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UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2021

 

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 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)

 

Simlatus Corporation

(Former name or former address, if changed since last report)

 

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 ☒ No ☐

 

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 ☒ No ☐

 

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  Accelerated filer                 
Non-accelerated Filer ☐  (Do not check if a smaller reporting company) Smaller reporting company x
Emerging growth company {    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

As of November 10, 2021, there were 148,143,687 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   35
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   38
ITEM 4. CONTROLS AND PROCEDURES   38
       
PART II. OTHER INFORMATION    
     
ITEM 1. LEGAL PROCEEDINGS   39
ITEM 1A. RISK FACTORS   39
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   39
ITEM 3. DEFAULTS UPON SENIOR SECURITIES   39
ITEM 4. MINE SAFETY DISCLOSURES   39
ITEM 5. OTHER INFORMATION   39
ITEM 6. EXHIBITS   39

 

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

2

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONSOLIDATED BALANCE SHEETS

 

 

    September 30,     December 31,  
    2021     2020  
ASSETS      (Unaudited)        (Audited)  
Current Assets                
Cash   $ 130,675     $ 134,855  
Accounts receivable     12,616       5,563  
Inventory, net     7,966       4,133  
Prepaid expenses     36        
Other current assets     450,000       10,000  
Total current assets     601,293       154,551  
                 
Property, plant and equipment, net     78,824        
Financial lease assets - related party     27,934       31,178  
Operating right-of-use assets     197,486        
Security deposit     5,162       5,162  
                 
Total assets   $ 910,699     $ 190,891  
                 
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT                
Current Liabilities:                
Accounts payable   $ 467,792     $ 522,418  
Accrued wages     836,858       321,530  
Accrued expenses     31,249       29,416  
Accrued interest     180,592       148,233  
Convertible notes payable in default     24,012       203,167  
Convertible notes payable, net of discount     543,183       29,771  
Current financing lease liabilities - related party     4,589       3,988  
Current operating lease liabilities     35,762        
Derivative liabilities     1,903,601       7,996,994  
Loans payable     87,420       87,420  
Related party liabilities     251,135       245,323  
Total Current liabilities     4,366,193       9,588,260  
                 
Non-current financing lease liabilities - related party     23,345       27,190  
Non-current operating lease liabilities     161,724        
                 
Total liabilities     4,551,262       9,615,450  
                 
Series A convertible preferred stock: 100,000 shares authorized, par value $0.0001; 31,278 shares issued and outstanding at September 30, 2021; 41,572 shares issued and outstanding at December 31, 2020 (1)     8,398,143       11,162,005  
Series C convertible preferred stock, 0 shares authorized, par value $0.0001; 0 shares issued and outstanding at September 30, 2021; 35,583 shares issued and outstanding at December 31, 2020           355,830  
Convertible preferred stock payable           754,249  
                 
Stockholders’ deficit:                
Series B preferred stock: 5,000 shares authorized, par value $0.0001; 1,500 shares issued and outstanding at September 30, 2021; 500 shares issued and outstanding at December 31, 2020            
Common stock: 500,000,000 shares authorized, par value $0.0001; 112,868,392 shares issued and outstanding at September 30, 2021; 32,644,913 shares issued and outstanding at December 31, 2020 (1)     11,287       3,264  
Additional paid in capital     4,483,894       (6,062,064 )
Accumulated deficit     (16,533,887 )     (15,637,843 )
Total stockholders’ deficit     (12,038,706 )     (21,696,643 )
Total liabilities and stockholders’ deficit   $ 910,699     $ 190,891  

 

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

 

The accompanying notes are an integral part of these financial statements

3

 

BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

    Three months ended     Nine months ended  
    September 30,     September 30,  
    2021     2020     2021     2020  
Sales   $ 68,471     $ 72,485     $ 224,933     $ 262,571  
Cost of materials     4,859       1,734       8,834       5,530  
Gross profit     63,612       70,751       216,099       257,041  
                                 
Operating expenses:                                
Depreciation     4,039             4,602        
G&A expenses     114,327       78,489       449,780       314,709  
Professional fees     15,479       6,556       47,728       70,901  
Salaries and wages     248,785       147,142       1,748,620       435,921  
Total operating expenses     382,630       232,187       2,250,730       821,531  
                                 
Loss from operations     (319,018 )     (161,436 )     (2,034,631 )     (564,490 )
                                 
Other income (expense):                                
Gain (loss) on conversion of debt     (193,971 )     58,726       (341,850 )     (45,892 )
Loss on conversion of debt of preferred shares     (325,704 )     (71,715 )     (1,448,385 )     (171,347 )
Derivative income (expense)     1,483,660       (1,415,510 )     3,672,655       (3,390,364 )
Interest expense     (358,816 )     (115,204 )     (743,833 )     (1,036,928 )
Total other income (expense)     605,169       (1,543,703 )     1,138,587       (4,644,531 )
                                 
Net profit (loss) before income taxes     286,151       (1,705,139 )     (896,044 )     (5,209,021 )
Income tax expense                        
Net profit (loss)   $ 286,151     $ (1,705,139 )   $ (896,044 )   $ (5,209,021 )
                                 
Per share information                                
Weighted average number of common shares outstanding, basic (1)     70,704,746       9,799,990       65,856,141       5,505,038  
Net income (loss) per common share, basic   $ 0.0040     $ (0.17 )   $ (0.0136 )   $ (0.95 )
                                 
Weighted average number of common shares outstanding, diluted (1)     739,114,197       132,753,342       65,856,141       5,505,038  
Net income (loss) per common share, diluted   $ 0.0004     $ (0.01 )   $ (0.0136 )   $ (0.95 )

 

(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

4

 

BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)

 

    Convertible Preferred Stock     Preferred Stock                 Additional     Accumulated     Total  
    Series A (1)     Series C     Shares     Series B     Common Stock (1)     Paid-In     Earnings     Shareholders’  
    Shares     Amount     Shares     Amount     Payable     Shares     Amount     Shares     Amount     Capital     (Deficit)     Equity (Deficit)  
Balances for December 31, 2020     41,572     $ 11,162,005       35,583     $ 355,830     $ 754,249       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                         881,198             881,198  
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     $ 2,919,833     $ (16,958,000 )   $ (14,031,706 )
                                                                                                 
