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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2023

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

For the transition period from ______ to _______

Commission File Number 000-53276

(BREWBILT LOGO)

BREWBILT BREWING COMPANY

(Name of small business issuer in its charter)

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

110 Spring Hill Dr #17

Grass Valley, CA 95945

(Address of principal executive offices)

(530) 205-3437

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o		Accelerated filer	o

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

Emerging growth company	o{

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

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

As of November 8, 2023, there were 9,028,743,427 shares of the registrant’s $0.0001 par value common stock issued and outstanding.

BREWBILT BREWING COMPANY

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

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

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	40
ITEM 1A.	RISK FACTORS	40
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	40
ITEM 4.	MINE SAFETY DISCLOSURES	40
ITEM 5.	OTHER INFORMATION	40
ITEM 6.	EXHIBITS	41

Special Note Regarding Forward-Looking Statements

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

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

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

BREWBILT BREWING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2023			2022
ASSETS		(unaudited)			(audited)
Current Assets
Cash	$	128,158		$	32,624
Accounts receivable		31,684			17,247
Inventory, net		36,462			26,434
Prepaid expenses		375			1,500
Other current assets		384			14,776
Total current assets		197,063			92,581

Property, plant and equipment, net		1,662,528			1,468,933
Finance lease assets		43,150			—
Finance lease assets - related party		44,208			51,088
Operating right-of-use assets		306,304			357,150
Security deposit		6,500			6,500
Total assets	$	2,259,753		$	1,976,252

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	306,137		$	298,642
Accrued wages		821,267			1,185,363
Accrued expenses		134,204			61,571
Accrued interest		433,368			330,154
Convertible notes payable in default		1,162,512			66,490
Convertible notes payable, net of discount		266,850			925,440
Current finance lease liabilities		13,195			—
Current finance lease liabilities - related party		9,731			9,252
Current operating lease liabilities		75,823			69,180
Deferred revenue		2,000			—
Derivative liabilities		3,383,074			2,398,176
Loans payable, net of discount		180,386			145,322
Related party liabilities, net of discount		609,931			378,110
Total Current liabilities		7,398,478			5,867,700

Non-current finance lease liabilities		29,955			—
Non-current finance lease liabilities - related party		34,477			41,836
Non-current operating lease liabilities		230,481			287,970
Non-current related party note payable, net of discount		1,366,908			977,396
Total liabilities		9,060,299			7,174,902

Series A convertible preferred stock: 10,100,000 shares authorized, par value $0.0001 (1) 55,678 shares issued and outstanding at September 30, 2023 50,256 shares issued and outstanding at December 31, 2022		14,949,543			13,493,736
Convertible preferred stock payable		2,399,829			599,829

Stockholders’ deficit:
Series B preferred stock: 5,000 shares authorized, par value $0.0001 1,000 shares issued and outstanding at September 30, 2023 1,000 shares issued and outstanding at December 31, 2022		—			—
Common stock: 100,000,000,000 shares authorized, par value $0.0001 (1) 8,838,743,427 shares issued and outstanding at September 30, 2023 207,723,162 shares issued and outstanding at December 31, 2022		883,874			20,772
Additional paid in capital		14,281,172			11,728,527
Accumulated deficit		(39,314,964	)		(31,041,514	)
Total stockholders’ deficit		(24,149,918	)		(19,292,215	)
Total liabilities and stockholders’ deficit	$	2,259,753		$	1,976,252

(1)

Preferred and common share amounts and per share amounts in the financial statements reflect the one-for-three hundred reverse stock split that was made effective on September 30, 2022.

The accompanying notes are an integral part of these financial statements

BREWBILT BREWING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended						Nine months ended
	September 30,						September 30,
	2023			2022			2023			2022
Sales	$	127,822		$	34,526		$	320,126		$	62,265
Cost of sales		117,147			27,364			348,046			37,159
Gross profit (loss)		10,675			7,162			(27,920	)		25,106

Operating expenses:
Depreciation		18,602			39,720			32,154			63,262
G&A expenses		128,823			414,563			382,411			1,043,199
Professional fees		17,467			14,310			24,942			44,938
Salaries and wages		705,520			781,718			2,028,974			1,498,202
Total operating expenses		870,412			1,250,311			2,468,481			2,649,601

Loss from operations		(859,737	)		(1,243,149	)		(2,496,401	)		(2,624,495	)

Other income (expense):
Interest income		44			1			56			5
Debt forgiveness		—			—			—			9,940
Gain on settlement of debt		—			76,921			25,000			76,171
Loss on cashless warrant exercise		—			—			(22,066	)		—
Loss on conversion of debt		(1,750	)		(216,405	)		(27,123	)		(346,959	)
Loss on conversion of preferred shares		—			(16,972	)		(30,530	)		(292,954	)
Loss on conversion of preferred shares - related party		—			—			(1,501,362	)		—
Derivative income (expense)		(38,673	)		669,306			(2,594,365	)		262,903
Interest expense		(416,847	)		(481,566	)		(1,604,206	)		(1,395,991	)
Interest expense - related party		(16,902	)		—			(22,453	)		—
Total other income (expense)		(474,128	)		31,285			(5,777,049	)		(1,686,885	)

Net loss before income taxes from continuing operations		(1,333,865	)		(1,211,864	)		(8,273,450	)		(4,311,380	)
Income tax expense		—			—			—			—
Net loss from continuing operations		(1,333,865	)		(1,211,864	)		(8,273,450	)		(4,311,380	)

Discontinued operations (Note 3)
Loss from operation of discontinued operations		—			—			—			(233,700	)
Total loss from discontinued operations, net of tax		—			—			—			(233,700	)

Net loss	$	(1,333,865	)	$	(1,211,864	)	$	(8,273,450	)	$	(4,545,080	)

Deemed dividend from related party note payable		(1,500,215	)		—			(1,900,215	)		—
Deemed dividend from note payable		(300,183	)		—			(300,183	)		—
Net loss attributable to common shareholders	$	(3,134,263	)	$	(1,211,864	)	$	(10,473,848	)	$	(4,545,080	)

Per share information
Weighted average number of common shares outstanding, basic (1)		8,517,711,543			5,960,970			6,169,203,566			3,519,093
Net loss per common share, basic, for continued operations	$	(0.0004	)	$	(0.2033	)	$	(0.0017	)	$	(1.2251	)
Net loss per common share, basic, for discontinued operations	$	—		$	—		$	—		$	(0.0664	)
Net loss per common share, basic, attributable to common shareholders	$	(0.0004	)	$	(0.2033	)	$	(0.0017	)	$	(1.2915	)

Per share information
Weighted average number of common shares outstanding, diluted (1)		8,517,711,543			5,960,970			6,169,203,566			3,519,093
Net loss per common share, diluted, for continued operations	$	(0.0004	)	$	(0.2033	)	$	(0.0017	)	$	(1.2251	)
Net loss per common share, diluted, for discontinued operations	$	—		$	—		$	—		$	(0.0664	)
Net loss per common share, diluted, attributable to common shareholders	$	(0.0004	)	$	(0.2033	)	$	(0.0017	)	$	(1.2915	)

(1)

Common share amounts and per share amounts in the financial statements reflect the one-for-three hundred reverse stock split that was made effective on September 30, 2022.

The accompanying notes are an integral part of these financial statements

BREWBILT BREWING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

					⁽¹⁾												⁽¹⁾
	Convertible Preferred Stock									Preferred Stock									Additional						Total
	Series A (1)						Shares			Series B					Common Stock (1)				Paid-In			Accumulated			Shareholders’
	Shares			Amount			Payable			Shares			Amount		Shares		Amount		Capital			Deficit			Equity (Deficit)
Balances for December 31, 2022		50,256		$	13,493,736		$	599,829			1,000		$	—		207,723,162	$	20,772	$	11,728,527		$	(31,041,514	)	$	(19,292,215	)

Conversion of debt to common stock		—			—			—			—			—		1,037,304,834		103,730		656,462			—			760,192
Convertible preferred stock converted to common stock		(1,976	)		(530,556	)		—			—			—		2,010,402,290		201,040		360,046			—			561,086
Convertible preferred stock converted to common stock - related party		(1,900	)		(510,150	)		—			—			—		3,110,125,000		311,013		1,700,499			—			2,011,512
Convertible preferred stock to be issued pursuant to director and officer agreements		—			—			800,000			—			—		—		—		—			—			—
Common stock issued pursuant to equity purchase agreement		—			—			—			—			—		68,296,141		6,830		17,373			—			24,203
Cashless warrant exercise		—			—			—			—			—		73,800,000		7,380		(7,380	)		—			—
Imputed interest		—			—			—			—			—		—		—		43,624			—			43,624
Derivative settlements		—			—			—			—			—		—		—		22,113			—			22,113
Net loss		—			—			—			—			—		—		—		—			(2,716,832	)		(2,716,832	)
Balances for March 31, 2023		46,380		$	12,453,030		$	1,399,829			1,000		$	—		6,507,651,427	$	650,765	$	14,521,264		$	(33,758,346	)	$	(18,586,317	)

Conversion of debt to common stock		—			—						—			—		1,303,058,667		130,306		(382,101	)		—			(251,795	)
Deemed dividend from convertible preferred stock issuable with a related party note payable		—			—			400,000			—			—		—		—		(400,000	)		—			(400,000	)
Debt discount on related party note payable		—			—			—			—			—		—		—		200,000			—			200,000
Loss on cashless warrant exercise																				22,066						22,066
Imputed interest		—			—						—			—		—		—		45,438			—			45,438
Derivative settlements		—			—						—			—		—		—		1,803,256			—			1,803,256
Net loss		—			—						—			—		—		—		—			(4,222,753	)		(4,222,753	)
Balances for June 30, 2023		46,380		$	12,453,030		$	1,799,829			1,000		$	—		7,810,710,094	$	781,071	$	15,809,923		$	(37,981,099	)	$	(21,390,105	)

