UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2022

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

For the transition period from ______ to _______

Commission File Number 000-53276

BREWBILT BREWING COMPANY

(Name of small business issuer in its charter)

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

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 15, 2022, there were 117,698,070 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	40
ITEM 4.	CONTROLS AND PROCEDURES	40
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. FINANCIAL STATEMENTS

BREWBILT BREWING COMPANY

(Formerly known as Simlatus Corporation)

CONDENSED BALANCE SHEETS

	September 30,			December 31,
	2022			2021
ASSETS	(unaudited)			(audited)
Current Assets
Cash	$	22,858		$	46,427
Accounts receivable		4,036			—
Inventory, net		34,925			11,576
Prepaid expenses		4,750			5,036
Related party deposit		—			450,000
Other current assets		643			—
Current assets of discontinued operations		—			14,626
Total current assets		67,212			527,665
Property, plant and equipment, net		1,466,999			99,424
Operating right-of-use assets		371,957			188,770
Security deposit		6,500			—
Non-current assets of discontinued operations		—			31,977
Total assets	$	1,912,668		$	847,836
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	694,352		$	226,134
Accrued wages		1,085,113			864,863
Accrued expenses		45,067			3,611
Accrued interest		277,064			240,579
Convertible notes payable in default		64,990			47,990
Convertible notes payable, net of discount		592,465			545,887
Current operating lease liabilities		65,652			36,369
Derivative liabilities		1,649,413			1,598,253
Loans payable		39,500			14,500
Related party liabilities		138,058			57,858
Current liabilities of discontinued operations		—			728,407
Total Current liabilities		4,651,674			4,364,451
Non-current financing lease liabilities - related party		—			—
Non-current operating lease liabilities		306,305			152,401
Non-current related party note payable		108,355			—
Non-current liabilities of discontinued operations		—			22,149
Total liabilities		5,066,334			4,539,001
Series A convertible preferred stock: 100,000 shares authorized, par value $0.0001 53,188 shares issued and outstanding at September 30, 2022 30,746 shares issued and outstanding at December 31, 2021 (1)		14,280,978			8,255,301
Convertible preferred stock payable		899,829			5,000,000
Stockholders’ deficit:
Series B preferred stock: 5,000 shares authorized, par value $0.0001 1,000 shares issued and outstanding at September 30, 2022 1,500 shares issued and outstanding at December 31, 2021		—			—
Common stock: 5,000,000,000 shares authorized, par value $0.0001 8,372,065 shares issued and outstanding at September 30, 2022 736,260 shares issued and outstanding at December 31, 2021(1)		837			74
Additional paid in capital		8,706,605			5,550,295
Accumulated deficit		(27,041,915	)		(22,496,835	)
Total stockholders’ deficit		(18,334,473	)		(16,946,466	)
Total liabilities and stockholders’ deficit	$	1,912,668		$	847,836