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     $ 2,968,515     $ (16,820,038 )   $ (13,845,027 )
                                                                                                 
Conversion of debt to common stock                                               30,393,222       3,039       530,669             533,708  
Convertible preferred stock converted to common stock     (697 )     (187,145 )                                   12,194,542       1,220       511,629             512,849  
Cashless warrant exercise                                               5,314,272       531       (531 )            
Imputed interest                                                           8,881             8,881  
Derivative settlements                                                           362,768             362,768  
Warrant discounts                                                           101,964             101,964  
Rounding due to reverse stock split                                               9,895       1       (1 )            
Net profit                                                                 286,151       286,151  
Balances for September 30, 2021     31,278     $ 8,398,143           $     $       1,500     $       112,868,392     $ 11,287     $ 4,483,894     $ (16,533,887 )   $ (12,038,706 )
                                                                                                 
    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, 2019     39,902     $ 10,713,687       35,583     $ 355,830     $       500     $       30,162     $ 3     $ (12,857,402 )   $ (4,179,521 )   $ (17,036,920 )
                                                                                                 
Imputed interest                                                           3,376             3,376  
Common shares issued due to reverse stock split rounding                                               23                          
Net loss                                                                 (52,412,485 )     (52,412,485 )
Balances for March 31, 2020     39,902     $ 10,713,687       35,583     $ 355,830     $       500     $       30,185     $ 3     $ (12,854,026 )   $ (56,592,006 )   $ (69,446,029 )
                                                                                                 
Conversion of debt to common stock                                               5,558,591       556       769,193             769,749  
Convertible preferred stock converted to common stock     (815 )     (218,827 )                                   1,326,859       133       318,327             318,460  
Imputed interest                                                           3,497             3,497  
Derivative settlements                                                           2,631,259             2,631,259  
Net profit                                                                 48,908,603       48,908,603  
Balances for June 30, 2020     39,087     $ 10,494,860       35,583     $ 355,830     $       500     $       6,915,635     $ 692     $ (9,131,750 )   $ (7,683,403 )   $ (16,814,461 )
                                                                                                 
Conversion of debt to common stock                                               7,071,372       707       179,927             180,634  
Convertible preferred stock converted to common stock     (662 )     (177,749 )                                   4,325,628       432       248,968             249,400  
Imputed interest                                                           3,353             3,353  
Derivative settlements                                                           406,636             406,636  
Net loss                                                                 (1,705,139 )     (1,705,139 )
Balances for September 30, 2020     38,425     $ 10,317,111       35,583     $ 355,830     $       500     $       18,312,635     $ 1,831     $ (8,292,803 )   $ (9,388,542 )   $ (17,679,514 )

 

(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

5

 

BREWBILT BREWING COMPANY
(Formerly known as Simlatus Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

    Nine months ended  
    September 30,  
    2021     2020  
Cash flows from operating activities:                
Net loss   $ (896,044 )   $ (5,209,021 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Amortization of convertible debt discount     608,512       642,775  
Depreciation     4,602        
Stock based compensation     1,118,690        
Imputed interest     24,684       10,226  
Loss on conversion of debt     341,850       45,892  
Loss on conversion of preferred shares to common stock     1,448,385       171,347  
Change in fair value of derivative liability     (3,672,655 )     3,390,364  
Penalties on notes payable     23,022       197,939  
Decrease (increase) in operating assets and liabilities:                
Accounts receivable     (7,053 )     (83 )
Inventory     (3,833 )     (1,918 )
Other current assets     10,000        
Prepaid expenses     (36 )     7,268  
Accrued interest     87,615       185,988  
Accounts payable     (54,626 )     119,279  
Accrued expenses     517,161       241,292  
Advances from related parties     5,812       (3,054 )
Deferred revenue           (629 )
Net cash (used in) provided by operating activities     (443,914 )     (202,335 )
                 
Cash flows from investing activities:                
Property, plant and equipment, additions     (83,426 )      
Deposit on equipment - related party     (450,000 )      
 Net cash (used in) provided by investing activities     (533,426 )      
                 
Cash flows from financing activities:                
Proceeds from convertible debt     973,160       132,500  
Proceeds from loans payable           72,920  
Payments on promissory notes           (2,000 )
Net cash (used in) provided for financing activities     973,160       203,420  
                 
Net increase (decrease) in cash     (4,180 )     1,085  
                 
Cash, beginning of period     134,855       25,495  
Cash, end of period   $ 130,675     $ 26,580  
                 
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   $ 592,532     $ 904,493  
Discount from derivative   $ 733,160     $ 342,791  
Preferred stock converted to common stock   $ 4,023,474     $ 396,576  
Derivative settlements   $ 2,887,565     $ 3,037,895  
Warrant discounts   $ 266,333     $  
Lease adoption recognition   $ 203,216     $  
Debt exchanged for payment of accounts payable   $     $ 15,600  
Preferred stock payable converted to preferred stock   $ 754,249     $  

 

The accompanying notes are an integral part of these financial statements

6

 

BREWBILT BREWING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)

 

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

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, fermentation and 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.

7

 

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 36 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.

8

 

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.

 

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 nine months ended September 30, 2021, the Company’s main revenue stream is from selling DirecTV services to corporate and residential customers. 54% of the Company’s revenue is from commissions, 16% is from corporate service subscribers, 11% is from residential service subscribers, and 11% was from installations and equipment. In addition, the Company’s sales for audio/video systems represented 8% 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 September 30, 2021 and December 31, 2020 is $0.

 

Accounts Payable and Accrued Expenses

 

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

9

 

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. Diluted net income per share is calculated by dividing net income by the weighted-average common shares and potentially dilutive securities outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. A total number of 668,409,451 shares for employee options, warrants, and convertible notes were used in the calculation of the income per share for the three months ended September 30, 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 September 30, 2021 and December 31, 2020 for each fair value hierarchy level:

 

 

September 30, 2021     Derivative Liabilities     Total  
Level I   $     $  
Level II   $     $  
Level III   $ 1,903,601     $ 1,903,601  
                 
December 31, 2020   Derivative Liabilities     Total  
Level I   $     $  
Level II   $     $  
Level III   $ 7,996,994     $ 7,996,994  

10

 

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 September 30, 2021 and December 31, 2020, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.

