16,946,466	)
Conversion of debt to common stock		—			—			—			—			—			—		—		273,219,132		27,322		387,434			—			414,756
Convertible preferred stock converted to common stock		(461	)		(123,779	)		—			—			—			—		—		126,373,667		12,637		247,896			—			260,533
Convertible preferred stock payable converted to preferred stock		18,622			5,000,007			—			—			(5,000,000	)		—		—		—		—		(7	)		—			(7	)
Convertible preferred shares to be issued to settle accrued wages		—			—			—			—			400,065			—		—		—		—		(65	)		—			(65	)
Convertible preferred shares to be issued pursuant to director agreements		—			—			—			—			199,764			—		—		—		—		236			—			236
Convertible preferred shares issued for services		93			24,971			—			—			—			—		—		—		—		29			—			29
Cashless warrant exercise		—			—			—			—			—			—		—		10,629,550		1,063		(1,063	)		—			—
Warrant discounts		—			—			—			—			—			—		—		—		—		83,372			—			83,372
Imputed interest		—			—			—			—			—			—		—		—		—		10,286			—			10,286
Derivative settlements		—			—			—			—			—			—		—		—		—		418,322			—			418,322
Net loss		—			—			—			—			—			—		—		—		—		—			(2,229,102	)		(2,229,102	)
Balances for March 31, 2022		49,000		$	13,156,500			—		$	—		$	599,829			1,500	$	—		631,100,311	$	63,110	$	6,674,721		$	(24,725,937	)	$	(17,988,106	)

Conversion of debt to common stock		—			—			—			—			—			—		—		253,025,124		25,302		263,426			—			288,728
Convertible preferred stock converted to common stock		(496	)		(133,176	)		—			—			—			—		—		312,086,500		31,209		241,319			—			272,528
Common stock issued pursuant to securities purchase agreement		—			—			—			—			—			—		—		30,000,000		3,000		18,000			—			21,000
Convertible preferred shares issued in connection with promissory note		400			107,400			—			—			—			—		—		—		—		—			—			—
Convertible preferred shares issued to settle debt		223			59,876			—			—			—			—		—		—		—		—			—			—
Warrant discounts		—			—			—			—			—			—		—		—		—		193,234			—			193,234
Imputed interest		—			—			—			—			—			—		—		—		—		12,449			—			12,449
Derivative settlements		—			—			—			—			—			—		—		—		—		127,778			—			127,778
Net loss		—			—			—			—			—			—		—		—		—		—			(1,104,114	)		(1,104,114	)
Balances for June 30, 2022		49,127		$	13,190,600			—		$	—		$	599,829			1,500	$	—		1,226,211,935	$	122,621	$	7,530,927		$	(25,830,051	)	$	(18,176,503	)

	Convertible Preferred Stock															Preferred Stock								Additional			Accumulated			Total
	Series A						Series C						Shares			Series B				Common Stock (1)				Paid-In			Earnings			Shareholders’
	Shares			Amount			Shares			Amount			Payable			Shares		Amount		Shares		Amount		Capital			(Deficit)			Equity (Deficit)
Balances for December 31, 2020		41,572		$	11,162,005			35,583		$	355,830		$	754,249			500	$	—		32,644,913	$	3,264	$	(6,062,064	)	$	(15,637,843	)	$	(21,696,643	)

Conversion of debt to common stock		—			—			—			—			—			—		—		10,944,128		1,094		389,080			—			390,174
Convertible preferred stock converted to common stock		(12,963	)		(3,480,499	)		(35,583	)		(355,830	)		—			—		—		20,784,050		2,080		4,956,931			—			4,959,011
Convertible preferred stock payable converted to preferred stock		2,809			754,249			—			—			(754,249	)		—		—		—		—		—			—			—
Preferred stock issued for services		559			149,992			—			—			—			1,000		—		—		—		785,236			—			785,236
Common stock issued for services		—			—			—			—			—			—		—		233,333		23		87,477			—			87,500
Imputed interest		—			—			—			—			—			—		—		—		—		8,000			—			8,000
Derivative settlements		—			—			—			—			—			—		—		—		—		2,494,842			—			2,494,842
Warrant discounts		—			—			—			—			—			—		—		—		—		164,369			—			164,369
Net loss		—			—			—			—			—			—		—		—		—		—			(1,320,157	)		(1,320,157	)
Balances for March 31, 2021		31,977		$	8,585,747			—		$	—		$	—			1,500	$	—		64,606,424	$	6,461	$	2,823,871		$	(16,958,000	)	$	(14,127,668	)

Conversion of debt to common stock		—			—			—			—			—			—		—		350,000		35		10,465			—			10,500
Imputed interest		—			—			—			—			—			—		—		—		—		7,803			—			7,803
Derivative settlements		—			—			—			—			—			—		—		—		—		29,955			—			29,955
Rounding due to reverse stock split		(2	)		(459	)		—			—			—			—		—		37		—		459			—			459
Net profit		—			—			—			—			—			—		—		—		—		—			137,962			137,962
Balances for June 30, 2021		31,975		$	8,585,288			—		$	—		$	—			1,500	$	—		64,956,461	$	6,496	$	2,872,553		$	(16,820,038	)	$	(13,940,989	)

(1)

Preferred and common share amounts and per share amounts in the financial statements reflect the one-for-one hundred and fifty reverse stock split that was made effective on June 11, 2021.

The accompanying notes are an integral part of these financial statements

BREWBILT BREWING COMPANY

(Formerly known as Simlatus Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended
	June 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(3,333,216	)	$	(1,182,195	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible debt discount		793,075			317,876
Depreciation		23,542			563
Stock based compensation		728,400			1,118,690
Preferred stock issued for services		25,000			—
Imputed interest		22,735			15,803
Forgiveness of debt		(9,940	)		—
Loss (gain) on conversion of debt		130,554			147,879
Loss on conversion of preferred shares to common stock		275,982			1,122,681
Loss on settlement of debt		750			—
Change in fair value of derivative liability		406,403			(2,188,995	)
Decrease (increase) in operating assets and liabilities:
Accounts receivable		(6,509	)		(9,604	)
Inventory		(24,951	)		(436	)
Other current assets		—			10,000
Prepaid expenses		1,786			—
Accrued interest		123,566			51,337
Accounts payable		320,945			(2,043	)
Accrued expenses		226,470			324,870
Advances from related parties		120,060			(37,184	)
Net cash (used in) provided by operating activities		(175,348	)		(310,758	)

Cash flows from investing activities:
Property, plant and equipment, additions		(716,640	)		(50,305	)
Deposit on equipment - related party		—			(200,000	)
Net cash (used in) provided by investing activities		(716,640	)		(250,305	)

Cash flows from financing activities:
Proceeds from convertible debt		836,600			529,240
Proceeds from promissory notes		25,000			—
Net cash (used in) provided for financing activities		861,600			529,240

Net increase (decrease) in cash		(30,388	)		(31,823	)

Cash, beginning of period		59,261			134,855
Cash, end of period	$	28,873		$	103,032

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	—		$	—
Cash paid for interest	$	—		$	—

Schedule of non-cash investing & financing activities:
Stock issued for debt conversion	$	572,930		$	252,795
Discount from derivative	$	839,661		$	529,240
Preferred stock converted to common stock	$	256,955		$	3,836,330
Preferred stock issued to settle debt	$	60,000
Related party exchange of accrued wages for note payable	$	114,354		$	—
Derivative settlements	$	546,100		$	2,524,797
Warrant discount from debt	$	276,606		$	164,369
Cashless warrant exercise	$	1,063		$	—
Convertible note payable exchanged for accrued interest	$	16,800		$	—
Lease adoption recognition	$	—		$	89,567
Preferred stock payable converted to preferred stock	$	5,000,007		$	754,249
Fixed assets exchanged for related party accounts payable	$	109,302		$	—

The accompanying notes are an integral part of these financial statements

BREWBILT BREWING COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

BrewBilt Brewing Company (formerly Simlatus Corporation) is the parent company of wholly-owned subsidiaries Satel Group Inc. and BrewBilt Brewing LLC.

Satel Group is the premier provider of DirecTV to high-rise apartments, condominiums and large commercial office buildings in the San Francisco metropolitan area and is now expanding both their DirecTV and Internet services across the Bay Area. Satel’s revenues will support BrewBilt Brewing Company during construction of the brewing facility and ramp-up of craft beer revenues.

BrewBilt Brewing is an independent craft beer manufacturer offering its own line of lagers and ales with a particular focus on traditional European lagers. BrewBilt Brewing will also offer contract brewing services for other breweries in need of additional capacity as well as private label ales for restaurants and bars desiring their own house beer.