Conversion of debt to common stock		—			—						—			—		1,028,033,333		102,803		(41,121	)		—			61,682
Convertible preferred stock payable converted to preferred stock		1,490			400,065			(400,000	)		—			—		—		—		(65	)		—			(65	)
Deemed dividend from convertible preferred stock issuable with a related party note payable		—			—			1,000,000			—			—		—		—		(1,000,000	)		—			(1,000,000	)
Deemed dividend from convertible preferred stock issued with a related party note payable		1,863			500,215			—			—			—		—		—		(500,215	)		—			(500,215	)
Deemed dividend from convertible preferred stock issued with a note payable		1,118			300,183			—			—			—		—		—		(300,183	)		—			(300,183	)
Debt discount on related party promissory notes		—			—			—			—			—		—		—		200,000			—			200,000
Convertible preferred shares issued to settle officer accrued wages and interest		3,150			845,775			—			—			—		—		—		(116	)		—			(116	)
Convertible preferred stock issued pursuant to director and officer agreements		1,677			450,275			—			—			—		—		—		(275	)		—			(275	)
Imputed interest		—			—			—			—			—		—		—		46,581			—			46,581
Derivative settlements		—			—			—			—			—		—		—		66,643			—			66,643
Net loss		—			—			—			—			—		—		—		—			(1,333,865	)		(1,333,865	)
Balances for September 30, 2023		55,678		$	14,949,543		$	2,399,829			1,000		$	—		8,838,743,427	$	883,874	$	14,281,172		$	(39,314,964	)	$	(24,149,918	)

	Convertible Preferred Stock									Preferred Stock									Additional						Total
	Series A (1)						Shares			Series B					Common Stock (1)				Paid-In			Accumulated			Shareholders’
	Shares			Amount			Payable			Shares			Amount		Shares		Amount		Capital			Deficit			Equity (Deficit)
Balances for December 31, 2021		30,746		$	8,255,301		$	5,000,000			1,500		$	—		736,260	$	74	$	5,550,295		$	(22,496,835	)	$	(16,946,466	)
Conversion of debt to common stock		—			—			—			—			—		910,730		91		414,665			—			414,756
Convertible preferred stock converted to common stock		(461	)		(123,779	)		—			—			—		421,246		42		260,491			—			260,533
Convertible preferred stock payable converted to preferred stock		18,622			5,000,007			(5,000,000	)		—			—		—		—		(7	)		—			(7	)
Convertible preferred shares to be issued to settle accrued wages		—			—			400,065			—			—		—		—		(65	)		—			(65	)
Convertible preferred shares to be issued pursuant to director agreements		—			—			199,764			—			—		—		—		236			—			236
Convertible preferred shares issued for services		93			24,971			—			—			—		—		—		29			—			29
Cashless warrant exercise		—			—			—			—			—		35,432		4		(4	)		—			—
Warrant discounts		—			—			—			—			—		—		—		83,372			—			83,372
Imputed interest		—			—			—			—			—		—		—		10,286			—			10,286
Derivative settlements		—			—			—			—			—		—		—		418,322			—			418,322
Net loss		—			—			—			—			—		—		—		—			(2,229,102	)		(2,229,102	)
Balances for March 31, 2022		49,000		$	13,156,500		$	599,829			1,500		$	—		2,103,668	$	211	$	6,737,620		$	(24,725,937	)	$	(17,988,106	)

Conversion of debt to common stock		—			—			—			—			—		843,417		84		288,644			—			288,728
Convertible preferred stock converted to common stock		(496	)		(133,176	)		—			—			—		1,040,288		104		272,424			—			272,528
Common stock issued pursuant to securities purchase agreement		—			—			—			—			—		100,000		10		20,990			—			21,000
Convertible preferred shares issued in connection with promissory note		400			107,400			—			—			—		—		—		—			—			—
Convertible preferred shares issued to settle debt		223			59,876			—			—			—		—		—		—			—			—
Warrant discounts		—			—			—			—			—		—		—		193,234			—			193,234
Imputed interest		—			—			—			—			—		—		—		12,449			—			12,449
Derivative settlements		—			—			—			—			—		—		—		127,778			—			127,778
Net loss		—			—			—			—			—		—		—		—			(1,104,114	)		(1,104,114	)
Balances for June 30, 2022		49,127		$	13,190,600		$	599,829			1,500		$	—		4,087,373	$	409	$	7,653,139		$	(25,830,051	)	$	(18,176,503	)

Preferred shares issued and cancelled in connection with sale and settlement of wholly owned subsidiary		2,406			646,011			—			(500	)		—		—		—		(77,601	)		—			(77,601	)
Deconsolidation of wholly owned subsidiary		—			—			—			—			—		—		—		350,636			—			350,636
Conversion of debt to common stock		—			—			—			—			—		3,510,598		351		424,229			—			424,580
Convertible preferred stock converted to common stock		(126	)		(33,831	)		—			—			—		281,925		28		50,775			—			50,803
Common stock issued pursuant to equity purchase agreement		—			—			—			—			—		252,092		25		17,662			—			17,687
Convertible preferred shares issued to directors to guarantee lease agreement		2,236			600,366			—			—			—		—		—		—			—			—
Convertible preferred shares cancelled pursuant to settlement agreement		(455	)		(122,168	)		—			—			—		—		—		—			—			—
Convertible preferred shares to be issued for services		—			—			300,000			—			—		—		—		—			—			—
Cashless warrant exercise		—			—			—			—			—		240,000		24		(24	)		—			—
Warrant discounts		—			—			—			—			—		—		—		103,197			—			103,197
Imputed interest		—			—			—			—			—		—		—		3,606			—			3,606
Derivative settlements		—			—			—			—			—		—		—		180,986			—			180,986
Rounding due to reverse stock split		—			—			—			—			—		77		—		—			—			—
Net loss		—			—			—			—			—		—		—		—			(1,211,864	)		(1,211,864	)
Balances for September 30, 2022		53,188		$	14,280,978		$	899,829			1,000		$	—		8,372,065	$	837	$	8,706,605		$	(27,041,915	)	$	(18,334,473	)

(1)

Preferred and common share amounts and per share amounts in the financial statements reflect the one-for-three hundred reverse stock split that was made effective on September 30, 2022.

The accompanying notes are an integral part of these financial statements

BREWBILT BREWING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine months ended
	September 30,
	2023			2022
Cash flows from operating activities:
Net loss from continued operations		(8,273,450	)		(4,311,380	)
Net loss from discontinued operations		—			(233,700	)
Net loss		(8,273,450	)		(4,545,080	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		1,060,114			1,217,593
Depreciation		148,156			63,262
Stock based compensation		1,250,000			1,346,453
Gain on settlement of debt		(25,000	)		(76,171	)
Preferred stock issued for services		—			325,000
Imputed interest		135,643			26,341
Forgiveness of debt		—			(9,940	)
Loss on cashless warrant exercise		22,066			—
Loss on conversion of debt		27,123			346,959
Loss on conversion of preferred shares		30,530			292,954
Loss on conversion of preferred shares - related party		1,501,362			—
Change in fair value of derivative liability		2,594,365			(262,903	)
Penalties on notes payable		140,772			—
Decrease (increase) in operating assets and liabilities:
Accounts receivable		(14,437	)		(4,036	)
Inventory		(10,028	)		(23,349	)
Other current assets		14,392			(643	)
Prepaid expenses		1,125			286
Security deposits		—			(6,500	)
Accrued interest		262,595			170,684
Accounts payable		7,495			468,218
Accrued expenses		497,996			86,484
Advances from related parties		(35,151	)		74,201
Deferred revenue		2,000			—
Net cash used in continuing operating activities		(662,332	)		(510,187	)
Net cash used in discontinued operating activities		—			215,093
Net cash used in by operating activities		(662,332	)		(295,094	)

Cash flows from investing activities:
Property, plant and equipment, additions		(269,341	)		(1,175,075	)
Deposit on equipment, related party		—			450,000
Net cash used in investing activities		(269,341	)		(725,075	)

Cash flows from financing activities:
Proceeds from convertible debt		—			1,043,100
Payments on convertible debt		—			(71,500	)
Proceeds from promissory notes		220,750			25,000
Payments on promissory notes		(48,128	)		—
Proceeds from related party loans		842,402			—
Payments on finance lease		(5,140	)		—
Payments on related party finance lease		(6,880	)		—
Proceeds from sale of stock		24,203			—
Net cash provided for financing activities		1,027,207			996,600

Net increase (decrease) in cash		95,534			(23,569	)

Cash, beginning of period		32,624			46,427
Cash, end of period	$	128,158		$	22,858

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

Schedule of non-cash investing & financing activities:
Preferred stock issued against related party debt	$	—		$	646,011
Deconsolidation of wholly owned entity	$	—		$	350,636
Preferred shares cancelled	$	—		$	122,168
Operating lease adoption recognition	$	—		$	212,040
Finance lease adoption recognition	$	48,290		$	—
Debt converted to common stock	$	542,956		$	1,128,064
Preferred stock converted to common stock	$	530,556		$	290,786
Preferred stock converted to common stock - related parties	$	510,150		$	—
Deemed dividend from preferred stock issuable with a related party note payable	$	1,000,000		$	—
Deemed dividend from preferred stock issued with a related party note payable	$	900,215		$	—
Deemed dividend from preferred stock issued with a note payable	$	300,183		$	—
Debt discount on related party note payable	$	400,000		$	—
Discount from derivative	$	282,545		$	781,105
Related party exchange of accrued wages for note payable	$	—		$	114,354
Related party exchange of accrued wages for preferred stock	$	845,775		$	—
Derivative settlements	$	1,892,012		$	727,086
Warrant discount from debt	$	—		$	379,803
Cashless warrant exercise	$	7,380		$	28
Fixed assets acquired with debt	$	31,694		$	—
Preferred stock issued to settle debt	$	—		$	60,000
Fixed assets acquired with related party accounts payable	$	28,696		$	255,762
Convertible note payable exchanged for accrued interest	$	—		$	16,800
Preferred stock payable converted to preferred stock	$	—		$	5,000,007

The accompanying notes are an integral part of these financial statements

BREWBILT BREWING COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

BrewBilt Brewing Company, a Florida Corporation, wholly owns BrewBilt Brewing LLC, a California Limited Liability Corporation that is located in the Sierra Foothills of Northern California. BrewBilt Brewing LLC is a Type-23 California licensed brewery with the Alcoholic Beverage Control Board (ABC). The Company began building its first processing brewery in 2021 and started delivering its craft beers in July of 2022.

The craft brewing industry refers to the production of beer by small, independent, and traditional breweries. These breweries emphasize quality, flavor, and brewing technique, often focusing on unique and innovative recipes that differ from mass-produced, mainstream beers. Craft breweries prioritize artisanal methods, local ingredients, and community involvement. BrewBilt Brewing is devoted to the modern execution of traditional styles utilizing hand-crafted, industry-leading equipment combined with an artful approach and a passion for quality. A focus on regionally sourced local ingredients gives the company its dynamic palette for distinctly satisfying beers. Inspired by European brewing tradition and American craft innovation, BrewBilt Brewing creates craft beers that reflect a sense of place in order to share their brewing philosophy for the ultimate drinking pleasure.