 

Income Taxes

 

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

 

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

 

2. GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2021, the Company has a shareholders’ deficit of $16,533,887 since its inception, working capital deficit of $3,764,900, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

 

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

 

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

11

 

3. OTHER ASSETS

 

During the nine months ended September 30, 2021, the Company paid a deposit of $450,000 to begin fabrication of a brewery system. The Company anticipates the system will be complete within nine to twelve months.

 

4. PROPERTY, PLANT, AND EQUIPMENT

 

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

 

 

Kegs 5 years
   
Computer software and equipment 2 to 5 years, or the term of a software license, whichever is shorter
   
Office equipment and furniture 3 to 7 years
   
Machinery and equipment 3 to 20 years
   
Leasehold improvements Lesser of the remaining term of the lease or estimated useful life of the asset

 

Property, plant, and equipment consisted of the following at September 30, 2021 and December 31, 2020:

 

    September 30,     December 31,  
    2021     2020  
Leasehold Improvements   $ 45,727     $  
Machinery and Equipment     37,699        
Property, plant, and equipment, gross     83,426        
Less accumulated depreciation     (4,602 )      
Property, plant and equipment, net   $ 78,824     $  

 

5. ACCRUED EXPENSES

 

As of September 30, 2021 and December 31, 2020, accrued expenses were comprised of the following:

 

    September 30,     December 31,  
    2021     2020  
Accrued expenses                
Credit cards   $ 9,630     $ 407  
Customer deposits     18,307       18,307  
Employee liabilities           7,612  
Sales tax payable     312       90  
Short-term loans     3,000       3,000  
Total accrued expenses   $ 31,249     $ 29,416  
                 
Accrued interest                
Interest on notes payable   $ 42,633     $ 44,855  
Interest on short-term loans     1,031       5,826  
Interest on accrued wages     136,928       97,552  
Total accrued interest   $ 180,592     $ 148,233  
                 
Accrued wages   $ 836,858     $ 321,530  

12

 

6. CONVERTIBLE NOTES PAYABLE

 

As of September 30, 2021 and December 31, 2020, notes payable were comprised of the following:

 

    Original   Due   Interest   Conversion   September 30,     December 31,  
    Note Date   Date   Rate   Rate   2021     2020  
BHP Capital NY #6   5/30/2019   2/29/2020   18%   Variable           27,500  
BHP Capital NY #7   7/22/2019   7/22/2020   8%   Variable           37,950  
BHP Capital NY #9   12/20/2019   12/20/2020   12%   Variable           11,075  
Emunah Funding #4*   10/20/2018   7/20/2019   24%   Variable     2,990       2,990  
Emunah Funding #8   1/31/2019   1/31/2020   24%   Variable           33,652  
FirstFire Global   3/8/2021   3/8/2022   12%   0.09     300,000        
Fourth Man #9   8/3/2020   8/3/2021   8%   Variable           27,500  
Fourth Man #10   12/15/2020   12/15/2021   8%   Variable           33,000  
Fourth Man #11   3/5/2021   3/5/2022   12%   0.09     115,000        
Fourth Man #12   9/27/2021   9/27/2022   12%   0.015     111,000        
Jefferson St Capital #2*   3/5/2019   10/18/2019   0%   Variable     5,000       5,000  
Jefferson St Capital #6   6/21/2019   3/21/2020   18%   Variable           27,500  
Jefferson St Capital #7   8/20/2019   5/20/2020   18%   Variable           38,500  
Jefferson St Capital #8*   12/20/2019   12/20/2020   12%   Variable     16,022       19,000  
Labrys Fund #2   7/28/2021   7/28/2022   12%   0.03     140,000        
Optempus Invest #4   11/2/2020   11/2/2021   10%   Variable     20,000       20,000  
Optempus Invest #5   11/5/2020   11/5/2021   10%   Variable     20,000       20,000  
Optempus Invest #6   12/31/2020   12/31/2021   6%   Variable     20,000       20,000  
Power Up Lending #5   6/15/2020   6/15/2021   10%   Variable           13,100  
Power Up Lending #6   6/24/2020   6/24/2021   10%   Variable           33,000  
Power Up Lending #7   7/9/2021   7/9/2022   10%   Variable     78,750        
Power Up Lending #8   8/2/2021   8/2/2022   10%   Variable     53,750        
Power Up Lending #9   8/24/2021   8/24/2022   10%   Variable     78,750        
Power Up Lending #10   9/8/2021   9/8/2022   10%   Variable     43,750        
                      1,005,012       369,767  
Less debt discount                     (437,817 )     (136,829 )
Notes payable, net of discount                   $ 567,195     $ 232,938  

 

* As of September 30, 2021, the balance of notes payable that are in default is $24,012.

 

BHP Capital NY, Inc.

 

On May 30, 2019, the Company issued a convertible note to BHP Capital NY for $27,500, which includes $16,667 paid Auctus Fund pursuant to a settlement agreement, $5,000 to settle outstanding accounts payable, transaction fee interest of $3,000, and cash consideration of $2,833. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on February 29, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 953,144 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $6,063, and conversion fees of $750. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

13

 

On July 22, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $37,950, of which $33,500 was received in cash and $4,450 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on July 22, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $37,950 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 2,362,756 common shares upon the conversion of principal in the amount of $37,950, accrued interest of $5,344, and conversion fees of $2,400. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On December 20, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $19,000 of which $15,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 12% (increases to 22% per annum upon an event of default), matures on December 20, 2020, and is convertible into the lower of 1) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $19,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 1,309,076 common shares upon the conversion of principal in the amount of $7,925, interest of $2,375 and conversion fees of $500. During the nine months ended September 30, 2021, the Company issued 704,648 common shares upon the conversion of principal in the amount of $11,075, accrued interest of $52, and conversion fees of $500. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Emunah Funding LLC

 

On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matured on July 20, 2018, and is convertible into common stock at 57.5% 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 September 30, 2021, the note has a principal balance of $2,990 and accrued interest of $1,616. This note is currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

14

 