BrewBilt Brewing LLC is the entity pursuing the Type 23 Small Beer Manufacturer license from the California Alcoholic Beverage Control Board (ABC). We expect this license to be issued once brewery construction is nearing completion. BrewBilt Brewing LLC has already received our Brewers Notice from the Alcohol and Tobacco Tax and Trade Bureau (TTB).

BrewBilt Brewing Company works closely with BrewBilt Manufacturing Inc., which is also located in Grass Valley, California and led by CEO Jef Lewis. BrewBilt Manufacturing custom designs and handcrafts brewing and fermentation equipment and will supply all necessary equipment to BrewBilt Brewing for our craft beer production.

BrewBilt Brewing’s ties with BrewBilt Manufacturing provide strong relationships with local suppliers of raw materials, equipment and services in California, an aggressive referral network of satisfied customers nationwide, and an Advisory Board consisting of successful business leaders who provide valuable product feedback and business expertise to management. The craft brewing and spirits industries continue to grow worldwide. California is where American craft brewing began and now has over 950 operating breweries – being centrally located in this booming market was a large draw for BrewBilt Brewing to locate its facility in the Sierra foothills.

In March of 2021, BrewBilt Brewing began design and permitting for the construction of its brewing facility in Grass Valley, California. This facility was leased by BrewBilt and is being upgraded with substantial tenant improvements to include a 20 BBL brewhouse, 20 and 40 BBL fermentation tanks, cold-storage space, and a state-of-the-art canning line. In July of 2021, BrewBilt took the opportunity to expand again by leasing additional space adjacent to the original lease.

BrewBilt Brewing began operations on June 29, 2022 with a 20-bbl batch of Party Eyes Kolsch. That first brew was released to market in both kegs and cans on July 19, followed by Jester’s Privilege IPA on July 22. The first batch of Party Eyes Kolsch sold so quickly that the Company is releasing the second batch on August 15 to satisfy customer demand. The Company’s second hoppy offering, Wizard Boots Hazy Pale Ale, will be released in the last week of August. Brain Bypass Helles, a traditional German lager, will complete its cold conditioning for release during the second week of September. This fourth style will complete BrewBilt’s “core four” year round offerings. In addition, the Company has also brewed its first seasonal beer called Royal Event Festbier, an Oktoberfest-inspired brew to be released in mid-September.

Reincorporation Merger Transaction

On March 24, 2021 Simlatus filed a PRE14C disclosing the merger between BrewBilt Brewing and Simlatus. Our Board of Directors and the holders of a majority of the voting power of our stockholders approved an Agreement and Plan of Merger pursuant to which the Company merged with and into BrewBilt Brewing Company, a Florida corporation and wholly-owned subsidiary of the Company, which resulted in the Company’s reincorporation from the State of Nevada to the State of Florida and change in the Company’s name to BrewBilt Brewing Company (the “Reincorporation Merger”). On March 16, 2021, the date we received the consent of the holders of a majority of the voting power of our stockholders, there were 61,373,100 shares of common stock outstanding, 33,020 shares of our Series A Preferred Stock outstanding, 1,500 shares of our Series B Preferred Stock outstanding, and 35,583 shares of our Series C Preferred Stock outstanding. The Series A Preferred Stock and Series C Preferred Stock are non-voting. Each share of Series B Preferred Stock has the right to cast a number of votes equal to four times the votes of all of the shares of our outstanding common stock with respect to any and all matters presented to the holders of common stock for their action.

Following the Reincorporation Merger, BrewBilt Brewing Company has a greater number of authorized shares of common stock available for issuance than the Company previously had available for issuance. Although at present the Company has no commitments or agreements to issue additional shares of common stock, it desires to have additional shares available to provide additional flexibility to use its capital stock for business and financial purposes in the future.

We obtained the approval of Jeffrey Lewis, Chief Executive Officer; Bennett Buchanan, Director; Samuel Berry, Chief Operations Officer; and Richard Hylen, Chairman of the Board, to the actions described in the Information Statement. Messrs. Lewis, Berry, and Hylen collectively hold 683 shares of our common stock, 6,519 shares of Series A Preferred Stock, and all 1,500 shares of our Series B Preferred Stock, or approximately 99% of the voting power of our stockholders.

On April 19, 2021 in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of Convertible Series A Preferred stock. In addition, the Company reduced the number of authorized shares to 100,000 with a par value of $0.0001. The financial statements have been retroactively adjusted to take this into account for all periods presented.

On April 19, 2021, in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of common stock. In addition, the Company reduced the number of authorized shares to 200,000,000 with a par value of $0.0001. The reverse split was effective on June 11, 2021, and the financial statements have been retroactively adjusted to take this into account for all periods presented. The Company issued 9,932 common shares due to rounding in connection with the reverse stock split.

The Reincorporation Merger transaction was completed on June 11, 2021.

Financial Statement Presentation

The audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Reclassification

Certain prior period amounts have been reclassified to conform to current period presentation.

Fiscal Year End

The Company has selected December 31 as its fiscal year end.

Use of Estimates

The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.

Advertising Costs

The Company expenses the cost of advertising and promotional materials when incurred. Total advertising costs were $22,022 and $30,324, for the six months ended June 30, 2022 and June 30, 2021, respectively.

Leases

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

Revenue Recognition and Related Allowances

During the six months ended June 30, 2022, the Company’s main revenue stream is from selling DirecTV services to corporate and residential customers. 29% of the Company’s revenue is from commissions, 27% is from corporate service subscribers, 11% is from residential service subscribers, and 10% was from installations and equipment. In addition, the Company’s sales for audio/video systems represented 23% of revenues.

On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.

Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:

	●	identification of the contract, or contracts, with a customer;

	●	identification of the performance obligations in the contract;

	●	determination of the transaction price;

	●	allocation of the transaction price to the performance obligations in the contract; and

	●	recognition of revenue when, or as, we satisfy a performance obligation.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’s evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at June 30, 2022 and December 31, 2021 is $0.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses are carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the fiscal year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.

Loss Per Share

Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on June 11, 2021.

Inventories

Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

These levels are:

Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 for each fair value hierarchy level:

June 30, 2022	Derivative Liabilities		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	2,298,217	$	2,298,217

December 31, 2021	Derivative Liabilities		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	1,598,253	$	1,598,253

In management’s opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of June 30, 2022 and December 31, 2021, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.

Income Taxes

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

As of the date of this filing, the Company is not current in filing their tax returns. The last return filed by the Company was December 31, 2017, and the Company has not accrued any potential penalties or interest from that period forward. The Company will need to file returns for the year ending December 31, 2021, 2020, 2019 and 2018, which are still open for examination.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The guidance requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires the consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of the new standard.

Although there were new accounting pronouncements issued or proposed by the FASB as of the six months ended June 30, 2022 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

2. GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of June 30, 2022, the Company has a shareholders’ deficit of $18,176,503 since its inception, working capital deficit of $5,675,145, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

The Company does not have sufficient cash to fund its desired business objectives for its production and marketing for the next 12 months. The Company has arranged financing and intends to utilize the cash received to fund the production and marketing of more beers. This financing may be insufficient to fund expenditures or other cash requirements required to complete the product design for the augmented/virtual reality markets. There can be no assurance the Company will be successful in completing any new product development. The Company plans to seek additional financing if necessary, in private or public equity offering(s) to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

3. 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 June 30, 2022 and December 31, 2021, prepaid expenses consisted of the following:

Schedule of Prepaid Expenses

	June 30,		December 31,
	2022		2021
Prepaid accounting fees	$	1,500	$	—
Prepaid employee wages		1,750		—
Prepaid leaseholder improvements		—		5,000
Prepaid postage		—		36
Prepaid Expenses	$	3,250	$	5,036

4. RELATED PARTY DEPOSITS

During the periods ending June 30, 2022 and December 31, 2021, the Company paid a deposit of $398,042 and $450,000, respectively, to BrewBilt Manufacturing for fabrication of a brewery system. During the six months ended June 30, 2022, the majority of the brewing equipment was completed and delivered to the company, which enabled the company to begin brewing beer. The equipment that was delivered and put into use has a cost of $957,344, and the company reclassed the deposit amount of $848,042 to fixed assets and recorded $109,302 to accounts receivable for the balance owed on the equipment to BrewBilt Manufacturing. The Company anticipates the remaining equipment will be complete and delivered within three months.

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.

5. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment are stated at cost or fair value as of the date of acquisition. Expenditures for repairs and maintenance are expensed as incurred. Major renewals and betterments that extend the life of the property are capitalized. Depreciation is computed using the straight-line method based upon the estimated useful lives of the underlying assets as follows:

Schedule of Use Life of Assets


Kegs	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 39 years

Leasehold improvements	Lesser of the remaining term of the lease or estimated useful life of the asset

Property, plant, and equipment consisted of the following at June 30, 2022 and December 31, 2021:

	June 30,			December 31,
	2022			2021
Brewing Equipment	$	998,380		$	37,699
Computer Equipment		2,933			2,933
Leasehold Improvements		383,748			68,487
Property, plant, and equipment, gross		1,385,061			109,119
Less accumulated depreciation		(33,237	)		(9,695	)
Property, plant and equipment, net	$	1,351,824		$	99,424

During the six months ended June 30, 2022, the majority of the brewing equipment was completed and delivered to the company. The equipment that was delivered and put into use has a cost of $957,344. During the six months ended June 30, 2022 and June 30, 2021, the company recorded depreciation expenses of $23,542 and $563, respectively.

6. ACCRUED EXPENSES

As of June 30, 2022 and December 31, 2021, accrued expenses were comprised of the following:

Schedule of Accrued Expenses

	June 30,		December 31,
	2022		2021
Accrued expenses
Credit cards	$	21,737	$	10,192
Customer deposits		18,307		18,307
Payroll tax liabilities		7,994		—
Sales tax payable		396		265
Short-term loans		3,000		3,000
Total accrued expenses	$	51,434	$	31,764

Accrued interest
Interest on notes payable	$	77,448	$	88,114
Interest on short-term loans		1,576		1,214
Interest on accrued wages		197,464		156,328
Total accrued interest	$	276,488	$	245,656

Accrued wages	$	1,231,635	$	1,026,073

7. CONVERTIBLE NOTES PAYABLE

As of June 30, 2022 and December 31, 2021, notes payable were comprised of the following:

Schedule of Convertible Notes Payable

	Original	Due	Interest	Conversion	June 30,			December 31,
	Note Date	Date	Rate	Rate	2022			2021
1800 Diagonal Lending #1	1/11/2022	1/11/2023	10%	Variable		53,750			—
1800 Diagonal Lending #2	2/10/2022	2/10/2023	10%	Variable		48,750			—
1800 Diagonal Lending #3	3/21/2022	3/21/2023	10%	Variable		53,750			—
Emunah Funding #4*	10/20/2018	7/20/2019	24%	Variable		2,990			2,990
FirstFire Global*	3/8/2021	3/8/2022	16%	0.0006		57,000			149,000
Fourth Man #11	3/5/2021	3/5/2022	12%	0.0004		—			26,000
Fourth Man #12	9/27/2021	9/27/2022	12%	0.0004		17,000			111,000
Fourth Man #13	1/1/2022	1/10/2023	12%	0.0015		140,000			—
Jefferson St Capital #2*	3/5/2019	10/18/2019	0%	Variable		5,000			5,000
Mast Hill Fund #1	1/27/2022	1/27/2023	12%	0.003		279,000			—
Mast Hill Fund #2	3/3/2022	3/3/2023	12%	0.001		63,000			—
Mast Hill Fund #3	4/1/2022	4/1/2023	12%	0.0006		425,000			—
Mammoth	3/3/2022	12/3/2021	0%	Variable		27,500			—
May Davis Partners	3/14/2022	12/14/2022	0%	Variable		27,500			—
Labrys Fund #2	7/28/2021	7/28/2022	12%	0.03		—			140,000
Optempus Invest #4	11/2/2020	11/2/2021	10%	Variable		—			20,000
Optempus Invest #5	11/5/2020	11/5/2021	10%	Variable		—			20,000
Optempus Invest #6	12/31/2020	12/31/2021	6%	Variable		—			20,000
Pacific Pier Capital	5/20/2022	5/20/2023	12%	0.00035		60,000			—
Power Up Lending #7	7/9/2021	7/9/2022	10%	Variable		—			78,750
Power Up Lending #8	8/2/2021	8/2/2022	10%	Variable		—			53,750
Power Up Lending #9	8/24/2021	8/24/2022	10%	Variable		—			78,750
Power Up Lending #10	9/8/2021	9/8/2022	10%	Variable		—			43,750
Power Up Lending #11	10/8/2021	10/8/2022	10%	Variable		—			43,750
						1,260,240			792,740
Less debt discount						(706,155	)		(198,863	)
Notes payable, net of discount					$	554,085		$	593,877

As of June 30, 2022, the balance of notes payable that are in default is $64,990.

1800 Diagonal Lending LLC (formerly Sixth Street Lending LLC)

On January 11, 2022, the Company issued a convertible note to 1800 Diagonal LLC for $53,750, of which $50,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on January 11, 2023, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of June 30, 2022, $1,747 of the transaction fees have been amortized to the statement of operations and the note has a principal and accrued interest balance of $53,750 and $2,503, 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 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. As of June 30, 2022, $1,438 of the transaction fees have been amortized to the statement of operations and the note has a principal and accrued interest balance of $48,750 and $1,870, respectively.

On March 21, 2022, the Company issued a convertible note to 1800 Diagonal LLC for $53,750, of which $50,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on March 21, 2023, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of June 30, 2022, $1,038 of the transaction fees have been amortized to the statement of operations and the note has a principal and accrued interest balance of $53,750 and $1,487, respectively.

Emunah Funding LLC

On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matured on July 20, 2018, and is convertible into common stock at 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,440 due to this conversion feature, which has been amortized to the statement of operations. On October 26, 2018, the principal amount of $40,000 was reassigned to Fourth Man, LLC. Pursuant to the default terms of the note, the Company entered a late filing penalty of $1,000. Prior to the period ended December 31, 2020, the note has converted $13,450 of principal and $4,918 of interest into 48 shares of common stock. As of June 30, 2022, the note has a principal balance of $2,990 and accrued interest of $2,153. This note is currently in default.

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 $0.0006. The Company recorded a debt discount from the derivative equal to $300,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered a penalty of $84,000. During the year ended December 31, 2021, the Company issued 40,500,000 common shares upon the conversion of principal in the amount of $235,000, and conversion fees of $5,000. During the six months ended June 30, 2022, the Company issued 36,000,000 common shares upon the conversion of principal in the amount of $92,000, accrued interest of $36,000 and conversion fees of $1,000. As of June 30, 2022, the note has a principal balance of $57,000 and accrued interest of $2,848. This note is currently in default.

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 $0.00436. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2021, the Company issued 25,242,685 common shares upon the conversion of principal in the amount of $114,000, accrued interest of $271 and conversion fees of $7,000. During the six months ended June 30, 2022, the Company issued 9,192,541 common shares upon the conversion of principal in the amount of $26,000, accrued interest of $12,329 and conversion fees of $1,750. As of June 30, 2022, the note has been fully satisfied.

On September 27, 2021, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $111,000 of which $91,000 was received in cash and $20,000 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on September 27, 2022 and is convertible into common shares at a fixed rate of $0.00436. The Company recorded a debt discount from the derivative equal to $111,000 due to this conversion feature, and $83,933 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $27,066. During the six months ended June 30, 2022, the Company issued 178,075,282 common shares upon the conversion of principal in the amount of $94,000 and conversion fees of $7,000. As of June 30, 2022, the note has a principal balance of $17,000 and accrued interest of $13,320.

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 $0.0015. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, and $65,589 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $74,411. As of June 30, 2022, the note has a principal balance of $140,000 and accrued interest of $16,800.

Jefferson Street Capital LLC

On March 5, 2019, the Company accepted and agreed to a Debt Purchase Agreement, whereby Jefferson Street Capital LLC acquired $30,000 of debt from an Emunah Funding LLC convertible note in exchange for $29,000, and the Company recorded a gain on settlement of debt of $1,000. The note bears no interest, matures on October 18, 2019, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading days ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $29,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 71 common shares upon the conversion of principal in the amount of $24,000 and $1,000 in conversion fees. As of June 30, 2022, the note has a principal balance of $5,000. This note is currently in default.

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 $0.03. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, which has been amortized to the statement of operations. As of December 31, 2021, the note had a principal balance of $140,000 and accrued interest of $16,800. On January 27, 2022, $157,500 was paid to Labrys Fund, pursuant to a note issued to Mast Hill Fund L.P. which settled the principal amount of $140,000, accrued interest of $16,800, and $750 was recorded to statement of operations as a loss on settlement of debt. As of June 30, 2022, the note has been fully satisfied.

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.

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, and $11,900 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $15,600. As of June 30, 2022, the note has a principal balance of $27,500.

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 $0.003. The Company recorded a debt discount from the derivative equal to $258,484 due to this conversion feature, and $109,059 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $149,425. As of June 30, 2022, the note has a principal balance of $279,000 and accrued interest of $14,126.

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 $0.001. The Company recorded a debt discount from the derivative equal to $63,000 due to this conversion feature, and $20,540 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $42,460. As of June 30, 2022, the note has a principal balance of $63,000 and accrued interest of $2,465.