California is often considered one of the birthplaces of the modern craft beer movement. Its craft beer market is known for diversity in beer styles, reflecting the state’s cultural and culinary diversity. Many beer enthusiasts travel to California to explore its breweries, tasting rooms, and beer-related attractions while BrewBilt Brewing places a strong emphasis on sustainability by sourcing local ingredients, and implementing eco-friendly practices such as upcycling spent grain to local ranchers.

Brewbilt Brewing Company was formerly Simlatus Corporation. Simlatus wholly owned the subsidiary Satel Group Inc. Both Simlatus and Satel are no longer associated with Brewbilt Brewing Company.

Settlement and Sale Transaction

On July 1, 2022, the Company executed a Settlement and Sale Agreement with our Chairman, Richard Hylen. The Company agreed to sell the wholly owned subsidiary, Satel Group, Inc. to Mr. Hylen in exchange for the debt that the Company owes him. As of June 30, 2022, this debt is inclusive of unpaid wages and interest of $264,096 and personal loans made to Satel in the amount of $304,314. The Company issued 2,406 shares of Series A Convertible Preferred stock at $268.50 per share, with a fair value of $646,011.

Financial Statement Presentation

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

Reclassification

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

Fiscal Year End

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

Use of Estimates

The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management regularly evaluates estimates and assumptions related to the valuation of assets and liabilities.

Management bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from managements estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates include:

■

Liability for legal contingencies.

■

Useful life of assets.

■

Deferred income taxes and related valuation allowances.

■

Impairment of finite-lived intangibles.

■

Obsolescence of inventory.

■

Stock-based compensation calculated using the lattice pricing model.

Cash Equivalents

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

Discontinued Operations

In accordance with the Financial Accounting Standards Board, ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the results of operations of a component of an entity or a group or component of an entity that represents a strategic shift that has, or will have, a major effect on the reporting company’s operations that has either been disposed of or is classified as held-for-sale are required to be reported as discontinued operations in a company’s consolidated financial statements. In order to be considered a discontinued operation, both the operations and cash flows of the discontinued component must have been (or will be) eliminated from the ongoing operations of the company and the company will not have any significant continuing involvement in the operations of the discontinued component after the disposal transaction. As a result of the Settlement and Sale Agreement to sell Satel Group Inc., the accompanying consolidated financial statements reflect the activity related to the sale of its previously wholly owned subsidiary as discontinued operations.

Advertising Costs

The Company expenses the cost of advertising and promotional materials when incurred. On September 27, 2022, the Company entered into a Platform Services Contract with SRAX for marketing advisory services and platform fees for a period of one year in the amount of $300,000, to be paid in Series A Convertible Preferred stock. The fees are non-refundable and therefore the Company recorded the full amount to the statement of operations. Total advertising costs were $24,360 and $332,982 for the nine months ended September 30, 2023 and September 30, 2022, respectively.

Leases

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

Revenue Recognition and Related Allowances

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

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

We determine revenue recognition through the following steps:

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

	●	identification of the performance obligations in the contract;

	●	determination of the transaction price;

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

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

If the conditions for revenue recognition are not met, the Company defers the revenue and related cost of sales until all conditions are met. As of September 30, 2023 and December 31, 2022, the Company has deferred revenue of $2,000 and $0, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’s evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on a due date basis. The allowance for doubtful accounts at September 30, 2023 and December 31, 2022 is $0.

Accounts Payable and Accrued Expenses

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

Basic and Diluted Loss Per Share

In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on September 30, 2022 (see Note 15). Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. During the nine months ended September 30, 2023 and 2022, the number of diluted shares that have been excluded are 50,014,065,887 and 87,729,607, respectively.

Inventories

Inventories consist of raw materials, beer cans and labels, keg collars and toppers, inbound freight charges, purchasing and receiving costs, direct labor, depreciation, overhead, and finished goods. Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of September 30, 2023 and December 31, 2022, the Company has inventory of $36,462 and $26,434, respectively.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the nine months ended September 30, 2023 and the year ended December 31, 2022, there were no impairment losses recognized for long-lived assets.

Fair Value of Financial Instruments

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

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

These levels are:

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

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

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

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 for each fair value hierarchy level:

September 30, 2023	Derivative Liabilities		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	3,383,074	$	3,383,074

December 31, 2022	Derivative Liabilities		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	2,398,176	$	2,398,176

In management’s opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of September 30, 2023 and December 31, 2022, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.

Debt issuance costs and debt discounts

Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying consolidated balance sheets.

Income Taxes

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

As of the date of this filing, the Company is not current in filing their tax returns. The last return filed by the Company was December 31, 2017, and the Company has not accrued any potential penalties or interest from that period forward. The Company will need to file returns for the years ending December 31, 2022, 2021, 2020, 2019 and 2018, which are still open for examination.

Recent Accounting Pronouncements

Although there were new accounting pronouncements issued or proposed by the FASB for the nine months ended September 30, 2023 and through the date of filing of this report, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

2. GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2023, the Company has a shareholders’ deficit of $24,149,918 since its inception, working capital deficit of $7,201,415, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieve a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

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

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

3. DISCONTINUED OPERATIONS – SATEL GROUP, INC. DISPOSITION

On July 1, 2022, the Company and Richard Hylen (the “Buyer”) entered into a Settlement and Sale Agreement for the sale of the Company’s wholly owned subsidiary, Satel Group Inc. in exchange for the debt owed to the buyer.

Satel Group Inc. is the premier provider of DirecTV to high-rise apartments, condominiums, and large commercial office buildings in the San Francisco metropolitan area. Satel’s revenues supported BrewBilt Brewing Company during construction of the brewing facility and ramp-up of craft beer revenues.

As of September 30, 2022, the debt is inclusive of unpaid wages of $254,272 and interest owed on the unpaid wages of $9,824 for a total amount of $264,096. Further, the buyer has personal loans made to Satel in the amount of $304,314. The company valued the liabilities at $646,011 and exchanged this with Preferred Series A stock at $268.50 per share for a total of 2,406 shares.

In accordance with ASC 205-20, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. The disposition of Satel met the criteria in paragraph 205-20-45-1E and was reported as a discontinued operation.

The major classes of assets and liabilities disposed of, reflected in our condensed balance sheet as of December 31 2021, respectively, are presented below:


Current Assets
Cash	$	12,834
Accounts receivable		1,792
Total current assets of discontinued operations		14,626

Financial lease assets - related party		26,815
Security deposit		5,162
Total non-current assets of discontinued operations		31,977

Total assets of discontinued operations	$	46,603

Current Liabilities:
Accounts payable	$	249,295
Accrued wages		161,210
Accrued expenses		28,153
Accrued interest		5,077
Current financing lease liabilities - related party		4,666
Loans payable		72,920
Related party liabilities		207,086
Total current liabilities of discontinued operations		728,407

Non-current financing lease liabilities - related party		22,149

Total liabilities of discontinued operations	$	750,556

During the nine months ended September 30, 2023 and September 30, 2022, discontinued operations consisted of the following:


	September 30,
	2023		2022
Revenue	$	—	$	93,420
Operating expenses		—		302,171
Interest expense		—		24,949
Net loss	$	—	$	(233,700	)

4. PREPAID EXPENSES

Prepaid fees represent amounts paid in advance for future contractual benefits to be received. Expenses paid in advance are recorded as a prepaid asset and then amortized to the statements of operations when services are rendered, or over the life of the contract using the straight-line method.

As of September 30, 2023 and December 31, 2022, prepaid expenses consisted of the following:

Schedule of Prepaid Expenses

	September 30,		December 31,
	2023		2022
Prepaid accounting fees	$	—	$	1,500
Prepaid transfer agent fees		375		—
Prepaid Expenses	$	375	$	1,500

5. PROPERTY, PLANT, AND EQUIPMENT

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

Schedule of Use Life of Assets

Kegs	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 as of September 30, 2023 and December 31, 2022:

	September 30,			December 31,
	2023			2022
Brewing Equipment	$	1,245,702		$	1,185,271
Computer Equipment		2,933			2,933
Construction in Progress		235,154			—
Furniture and Fixtures		13,056			—
Leasehold Improvements		383,748			394,352
Vehicles		31,694			—
Property, plant, and equipment, gross		1,912,287			1,582,556
Less accumulated depreciation		(249,759	)		(113,623	)
Property, plant, and equipment, net	$	1,662,528		$	1,468,933

During the nine months ended September 30, 2023, the Company received $33,909 in brewing equipment, recorded construction in progress expenses of $224,550, reclassified leaseholder improvements of $10,604 to construction in progress, purchased $13,056 in furniture for the office and the Taproom, and purchased a vehicle for $31,694. During the nine months ended September 30, 2023 and September 30, 2022, the Company recorded depreciation on fixed assets of $136,136 and $63,262, respectively.

6. ACCRUED EXPENSES

As of September 30, 2023 and December 31, 2022, accrued expenses were comprised of the following:

Schedule of Accrued Expenses

	September 30,		December 31,
	2023		2022
Accrued expenses
Credit cards	$	20,104	$	11,881
CRV payable		217		720
Customer keg deposits		5,970		2,580
Payroll liabilities		99,402		34,035
Sales tax payable		511		355
Other short-term liabilities		8,000		12,000
Total accrued expenses	$	134,204	$	61,571

Accrued interest
Interest on notes payable	$	174,971	$	96,796
Interest on accrued wages		258,397		233,358
Total accrued interest	$	433,368	$	330,154

Accrued wages	$	821,267	$	1,185,363

7. CONVERTIBLE NOTES PAYABLE

As of September 30, 2023 and December 31, 2022, convertible notes payable were comprised of the following:

Schedule of Convertible Notes Payable

	Original	Due	Interest	Conversion	September 30,			December 31,
	Note Date	Date	Rate	Rate	2023			2022
1800 Diagonal #1*	10/10/2022	10/10/2023	22%	Variable		—			44,250
1800 Diagonal #2*	11/2/2022	11/2/2023	22%	Variable		81,375			54,250
1800 Diagonal #3*	11/28/2022	11/28/2023	22%	Variable		66,375			44,250
1800 Diagonal #4*	1/10/2023	1/10/2024	22%	Variable		76,877			—
Coventry*	10/7/2022	10/7/2023	18%	Variable		139,638			—
Emunah Funding #4*	10/20/2017	7/20/2018	24%	Variable		2,990			2,990
FirstFire Global*	3/8/2021	3/8/2022	16%	Variable		31,000			31,000
Fourth Man #13	1/10/2022	1/10/2023	16%	Variable		—			48,000
Fourth Man #14	12/22/2022	12/22/2023	12%	Variable		52,000			52,000
Jefferson St Capital #2*	3/5/2019	10/18/2019	0%	Variable		5,000			5,000
Mammoth*	3/3/2022	12/3/2022	18%	Variable		27,500			27,500
Mast Hill Fund #1*	1/27/2022	1/27/2023	16%	Variable		248,787			248,787
Mast Hill Fund #2*	3/3/2022	3/3/2023	16%	Variable		63,000			63,000
Mast Hill Fund #3*	4/1/2022	4/1/2023	16%	Variable		328,479			381,144
Mast Hill Fund #4	7/13/2022	7/13/2023	12%	Variable		—			125,000
Mast Hill Fund #5*	9/6/2022	9/6/2023	16%	Variable		19,691			125,000
Mast Hill Fund #6	10/14/2022	10/14/2023	12%	Variable		217,935			245,000
Pacific Pier Capital #1*	5/20/2022	5/20/2023	16%	Variable		71,800			60,000
Pacific Pier Capital #2	11/3/2022	11/3/2023	12%	Variable		20,000			20,000
						1,452,447			1,577,171
Less debt discount						(23,085	)		(585,241	)
Notes payable, net of discount					$	1,429,362		$	991,930

As of September 30, 2023 and December 31, 2022, the balance of notes payable that are in default is $1,162,512 and $66,490, respectively.