On January 31, 2019, the Company received funding pursuant to convertible note issued to Emunah Funding LLC for $33,000, which includes $5,000 to settle outstanding accounts payable, $4,500 in transaction fees and cash consideration of $23,500. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on January 31, 2020, and is convertible into common stock at 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered late filing penalties of $50,652. During the year ended December 31, 2020, the Company made cash payments of $50,000. During the nine months ended September 30, 2021, the Company issued 2,003,195 common shares upon the conversion of principal in the amount of $33,652, and accrued interest of $11,819. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

FirstFire Global Opportunity Fund LLC

 

On March 8, 2021, the Company received funding pursuant to a convertible note issued to FirstFire Global Opportunities Fund LLC for $300,000 of which $242,900 was received in cash and $57,100 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on March 8, 2022, and is convertible into common shares at a fixed rate of $0.09. The Company recorded a debt discount from the derivative equal to $300,000 due to this conversion feature, and $169,315 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2021 of $130,685. As of September 30, 2021, the note has a principal balance of $300,000 and accrued interest of $20,318.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Fourth Man LLC

 

On August 3, 2020, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $27,500 of which $25,000 was received in cash and $2,500 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on August 3, 2021, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 1,615,983 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $1,088, and conversion fees of $500. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On December 15, 2020, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $33,000 of which $27,600 was received in cash and $5,400 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on December 15, 2021, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 1,900,885 common shares upon the conversion of principal in the amount of $33,000, accrued interest of $1,624 and conversion fees of $1,000. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

15

 

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 $0.09. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, and $80,165 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2021 of $59,835. During the nine months ended September 30, 2021, the Company issued 4,994,547 common shares upon the conversion of principal in the amount of $25,000, accrued interest of $271 and conversion fees of $1,750. As of September 30, 2021, the note has a principal balance of $115,000 and accrued interest of $9,283.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

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 $0.015. The Company recorded a debt discount from the derivative equal to $111,000 due to this conversion feature, and $912 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2021 of $110,088. As of September 30, 2021, the note has a principal balance of $111,000 and accrued interest of $109.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Jefferson Street Capital LLC

 

On March 5, 2019, the Company accepted and agreed to a Debt Purchase Agreement, whereby Jefferson Street Capital LLC acquired $30,000 of debt from an Emunah Funding LLC convertible note in exchange for $29,000, and the Company recorded a gain on settlement of debt of $1,000. The note bears no interest, matures on October 18, 2019, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading days ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $29,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued 71 common shares upon the conversion of principal in the amount of $24,000 and $1,000 in conversion fees. As of September 30, 2021, the note has a principal balance of $5,000. This note is currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On June 21, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $27,500, which includes transaction fee interest of $4,000, and cash consideration of $23,500. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on March 21, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 846,995 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $3,352, and conversion fees of $1,500. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

16

 

On August 20, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $38,500, of which $32,000 was received in cash and $6,500 was recorded as transaction fees. The note bears interest at 10% (increases to 18% per annum upon an event of default), matures on May 20, 2020, and is convertible into the lower of 1) 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of the note, and 2) 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $38,500 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 6,132,125 common shares upon the conversion of principal in the amount of $38,500, accrued interest of $5,997, and conversion fees of $2,250. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On December 20, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $19,000, of which $15,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 12% (increases to 22% per annum upon an event of default), matures on December 20, 2020, and is convertible into the lower of 1) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $19,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered a penalty of $23,002, which increased the principal balance to $42,022. During the nine months ended September 30, 2021, the Company issued 4,681,821 common shares upon the conversion of principal in the amount of $26,000, accrued interest of $4,022, and conversion fees of $1,000. As of September 30, 2021, the note has a principal balance of $16,022 and accrued interest of $19. This note is currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Labrys Fund, LP

 

On February 8, 2021, the Company received funding pursuant to a convertible note issued to Labrys Fund, LP for $140,000 of which $112,920 was received in cash and $27,080 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on February 8, 2022, and is convertible into common shares at a fixed rate of $0.09. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 6,762,140 common shares upon the conversion of principal in the amount of $140,000, accrued interest of $8,648, and conversion fees of $3,500. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On July 28, 2021, the Company received funding pursuant to a convertible note issued to Labrys Fund, LP for $140,000 of which $112,920 was received in cash and $27,080 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on July 28, 2022, and is convertible into common shares at a fixed rate of $0.03. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, and $24,548 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2021 of $115,452. As of September 30, 2021, the note has a principal balance of $140,000 and accrued interest of $2,946.

 

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.

17

 

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, and $18,192 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2021 of $1,808. As of September 30, 2021, the note has a principal balance of $20,000 and accrued interest of $1,819.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On November 5, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 5, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, and $18,028 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2021 of $1,972. As of September 30, 2021, the note has a principal balance of $20,000 and accrued interest of $1,803.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On December 31, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000. The Company received a cash payment of $10,000 on January 8, 2021, and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on December 31, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, and $14,958 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2021 of $5,042 On June 24, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $33,000, of which $30,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 24, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 1,394,444 common shares upon the conversion of principal in the amount of $33,000 and accrued interest of $1,650. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Power Up Lending Group Ltd.

 

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

18

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On June 15, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,000, of which $40,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 15, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $43,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 3,322,222 common shares upon the conversion of principal in the amount of $29,900. During the nine months ended September 30, 2021, the Company issued 1,062,963 common shares upon the conversion of principal in the amount of $13,100 and accrued interest of $2,150. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On June 24, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $33,000, of which $30,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 24, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 1,394,444 common shares upon the conversion of principal in the amount of $33,000 and accrued interest of $1,650. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On July 9, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $78,750, of which $75,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on July 9, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of September 30, 2021, $853 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $78,750 and accrued interest of $1,791.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On August 2, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $53,750, of which $50,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on August 2, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of September 30, 2021, $606 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $53,750 and accrued interest of $869.

 

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.

19

 

On August 24, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $78,750, of which $75,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on August 24, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of September 30, 2021, $380 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $78,750 and accrued interest of $798.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On September 8, 2021, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,750, of which $40,000 was received in cash, and $3,750 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on September 8, 2022, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. As of September 30, 2021, $226 of the transaction fees have been amortized to the statement of operations and the note has a principal balance of $43,750 and accrued interest of $264.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Redstart Holdings Corp.