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 $0.0006. The Company recorded a debt discount from the derivative equal to $425,000 due to this conversion feature, and $104,795 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $320,205. As of June 30, 2022, the note has a principal balance of $425,000 and accrued interest of $12,575.

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, and $10,800 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $16,700. As of June 30, 2022, the note has a principal balance of $27,500.

Optempus Investments, LLC

On November 2, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 2, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. On April 1, 2022, Optempus Investments, LLC entered into a Note Purchase Agreement with Maguire and Associates LLC, whereby the principal amount of $20,000 and accrued interest of $3,796 was reassigned to Maguire & Associates. As of June 30, 2022, the note has been fully satisfied.

On November 5, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 5, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. On April 1, 2022, Optempus Investments, LLC entered into a Note Purchase Agreement with Maguire and Associates LLC, whereby the principal amount of $20,000 and accrued interest of $3,760 was reassigned to Maguire & Associates. As of June 30, 2022, the note has been fully satisfied.

On December 31, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000. The Company received a cash payment of $10,000 on January 8, 2021, and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on December 31, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, which has been amortized to the statement of operations. On April 1, 2022, Optempus Investments, LLC entered into a Note Purchase Agreement with Maguire and Associates LLC, whereby the principal amount of $20,000 and accrued interest of $2,384 was reassigned to Maguire & Associates. As of June 30, 2022, the note has been fully satisfied.

Pacific Pier Capital LLC

On May 20, 2022, the Company received funding pursuant to a convertible note issued to Pacific Pier Capital LLC for $60,000 of which $47,760 was received in cash and $12,240 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on May 20, 2023 and is convertible into common shares at a fixed rate of $0.00035. The Company recorded a debt discount from the derivative equal to $60,000 due to this conversion feature, and $6,740 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2022 of $53,260. As of June 30, 2022, the note has a principal balance of $60,000 and accrued interest of $7,200.

Power Up Lending Group Ltd.

On May 18, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $16,000, of which $15,600 was paid to settle accounts payable, and $400 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on May 18, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $16,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 1,855,556 common shares upon the conversion of principal in the amount of $16,000 and accrued interest of $700. As of June 30, 2022, the note has an accrued interest balance of $100.

On July 9, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $78,750, of which $75,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on July 9, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $78,750 due to this conversion feature, which has been amortized to the statement of operations. During the six months ended June 30, 2022, the Company issued 44,110,294 common shares upon the conversion of principal in the amount of $78,750 and accrued interest of $3,938. As of June 30, 2022, the note has been fully satisfied.

On August 2, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $53,750, of which $50,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on August 2, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $53,750 due to this conversion feature, which has been amortized to the statement of operations. During the six months ended June 30, 2022, the Company issued 34,593,750 common shares upon the conversion of principal in the amount of $53,750 and accrued interest of $1,600. As of June 30, 2022, the note has been fully satisfied.

On August 24, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $78,750, of which $75,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on August 24, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $78,750 due to this conversion feature, which has been amortized to the statement of operations. During the six months ended June 30, 2022, the Company issued 77,545,203 common shares upon the conversion of principal in the amount of $78,750 and accrued interest of $3,938. As of June 30, 2022, the note has been fully satisfied.

On September 8, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,750, of which $40,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on September 8, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $43,750 due to this conversion feature, which has been amortized to the statement of operations. During the six months ended June 30, 2022, the Company issued 71,777,344 common shares upon the conversion of principal in the amount of $43,750 and accrued interest of $2,188. As of June 30, 2022, the note has been fully satisfied.

On October 8, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,750, of which $40,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on October 8, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $43,750 due to this conversion feature, which has been amortized to the statement of operations. During the six months ended June 30, 2022, the Company issued 74,949,842 common shares upon the conversion of principal in the amount of $43,750 and accrued interest of $2,188. As of June 30, 2022, the note has been fully satisfied.

Convertible Note Conversions

During the six months ended June 30, 2022, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:

	Principal		Interest		Fee		Total		Conversion	Shares
Date	Conversion		Conversion		Conversion		Conversion		Price	Issued		Issued to
1/3/2022	$	51,500	$	—	$	1,000	$	52,500	$0.00500		10,500,000	FirstFire
1/4/2022		26,000		12,329		1,750	$	40,079	$0.00436		9,192,541	Fourth Man #11
1/13/2022		23,100		—		—	$	23,100	$0.00210		11,000,000	Power Up #7
1/13/2022		—		36,000		—	$	36,000	$0.00300		12,000,000	FirstFire
1/14/2022		22,000		—		—	$	22,000	$0.00200		11,000,000	Power Up #7
1/21/2022		40,500		—		—	$	40,500	$0.00300		13,500,000	FirstFire
2/1/2022		21,300		—		—	$	21,300	$0.00170		12,529,412	Power Up #7
2/3/2022		12,350		3,938		—	$	16,288	$0.00170		9,580,882	Power Up #7
2/14/2022		27,000		—		—	$	27,000	$0.00160		16,875,000	Power Up #8
2/14/2022		26,750		1,600		—	$	28,350	$0.00160		17,718,750	Power Up #8
2/25/2022		23,000		—		—	$	23,000	$0.00130		17,692,308	Power Up #9
3/1/2022		21,200		—		—	$	21,200	$0.00120		17,666,667	Power Up #9
3/7/2022		19,500		—		—	$	19,500	$0.00110		17,727,273	Power Up #9
3/11/2022		15,050		950		—	$	16,000	$0.00080		20,000,000	Power Up #9
3/16/2022		—		2,988		—	$	2,988	$0.00067		4,458,955	Power Up #9
3/17/2022		13,400		—		—	$	13,400	$0.00064		20,937,500	Power Up #10
3/21/2022		13,400		—		—	$	13,400	$0.00064		20,937,500	Power Up #10
3/22/2022		13,400		—		—	$	13,400	$0.00064		20,937,500	Power Up #10
3/24/2022		3,550		2,188		—	$	5,738	$0.00064		8,964,844	Power Up #10
4/12/2022		20,100		—		—	$	20,100	$0.00064		31,406,250	Power Up #11
4/12/2022		20,000		—		1,750	$	21,750	$0.00064		33,984,375	Fourth Man #12
4/14/2022		19,200		—		—	$	19,200	$0.00061		31,475,410	Power Up #11
4/19/2022		4,450		2,188		—	$	6,638	$0.00055		12,068,182	Power Up #11
4/25/2022		20,000		—		1,750	$	21,750	$0.00055		39,545,454	Fourth Man #12
5/24/2022		25,000		—		1,750	$	26,750	$0.00055		48,636,363	Fourth Man #12
6/9/2022		29,000		—		1,750	$	30,750	$0.00055		55,909,090	Fourth Man #12
Total conversions		510,750		62,179		9,750		582,679			526,244,256
Loss on conversion		—		—		—		120,804
	$	510,750	$	62,179	$	9,750	$	703,483			526,244,256

8. LEASES

The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity.

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the January 1, 2019 adoption date.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms of month-to-month and two years.

The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.

The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, we will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight-line basis over the term of the lease.

Operating Leases

On February 1, 2017, Simlatus Corp. entered into a standard office lease for approximately 1,700 square feet of office space at 175 Joerschke Drive, Suite A, Grass Valley, CA 95945. The lease has a term of 1 year, from February 1, 2017 through January 31, 2018, with a monthly rent of $1,400. On February 1, 2018, the Company entered into a month-to-month lease with a monthly rent of $1,400. The lease was terminated on December 31, 2021.

On January 31, 2018, Satel Group, Inc. entered into a standard office lease for approximately 1,006 square feet of office space at 330 Townsend Street, Suite 135, San Francisco, CA 94107. The lease has a term of 2 years, from December 1, 2018 through November 30, 2019, with a monthly rent of $5,781 and applicable common area maintenance expenses. On December 1, 2019, the Company entered into a month-to-month lease with a monthly rent of $5,781. On December 1, 2020, the Company reduced the amount of space leased resulting in a reduced monthly rent of $3,169.

On March 1, 2021, BrewBilt Brewing entered into a commercial lease with Lave Systems for approximately 4,000 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of two years, from March 1, 2021 through February 28, 2023, with a monthly rent of $4,000. Lease payments shall increase on March 1, 2022 based upon the CPI published in the Wall Street Journal. On March 1, 2021, the Company recorded of ROU assets of $89,567 and lease liabilities of $89,567 in recognition of this lease.

On July 18, 2021, BrewBilt Brewing terminated its commercial lease with Lave Systems and entered into a new lease agreement with the Jon and Andrea Straatemeir Trust. On August 1, 2021, the company entered into a commercial lease for approximately 6,547 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of five years, from August 1, 2021 through July 31, 2026, with a monthly rent of $4,000.