1800 Diagonal Lending LLC (formerly Sixth Street Lending LLC)

On October 10, 2022, the Company issued a convertible note to 1800 Diagonal Lending LLC for $44,250, of which $40,000 was received in cash, and $4,250 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on October 10, 2023, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest closing prices during the 20 day trading period on the trading day prior to the conversion date. On April 17, 2023, a default penalty of $22,125 was accessed by the note holder for failure of timely filing of the company’s Form 10-K. Pursuant to the default, the Company recorded a debt discount from the derivative equal to $42,003 due to this conversion feature, which, in addition to the transactions fees, has been amortized to the statement of operations. During the nine months ended September 30, 2023, the Company issued 1,170,858,667 common shares upon the conversion of principal in the amount of $66,375, and interest of $3,876. As of September 30, 2023, the note has been fully satisfied.

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

On November 2, 2022, the Company issued a convertible note to 1800 Diagonal Lending LLC for $54,250, of which $50,000 was received in cash, and $4,250 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 2, 2023, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest closing prices during the 20 day trading period on the trading day prior to the conversion date. On April 17, 2023, a default penalty of $27,125 was accessed by the note holder for failure of timely filing of the company’s Form 10-K. Pursuant to the default, the Company recorded a debt discount from the derivative equal to $50,000 due to this conversion feature, which, in addition to the transactions fees, has been amortized to the statement of operations. As of September 30, 2023, the note has a principal and accrued interest balance of $81,375 and $10,609, respectively.

On November 28, 2022, the Company issued a convertible note to 1800 Diagonal Lending LLC for $44,250, of which $40,000 was received in cash, and $4,250 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 28, 2023, and is convertible beginning on the date which is 180 days following the date of the note. The conversion price is 61% multiplied by the average of the two lowest closing prices during the 20 day trading period on the trading day prior to the conversion date. On April 17, 2023, a default penalty of $22,125 was accessed by the note holder for failure of timely filing of the company’s Form 10-K. Pursuant to the default, the Company recorded a debt discount from the derivative equal to $40,000 due to this conversion feature, which, in addition to the transactions fees, has been amortized to the statement of operations. As of September 30, 2023, the note has a principal and accrued interest balance of $66,375 and $8,338, respectively.

On January 10, 2023, the Company received funding pursuant to a promissory note with 1800 Diagonal Lending LLC in the amount of $61,600, of which, $50,750 was received in cash and $10,850 was recorded as debt issuance fees, which will be amortized over the life of the note. The note bears interest of 12% (increases to 22% per annum upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on January 10, 2024. The principal amount and the guaranteed interest are due and payable in ten equal monthly payments of $6,899, commencing on March 1, 2023 and continuing on the 1^stday of each month thereafter. On April 17, 2023, the Company defaulted on the promissory note, and pursuant to the terms, the note became convertible. The company reclassed $49,280 in principal, $5,914 in accrued interest and assessed a default penalty of $27,597 to convertible notes payable. The note is convertible into common stock at 75% of the lowest trading price of the 10 trading day period ending on the latest complete day prior to the date of conversion. Pursuant to the default, the Company recorded a debt discount from the derivative equal to $76,877 due to this conversion feature, which, in addition to the transactions fees, has been amortized to the statement of operations. As of September 30, 2023, the note has a principal and accrued interest balance of $76,877 and $10,177, respectively.

Coventry Enterprises LLC

On October 7, 2022, the Company received funding pursuant to a promissory note with Coventry Enterprises LLC in the amount of $125,000. The note bears interest of 10% (increases to 18% per annum upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on October 7, 2023. On March 7, 2023, the Company defaulted on the promissory note, and pursuant to the terms, the note became convertible. The company reclassed $125,000 in principal, $12,500 in accrued interest and assessed a default penalty of $25,000 to convertible notes payable. The conversion price of this note is 90% per share of the lowest per-share VWAP during the 20 trading days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $73,665 due to this conversion feature which has been amortized to the statement of operations. During the nine months ended September 30, 2023, the Company issued 333,333,333 common shares upon the conversion of principal in the amount of $10,362, and interest of $19,638. As of September 30, 2023, the note has a principal and accrued interest balance of $139,638 and $10,329, respectively.

Emunah Funding LLC

On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matured on July 20, 2018, and is convertible into common stock at the lower of 1) 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $55,440 due to this conversion feature, which has been amortized to the statement of operations. On October 26, 2018, the principal amount of $40,000 was reassigned to Fourth Man, LLC. Pursuant to the default terms of the note, the Company entered a late filing penalty of $1,000. Prior to the period ended December 31, 2020, the note has converted $13,450 of principal and $4,918 of interest into .16 shares of common stock. As of September 30, 2023, the note has a principal balance of $2,990 and accrued interest of $3,051. This note is currently in default.

FirstFire Global Opportunity Fund LLC

On March 8, 2021, the Company received funding pursuant to a convertible note issued to FirstFire Global Opportunities Fund LLC for $300,000 of which $242,900 was received in cash and $57,100 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on March 8, 2022, and is convertible into common shares at the lower of 1) a fixed rate of $0.005 or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $242,900 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered a penalty of $84,000. During the year ended December 31, 2021, the Company issued 135,000 common shares upon the conversion of principal in the amount of $235,000, and conversion fees of $5,000. During the year ended December 31, 2022, the Company issued 5,620,000 common shares upon the conversion of principal in the amount of $118,000, accrued interest of $36,000 and conversion fees of $2,500. As of September 30, 2023, the note has a principal balance of $31,000 and accrued interest of $10,802. This note is currently in default.

Fourth Man LLC

On January 10, 2022, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $140,000 of which $115,440 was received in cash and $24,560 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on January 10, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.45; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $115,440 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 17,343,765 common shares upon the conversion of principal in the amount of $92,000 and conversion fees of $7,000. During the nine months ended September 30, 2023, the Company issued 143,849,342 common shares upon the conversion of principal in the amount of $48,000, interest of $33,638 and conversion fees of $5,250. As of September 30, 2023, the note has been fully satisfied.

On December 22, 2022, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $52,000 of which $40,000 was received in cash and $12,000 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on December 22, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.0009; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $40,000 due to this conversion feature, and $30,904 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2023 of $11,825. As of September 30, 2023, the note has a principal balance of $52,000 and accrued interest of $6,240.

Jefferson Street Capital LLC

On March 5, 2019, the Company accepted and agreed to a Debt Purchase Agreement, whereby Jefferson Street Capital LLC acquired $30,000 of debt from an Emunah Funding LLC convertible note in exchange for $29,000, and the Company recorded a gain on settlement of debt of $1,000. The note bears no interest, matures on October 18, 2019, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading days ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $29,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2019, the Company issued .24 common shares upon the conversion of principal in the amount of $24,000 and $1,000 in conversion fees. As of September 30, 2023, the note has a principal balance of $5,000. This note is currently in default.

Mammoth Corporation

On March 3, 2022, the Company received funding pursuant to a convertible note issued to Mammoth Corporation for $27,500, of which $25,000 was received in cash and $2,500 was recorded as transaction fees. The note bears interest at 0% (18% per annum upon an event of default), matures on December 3, 2022, and converts into 50% multiplied by the average of the three lowest common stock trading prices during the 30 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature, which has been amortized to the statement of operations. As of September 30, 2023, the note has a principal balance of $27,500 and accrued interest of $7,812. This note is currently in default.

Mast Hill Fund, LP

On January 27, 2022, the Company issued a convertible note to Mast Hill Fund, L.P. for $279,000, of which $75,550 was received in cash, $45,900 was recorded as transaction fees, and $157,550 was paid to Labrys Fund, L.P. to settle the principal amount of $140,000 and accrued interest of $16,800. The company recorded a loss on settlement of debt of $750. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on January 27, 2023, and is convertible into common shares at the lower of 1) a fixed rate of $0.90; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $212,584 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 933,000 common shares upon the conversion of principal in the amount of $30,213, accrued interest of $20,517, and conversion fees of $5,250. As of September 30, 2023, the note has a principal balance of $248,787 and accrued interest of $38,440. This note is currently in default.

On March 3, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $63,000 of which $51,300 was received in cash and $11,700 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on March 3, 2023, and is convertible into common shares at the lower of 1) a fixed rate of $0.30; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $51,300 due to this conversion feature, which has been amortized to the statement of operations. As of September 30, 2023, the note has a principal balance of $63,000 and accrued interest of $13,387. This note is currently in default.

On April 1, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $425,000 of which $351,550 was received in cash and $73,450 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on April 1, 2023, and is convertible into common shares at the lower of 1) a fixed rate of $0.18; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $351,545 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2022, the Company issued 25,380,509 common shares upon the conversion of principal in the amount of $43,856, accrued interest of $36,225, and conversion fees of $8,750. During the nine months ended September 30, 2023, the Company issued 27,305,900 common shares upon the conversion of principal in the amount of $52,664, accrued interest of $3,655, and conversion fees of $3,500. As of September 30, 2023, the note has a principal balance of $328,479 and accrued interest of $34,325. This note is currently in default.

On July 13, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $125,000 of which $103,250 was received in cash and $21,750 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on July 13, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.06; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $103,250 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2023, the Company issued 433,949,592 common shares upon the conversion of principal in the amount of $125,000, accrued interest of $9,201, and conversion fees of $8,750. As of September 30, 2023, the note has been fully satisfied.