 

On January 25, 2021, the Company received funding pursuant to a convertible note issued to Redstart Holdings Corp. for $63,500 of which $60,000 was received in cash and $3,500 was recorded as transaction fees. The note bears interest of 10% (increases to 22% per annum upon an event of default), matures on January 25, 2022, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $64,500 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2021, the Company issued 6,271,704 common shares upon the conversion of principal in the amount of $63,500 and accrued interest of $3,175. As of September 30, 2021, the note has been fully satisfied.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

20

 

Convertible Note Conversions

 

During the nine months ended September 30, 2021, 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
1/5/2021   $ 13,000     $     $     $ 13,000     $ 0.01350       962,962     Power Up
1/7/2021     10,000             750       10,750       0.01500       716,667     Jefferson St
1/11/2021     100       2,150             2,250       0.02250       100,000     Power Up
1/11/2021     15,000                   15,000       0.02250       666,667     Power Up
1/12/2021     11,075       52       500       11,627       0.01650       704,648     BHP
1/14/2021     18,000       1,650             19,650       0.02700       727,778     Power Up
1/15/2021           6,300             6,300       0.01500       420,000     Emunah
1/20/2021     30,000       5,000       1,200       36,200       0.01800       2,011,111     BHP
1/22/2021           3,300             3,300       0.01500       220,000     Emunah
1/26/2021     27,500       1,088       500       29,088       0.01800       1,615,983     Fourth Man
2/8/2021     5,400       2,105             7,505       0.02250       333,571     Emunah
2/8/2021     7,950       344       1,200       9,494       0.02700       351,645     BHP
2/9/2021     7,550       19             7,569       0.02250       336,381     Emunah
2/11/2021     27,500       6,063       750       34,313       0.03600       953,144     BHP
2/16/2021     20,702       95             20,797       0.03000       693,242     Emunah
3/8/2021     17,500       3,352       750       21,602       0.16575       130,329     Jefferson St
6/23/2021     10,000             500       10,500       0.03000       350,000     Fourth Man
7/21/2021     10,000             750       10,750       0.01950       551,282     Jefferson St
8/5/2021     23,000       1,624       500       25,124       0.01620       1,550,885     Fourth Man
8/9/2021     48,351       8,377       1,750       58,478       0.02250       2,599,000     Labrys
8/9/2021     15,000                   15,000       0.01730       867,052     Redstart
8/11/2021     20,000                   20,000       0.01440       1,388,889     Redstart
8/17/2021     20,000                   20,000       0.00870       2,298,851     Redstart
8/18/2021     91,649       271       1,750       93,671       0.02250       4,163,140     Labrys
8/23/2021     8,500       3,175             11,675       0.00680       1,716,912     Redstart
8/23/2021     10,000             750       10,750       0.00657       1,637,471     Jefferson St
8/25/2021     18,500       5,997       750       25,247       0.00640       3,943,372     Jefferson St
9/15/2021     15,000             500       15,500       0.00542       2,861,098     Jefferson St
9/22/2021     25,000       271       1,750       27,021       0.00541       4,994,547     Fourth Man
9/28/2021     11,000       4,022       500       15,522       0.00853       1,820,723     Jefferson St
Total conversions     537,277       55,255       15,150       607,682             41,687,350      
Loss on conversion                       326,700                  
    $ 537,277     $ 55,255     $ 15,150     $ 934,382             41,687,350      

 

7. LEASES

 

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

 

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

 

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

21

 

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.

 

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 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:

 

    September 30, 2021  
Right-of-use assets   $ 197,486  
Current operating lease liabilities     35,762  
Non-current operating lease liabilities     161,724  

 

Years Ending      
December 31,   Operating Leases  
2021   $ 12,000  
2022     48,000  
2023     48,000  
2024     48,000  
2025     48,000  
2026     28,000  
Total     232,000  
Less imputed Interest     34,514  
Total liability   $ 197,486  

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Financing Leases

 

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:

 

 

    September 30, 2021  
Right-of-use assets   $ 27,934  
Current financing lease liabilities     4,589  
Non-current financing lease liabilities     23,345  

 

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

 

 

Years Ending      
December 31,   Finance Leases  
2021   $ 1,583  
2022     6,334  
2023     6,334  
2024     6,334  
2025     6,334  
Thereafter     6,334  
Total     33,253  
Less imputed Interest     5,319  
Total liability   $ 27,934  

 

Other information related to leases is as follows:

 

 

Lease Type   Weighted Average Remaining
Term
  Weighted Average Interest Rate
Finance Leases   6 years   7%

 

8. LOANS PAYABLE

 

On October 1, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before October 1, 2020. During the period ended September 30, 2021 and December 31, 2020, the Company recorded payments of $0 and $2,000, respectively.

 

As of September 30, 2021 and December 31, 2020, the principal balance owed to Direct Capital Group was $14,500 and $16,500, respectively.

 

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

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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 September 30, 2021, the Company has accrued interest of $1,031 on the PPP loan.

 

9. DERIVATIVE LIABILITIES

 

During the nine months ended September 30, 2021 the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at September 30, 2021 based on the lattice model.

 

The following table represents the Company’s derivative liability activity for the embedded conversion features for the nine months ended September 30, 2021:

 

 

    Notes     Warrants     Stock Payable     Total  
Balance, beginning of period   $ 3,933,475     $ 27,343     $ 4,036,176     $ 7,996,994  
Initial recognition of derivative liability     3,800,484       2,554,216             6,354,700  
Derivative settlements     (2,767,657 )     (119,908 )           (2,887,565 )
Loss (gain) on derivative liability valuation     (4,736,303 )     (2,198,579 )     (2,625,646 )     (9,560,528 )
Balance, end of period   $ 229,999     $ 263,072     $ 1,410,530     $ 1,903,601  

 

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 September 30, 2021:

 

    Valuation date
Expected dividends   0%
Expected volatility   152.60%-259.46%
Expected term   .09 - .99 years
Risk free interest   .04%-.08%

 

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.

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

 

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

 

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

 

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

 

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

 

On June 13, 2019, the Company entered into a Securities Exchange Agreement with Fourth Man Fund, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated July 3, 2018, July 17, 2018, October 3, 2018, and August 22, 2018, representing 597 shares of common stock, exchanged for 10,167 shares of Preferred Series C stock at $10 per share. The exchange extinguished $734,381 worth of derivative liabilities.