ROU assets and lease liabilities related to our operating leases are as follows:

	June 30, 2022
Right-of-use assets	$	170,891
Current operating lease liabilities		37,614
Non-current operating lease liabilities		133,277

The following is a schedule, by years, of future minimum lease payments required under the operating leases:

Years Ending
December 31,	Operating Leases
2022	$	24,000
2023		48,000
2024		48,000
2025		48,000
2026		28,000
Total		196,000
Less imputed Interest		25,109
Total liability	$	170,891

Other information related to leases is as follows:

Lease Type		Weighted Average Remaining Term		Weighted Average Interest Rate
Operating Leases		4.08 years		7%

Financing Leases

On December 22, 2020, the President, Richard Hylen, and the Company entered into two vehicle leases in the amount of $19,314 and $18,689, respectively. The leases have a term of 6 years, from February 5, 2021 January 5, 2027, with monthly payments of $268 and $260, respectively.

On December 22, 2020, the Company entered into a vehicle lease in the amount of $19,314. The lease has a term of 6 years, from February 5, 2021 January 5, 2027, with a monthly payment of $268.

On December 22, 2020, the Company entered into a vehicle lease in the amount of $18,689. The lease has a term of 6 years, from February 5, 2021 January 5, 2027, with a monthly payment of $260.

The Company evaluated the leases in accordance with ASC 842 and determined that its leases meet the definition of a finance lease.

Financing lease assets and liabilities related to our financing leases are as follows:

	June 30, 2022
Right-of-use assets	$	24,521
Current financing lease liabilities		4,826
Non-current financing lease liabilities		19,695

The following is a schedule, by years, of future minimum lease payments required under the finance leases:

Years Ending
December 31,	Finance Leases
2022		3,167
2023		6,334
2024		6,334
2025		6,334
2026		6,334
Total		28,503
Less imputed Interest		3,982
Total liability	$	24,521

Other information related to leases is as follows:

Lease Type		Weighted Average Remaining Term		Weighted Average Interest Rate
Finance Leases		4.5 years		7%

9. LOANS PAYABLE

On October 1, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before October 1, 2020. As of June 30, 2022 and December 31, 2021, the principal balance owed to Direct Capital Group was $14,500 and $14,500, respectively.

On May 3, 2020, the Company, was granted a loan (the “Loan”) from Bank of America. in the amount of $72,920, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

The Loan, which was in the form of a Note dated May 3, 2020 issued by the Borrower, matures on May 3, 2022, and bears interest at a rate of 1% per annum, payable monthly commencing on November 3, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. As of June 30, 2022 and year ended December 31, 2021, the Company recorded accrued interest of $1,576 and $1,215, respectively, on the PPP loan.

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.

10. DERIVATIVE LIABILITIES

During the six months ended June 30, 2022, the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at June 30, 2022 based on the lattice model.

The following table represents the Company’s derivative liability activity for the embedded conversion features for the six months ended June 30, 2022:

	Notes			Warrants			Stock Payable			Total
Balance, beginning of period	$	159,045		$	50,399		$	1,388,809		$	1,598,253
Initial recognition of derivative liability		1,934,643			1,576,136			—			3,510,779
Derivative settlements		(513,336	)		(32,764	)		—			(546,100	)
Loss (gain) on derivative liability valuation		(1,079,962	)		(1,114,498	)		(70,255	)		(2,264,715	)
Balance, end of period	$	500,390		$	479,273		$	1,318,554		$	2,298,217

Convertible Notes

The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of June 30, 2022:

		Valuation date
Expected dividends		0%
Expected volatility		222.64%-255.69%
Expected term		.09 - .89 years
Risk free interest		1.28%-2.68%

Warrants

On January 2, 2019, the Company executed a Common Stock Purchase Warrant for 12,146 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.016 per share and expire on December 31, 2023.

On January 31, 2019, the Company executed a Common Stock Purchase Warrant for 14,667 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.016 per share and expire on January 30, 2024.

On March 26, 2019, the Company executed a Common Stock Purchase Warrant for 10,958 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.017 per share and expire on March 25, 2024.

On April 9, 2019, the Company executed a Common Stock Purchase Warrant for 3,667. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.10 per share and expire on April 8, 2024.

On April 9, 2019, the Company executed a Common Stock Purchase Warrant for 3,667 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.10 per share and expire on April 8, 2024.

On April 23, 2019, the Company executed a Common Stock Purchase Warrant for 700 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.25 per share and expire on April 22, 2024.

On May 30, 2019, the Company executed a Common Stock Purchase Warrant for 4,167 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.04 per share and expire on May 29, 2024.

On June 21, 2019, the Company executed a Common Stock Purchase Warrant for 6,667 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.025 per share and expire on June 20, 2024.

On July 22, 2019, the Company executed a Common Stock Purchase Warrant for 11,195 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.023 per share and expire on July 22, 2024.

On August 7, 2019, the Company executed a Common Stock Purchase Warrant for 14,667 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.015 per share and expire on August 7, 2024.

On August 12, 2019, the Company executed a Common Stock Purchase Warrant for 7,822 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.015 per share and expire on August 7, 2024.

On August 20, 2019, the Company executed a Common Stock Purchase Warrant for 23,333 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.01 per share and expire on August 7, 2024.

On October 9, 2019, the Company executed a Common Stock Purchase Warrant for 114,583 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0016 per share and expire on October 9, 2024.

On February 8, 2021, the Company executed a Common Stock Purchase Warrant for 15,385 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.00468 per share and expire on February 8, 2026.

On March 8, 2021, the Company executed a Common Stock Purchase Warrant for 3,333,333 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on March 9, 2024.

On January 10, 2022, the Company executed a Common Stock Purchase Warrant for 124,444,444 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on January 10, 2025.

On March 3, 2022, the Company executed a Common Stock Purchase Warrant for 63,000,000 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on March 3, 2027.

On April 1, 2022, the Company executed a Common Stock Purchase Warrant for 710,000,000 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0006 per share and expire on April 1, 2027.

On May 20, 2022, the Company executed a Common Stock Purchase Warrant for 60,000,000 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on May 20, 2027.

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		0%
Expected volatility		239.05%-547.52%
Expected term		1.51 – 4.89 years
Risk free interest		2.80%-3.00%

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		0%
Expected volatility		227.34%
Expected term		1 year
Risk free interest		2.80%

11. RELATED PARTY TRANSACTIONS

The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. During the year ended December 31, 2021 the Company made payments of $76,746 to amounts due to related parties, and $96,367 was advanced to the Company by related parties. During the six months ended June 30, 2022, the Company made payments of $18,538 to amounts due to related parties, and $142,597 was advanced to the Company by related parties.

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 six months ended June 30, 2022, the Company made payments of $4,000. The balance at June 30,2022 is $110,355 and is reported as non-current related party liabilities on the balance sheet.

As of June 30, 2022 and December 31, 2021, the Company has current related parties liabilities of $389,003 and $264,944, respectively, and non-current related party liabilities of $110,355 and $0, respectively.

During the six months ended June 30, 2022, the Company recorded imputed interest of $22,735 to the statement of operations with a corresponding increase to additional paid in capital.

During the periods ending June 30, 2022 and December 31, 2021, the Company paid a deposit of $398,042 and $450,000, respectively, to BrewBilt Manufacturing for fabrication of a brewery system. During the six months ended June 30, 2022, the majority of the brewing equipment was completed and delivered to the company. The equipment that was delivered and put into use has a cost of $957,344, and the company reclassed the deposit amount of $848,042 to fixed assets and recorded $109,302 to accounts payable for the balance owed on the equipment to BrewBilt Manufacturing. The Company anticipates the remaining equipment will be complete and delivered within three months.

12. CONVERTIBLE PREFERRED STOCK

Series A Convertible Preferred Stock

On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create Series A Convertible Preferred Stock, with a par value of $0.001 and 10,000,000 shares authorized.

On January 3, 2017, the Company filed an Amendment to Certificate of Designation with the Nevada Secretary of State defining the rights and preferences of the Series A Convertible Preferred shares. Series A Convertible Preferred stock shall be convertible into common shares at the rate of the closing market price on the day of the conversion notice equal to the dollar amount of the value of the Series A Convertible Preferred shares, and holders shall have no voting rights on corporate matters, unless and until they convert their Series A Convertible Preferred shares into Common shares, at which time they will have the same voting rights as all Common Shareholders have; their consent shall not be required for taking any corporate action.

On October 26, 2018, the Company issued 3,259 Series A Convertible Preferred shares to Donna Murtaugh, to settle liabilities of $875,000 owed to her pursuant to the Asset Purchase Agreement dated March 9, 2016.

As of November 13, 2018, 23,263 shares of Series A Convertible Preferred stock were transferred into the Company in connection with the reverse merger.

On November 13, 2018, the Company granted 7,244 Series A Convertible Preferred shares to Richard Hylen, valued at $1,945,000, pursuant the Merger Agreement.