On September 6, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $125,000 of which $103,250 was received in cash and $21,750 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on September 6, 2023, and is convertible into common shares at the lower of 1) a fixed rate of $0.06; or 2) the most favorable common stock conversion price. The Company recorded a debt discount from the derivative equal to $103,250 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2023, the Company issued 432,200,000 common shares upon the conversion of principal in the amount of $105,309, accrued interest of $7,885, and conversion fees of $3,500. As of September 30, 2023, the note has a principal balance of $19,691 and accrued interest of $1,342. This note is currently in default.

On October 14, 2022, the Company received funding pursuant to a convertible note issued to Mast Hill Fund, L.P. for $245,000 of which $202,270 was received in cash and $42,730 was recorded as transaction fees. The note bears interest of 12% per annum, which will increase to 16% upon an event of default, matures on October 14, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.0035; or 2) the most favorable common stock conversion rate. The Company recorded a debt discount from the derivative equal to $202,270 due to this conversion feature, and $194,512 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2023 of $9,397. During the nine months ended September 30, 2023, the Company issued 714,400,000 common shares upon the conversion of principal in the amount of $27,066, accrued interest of $25,286, and conversion fees of $3,500. As of September 30, 2023, the note has a principal balance of $217,935 and accrued interest of $2,009.

Pacific Pier Capital LLC

On May 20, 2022, the Company received funding pursuant to a convertible note issued to Pacific Pier Capital LLC for $60,000 of which $47,760 was received in cash and $12,240 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on May 20, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.105; or 2) the most favorable common stock conversion rate. Due to the default on May 20, 2023, the company recorded a default penalty of $16,800. The Company recorded a debt discount from the derivative equal to $47,760 due to this conversion feature, which has been amortized to the statement of operations. During the nine months ended September 30, 2023, the Company issued 112,500,000 common shares upon the conversion of principal in the amount of $5,000, and conversion fees of $1,750. As of September 30, 2023, the note has a principal balance of $71,800 and accrued interest of $12,921. This note is currently in default.

On November 3, 2022, the Company received funding pursuant to a convertible note issued to Pacific Pier Capital LLC for $20,000 of which $15,000 was received in cash and $5,000 was recorded as transaction fees. The note bears interest of 12% per annum (increases to 16% upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on November 3, 2023 and is convertible into common shares at the lower of 1) a fixed rate of $0.0015; or 2) the most favorable common stock conversion rate. The Company recorded a debt discount from the derivative equal to $15,000 due to this conversion feature, and $13,603 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at September 30, 2023 of $1,863. As of September 30, 2023, the note has a principal balance of $20,000 and accrued interest of $2,400.

Convertible Note Conversions

During the nine months ended September 30, 2023, 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
1/9/2023	$	28,874	$	2,381	$	1,750	$	33,005		0.00350		9,430,000	Mast Hill
1/12/2023		30,000		—		1,750		31,750		0.00350		9,071,428	Fourth Man
1/20/2023		23,790		1,274		1,750		26,814		0.00150		17,875,900	Mast Hill
1/26/2023		18,000		8,000		1,750		27,750		0.00110		25,227,272	Fourth Man
1/30/2023		6,515		8,178		1,750		16,443		0.00095		17,400,000	Mast Hill
2/2/2023		17,789		117		1,750		19,656		0.00095		20,800,000	Mast Hill
2/23/2023		25,230		695		1,750		27,675		0.00027		102,500,000	Mast Hill
2/24/2023		—		25,638		1,750		27,388		0.00025		109,550,642	Fourth Man
3/2/2023		56,423		174		1,750		58,347		0.00027		216,100,000	Mast Hill
3/8/2023		19,042		38		1,750		20,830		0.00027		77,149,592	Mast Hill
3/13/2023		48,912		7,685		1,750		58,347		0.00027		216,100,000	Mast Hill
3/21/2023		56,397		200		1,750		58,347		0.00027		216,100,000	Mast Hill
5/2/2023		14,235		16,486		1,750		32,471		0.00010		324,700,000	Mast Hill
5/3/2023		10,362		19,638		—		30,000		0.00009		333,333,333	Coventry
5/4/2023		10,000		—		—		10,000		0.00006		166,666,667	1800 Diagonal
6/28/2023		5,000		—		1,750		6,750		0.00006		112,500,000	Pacific Pier
6/29/2023		18,075		3,876		—		21,951		0.00006		365,858,667	1800 Diagonal
7/28/2023		23,300		—		—		23,300		0.00006		388,333,333	1800 Diagonal
7/28/2023		12,832		8,800		1,750		23,382		0.00006		389,700,000	Mast Hill
7/31/2023		15,000		—		—		15,000		0.00006		250,000,000	1800 Diagonal
Total conversions		439,776		103,180		26,250		569,206				3,368,396,834
Conversion fees								(26,250	)
Loss on conversion		—		—		—		27,123
	$	439,776	$	103,180	$	26,250	$	570,079				3,368,396,834

8. LEASES

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

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

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms from 2.5 years to 4.75 years.

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

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

Operating Leases

On August 1, 2021, the company entered into a commercial lease for approximately 6,547 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of five years, from August 1, 2021 through July 31, 2026, with a monthly rent of $4,000. On August 1, 2021, the Company recorded ROU assets of $203,216 and lease liabilities of $203,216 in recognition of this lease.

On August 26, 2022, the company entered into a commercial lease with 4-Corners LLC to establish a Tap Room as part of its brewery revenue. The space is located at 300 Spring St, Nevada City, NV 95959, and the lease has a term of five years, from September 1, 2022 through August 31, 2027. The rent is $3,000 per month from September 1, 2022 through December 31, 2022, $3,500 per month from January 1, 2023 through August 31, 2023, $3,800 per month from September 1, 2023 through August 31, 2024, $4,400 per month from September 1, 2024 through August 31, 2025, $4,700 per month from September 1, 2025 through August 31, 2026, and $4,914 per month from September 1, 2026 through August 31, 2027. On September 1, 2022, the Company recorded ROU assets of $212,040 and lease liabilities of $212,040 in recognition of this lease.

The Lease Agreement requires a personal guarantee from Jeffrey Lewis and Bennett Buchanan, both Director(s) of the Company, and the Company agreed to issue $300,000 in Series A Convertible Preferred shares each to Mr. Lewis and Mr. Buchanan as collateral for the personal guarantee. On August 25, 2022, the Company issued 1,118 shares of Series A Convertible Preferred stock to Jeffrey Lewis and Bennett Buchanan at $268.50 per share, for a total value of $600,366.

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

	September 30, 2023
Right-of-use assets	$	306,304
Current operating lease liabilities		75,823
Non-current operating lease liabilities		230,481

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

Years Ending
December 31,	Operating Leases
2023	$	23,400
2024		96,000
2025		102,000
2026		85,256
2027		39,312
Total		345,968
Less imputed Interest		39,664
Total liability	$	306,304

Other information related to leases is as follows:

Lease Type		Weighted Average Remaining Term		Weighted Average Interest Rate
Operating Leases		3.39 years		7%

Finance Leases

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

On February 22, 2023, the Company entered into a Lease Agreement with American Keg Company to lease 132 kegs. The agreement is for a period of 36 months, with a monthly payment of $592. At the end of the lease the Company will own the kegs with a $1 per key buyout. The Company recorded ROU assets of $19,259 and lease liabilities of $19,259 in recognition of this lease.

On April 26, 2023, the Company entered into a Lease Agreement with American Keg Company to lease 96 kegs. The agreement is for a period of 36 months, with a monthly payment of $502. At the end of the lease the Company will own the kegs with a $1 per key buyout. The Company recorded ROU assets of $16,326 and lease liabilities of $16,236 in recognition of this lease.

On May 10, 2023, the Company entered into a Lease Agreement with PNC Equipment Finance to lease a 2023 Doosan lift truck. The agreement is for a period of 60 months, with a monthly payment of $250. At the end of the lease the Company will own the equipment with a $1 buyout. The Company recorded ROU assets of $12,705 and lease liabilities of $12,705 in recognition of this lease.

During the nine months ended September 30, 2023, the Company depreciated $5,140 of the finance right of use assets.

Finance lease assets and liabilities related to our finance lease are as follows:

	September 30, 2023
Right-of-use assets	$	43,150
Current finance lease liabilities		13,195
Non-current finance lease liabilities		29,955

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

Years Ending
December 31,	Finance Lease
2023	$	4,034
2024		16,137
2025		16,138
2026		7,289
2027		3,001
2028		1,501
Total		48,100
Less imputed Interest		4,950
Total liability	$	43,150

Other information related to the lease is as follows:

Lease Type		Weighted Average Remaining Term		Weighted Average Interest Rate
Finance Lease		3.15 years		7%

Finance Lease – Related Party

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

On November 6, 2022, the Company entered into a van lease agreement with an employee in the amount of $62,086. The lease has a term of 5 years, from November 2022 to October 2027, with a monthly payment of $1,035. During the nine months ended September 30, 2023, the Company depreciated $6,880 of the right of use asset.

Related party finance lease assets and liabilities related to our finance lease are as follows:

	September 30, 2023
Right-of-use assets - related party	$	44,208
Current finance lease liabilities - related party		9,731
Non-current finance lease liabilities - related party		34,477

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

Years Ending
December 31,	Finance Lease
2023	$	3,104
2024		12,417
2025		12,417
2026		12,417
2027		10,348
Total		50,703
Less imputed Interest		6,495
Total liability	$	44,208

Other information related to the lease is as follows:

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

9. LOANS PAYABLE

On January 10, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before January 10, 2020. As of December 31, 2022, the note had a balance of $14,500, which was paid during the nine months ended September 30, 2023. As of September 30, 2023, the note has been fully satisfied.

On June 29, 2022, the Company entered into a Promissory Note with Maguire & Associates LLC in the amount of $25,000. The note bears no interest and is due on or before December 31, 2022. The note was secured with the issuance of 400 shares of Convertible Series A Preferred stock, valued at $107,400. On January 1, 2023, the note went into default and Maguire & Associates accepted the shares as full payment. As of September 30, 2023, the liability has been fully satisfied.