 

On June 13, 2019, the Company entered into a Securities Exchange Agreement with Emunah Funding, LLC. Both parties agreed to exchange the Warrants pursuant under the terms of a Securities Exchange Agreement, in its entirety. The Agreement is for warrants dated October 20, 2017, November 6, 2017, November 30, 2017, January 11, 2018, May 15, 2018, and October 31, 2018, representing 866 shares of common stock, exchanged for 35,583 shares of Preferred Series C stock at $10 per share. The exchange extinguished $1,095,620 worth of derivative liabilities.

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

On February 8, 2021, the Company executed a Common Stock Purchase Warrant for 933,333 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on February 8, 2024.

 

On March 5, 2021, the Company executed a Common Stock Purchase Warrant for 933,333 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on March 5, 2024.

 

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

 

On July 28, 2021, the Company executed a Common Stock Purchase Warrant for 6,222,222 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0225 per share and expire on July 28, 2024.

 

On September 27, 2021, the Company executed a Common Stock Purchase Warrant for 9,876,522 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.01125 per share and expire on September 27, 2024.

 

The Company evaluated all outstanding warrants to determine whether these instruments may be tainted. All warrants outstanding were considered tainted. The Company valued the embedded derivatives within the warrants based on the independent report of the valuation specialist.

 

The fair value at the valuation dates were based upon the following management assumptions:

 

    Valuation date
Expected dividends   0%
Expected volatility   523.10%-567.18%
Expected term   2.263.02 years
Risk free interest   0.28%-.53%

 

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   258.65%
Expected term   1 year
Risk free interest   0.09%

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10. RELATED PARTY TRANSACTIONS

 

The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. During the nine months ended September 30, 2021 the Company made payments of $52,627 to amounts due to related parties, and $58,440 was advanced to the Company by related parties. As of September 30, 2021 and December 31, 2020, the Company owed related parties $251,135 and $245,323, respectively. During the nine months ended September 30, 2021, the Company recorded imputed interest of $24,684 to the statement of operations with a corresponding increase to additional paid in capital.

 

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

 

During the nine months ended September 30, 2021, the Company paid a deposit of $450,000 to BrewBilt Manufacturing, Inc. to begin fabrication of a brewery system. The Company anticipates the system will be complete within nine to twelve months.

 

11. CONVERTIBLE PREFERRED STOCK

 

Series A Convertible Preferred Stock

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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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 8,119,146 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.

 

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 nine months ended September 30, 2021, 13,660 shares of Convertible Series A Preferred stock were converted to 32,978,592 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $1,604,221, which was recorded to the statement of operations.

 

During the nine months ended September 30, 2021, the Company issued 93 shares each of Convertible Series A Preferred stock to Richard Hylen, Jef Lewis, and Bennett Buchanan and 279 shares of Convertible Series A Preferred stock to Sam Berry, pursuant to employee, consulting, and director agreements (Note 15). These shares were issued at a value at $149,992 and resulted in a gain of conversion of $6, which was recorded to the statement of operations.

 

The Series A Convertible Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception. Each share of the Convertible Series A Preferred Stock has a fixed value of $268.50 per share, has no voting rights, and is convertible into common stock at closing market price on the date of conversion. The Company has recorded $8,398,143, which represents 31,278 Series A Convertible Preferred Stock at $268.50 per share, issued and outstanding as of September 30, 2021, outside of permanent equity and liabilities.

 

Series C Convertible Preferred Stock

 

On June 13, 2019, the Company’s Board of Directors authorized the creation of 45,750 shares of Series C Convertible Preferred Stock with a par value of $0.0001, and on June 13, 2019, a Certificate of Designation was filed with the Nevada Secretary of State. The Convertible Preferred Series C shall have no voting rights as to corporate matters unless, and until, they are converted into common shares, at which time, they will have the same voting rights as all common stock shareholders. Convertible Preferred Series C shares cannot be sold, assigned, hypothecated, or otherwise disposed of, without first obtaining the consent of the majority Convertible Preferred Series C shareholders. Convertible Preferred Series C shares shall have a value of $10.00 USD 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.

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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 nine months ended September 30, 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.

 

As of September 30, 2021, 100,000 Series A Convertible Preferred shares and 0 Series C Convertible Preferred shares were authorized, of which 31,278 Series A Convertible Preferred shares were issued and outstanding and 0 Series C Convertible Preferred shares were issued and outstanding.

 

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.

 

12. PREFERRED STOCK

 

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

 

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

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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, 2020, newly appointed President, Jef Lewis and Satel’s President were 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 $881,192 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 Nevada 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 September 30, 2021, 5,000 Series B Preferred shares were authorized, of which 1,500 shares were issued and outstanding.

 

13. COMMON STOCK

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

30

 

On December 18, 2019, the Company approved the authorization of a 1 for 1,000 reverse stock split of the Company’s outstanding shares of common stock. The financial statements have been retroactively adjusted to take this into account for all periods presented.

 

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.

 

During the year ended December 31, 2019, 10,167 shares of Series C preferred stock were converted to 187 common shares in accordance with the conversion terms.

 

During the year ended December 31, 2019, 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. The Company issued 36 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 $0.00001 per share.

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During the nine months ended September 30, 2021, warrant holders exercised the warrants and the Company issued 5,314,272 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.

 

During the nine months ended September 30, 2021, 13,660 shares of Convertible Series A Preferred stock were converted to 32,978,592 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $1,604,221, which was recorded to the statement of operations.

 

During the nine months ended September 30, 2021, the holders of convertible notes converted a total of $592,532 of principal and interest, and $15,150 in note fees, into 41,687,350 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $341,850 and settled $2,887,565 worth of derivative liabilities which was recorded to additional paid in capital.

 

As of September 30, 2021, 500,000,000 common shares, par value $0.0001, were authorized, of which 112,868,392 shares were issued and outstanding.

 

14. INCOME TAXES

 

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

 

The deferred tax asset and the valuation allowance consist of the following at September 30, 2021:

 

    September 30, 2021  
Net tax loss carry-forwards   $ 1,858,080  
Statutory rate     21 %
Expected tax recovery     390,197  
Change in valuation allowance     (390,197 )
Income tax provision   $  
         
Components of deferred tax asset:        
Non capital tax loss carry-forwards   $ 390,197  
Less: valuation allowance     (390,197 )
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 and 2020 which are still open for examination.