On January 9, 2019, the Company entered into an Asset Purchase Agreement Proscere Bioscience Inc., a Florida Corporation. Pursuant to the Asset Purchase Agreement, Proscere Bioscience assigned and transferred all of its right, title, and interest to its fixed assets and “know how” to Simlatus Corporation. These assets and “know how” pursuant to the 5 year Exclusive Distribution & License Agreement dated January 9, 2019 are valued at $3,000,000. As consideration for the assets and “know how” Simlatus Corporation issued 11,173 shares of Convertible Preferred Series A stock. At that time, Proscere Bioscience became a wholly subsidiary of Simlatus Corporation.

On March 19, 2019, Richard Hylen entered into a Debt Settlement Agreement with Xillient, LLC to settle $362,261 in outstanding debt owed to Xillient, LLC for $200,000. Mr. Hylen transferred 745 of his Convertible Preferred Series A that are valued at $200,000. The liability amount of $362,261 was reclassed to additional paid in capital due to the contributed capital by a related party.

On April 10, 2019, the Board of Directors repurchased and returned to treasury 168 Convertible Preferred Series A shares valued at $45,000 in the name of Optempus Investments, LLC. The company authorized and paid the payment of $45,000 to Optempus Investments, LLC for the repurchase of 168 Convertible Preferred Series A shares. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Convertible Preferred Series A Stock is convertible to common stock at market price the day of conversion.

On June 3, 2019, the Board of Directors repurchased and returned to treasury 121 Convertible Preferred Series A shares valued at $32,505 in the name of Optempus Investments, LLC. The company authorized and paid the payment of $32,505 to Optempus Investments, LLC for the repurchase of 121 Convertible Preferred Series A shares. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Convertible Preferred Series A Stock is convertible to common stock at market price the day of conversion.

On June 21, 2019, 289 Convertible Preferred Series A shares held in treasury were retired.

During the year ended December 31, 2019, 4,749 shares of Convertible Series A Preferred stock were converted to 14,336 common shares in accordance with the conversion terms.

On November 27, 2020, the Company and a note holder agreed to convert the principal and interest balance of $212,054 to 790 shares of Convertible Series A Preferred stock.

On December 28, 2020, the Company converted wages and accrued interest owed to Richard Hylen and Mike Schatz to Convertible Series A Preferred stock. The Company issued 652 shares valued at $174,930 in exchange of wages and interest of $174,930 owed to Richard Hylen. The Company issued 2,119 shares valued at $568,899 to settle wages and interest of $568,899 owed to Mike Schatz.

During the year ended December 31, 2020, 1,890 shares of Convertible Series A Preferred stock were converted to 8,119,147 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,349, which was recorded to the statement of operations.

On April 19, 2021 in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of Convertible Series A Preferred stock. At the time the reverse split is effective, the stated value of each share will be $268.50. In addition, the Company reduced the number of authorized shares to 100,000 with a par value of $0.0001. The financial statements have been retroactively adjusted to take this into account for all periods presented.

During the year ended December 31, 2021, 14,192 shares of Convertible Series A Preferred stock were converted to 74,175,550 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $1,759,694, which was recorded to the statement of operations.

During the year ended December 31, 2021, the Company issued 93 shares each of Convertible Series A Preferred stock to Richard Hylen, Jef Lewis, and Bennett Buchanan and 279 shares of Convertible Series A Preferred stock to Sam Berry, pursuant to employee, consulting, and director agreements (Note 16). These shares were issued at a value at $149,992 and resulted in a gain of conversion of $6, which was recorded to the statement of operations.

On 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 November 1, 2021, the Company entered into a Licensing Agreement with Maguire & Associates and agreed to issue 18,622 shares of Convertible Preferred Series A stock valued at $5,000,000. The shares were issued on March 8, 2022 and $5,000,007 was reclassified to Series A Convertible Preferred Stock, and $7 was recorded to additional paid in capital.

On April 1, 2022, the Company issued 223 shares of Series A Convertible Preferred stock to settle $60,000 in convertible debt. The shares were valued at $59,875, 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.

During the six months ended June 30, 2022, 957 shares of Convertible Series A Preferred stock were converted to 438,460,167 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $276,107, which was recorded to the statement of operations.

On June 29, 2022, the Company issued 400 shares of Convertible Series A Preferred stock, valued at $107,400, in connection with a promissory note.

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 $13,190,600, which represents 49,127 Series A Convertible Preferred Stock at $268.50 per share, issued and outstanding as of June 30, 2022, outside of permanent equity and liabilities.

Series C Convertible Preferred Stock

On June 13, 2019, the Company’s Board of Directors authorized the creation of 45,750 shares of Series C Convertible Preferred Stock with a par value of $0.0001, and on June 13, 2019, a Certificate of Designation was filed with the Nevada Secretary of State. The Convertible Preferred Series C shall have no voting rights as to corporate matters unless, and until, they are converted into common shares, at which time, they will have the same voting rights as all common stock shareholders. Convertible Preferred Series C shares cannot be sold, assigned, hypothecated, or otherwise disposed of, without first obtaining the consent of the majority Convertible Preferred Series C shareholders. Convertible Preferred Series C shares shall have a value of $10 per share and shall convert into common shares at the rate of the closing market price on the day of conversion notice equal to the dollar amount of the value of the Convertible Preferred Series C share. At no time may the shareholder convert their shares into more than 4.99% of the issued and outstanding.

On June 13, 2019, the Company entered into a Securities Exchange Agreement with Fourth Man Fund, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated July 3, 2018, July 17, 2018, October 3, 2018, and August 22, 2018, representing 89,540 shares of common stock, exchanged for 10,167 shares of Convertible Preferred Series C stock at $10 per share. The exchange extinguished $734,381 worth of derivative liabilities.

On June 13, 2019, the Company entered into a Securities Exchange Agreement with Emunah Funding, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated October 20, 2017, November 6, 2017, November 30, 2017, January 11, 2018, May 15, 2018, and October 31, 2018, representing 129,952 shares of common stock, exchanged for 35,583 shares of Convertible Preferred Series C stock at $10 per share. The exchange extinguished $1,095,620 worth of derivative liabilities.

During the year ended December 31, 2019, 10,167 shares of Convertible Series C preferred stock were converted to 28,015 common shares in accordance with the conversion terms.

During the year ended December 31, 2021, 35,583 shares of Convertible Series C Preferred stock valued at $355,830 were converted to 666,667 common shares in accordance with the conversion terms. The issuances resulted in a gain on conversion of $155,830, which was recorded to the statement of operations.

The Convertible Series C Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception.

On June 11, 2021, in connection with the Merger Agreement, the Company eliminated Series C Convertible Preferred stock class.

Preferred Stock Payable

On December 28, 2020, the Company received resignation letters from Baron Tennelle, Dusty Vereker, and Robert Stillwaugh. The Company agreed to issue Preferred Series A shares to settle unpaid wages and interest owed to those individuals.

The Company agreed to issue 353 Preferred Series A shares to Baron Tennelle in exchange for accrued wages of $90,000 and interest of $4,745. The Company agreed to issue 337 Preferred Series A shares to Dusty Vereker in exchange for accrued wages of $86,250 and interest of $4,350. The Company agreed to issue 2,119 Preferred Series A shares to Robert Stillwaugh in exchange for accrued wages of $427,708 and interest of $141,190.

The shares were issued on January 7, 2021 and the Company reclassed $754,249 from Preferred Stock Payable to Convertible Series A Preferred Stock.

On November 1, 2021, the Company entered into a Licensing Agreement with Maguire & Associates and agreed to issue 18,622 shares of Convertible Preferred Series A stock valued at $5,000,000. 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.

13. PREFERRED STOCK

On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create Series B Preferred Stock, with a par value of $0.001 and 10,000,000 shares authorized.

On July 1, 2015, the Company’s Board of Directors authorized the creation of shares of Series B Voting Preferred Stock and on July 27, 2015 a Certificate of Designation was filed with the Nevada Secretary of State. The holder of the shares of the Series B Voting Preferred Stock has the right to vote those shares of the Series B Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series B Voting Preferred Stock is equal to and counted as 4 times the votes of all of the shares of the Company’s (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval.

On November 9, 2018, Mike Schatz returned 250 Preferred Series B Control Shares, valued at par value, pursuant to his new employee agreement dated November 1, 2018.

On November 9, 2018, Robert Stillwaugh returned 250 Preferred Series B Control Shares, valued at par value, pursuant to his new employee agreement dated November 1, 2018.

On November 9, 2018, newly appointed President, Richard Hylen was issued 500 Preferred Series B Control Shares, pursuant to his employee agreement dated November 1, 2018.