On October 7, 2022, the Company received funding pursuant to a promissory note with Coventry Enterprises LLC in the amount of $125,000, of which, $100,000 was received in cash and $25,000 was recorded as debt issuance fees, which will be amortized over the life of the note. The note bears interest of 10% (increases to 18% per annum upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on October 7, 2023. The principal amount and the guaranteed interest are due and payable in seven equal monthly payments of $19,642.85, commencing on March 7, 2023 and continuing on the 7^th day of each month thereafter. In addition, the Company agreed to issue 1,000,000 shares of common stock in connection with the note. On March 7, 2023, the Company defaulted on the note, and pursuant to the terms, the note became convertible. The company reclassed $125,000 in principal and $12,500 in accrued interest to convertible notes payable and amortized the debt issuance fees of $25,000 to the statement of operations.

On January 10, 2023, the Company entered into a Promissory Note with 1800 Diagonal Lending LLC, in the amount of $61,600, of which, $50,750 was received in cash and $10,850 was recorded as debt issuance fees, which will be amortized over the life of the note. The note bears interest of 12% (increases to 22% per annum upon an event of default), which is guaranteed and earned in full as of the issue date. The note matures on January 10, 2024. The principal amount and the guaranteed interest are due and payable in ten equal monthly payments of $6,899, commencing on March 1, 2023 and continuing on the 1^stday of each month thereafter. During the nine months ended September 30, 2023, the company recorded principal and interest payments of 13,798. On April 17, 2023, the note went into default due to a late filing, and pursuant to the terms, the note became convertible. The company reclassified $49,280 in principal and $5,914 in accrued interest to convertible notes payable and amortized the debt issuance fees of $10,850 to the statement of operations.

On March 3, 2023, the Company purchased a vehicle and entered into a loan agreement in the amount of $31,694, with an annual interest rate of 13.39%. The loan is for a period of 74 months with a monthly payment of $626. As of September 30, 2023, the balance on the loan is $30,386.

On July 11, 2023, the Company entered into a Promissory Note with Micah Berry in the amount of $150,000. The full balance of this note, including all accrued interest, is due and payable 183 days from the issuance date, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 1,118 shares of Series A Convertible Preferred shares with a stated value of $300,183. The Company will also pay Mr. Berry 2% of net profits generated by the BrewBilt Taproom, for 60 months, commencing upon the first day of Taproom business. The payments will be monthly and due on the first day of the following month. As of September 30, 2023, the note has a principal balance of $150,000 and accrued interest of $2,686.

10. DERIVATIVE LIABILITIES

During the nine months ended September 30, 2023, the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at September 30, 2023 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, 2023:

	Notes			Warrants			Stock Payable			Total
Balance, beginning of period	$	329,690		$	133,397		$	1,935,089		$	2,398,176
Initial recognition of derivative liability		449,904			—			—			449,904
Derivative settlements		(1,891,895	)		(117	)		—			(1,892,012	)
Loss (gain) on derivative liability valuation		2,927,199			(126,640	)		(373,553	)		2,427,006
Balance, end of period	$	1,814,898		$	6,640		$	1,561,536		$	3,383,074

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, 2023:

	Valuation date
Expected dividends		0%
Expected volatility		183.59%-368.84%
Expected term		.09 - .28 years
Risk free interest		5.55%-5.60%

Warrants

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

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

	Valuation date
Expected dividends		0%
Expected volatility		245.79%-492.42%
Expected term		.26 – 4.23 years
Risk free interest		4.70%-.5.61%

Stock Payable

The payables to be issued in stock are at 100% of the lowest closing market price with a 15 day look back. The fair value at the valuation dates were based upon the following management assumptions:

	Valuation date
Expected dividends		0%
Expected volatility		324.90%
Expected term		1 year
Risk free interest		5.46%

11. WARRANTS

Common Stock

A summary of warrant activity for the nine months ended September 30, 2023 is as follows:

Schedule of Warrant Activity

						Weighted-Average
				Weighted-Average		Remaining		Aggregate
Warrants	Shares			Exercise Price		Contractual Term		Intrinsic Value
Outstanding at December 31, 2022 (*)		66,817,960		$	0.542		4.83	$	—
Granted		—			—		—		—
Exercised		(388,563	)		—		—		—
Forfeited or expired		—			—
Outstanding at September 30, 2023		66,429,397		$	0.544		4.08	$	—
Exercisable at September 30, 2023		66,429,397		$	0.544		4.08	$	—

(*)

The opening shares and exercise price were adjusted to reflect a reverse split at a ratio of 1-for-300 on September 30, 2022

The aggregate intrinsic value in the preceding tables represents the total pre-tax intrinsic value, based on options with an exercise price that is higher than the Company’s market stock price of $0.0001 on September 30, 2023.

Convertible Preferred Stock – Related Parties

On June 30, 2023, in connection with a related party senior secured promissory note, the Company granted 2,000 warrants exercisable into an equivalent number of Series A convertible preferred stock at a strike price of $100 with a contractual term of five (5) years. At issuance date, the warrants have an intrinsic value of $337,000, resulting from the difference between the stated price of $268.50 and the strike price of $100.

On July 24, 2023, in connection with a related party senior secured promissory note, the Company granted 1,000 warrants exercisable into an equivalent number of Series A convertible preferred stock at a strike price of $100 with a contractual term of five (5) years. At issuance date, the warrants have an intrinsic value of $168,500, resulting from the difference between the stated price of $268.50 and the strike price of $100.

12. RELATED PARTY TRANSACTIONS

As of September 30, 2023 and December 31, 2022, related party transactions were comprised of the following:

Schedule of Related Party Transactions

	September 30,		December 31,
	2023		2022
Assets:
Related party financial lease assets	$	44,208	$	51,088

Current liabilities:
Accrued wages	$	821,267	$	1,185,363
Accrued interest on wages	$	258,397	$	233,358

Related party accounts payable	$	171,985	$	200,593
Related party advances		254,619		177,517
Related note payable interest		22,453		—
Related note payable, net of discount		160,874		—
Total related party liabilities	$	609,931	$	378,110

Related party financial lease liabilities	$	9,731	$	9,252

Non-current liabilities:
Related party financial lease liabilities	$	34,477	$	41,836
Related party notes payable	$	1,366,908	$	977,396

Related party deposits and accounts payable

BrewBilt Manufacturing, Inc, which is led by Director Jef Lewis, is supplying all necessary equipment to the company for its craft beer production.

During the nine months ended September 30, 2023 and the year ended December 31, 2022, equipment in the amount of $33,909 and $1,135,801, respectively, was completed and delivered to the Company. As of September 30, 2023 and December 31, 2022, the Company has an outstanding accounts payable balance to BrewBilt Manufacturing of $171,985 and $200,593, respectively, which has been recorded as related party liabilities on the balance sheet.

All fabricated equipment is non-refundable. Any equipment purchased by BrewBilt Manufacturing on behalf of the company would potentially be refundable based on the individual manufacturers return policy.

Finance leases

Officer and Director Agreements

Jef Lewis

On January 1, 2023, the Company entered into a Directors Agreement with Jef Lewis for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.

On January 1, 2023, the Company and Jef Lewis entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.

On September 5, 2023, the Company accepted the resignation of Jef Lewis as the Company’s Chief Executive Officer, Secretary and Treasurer. Following his resignation, Mr. Lewis continues to serve as a member of the Company’s Board of Directors. Pursuant to the Directors Agreement, the Company will (i) compensate Mr. Lewis $36,000 per annum, and (ii) issue Mr. Lewis 559 shares of the Company’s Preferred Series A Stock with an aggregate stated value of $150,000.

In addition, the Company issued 1,965 shares of the Series A Convertible Preferred Stock with a stated value of $527,603 as payment for unpaid wages and accrued interest of $527,500 and recorded $103 to additional paid in capital.

Bennett Buchanan

On January 1, 2023, the Company entered into a Directors Agreement with Bennett Buchanan for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.

On January 1, 2023, the Company and Bennett Buchanan entered into an Employee Agreement that includes the issuance of $150,000 Preferred Series A shares, and an annual salary of $250,000. Unpaid wages will accrue interest at 6% per annum and may be converted to Preferred Series A stock of the company at equal value and under the conversion guidelines of the Certificate of designation for Preferred Series A stock.

On September 5, 2023, the Company appointed Mr. Buchanan, a director of the Company and the Company’s COO prior to his appointment, to serve as the Company’s Chief Executive Officer, Secretary and Treasurer. In connection with his appointment, the Company entered into an Employment Agreement with Mr. Buchanan dated September 5, 2023 (the “Employment Agreement”). Pursuant to the Employment Agreement, the Company will (i) compensate Mr. Buchanan $250,000 per annum, and (ii) issue Mr. Buchanan 559 shares of the Company’s Preferred Series A Stock with an aggregate stated value of $150,000. Unpaid salary will accrue interest at a rate of 6% per annum and may be converted into shares of the Company’s Preferred Series A Stock, which will be subject to repurchase by the Company on demand by Mr. Buchanan. The Employment Agreement has a term ending December 31, 2024, subject to the right of either party to terminate the Employment Agreement at any time on 90 days written notice.

In addition, the Company issued 1,185 shares Series A Convertible Preferred Stock with a stated value of $318,172 as payment for unpaid wages and accrued interest of $318,159 and recorded $13 to additional paid in capital.

Richard Hylen

On January 1, 2023, the Company entered into a Directors Agreement with Richard Hylen for a term of one year. In exchange for serving in this capacity, the Company will issue $50,000 of Series A Convertible Preferred stock at a price of $268.50 per share.

Sam Berry

On January 1, 2023, the Company entered into a Directors Agreement with Sam Berry for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.

Adam Eisenburg

On July 24, 2023, the Company entered into a Directors Agreement with Adam Eisenberg for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share.

Related party advances and imputed interest

The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. During the nine months ended September 30, 2023, related parties advanced $77,102 to the company, and the Company recorded imputed interest of $25,987 to the statement of operations with a corresponding increase to additional paid in capital. As of September 30, 2023 and December 31, 2022, the Company has an outstanding balance owed to related parties of $254,619 and $177,517, respectively, which has been recorded as related party liabilities on the balance sheet.

Related party notes payable

On June 30, 2023, the Company entered into a senior secured promissory note with Adam Eisenberg in the amount of $200,000. The full balance of this note, including all accrued interest, is due and payable six months from the issuance date, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 1,490 shares of Series A preferred stock with a stated value of $400,000. The Company recorded a deemed dividend in the amount of $400,000 as the noteholder is a related party. As of September 30, 2023, the note has an accrued interest balance of $4,073.

The convertible promissory note also includes the granting of 2,000 warrants convertible into an equivalent number of the Company’s Series A convertible preferred stock, at a strike price of $100 per share, immediately exercisable, with a contractual term of five years.