 

15. COMMITMENTS AND CONTINGENCIES

 

Employee and Director Agreements

 

On January 1, 2021, the Company dismissed Richard Hylen as CEO, and appointed him as the Chairman and Secretary of the company, and the President of Satel Group Inc., a wholly owned subsidiary of the company, and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements replaced all previous agreements. Mr. Hylen will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares of the company. On January 20, 2021, the Company issued 93 shares (13,966 pre-split), pursuant with the Certificate of Designation for conversion rights of said shares.

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On January 1, 2021, the Company appointed Jef Lewis as a Director and the Chief Executive Officer, President and Treasurer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares on January 20, 2021. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares. On January 20, 2021, the Company issued 93 shares, pursuant with the Certificate of Designation for conversion rights of said shares.

 

Jeffrey Lewis is 47 years old. Founder of BrewBilt Manufacturing LLC, and is the Chairman and CEO of BrewBilt Manufacturing, Inc., a multiple million dollar craft beer brewery manufacturing facility in Northern California, has over 15 years of experience managing engineering, design, and fabrication teams that custom design and fabricate integrated stainless steel distillation and brewing systems for the craft beer beverage industries.

 

On January 1, 2021, the Company appointed Samuel Berry as a Director and the Chief Operations Officer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $100,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $268.50 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. The company issued to the employee $50,000 of Preferred Series A shares at a value of $268.50 per share. As Director the undersigned is hereby granted $25,000 of Preferred Series A shares of the company, pursuant with the Certificate of Designation for conversion rights of said shares. On January 20, 2021, the Company issued 279 shares of Convertible Preferred Series A shares, pursuant to these agreements.

 

Samuel Berry is 43 years old and a graduate from Keene State College in New Hampshire with a Bachelor of Science, and a graduate from Florida International University with his Master of Science. Sam is a Director of BrewBilt Manufacturing Inc. and experienced with the operations of a public craft beer manufacturing business. With over 15 years of business experience in management, he will oversee the operations of BrewBilt Brewing.

 

On March 1, 2021, the Company appointed Bennett Buchanan as a Director and of the company and pursuant with the Employment Agreement and Director Agreement dated March 3, 2021. Pursuant to the Employment Agreement, Mr. Buchanan will be employed on at-will basis and receive an annual salary of $100,000 payable in monthly installments, with unpaid amounts accruing interest at the rate of 6% per annum. Unpaid salary may be converted by Mr. Buchanan into shares of Convertible Series A Preferred Stock of the Company. On March 4, 2021, the Company issued 93 shares of Convertible Series A Preferred Stock pursuant to the Employment Agreement.

 

Bennett Buchanan is 36 years old and the co-founder and brewer for the award-winning Old Bus Tavern brewpub in San Francisco. He has also honed his skills brewing on a production scale for the Fort Point Beer Company. Bennett holds a Bachelor of Science in Civil Engineering and a Master of Engineering Management from Cornell University.

 

On April 1, 2021, the company renewed an Employee Agreement with Mike Schatz. The employee will receive an annual salary of $125,000 to be paid in equal monthly installments. Any unpaid amounts will accrue annual interest of 6% and may be converted to common stock of the company at fair market value on the date of conversion.

33

 

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

 

Legal Matters

 

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

 

16. SUBSEQUENT EVENTS

 

Licensing Agreement

 

On November 1, 2021, the Company entered into an IP Purchase and License Agreement 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.

 

Convertible Notes and Agreements

 

On October 8, 2021, the Company entered in a Convertible Promissory Note with Power Up Lending Group, Inc, in the amount of $43,750. The note is unsecured, bears interest at 10% per annum, and matures on October 8, 2022.

 

Subsequent Issuances

 

On October 11, 2021, the holder of a convertible note converted a total of $32,500 of principal and fees into 4,200,000 shares of our common stock.

 

On October 20, 2021, the holder of a convertible note converted a total of $39,750 of principal and fees into 5,300,000 shares of our common stock.

 

On October 20, 2021, the holder of a convertible note converted a total of $30,750 of principal and fees into 5,683,918 shares of our common stock.

 

On October 20, 2021, 150 shares of Convertible Preferred Series A stock was converted in to 5,034,375 shares of common stock.

 

On November 2, 2021, the holder of a convertible note converted a total of $16,522 of principal and fees into 3,784,252 shares of our common stock.

 

On November 2, 2021, 86 shares of Convertible Preferred Series A stock was converted in to 5,772,750 shares of common stock.

 

On November 4, 2021, the holder of a convertible note converted a total of $41,250 of principal and fees into 5,500,000 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.

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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 September 30, 2021 Compared with the Three Months Ended September 30, 2020

 

Revenues:

 

The Company’s revenues were $68,471 for the three months ended September 30, 2021 compared to $72,485 for the three months ended September 30, 2020. The company has a strong relationship with DirecTV and has focused its efforts on expanding services outside of the San Francisco metropolitan area. For the three months ended September 30, 2021, the Company had one major customer who represented approximately 49% of total revenue. The decrease in revenue is due to a decrease in customer sales and a reduction in sales efforts due to COVID-19. In addition, 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 $4,859 for the three months ended September 30, 2021, compared to $1,734 for the three months ended September 30, 2020. This is due to a higher number of audio/video equipment sales that were sold in the quarter ending September 30, 2021 compared to the three months ending September 30, 2020.

 

Operating Expenses:

 

Operating expenses consisted primarily of consulting fees, professional fees, salaries and wages, share based compensation, office expenses and fees associated with preparing reports and SEC filings relating to being a public company. Operating expenses for the three months ended September 30, 2021, and September 30, 2020, were $382,630 and $232,187, respectively. The increase was primarily attributable to an increase in wages and general and administrative expenses.

 

Other Income (Expense):

 

Other income (expense) for the three months ended September 30, 2021 and September 30, 2020 was $605,169 and $(1,543,703), 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 decrease in other expense primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities.

35

 

Net Profit (Loss):

 

Net profit (loss) for the three months ended September 30, 2021 was $286,151 compared to $(1,705,139) for the three months ended September 30, 2020. The variance in net profit (loss) can be explained by the changes in the fair value of derivative liabilities.