On January 20, 2021, newly appointed President, Jef Lewis and Satel’s President Richard Hylen were each issued 500 Preferred Series B Control Shares each, pursuant to their employee agreements dated January 1, 2021. The Company determined the Control shares have a value of $785,230 which was recorded as stock based compensation on the statement of operations and an offsetting entry to additional paid in capital.

On June 11, 2021, the Company filed a Certificate of Amendment with the Florida Secretary of State to decrease the number of authorized Preferred Series B from 10,000 to 5,000 with a par value of $0.0001.

As of June 30, 2022, 5,000 Series B Preferred shares were authorized, of which 1,500 shares were issued and outstanding.

14. COMMON STOCK

As of November 13, 2018, 19 shares of common stock were transferred into the Company in connection with the reverse merger.

On November 13, 2018, the Company issued 682 shares of restricted common stock to Richard Hylen as collateral, pursuant to the Asset Purchase Agreement dated November 13, 2018. The shares are valued at $4,298,450 based on the market price of the Company’s common stock on the date of the agreement.

During the year ended December 31, 2018, the holders of convertible notes converted a total of $10,448 of principal and interest into 19 shares of common stock. The issuance extinguished $115,941 worth of derivative liabilities which was recorded to additional paid in capital.

On April 16, 2019, the Company issued 3 common shares at to Hanson & Associates to settle outstanding stock payable liabilities pursuant to a Consulting Agreement dated April 1, 2017. The stock was valued at $24,953 on the date of issuance, which extinguished $24,953 in derivative liabilities.

On June 13, 2019, the Company filed a Certificate of Amendment with the Nevada Secretary of State to increase the number of authorized common shares from 900,000,000 to 975,000,000 with a par value of $0.00001.

On July 23, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 975,000,000 to 1,500,000,000 shares at par value $0.00001 per share.

On September 16, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 1,500,000,000 to 5,000,000,000 shares at par value $0.00001 per share.

On October 17, 2019, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 5,000,000,000 to 10,000,000,000 shares at par value $0.00001 per share.

On December 18, 2019, the Company approved the authorization of a 1 for 1,000 reverse stock split of the Nevada warrant holders exercised the warrants and the Company issued 789 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.

During the year ended December 31, 2019, the holders of convertible notes converted a total of $866,299 of principal and interest, and $16,500 in note fees, into 14,128 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $86,719 and settled $1,784,469 worth of derivative liabilities which was recorded to additional paid in capital.

On March 27, 2020, 23 shares of common stock were issued due to rounding in conjunction with the reverse stock split.

On June 5, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to decrease the number of authorized Common Shares from 10,000,000,000 to 2,000,000,000 shares at par value $0.00001 per share.

On June 11, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 2,000,000,000 to 5,000,000,000 shares at par value $0.00001 per share.

On August 14, 2020, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 5,000,000,000 to 10,000,000,000 shares at par value $0.00001 per share.

During the year ended December 31, 2020, 1,890 shares of Convertible Series A Preferred stock were converted to 8,119,146 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,349, which was recorded to the statement of operations.

During the year ended December 31, 2020, the holders of convertible notes converted a total of $1,005,664 of principal and interest, and $30,935 in note fees, into 24,495,581 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $41,116 and settled $4,976,556 worth of derivative liabilities which was recorded to additional paid in capital.

On March 8, 2021, the Company issued 233,333 common shares in stock based compensation, valued at $87,500.

On April 19, 2021, in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of common stock. In addition, the Company reduced the number of authorized shares to 200,000,000 with a par value of $0.0001. The reverse split was effective on June 11, 2021, and the financial statements have been retroactively adjusted to take this into account for all periods presented. During the year ended December 31, 2021, the Company issued 9,932 common shares due to rounding in connection with the reverse stock split.

On August 3, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 200,000,000 to 500,000,000 shares at par value $0.0001 per share.

On August 11, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 500,000,000 to 1,000,000,000 shares at par value $0.0001 per share.

On September 2, 2021, the Company’ Board of Directors and the Majority Stockholders owning a majority of the Company’s voting securities, approved a resolution authorizing the Company to amend the Articles of Incorporation to increase the number of authorized Common Shares from 1,000,000,000 to 2,000,000,000 shares at par value $0.0001 per share.

During the year ended December 31, 2021, warrant holders exercised the warrants and the Company issued 6,927,827 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.

During the year ended December 31, 2021, the holders of convertible notes converted a total of $877,299 of principal, $55,255 of interest, and $25,900 in note fees, into 106,219,740 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $513,973 and settled $3,085,456 worth of derivative liabilities which was recorded to additional paid in capital.

On January 24, 2022, a warrant holder exercised the warrants and the Company issued 917,764 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.

On January 31, 2022, a warrant holder exercised the warrants and the Company issued 9,711,786 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.

On April 5, 2022, the Company filed a Certificate of Amendment with the Florida Secretary of State to increase the number of authorized common shares from 5,000,000,000 to 15,000,000,000 with a par value of $0.0001.

On May 20, 2022, the Company issued 30,000,000 shares of common stock, valued at $21,000, in connection with a Securities Purchase Agreement.

During the six months ended June 30, 2022, the holders of convertible notes converted a total of $510,750 of principal, $62,179 of interest, and $9,750 in note fees, into 526,244,256 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $130,554 and settled $482,162 worth of derivative liabilities which was recorded to additional paid in capital.

As of June 30, 2022, 15,000,000,000 common shares, par value $0.0001, were authorized, of which 1,226,211,935 shares were issued and outstanding.

15. INCOME TAXES

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

The deferred tax asset and the valuation allowance consist of the following at June 30, 2022:

Schedule of Deferred tax Assets

	June 30, 2022
Net tax loss carry-forwards	$	2,559,589
Statutory rate		21%
Expected tax recovery		537,514
Change in valuation allowance		(537,514	)
Income tax provision	$	—

Components of deferred tax asset:
Non capital tax loss carry-forwards	$	537,514
Less: valuation allowance		(537,514	)
Net deferred tax asset	$	—

As of the date of this filing, the Company is not current in filing their tax returns. The last return filed by the Company was December 31, 2017, and the Company has not accrued any potential penalties or interest from that period forward. The Company will need to file returns for the year ending December 31, 2018, 2019, 2020 and 2021 which are still open for examination.

16. COMMITMENTS AND CONTINGENCIES

Distribution and Licensing Agreements

On November 1, 2021, the Company entered into a Distribution Agreement with South Pacific Traders Oy for the exclusive right to distribute the company’s products in the European Community and the United Kingdom. The term of the agreement is for a period of five years.

On November 1, 2021, the Company entered into an IP Purchase and License Agreement with Maguire & Associates LLC to provide for the marketing of products and services into the European Community based on the inventions of the IP/License Rights to develop and commercialize for the sole benefit BrewBilt Brewing. The agreement is for a period of five years. Pursuant to the agreement, the Company has issued 18,622 Series A shares valued at $5,000,000.

Director Agreements

On January 1, 2022, the Company entered into a new Directors Agreement with Jef Lewis for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.

On January 1, 2022, the Company entered into a new Directors Agreement with Sam Berry for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.

On January 1, 2022, the Company entered into a new Directors Agreement with Bennett Buchanan for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.

On January 1, 2022, the Company entered into a new Directors Agreement with Richard Hylen for a term of one year. In exchange for serving in this capacity, the Company will issue 186 shares of Convertible Preferred Series A stock at a price of $268.50 per share. The shares are restricted and cannot be sold or otherwise transferred by the undersigned except as provided by law, and in no event, prior to the maturity date of six (6) months.

Lease

On August 1, 2021, the company entered into a commercial lease for approximately 6,547 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of five years, from August 1, 2021 through July 31, 2026, with a monthly rent of $4,000.

Legal Matters

As of the date of this filing, the Company knows of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer, or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

17. SUBSEQUENT EVENTS

Settlement and Sale Agreement

On July 1, 2022, the Company agreed to sell the wholly owned subsidiary, Satel Group, Inc., to Richard Hylen in exchange for all outstanding debt owed to Mr. Hylen. Mr. Hylen has agreed to exchange the debt owed to him by the Company in exchange for the purchase of Satel Group, Inc. As of June 30, 2022, this 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. Furthermore, Mr. Hylen made advances to Satel in the amount of $304,314. On August 9, 2022, the Company issued 2,406 shares of Convertible Preferred Series A stock valued at $646,011.

Convertible Notes

On July 13, 2022, the Company entered in a Convertible Promissory Note with Mast Hill Fund, L.P., in the amount of $125,000. The note is unsecured, bears interest at 12% per annum, and matures on July 13, 2023. In connection with the note, the Company executed a Common Stock Purchase Warrant for 417,000,000 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0003 per share and expire on July 13, 2027.