The Company will also pay Mr. Eisenberg a perpetual royalty fee set at 2% of the net profits generated by the BrewBilt Taproom, commencing on the first day of the Taproom business. The payments will be monthly and due on the first day of the following month.

The Company recorded a total amount of $200,000 as a debt discount to the note for all of the embedded features in the promissory note, which is presented as an offset to the principal balance of the promissory note. During the nine months ended September 30, 2023, $100,546 of the debt discount has been amortized to the statement of operations. As a result, the carrying balance of the note is $100,546 as of September 30, 2023.

On July 24, 2023, the Company entered into a senior secured promissory note with Adam Eisenberg in the amount of $100,000. The full balance of this note, including all accrued interest, is due and payable on May 24, 2024, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 745 shares of Series A Convertible Preferred stock with a stated value of $200,032. The Company recorded a deemed dividend in the amount of $200,032 as the noteholder is a related party. As of September 30, 2023, the note has an accrued interest balance of $1,501.

The convertible promissory note also includes the granting of 1,000 warrants convertible into an equivalent number of the Company’s Series A convertible preferred stock, at a strike price of $100 per share, immediately exercisable, with a contractual term of five years.

The Company will also pay Mr. Eisenberg a perpetual royalty fee set at 1% of the net profits generated by the BrewBilt Taproom, commencing on the first day of the Taproom business. The payments will be monthly and due on the first day of the following month.

The Company recorded a total amount of $100,000 as a debt discount to the note for all of the embedded features in the promissory note, which is presented as an offset to the principal balance of the promissory note. During the nine months ended September 30, 2023, $30,164 of the debt discount has been amortized to the statement of operations. As a result, the carrying balance of the note is $30,164 as of September 30, 2023.

On July 24, 2023, the Company entered into a senior secured promissory note with Steven Eisenberg, who is the father of director Adam Eisenberg, in the amount of $100,000. The full balance of this note, including all accrued interest, is due and payable on May 24, 2024, and will accumulate interest at a rate of 8% per annum, compounded daily. The note is secured with the issuance of 745 shares of Series A Convertible Preferred stock with a stated value of $200,032. The Company recorded a deemed dividend in the amount of $200,032 as the noteholder is a related party. As of September 30, 2023, the note has an accrued interest balance of $1,501.

Non-current related party notes payable and imputed interest

On March 31, 2022, the Company elected not to renew an employee agreement with Mike Schatz and converted accrued wages and interest of $114,355 to an interest free promissory note. This note will be repaid commencing on April 1, 2022, in monthly installments of no less than $2,000 until the principal amount is satisfied and paid in full. During the nine months ended September 30, 2023, the Company recorded imputed interest of $11,483, which was recorded to the statement of operations with a corresponding increase to additional paid in capital. The balance at September 30, 2023 is $102,355 and is reported as non-current related party liabilities on the balance sheet.

On October 4, 2022, the Company entered in a Promissory Note with a former related party that is a holder of Convertible Preferred Series shares. The shareholder agreed to cancel 3,259 shares of Series A Convertible Preferred stock in exchange for a Promissory Note in the amount of $875,042. The Company agreed to issue 87,504,150 shares of common stock as collateral in the event the note is not paid by the due date of December 31, 2025. During the nine months ended September 30, 2023, the Company recorded imputed interest of $98,173 to the statement of operations, with a corresponding increase to additional paid in capital. The balance of the note as of September 30, 2023 is $875,042 and is reported as non-current related party liabilities on the balance sheet.

On April 14, 2023, the Company entered into a Promissory Note with Bennett Buchanan in the amount of $295,000, of which, $215,000 was received in cash and $80,000 was recorded as debt issuance fees, which will be amortized over the life of the note. The note will accumulate interest at a rate of 12% per annum, compounded daily and the full balance of the note, including all accrued interest is due and payable on December 31, 2024. As of September 30, 2023, the note has an accrued interest balance of $14,780.

The note is secured with $1,000,000 in Preferred Series A Stock. The transfer agent has reserved 3,725 shares which will be issued to Mr. Buchanan in the event of default, and the company recorded $1,000,000 to Preferred convertible shares payable. The Company recorded a deemed dividend in the amount of $1,000,000 as the noteholder is a related party.

During the nine months ended September 30, 2023, debt issuance fees of $21,563 has been amortized to the statement of operations. As of September 30, 2023, the note has a principal balance of $295,000 and debt issuance fees of $(58,437) for a net balance of $236,563, which is reported as non-current related party liabilities on the balance sheet.

On September 20, 2023, the Company entered into a Promissory Note with Bennett Buchanan in the amount of $165,000, of which, $150,000 was received in cash and $15,000 was recorded as debt issuance fees, which will be amortized over the life of the note. The note will accumulate interest at a rate of 12% per annum, compounded daily, and the full balance of the note, including all accrued interest is due and payable on December 31, 2024. As of September 30, 2023, the note has an accrued interest balance of $598.

The note includes the issuance of 745 Preferred Series A Stock, with a stated value of $100,151. The Company recorded a deemed dividend in the amount of $100,151 as the noteholder is a related party.

During the nine months ended September 30, 2023, debt issuance fees of $2,948 has been amortized to the statement of operations. As of September 30, 2023, the note has a principal balance of $165,000 and debt issuance fees of $(12,052) for a net balance of $152,948, which is reported as non-current related party liabilities on the balance sheet.

Other related party transactions

During the nine months ended September 30, 2023, Jef Lewis converted 1,211 Series A Convertible Preferred shares, valued at $325,153 in to 1,260,160,000 shares of common stock. The common stock was valued at $1,456,522 based on the market price on the date of the conversions, and the company recorded a loss on conversion of $1,131,369 to the statement of operations.

During the nine months ended September 30, 2023, Bennett Buchanan converted 689 Series A Convertible Preferred shares, valued at $184,997 into 1,849,965,000 shares of common stock. The common stock was valued at $554,990 based on the market price on the date of the conversion, and the company recorded a loss on conversion of $369,993 to the statement of operations.

13. CONVERTIBLE PREFERRED STOCK

Series A Convertible Preferred Stock

On July 20, 2023, 1,118 Series A Convertible Preferred shares were issued with a stated value of $300,183 in connection with a promissory note.

During the nine months ended September 30, 2023, 1,976 shares of Convertible Series A Preferred shares, valued at $530,556, were converted into 2,010,402,290 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $30,530, which was recorded to the statement of operations.

Series A Convertible Preferred Stock – Related Parties

On July 25, 2023, the company issued 1,490 Convertible Preferred Series A shares to Adam Eisenberg with a stated value of $400,065 and reclassified preferred stock payable of $400,000 to Series A Convertible Preferred stock and $65 to additional paid in capital.

On July 25, 2023, 559 Convertible Preferred Series A shares were issued to Adam Eisenberg with a stated value of $150,092 pursuant to a Directors Agreement.

On July 25, 2023, 745 Series A Convertible Preferred shares were issued to Adam Eisenberg with a stated value of $200,032 in connection with a promissory note.

On August 23, 2023, 745 Series A Convertible Preferred shares were issued to Steven Eisenberg with a stated value of $200,032 in connection with a promissory note.

On September 6, 2023, the company issued 1,965 Series A Convertible Preferred shares to Jef Lewis with a stated value of $527,603 as payment for unpaid wages and accrued interest of $527,500 and recorded $103 to additional paid in capital.

On September 6, 2023, 559 Series A Convertible Preferred shares were issued to Jef Lewis with a stated value of $150,092 pursuant to a Directors Agreement.

On September 6, 2023, the company issued 1,185 Series A Convertible Preferred shares to Bennett Buchanan with a stated value of $318,172 as payment for unpaid wages and accrued interest of $318,159 and recorded $13 to additional paid in capital.

On September 6, 2023, 559 Series A Convertible Preferred shares were issued to Bennett Buchanan with a stated value of $150,091 pursuant to an Employee Agreement.

On September 23, 2023, 373 Series A Convertible Preferred shares were issued to Bennett Buchanan with a stated value of $100,151 in connection with a promissory note.

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 $14,949,543 which represents 55,678 Series A Convertible Preferred Stock at $268.50 per share, issued and outstanding as of September 30, 2023, outside of permanent equity and liabilities.

Preferred Stock Payable

On January 1, 2023, the company agreed to issue $150,000 of Convertible Series A shares each to Jef Lewis, Sam Berry, and Bennett Buchanan, and $50,000 in shares to Richard Hylen for total fees of $500,000, pursuant to Directors Agreements.

On January 1, 2023, the company agreed to issue $150,000 of Convertible Series A shares each to Jef Lewis and Bennett Buchanan, for total fees of $300,000, pursuant to Employee Agreements.

On June 30, 2023, the company agreed to issue $400,000 of Convertible Series A shares to Adam Eisenberg in connection with a Promissory Note. On July 24, 2023, the company issued 1,490 shares with a stated value of $400,065 and reclassified preferred stock payable of $400,000 to Series A convertible preferred stock and $65 to additional paid in capital.

In connection with a Promissory Note with Bennet Buchanan dated April 14, 2023, the company recorded $1,000,000 to Preferred convertible shares payable which will be issued in the event the note goes into default.

14. PREFERRED STOCK

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

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

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

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

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

On July 1, 2022, the Company cancelled 500 Preferred Series B Control shares held by Richard Hylen in connection with the sale of the company’s wholly owned subsidiary, Satel Inc.

Pursuant to an Employee Agreement dated September 5, 2023, 500 Preferred Series B Control shares will be transferred from former CEO Jef Lewis to newly appointed CEO Bennett Buchanan. The shares were transferred on October 26, 2023.

As of September 30, 2023, 5,000 Series B Preferred shares were authorized, of which 1,000 shares were issued and outstanding.

15. COMMON STOCK

On February 1, 2023, the Company filed a Certificate of Amendment with the Florida Secretary of State to increase the number of authorized common shares from 20,000,000,000 to 30,000,000,000 with a par value of $0.0001.

On February 27, 2023, the Company filed a Certificate of Amendment with the Florida Secretary of State to increase the number of authorized common shares from 30,000,000,000 to 100,000,000,000 with a par value of $0.0001.

During the nine months ended September 30, 2023, 68,296,141 shares of common stock were purchased for $24,203 pursuant to an Equity Purchase Agreement.

During the nine months ended September 30, 2023, 1,976 shares of Convertible Series A Preferred stock, valued at $530,556, were converted into 2,010,402,290 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $30,530, which was recorded to the statement of operations.

During the nine months ended September 30, 2023, warrant holders exercised the warrants and the Company issued 73,800,000 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms. The issuance resulted in a loss on conversion of $22,066 and settled $117 worth of derivative liabilities which was recorded to additional paid-in capital.