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

The accompanying notes are an integral part of these financial statements

3

BREWBILT BREWING COMPANY

(Formerly known as Simlatus Corporation)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Sales	$	34,526		$	16,640		$	62,265		$	29,362
Cost of materials		27,364			4,859		$	37,159			8,834
Gross profit		7,162			11,781			25,106			20,528
Operating expenses:
Depreciation		39,720			4,039			63,262			4,602
G&A expenses		414,563			71,443			1,043,199			305,015
Professional fees		14,310			15,479			44,938			47,728
Salaries and wages		781,718			150,000			1,498,202			1,444,525
Total operating expenses		1,250,311			240,961			2,649,601			1,801,870
Loss from operations		(1,243,149	)		(229,180	)		(2,624,495	)		(1,781,342	)
Other income (expense):
Interest income		1			—			5			—
Debt forgiveness		—			—			9,940			—
Gain (loss) on settlement of debt		76,921			—			76,171			—
Loss on conversion of debt		(216,405	)		(193,971	)		(346,959	)		(341,850	)
Loss on conversion of debt of preferred shares		(16,972	)		(325,704	)		(292,954	)		(1,448,385	)
Derivative income (expense)		669,306			1,483,660			262,903			3,672,655
Interest expense		(481,566	)		(351,627	)		(1,395,991	)		(731,723	)
Total other income (expense)		31,285			612,358			(1,686,885	)		1,150,697
Net profit (loss) before income taxes from continuing operations		(1,211,864	)		383,178			(4,311,380	)		(630,645	)
Income tax expense		—			—			—			—
Net profit (loss) from continuing operations		(1,211,864	)		383,178			(4,311,380	)		(630,645	)
Discontinued operations (Note 3)
Loss from operation of discontinued operations		—			(97,027	)		(233,700	)		(265,399	)
Total profit (loss) from discontinued operations, net of tax		—			(97,027	)		(233,700	)		(265,399	)
Net profit (loss)	$	(1,211,864	)	$	286,151		$	(4,545,080	)	$	(896,044	)
Per share information
Weighted average number of common shares outstanding, basic (1)		5,960,970			235,682			3,519,093			219,520
Net income (loss) per common share, basic, for continued operations	$	(0.2033	)	$	1.6258		$	(1.2251	)	$	(2.8728	)
Net income (loss) per common share, basic, for discontinued operations	$	—		$	(0.4117	)	$	(0.0664	)	$	(1.2090	)
Per share information
Weighted average number of common shares outstanding, diluted (1)		5,960,970			2,463,714			3,519,093			219,520
Net income (loss) per common share, diluted, for continued operations	$	(0.2033	)	$	0.1555		$	(1.2251	)	$	(2.8728	)
Net income (loss) per common share, diluted, for discontinued operations	$	—		$	(0.0394	)	$	(0.0664	)	$	(1.2090	)

(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

4

BREWBILT BREWING COMPANY

(Formerly known as Simlatus Corporation)

CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

	Convertible Preferred Stock															Preferred Stock									Additional			Accumulated			Total
	Series A (1)						Series C						Shares			Series B					Common Stock (1)				Paid-In			Earnings			Shareholders’
	Shares			Amount			Shares			Amount			Payable			Shares			Amount		Shares		Amount		Capital			(Deficit)			Equity (Deficit)
Balances for December 31, 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	)
	Convertible Preferred Stock															Preferred Stock									Additional			Accumulated			Total
	Series A						Series C						Shares			Series B					Common Stock (1)				Paid-In			Earnings			Shareholders’
	Shares			Amount			Shares			Amount			Payable			Shares			Amount		Shares		Amount		Capital			(Deficit)			Equity (Deficit)
Balances for December 31, 2020		41,572		$	11,162,005			35,583		$	355,830		$	754,249			500		$	—		108,816	$	11	$	(6,058,811	)	$	(15,637,843	)	$	(21,696,643	)
Conversion of debt to common stock		—			—			—			—			—			—			—		36,481		3		390,171			—			390,174
Convertible preferred stock converted to common stock		(12,963	)		(3,480,499	)		(35,583	)		(355,830	)		—			—			—		69,280		7		4,959,004			—			4,959,011
Convertible preferred stock payable converted to preferred stock		2,809			754,249			—			—			(754,249	)		—			—		—		—		—			—			—
Preferred stock issued for services		559			149,992			—			—			—			1,000			—		—		—		881,198			—			881,198
Common stock issued for services		—			—			—			—			—			—			—		778		—		87,500			—			87,500
Imputed interest		—			—			—			—			—			—			—		—		—		8,000			—			8,000
Derivative settlements		—			—			—			—			—			—			—		—		—		2,494,842			—			2,494,842
Warrant discounts		—			—			—			—			—			—			—		—		—		164,369			—			164,369
Net loss		—			—			—			—			—			—			—		—		—		—			(1,320,157	)		(1,320,157	)
Balances for March 31, 2021		31,977		$	8,585,747			—		$	—		$	—			1,500		$	—		215,355	$	21	$	2,823,871		$	(16,958,000	)	$	(14,031,706	)
Conversion of debt to common stock		—			—			—			—			—			—			—		1,167		—		10,500			—			10,500
Imputed interest		—			—			—			—			—			—			—		—		—		7,803			—			7,803
Derivative settlements		—			—			—			—			—			—			—		—		—		29,955			—			29,955
Rounding due to reverse stock split		(2	)		(459	)		—			—			—			—			—		—		—		459			—			459
Net profit		—			—			—			—			—			—			—		—		—		—			137,962			137,962
Balances for June 30, 2021		31,975		$	8,585,288			—		$	—		$	—			1,500		$	—		216,522	$	21	$	2,974,990		$	(16,820,038	)	$	(13,845,027	)
Conversion of debt to common stock		—			—			—			—			—			—			—		101,311		10		533,698			—			533,708
Convertible preferred stock converted to common stock		(697	)		(187,145	)		—			—			—			—			—		40,648		4		512,845			—			512,849
Cashless warrant exercise		—			—			—			—			—			—			—		17,714		2		(2	)		—			—
Imputed interest		—			—			—			—			—			—			—		—		—		8,881			—			8,881
Derivative settlements		—			—			—			—			—			—			—		—		—		362,768			—			362,768
Warrant discounts		—			—			—			—			—			—			—		—		—		101,964			—			101,964
Rounding due to reverse stock split		—			—			—			—			—			—			—		33		—		—			—			—
Net profit		—			—			—			—			—			—			—		—		—		—			286,151			286,151
Balances for September 30, 2021		31,278		$	8,398,143			—		$	—		$	—			1,500		$	—		376,228	$	37	$	4,495,144		$	(16,533,887	)	$	(12,038,706	)