Subsequent Stock Filings and Issuances

On July 1, 2022, the Company issued 2,406 shares of Convertible Series A Preferred stock to Richard Hylen in connection with the Settlement and Sale Agreement. In addition, the Company retired 500 Series B Preferred shares pursuant to the agreement.

On July 18, 2022, the holder of a convertible note converted a total of $18,900 of principal into 60,967,742 shares of our common stock.

On July 21, 2022, the holder of a convertible note converted a total of $14,600 of principal into 60,833,333 shares of our common stock.

On July 22, 2022, the holder of a convertible note converted a total of $14,600 of principal into 60,833,333 shares of our common stock.

On July 26, 2022, the holder of a convertible note converted a total of $5,650 of principal and $2,688 of accrued interest into 34,739,583 shares of our common stock.

On July 27, 2022, a warrant holder exercised the warrants and the Company issued 72,000,000 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.

On August 3, 2022, the Company issued 75,627,737 shares of common stock in connection with an Equity Purchase Agreement.

On August 10, 2022, the holder of a convertible note converted a total of $13,250 of interest and $1,750 in conversion fees into 75,000,000 shares of our common stock.

On August 10, 2022, the holder of a convertible note converted a total of $17,000 of principal and $1,750 in conversion fees into 78,125,000 shares of our common stock.

The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional subsequent events to disclose.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

Revenues:

The Company’s revenues were $31,418 for the three months ended June 30, 2022 compared to $69,055 for the three months ended June 30, 2021. The decrease was primarily due to a decrease in DirecTV revenues. For the three months ended June 30, 2022, 60% of the revenue was from monthly commercial and residential customers. Richard Hylen has been focused on expansion, and local customer base retention has declined. Satel has strong relationships with commercial and residential building owners and management, and as a public company with the adequate funding, Satel can expand its services and anticipates increasing revenues over the next 24 months. Satel recognizes the customer needs, and the importance of competitive pricing and services. The company believes that it can invest its capital into faster internet, bundling of various internet based services, and expanding its customer base into the entire Bay Area.

Cost of Sales:

The Company’s cost of sales was $20 for the three months ended June 30, 2022, compared to $1,484 for the three months ended June 30, 2021. This is due to a higher number of audio/video equipment sales that were sold in the quarter ending June 30, 2021 compared to the three months ending June 30, 2022.

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 three months ended June 30, 2022 and June 30, 2021, were $618,095 and $383,058, respectively. The increase was primarily attributable to an increase in wages and expenses related to the brewery.

Other Income (Expense):

Other income (expense) for the three months ended June 30, 2022 and June 30, 2021 was $(517,417) and $453,449, respectively. Other income (expense) consisted of derivative valuation gains and losses, gains or losses on settlement of debt and conversion of debt, and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The increase in other expense primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities and an increase in loss on conversion of debt.

Net Profit (Loss):

Net profit (loss) for the three months ended June 30, 2022 was $(1,104,114) compared to $137,962 for the three months ended June 30, 2021. The increase in net loss can be explained by the changes in the fair value of derivative liabilities and the increase in operating expenses.

RESULTS OF OPERATIONS

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Revenues:

The Company’s revenues were $121,159 for the six months ended June 30, 2022 compared to $156,463 for the six months ended June 30, 2021. The company has a strong relationship with DirecTV and has focused its efforts on expanding services outside of the San Francisco metropolitan area. For the six months ended June 30, 2022, the Company had one major customer who represented approximately 29% of total revenue. Although there was an increase in audio/video system sales, Satel saw a decrease in sales. Richard Hylen has been focused on expansion, and local customer base retention has declined. Satel has strong relationships with commercial and residential building owners and management, and as a public company with the adequate funding, Satel can expand its services and anticipates increasing revenues over the next 24 months. Satel recognizes the customer needs, and the importance of competitive pricing and services. The company believes that it can invest its capital into faster internet, bundling of various internet based services, and expanding its customer base into the entire Bay Area.

Cost of Sales:

The Company’s cost of sales was $9,795 for the six months ended June 30, 2022, compared to $3,975 for the six months ended June 30, 2021. This is due to a higher number of audio/video equipment sales that were sold in the six months ending June 30, 2022 compared to the six months ending June 30, 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 six months ended June 30, 2022 and June 30, 2021, were $1,701,461 and $1,868,100, respectively. The variance was primarily attributable to an increase in share based compensation that was reported during the six months ended June 30, 2021.

Other Income (Expense):

Other income (expense) for the six months ended June 30, 2022 and June 30, 2021 was $(1,743,119) and $533,418, respectively. Other income (expense) consisted of derivative valuation gains and losses, gains or losses on settlement of debt and conversion of debt, and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The increase in other expense primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities and an increase in interest expenses.

Net Loss:

Net loss for the six months ended June 30, 2022 was $3,333,216 compared to $1,182,195 for the six months ended June 30, 2021. The increase in net loss can be explained by the changes in the fair value of derivative liabilities.

Impact of Inflation

We believe that the rate of inflation has had a negligible effect on our operations.

Liquidity and Capital Resources

	June 30,			December 31,
	2022			2021
Current Assets	$	76,951		$	527,665
Current Liabilities		5,752,096			4,364,451
Working Capital (Deficit)	$	(5,675,145	)	$	(3,836,786	)

The overall working capital (deficit) increased from $(3,836,786) at December 31, 2021 to $(5,675,145) at June 30, 2022 due to the reclassing of $450,000 in related party deposits to fixed assets and an increase of derivative liabilities and accounts payable.

	June 30,			June 30,
	2022			2021
Cash Flows (used in) provided by Operating Activities	$	(175,348	)	$	(310,758	)
Cash Flows (used in) provided for Investing Activities		(716,640	)		(250,305	)
Cash Flows (used in) provided for Financing Activities		861,600			529,240
Net Increase (decrease) in Cash During Period	$	(30,388	)	$	(31,823	)

During the six months ended June 30, 2022 cash (used in) provided by operating activities was $(175,348) compared to $(310,758) for the six months ended June 30, 2021. The decrease in the cash used in operating activities is primarily attributed to the change in fair value of derivative liabilities, stock based compensation and loss on conversions.

During the six months ended June 30, 2022 cash (used in) provided for investing activities was $(716,640) compared to $(250,305) for the six months ended June 30, 2021. In the six months ended June 30, 2022, the company recognized brewing equipment of $960,68, reclassified $450,000 of related party deposits, recorded $109,302 of related party accounts payable and incurred $315,261 in leasehold improvements.

During the six months ended June 30, 2022, cash (used in) provided for financing activities was $861,600 compared to $529,240, for the six months ended June 30, 2021. The increase in cash used by financing activity primarily resulted from an increase in proceeds from notes payable and promissory notes during the six months ended June 30, 2022.

As of June 30, 2022, the Company had a cash balance and current asset total of $28,873 and $76,951 respectively, compared with $59,261 and $527,665 of cash and current assets, respectively, as of December 31, 2021. The decrease in assets was due to the reclassification of related party deposits for brewery equipment that was delivered and put into use in Q2 2022.

As of June 30, 2022, the Company had total current liabilities of $4,752,096 compared with $4,364,451 as of December 31, 2021. The increase in current liabilities was primarily attributed to an increase in derivative liabilities and accounts payable.

Going Concern

The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related parties through capital investment and borrowing funds.

As of June 30, 2022 we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our December 31, 2021 audited financial statements that they have substantial doubt that we will be able to continue as a going concern.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recent Accounting Pronouncements

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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a non-accelerated filer and a smaller reporting company, as defined in Rule 12b-2 of the of the Securities Exchange Act of 1934, and as such, are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our Company’s officers, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our Company’s officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2022. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses in our internal control over financial reporting identified in our Annual Report on Form 10-K for the year ended December 31, 2021, that was filed with the SEC on April 4, 2022, the Company’s officers concluded that our disclosure controls and procedures are ineffective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act, during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

A smaller reporting company is not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number
Exhibit Number		Description
31.1		Certification of the Chief Executive Officer required under Rule 13a-14(a)/15d-14(a) of the Exchange Act*
31.2		Certification of the Chief Financial Officer required under Rule 13a-14(a)/15d-14(a) of the Exchange Act*
32.1		Certification of the Chief Executive Officer and Chief Financial Officer required under Section 1350 of the Exchange Act*
101.INS		XBRL Instance Document*
101.SCH		XBRL Taxonomy Extension Schema*
101.CAL		XBRL Taxonomy Extension Calculation Linkbase*
101.DEF		XBRL Taxonomy Extension Definition Linkbase*
101.LAB		XBRL Taxonomy Extension Label Linkbase*
101.PRE		XBRL Taxonomy Extension Presentation Linkbase*

Filed herewith

Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Dated: August 15, 2022

	/s/ Jef Lewis
	By: Jef Lewis
	Its: President, Chief Executive Officer