During the nine months ended September 30, 2023, the holders of convertible notes converted a total of $570,079 of principal, interest, and fees into 3,368,396,834 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $27,123 and settled $1,891,895 worth of derivative liabilities which was recorded to additional paid in capital.

As of September 30, 2023, 100,000,000,000 common shares, par value $0.0001, were authorized, of which 8,838,743,427 shares were issued and outstanding.

16. INCOME TAXES

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

The deferred tax asset and the valuation allowance consist of the following at September 30, 2023:

Schedule of Deferred tax Assets

	September 30, 2023
Net tax loss carry-forwards	$	5,004,244
Statutory rate		21	%
Expected tax recovery		1,050,891
Change in valuation allowance		(1,050,891	)
Income tax provision	$	—

Components of deferred tax asset:
Noncapital tax loss carry-forwards	$	1,050,891
Less: valuation allowance		(1,050,891	)
Net deferred tax asset	$	—

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

17. COMMITMENTS AND CONTINGENCIES

Distribution and Licensing Agreements

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

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

Director Agreements

On January 1, 2023, the Company entered into a Directors Agreement with Jef Lewis for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Convertible Preferred Series A stock at a price of $268.50 per share.

On January 1, 2023, the Company entered into a Directors Agreement with Bennett Buchanan for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Convertible Preferred Series A stock at a price of $268.50 per share.

On January 1, 2023, the Company entered into a Directors Agreement with Richard Hylen for a term of one year. In exchange for serving in this capacity, the Company will issue $50,000 of Convertible Preferred Series A stock at a price of $268.50 per share.

On January 1, 2023, the Company entered into a Directors Agreement with Sam Berry for a term of one year. In exchange for serving in this capacity, the Company will issue $150,000 of Convertible Preferred Series A stock at a price of $268.50 per share.

On July 24, 2023, the Company entered into a Directors Agreement with Adam Eisenberg for a term of one year. . In exchange for serving in this capacity, the Company will issue $150,000 of Series A Convertible Preferred stock at a price of $268.50 per share. On July 25, 2023, the Company issued 559 shares of Series A Convertible Preferred stock with a stated value of $150,092.

On September 5, 2023, the Company accepted the resignation of Jef Lewis as the Company’s Chief Executive Officer, Secretary and Treasurer. Following his resignation, the Company and Mr. Lewis entered into a new Directors Agreement. Pursuant to the Agreement, the Company will compensate Mr. Lewis $36,000 per annum, and issue 559 shares of Series A Convertible Preferred stock with a stated value of $150,092.

Employee Agreements

On September 5, 2023, the Company appointed Mr. Buchanan to serve as the Company’s Chief Executive Officer, Secretary and Treasurer. In connection with his appointment, the Company entered into a new Employment Agreement. Pursuant to the Agreement, the Company will compensate Mr. Buchanan $250,000 per annum, and issue 559 shares of Series A Convertible Preferred stock with a stated value of $150,091. Unpaid salary will accrue interest at a rate of 6% per annum and may be converted into shares of the Company’s Series A Convertible Preferred stock, which will be subject to repurchase by the Company on demand by Mr. Buchanan. The Employment Agreement has a term ending December 31, 2024, subject to the right of either party to terminate the Employment Agreement at any time on 90 days written notice.

Leases

18. SUBSEQUENT EVENTS

Hops Agreement

On October 4, 2023, the company entered into an agreement with Hollingbery & Son, Inc. for the purchase of hops in the amount of $31,765. A deposit of 10% is due at harvest and the remaining balance within 30 days of delivery of the product.

Promissory Notes

On October 25, 2023, the Company entered into a Promissory Note with Peter and Kacie Callaham in the amount of $220,000. The full balance of this note, including all accrued interest, is due and payable on October 20, 2024, and will accumulate interest at a rate of 10%. The note includes the issuance of 745 shares of Series A Convertible Preferred shares with a stated value of $200,033. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 60 months, commencing on December 1, 2023. The payments will be monthly and due on the first day of the following month.

On October 25, 2023, the Company entered into a Promissory Note with Richard and Kacie Catherine Beckley in the amount of $220,000. The full balance of this note, including all accrued interest, is due and payable on October 20, 2024, and will accumulate interest at a rate of 10%. The note includes the issuance of 745 shares of Series A Convertible Preferred shares with a stated value of $200,033. The Company will also pay 2% of net profits generated by the BrewBilt Taproom, for 60 months, commencing on December 1, 2023. The payments will be monthly and due on the first day of the following month.

Subsequent Stock Issuances

On October 16, 2023, the holder of a convertible note converted a total of $3,420 of interest into 190,000,000 shares of our common stock.

On October 25, 2023, 745 shares of Convertible Series A shares at $268.50 per share were issued to Peter and Kacie Callaham in connection with a promissory note.

On October 25, 2023, 745 shares of Convertible Series A shares at $268.50 per share were issued to Richard and Catherine Beckley in connection with a promissory note.

On October 26, 2023, 500 Preferred Series B Control shares were transferred from former CEO Jef Lewis to newly appointed CEO Bennett Buchanan.

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

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

FORWARD-LOOKING STATEMENTS

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

RESULTS OF OPERATIONS

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Revenues:

The Company’s revenues were $127,822 for the three months ended September 30, 2023 compared to $34,526 for the three months ended September 30, 2022. The increase was due to the production of beer that began in June of 2022.

Cost of Sales:

The Company’s cost of sales was $117,147 for the three months ended September 30, 2023, compared to $27,364 for the three months ended September 30, 2022. The increase was primarily due to the production of beer that began in June of 2022.

Operating Expenses:

Operating expenses consisted primarily of consulting fees, professional fees, salaries, and wages, share based compensation, office expenses and fees associated with preparing reports and SEC filings relating to being a public company. Operating expenses for the three months ended September 30, 2023 and September 30, 2022, were $870,412 and $1,250,311, respectively. Although there was an increase in salaries and wages paid in Q3 2023, there was a decrease in share based compensation. There was also a significant decrease in advertising expenses in Q3 2023.

Other Income (Expense):

Other income (expense) for the three months ended September 30, 2023 and September 30, 2022 was $(474,128) and $31,285, respectively. Other expense consisted of derivative valuation gains and losses, gains or losses on settlement of debt and conversion of debt, and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The increase in other expense primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities and an increase in interest expenses.

Net Loss:

Net loss for the three months ended September 30, 2023 was $1,333,865 compared to $1,211,864 for the three months ended September 30, 2022. The increase in net loss can be explained by the increase in other expenses.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Revenues:

The Company’s revenues were $320,126 for the nine months ended September 30, 2023 compared to $62,265 for the nine months ended September 30, 2022. The increase was primarily due to the production of beer that began in June of 2022. The Company’s revenues in Q1 2022 were from audio and video equipment sales as part of the operations of Simlatus Corp.

Cost of Sales:

The Company’s cost of sales was $348,046 for the nine months ended September 30, 2023, compared to $37,159 for the nine months ended September 30, 2022. The cost to produce beer is much higher than the cost of materials for audio and video equipment that was sold in Q1 2023.

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, 2023 and September 30, 2022, were $2,468,481 and $2,649,601, respectively. Although wages were higher in Q3 2023, there was a decrease in advertising expenses and professional fees.

Other Expense:

Other expense for the nine months ended September 30, 2023 and September 30, 2022 was $5,777,049 and $1,686,885, respectively. Other expense consisted of derivative valuation gains and losses, gains or losses on settlement of debt and conversion of debt, and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The increase in other expense primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities and an increase in loss on conversion of related party preferred shares.

Net Loss:

Net loss for the nine months ended September 30, 2023 was $8,273,450 compared to $4,311,380 for the nine months ended September 30, 2022. The increase in net loss can be explained by the increase in derivative expenses, losses on conversion of debt and the increase in salaries and wages.

Impact of Inflation

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

Liquidity and Capital Resources

	September 30, 2023			December 31, 2022
Current Assets	$	197,063		$	92,581
Current Liabilities		7,398,478			5,867,700
Working Capital (Deficit)	$	(7,201,415	)	$	(5,775,119	)

The overall working capital deficit increased from $5,775,119 at December 31, 2022 to $7,201,415 at September 30, 2023 due to an increase in derivative liabilities, accrued expenses, notes payable and related party liabilities.

	September 30,			September 30,
	2023			2022
Cash Flows used in Operating Activities		(662,332	)		(295,094	)
Cash Flows used in Investing Activities		(269,341	)		(725,075	)
Cash Flows provided for Financing Activities		1,027,207			996,600
Net Increase (decrease) in Cash During Period		95,534			(23,569	)

During the nine months ended September 30, 2023 cash used in operating activities was $662,332 compared to $295,094 for the nine months ended September 30, 2022. The increase in the cash used in operating activities is primarily attributed to the fair value change in derivative liabilities and an increase in loss on conversions. There were also increases in accrued interest and related party advances in Q3 2023.

During the nine months ended September 30, 2023 cash used in investing activities was $269,341 compared to $725,075 for the nine months ended September 30, 2022. The decrease in cash used in investing activities is due to brewing equipment delivered and put in to use in Q2 2022.

During the nine months ended September 30, 2023, cash provided for financing activities was $1,027,207 compared to $996,600, for the nine months ended September 30, 2022. The increase in cash provided by financing activity primarily resulted from an increase in proceeds from related party promissory notes during the nine months ended September 30, 2023.

As of September 30, 2023, the Company had a cash balance and current asset total of $128,158 and $197,063 respectively, compared with $32,624 and $92,581 of cash and current assets, respectively, as of December 31, 2022. The increase in assets was due to funds received from related party promissory notes issued in the second and third quarters of 2023.

As of September 30, 2023, the Company had total current liabilities of $7,398,478 compared with $5,867,700 as of December 31, 2022. The increase in current liabilities was primarily attributed to an increase in derivative liabilities, accrued expenses, notes payable and related party liabilities.

Going Concern

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

As of September 30, 2023 we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our December 31, 2022 audited financial statements that they have substantial doubt that we will be able to continue as a going concern.

Future Financings

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

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

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

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, 2023. 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, 2022, that was filed with the SEC on May 2, 2023, the Company’s officers concluded that our disclosure controls and procedures are ineffective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act, during the quarter ended September 30, 2023 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

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

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

Filed herewith

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

SIGNATURES

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

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

Dated: November 13, 2023

	/s/ Bennett Buchanan
	By: Bennett Buchanan
	Its: President, Chief Executive Officer

BrewBilt Brewing Co 10-Q