(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

5

BREWBILT BREWING COMPANY

(Formerly known as Simlatus Corporation)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended
	September 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(4,545,080	)	$	(896,044	)
Net loss from discontinued operations		(233,700	)		(265,399	)
Net loss from continuing operations		(4,311,380	)		(630,645	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible debt discount		1,217,593			608,512
Depreciation		63,262			4,602
Stock based compensation		1,346,453			1,118,690
Preferred stock issued for services		325,000			—
Imputed interest		26,341			9,681
Forgiveness of debt		(9,940	)		—
Loss on conversion of debt		346,959			341,850
Loss on conversion of preferred shares to common stock		292,954			1,448,385
Loss on settlement of debt		(76,171	)		—
Change in fair value of derivative liability		(262,903	)		(3,672,655	)
Penalties on notes payable		—			23,022
Decrease (increase) in operating assets and liabilities:
Accounts receivable		(4,036	)		(10,860	)
Inventory		(23,349	)		(3,833	)
Other current assets		(643	)		10,000
Prepaid expenses		286			(36	)
Security deposits		(6,500	)		—
Accrued interest		170,684			90,508
Accounts payable		468,218			(58,033	)
Accrued expenses		86,484			404,550
Advances from related parties		74,201			(12,643	)
Other current liabilities		—			(10,000	)
Net cash used in continuing operating activities		(276,487	)		(338,905	)
Net cash used in discontinued operating activities		(18,607	)		(105,009	)
Net cash (used in) provided by operating activities		(295,094	)		(443,914	)
Cash flows from investing activities:
Property, plant and equipment, additions		(1,175,075	)		(83,426	)
Deposit on equipment - related party		450,000			(450,000	)
Net cash (used in) provided by investing activities		(725,075	)		(533,426	)
Cash flows from financing activities:
Payments on convertible debt		(71,500	)		—
Proceeds from convertible debt		1,043,100			973,160
Proceeds from promissory notes		25,000			—
Net cash (used in) provided for financing activities		996,600			973,160
Net increase (decrease) in cash		(23,569	)		(4,180	)
Cash, beginning of period		46,427			134,855
Cash, end of period	$	22,858		$	130,675
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		$	—
Debt converted to common stock	$	1,128,064		$	—
Preferred shares cancelled	$	122,168		$	—
Stock issued for debt conversion	$	—		$	592,532
Discount from derivative	$	781,105		$	733,160
Preferred stock converted to common stock	$	290,786		$	4,023,474
Preferred stock issued to settle convertible debt	$	60,000
Related party exchange of accrued wages for note payable	$	114,354		$	—
Derivative settlements	$	727,086		$	2,887,565
Warrant discount from debt	$	379,803		$	266,333
Cashless warrant exercise	$	28		$	—
Convertible note payable exchanged for accrued interest	$	16,800		$	—
Lease adoption recognition	$	212,040		$	203,216
Preferred stock payable converted to preferred stock	$	5,000,007		$	754,249
Fixed assets exchanged for related party accounts payable	$	255,762		$	—