 

Nine months Ended September 30, 2021 Compared with the Nine months Ended September 30, 2020

 

Revenues:

 

The Company’s revenues were $224,933 for the nine months ended September 30, 2021 compared to $262,571 for the nine months ended September 30, 2020. The company has a strong relationship with DirecTV and has focused its efforts on expanding services outside of the San Francisco metropolitan area. For the nine months ended September 30, 2021, the Company had one major customer who represented approximately 49% of total revenue. The decrease in revenue is due to a decrease in customer sales and a reduction in sales efforts due to COVID-19.

 

Cost of Sales:

 

The Company’s cost of sales was $8,834 for the nine months ended September 30, 2021, compared to $5,530 for the nine months ended September 30, 2020. This is due to a higher number of audio/video equipment sales that were sold during the period ending September 30, 2021 compared to September 30, 2020.

 

Operating Expenses:

 

Operating expenses consisted primarily of consulting fees, professional fees, salaries and wages, share based compensation, office expenses and fees associated with preparing reports and SEC filings relating to being a public company. Operating expenses for the nine months ended September 30, 2021, and September 30, 2020, were $2,250,730 and $821,531, respectively. The increase was primarily attributable to an increase in share based compensation and general and administrative expenses.

 

Other Income (Expense):

 

Other income (expense) for the nine months ended September 30, 2021 and September 30, 2020 was $1,138,587 and $(4,644,531), respectively. Other income (expense) consisted of derivative valuation gains and losses, gains or losses on settlement of debt and conversion of debt, and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The increase in other income primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities.

 

Net Loss:

 

Net loss for the nine months ended September 30, 2021 was $896,044 compared to $5,209,021 for the nine months ended September 30, 2020. The decrease in net loss can be explained by the changes in the loss in the fair value of derivative liabilities.

 

Impact of Inflation

 

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

 

Liquidity and Capital Resources

 

    September 30,       December 31,  
    2021     2020  
Current Assets   $ 601,293     $ 154,551  
Current Liabilities     4,366,193       9,588,260  
Working Capital (Deficit)   $ (3,764,900 )   $ (9,433,709 )

36

 

The overall working capital (deficit) decreased from $(9,433,709) at December 31, 2020 to $(3,764,900) at September 30, 2021 due to the change in value of derivative liabilities, an increase in fixed assets and deposits paid for brewery equipment.

 

    September 30,       September 30,  
    2021     2020  
Cash Flows (used in) provided by Operating Activities   $ (443,914 )   $ (202,335 )
Cash Flows (used in) provided by Investing Activities     (533,426 )      
Cash Flows (used for) provided by Financing Activities     973,160       203,420  
Net Increase (decrease) in Cash During Period   $ (4,180 )   $ 1,085  

 

During the nine months ended September 30, 2021 cash (used in) provided by operating activities was $(443,914) compared to $(202,335) for the nine months ended September 30, 2020. The increase in the cash used in operating activities is primarily attributed to the change in fair value of derivative liabilities, stock based compensation and loss on conversion.

 

During the nine months ended September 30, 2021 cash (used in) provided by investing activities was $(533,426) compared to $0 for the nine months ended September 30, 2020. This increase in cash used in investing activities is due to a deposit paid to begin fabrication of a brewery system and fixed asset additions.

 

During the nine months ended September 30, 2021, cash (used for) provided by financing activities was $973,160 compared to $203,420, for the nine months ended September 30, 2020. The increase in cash used by financing activity primarily resulted from an increase in proceeds from notes payable during the nine months ended September 30, 2021.

 

As of September 30, 2021, the Company had a cash balance and current asset total of $130,675 and $601,293 respectively, compared with $134,855 and $154,551 of cash and current assets, respectively, as of December 31, 2020. The increase in assets was due to an increase in accounts receivable and a deposit made to begin fabrication of brewery equipment.

 

As of September 30, 2021, the Company had total current liabilities of $4,366,193 compared with $9,588,260 as of December 31, 2020. The decrease in current liabilities was primarily attributed to a decrease in derivative liabilities and accounts payable.

 

Going Concern

 

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

 

As of September 30, 2021, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our December 31, 2020 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.

37

 

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

 

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.

 

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 September 30, 2021. 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, 2020, that was filed with the SEC on March 31, 2021, the Company’s officers concluded that our disclosure controls and procedures are ineffective.

38

 

 

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 September 30, 2021 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   Description of Exhibit   Filing
3.1   Articles of Incorporation   Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
3.1a   Amended Articles of Incorporation   Filed with the SEC on November 11, 2009, on our Current Report on Form 8-K.
3.2   Bylaws   Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
10.45   Asset Purchase Agreement, by and between the Company and RJM and Associates, dated March 9, 2016   Filed with the SEC on March 10, 2016 as part of our Current Report on Form 8-K.
31.01   Certification of Principal Executive Officer Pursuant to Rule 13a-14   Filed herewith.
31.02   Certification of Principal Financial Officer Pursuant to Rule 13a-14   Filed herewith.
32.01   Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act   Filed herewith.
101.INS   XBRL Instance Document   Filed herewith.
101.SCH   XBRL Taxonomy Extension Schema Document   Filed herewith.
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document   Filed herewith.
101.LAB   XBRL Taxonomy Extension Labels Linkbase Document   Filed herewith.
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document   Filed herewith.
01.DEF   XBRL Taxonomy Extension Definition Linkbase Document   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.

39

 

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: November 15, 2021

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

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Exhibit 31.1

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

 

I, Jef Lewis, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of BrewBilt Brewing Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  Date: November 15, 2021
   
  /s/ Jef Lewis  
  By: Jef Lewis
  Its: Principal Executive Officer

 

 

 

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14

 

I, Jef Lewis, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of BrewBilt Brewing Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  Date: November 15, 2021
   
  /s/ Jef Lewis  
  By: Jef Lewis
  Its: Principal Financial Officer

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of BrewBilt Brewing Company (the “Company”) on Form 10-Q for the period ending September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jef Lewis, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Jef Lewis  
By: Jef Lewis
Principal Executive Officer and Principal Financial Officer
Dated: November 15, 2021

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.