The accompanying notes are an integral part of these financial statements

6

BREWBILT BREWING COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

BrewBilt Brewing Company (formerly Simlatus Corporation) is the parent company of wholly owned subsidiaries Satel Group Inc. and BrewBilt Brewing LLC. On July 1, 2022, the Company sold Satel Group Inc. to Richard Hylen in exchange for the debt that the Company owes him.

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

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

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

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

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

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

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

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Reincorporation Merger Transaction

On March 24, 2021 Simlatus filed a PRE14C disclosing the merger between BrewBilt Brewing and Simlatus. Our Board of Directors and the holders of a majority of the voting power of our stockholders approved an Agreement and Plan of Merger pursuant to which the Company merged with and into BrewBilt Brewing Company, a Florida corporation and wholly owned subsidiary of the Company, which resulted in the Company’s reincorporation from the State of Nevada to the State of Florida and change in the Company’s name to BrewBilt Brewing Company (the “Reincorporation Merger”). On March 16, 2021, the date we received the consent of the holders of a majority of the voting power of our stockholders, there were 204,577 shares of common stock outstanding, 33,020 shares of our Series A Preferred Stock outstanding, 1,500 shares of our Series B Preferred Stock outstanding, and 35,583 shares of our Series C Preferred Stock outstanding. The Series A Preferred Stock and Series C Preferred Stock are non-voting. Each share of Series B Preferred Stock has the right to cast a number of votes equal to four times the votes of all of the shares of our outstanding common stock with respect to any and all matters presented to the holders of common stock for their action.

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

We obtained the approval of Jeffrey Lewis, Chief Executive Officer; Bennett Buchanan, Director; Samuel Berry, Chief Operations Officer; and Richard Hylen, Chairman of the Board, to the actions described in the Information Statement. Messrs. Lewis, Berry, and Hylen collectively hold 3 shares of our common stock, 6,519 shares of Series A Preferred Stock, and all 1,500 shares of our Series B Preferred Stock, or approximately 99% of the voting power of our stockholders.

On April 19, 2021, in connection with the Merger Agreement, the Company approved the authorization of a 1 for 150 reverse stock split of the Company’s outstanding shares of common stock. In addition, the Company reduced the number of authorized shares to 200,000,000 with a par value of $0.0001. The reverse split was effective on June 11, 2021, and the financial statements have been retroactively adjusted to take this into account for all periods presented. The Company issued 33 common shares due to rounding in connection with the reverse stock split.

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

Settlement and Sale Transaction

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

Financial Statement Presentation 

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

Reclassification

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

Fiscal Year End 

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

Use of Estimates

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

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

Cash Equivalents

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

Discontinued Operations

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

Advertising Costs

The Company expenses the cost of advertising and promotional materials when incurred. On September 27, 2022, the Company entered into a Platform Services Contract with SRAX for marketing advisory services and platform fees for a period of one year in the amount of $300,000, to be paid in Convertible Preferred Series A stock. The fees are non-refundable and therefore the Company recorded the full amount to the statement of operations. Total advertising costs were $332,982 and $40,824, for the nine months ended September 30, 2022 and September 30, 2021, respectively.

Leases

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

Revenue Recognition and Related Allowances

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.

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We determine revenue recognition through the following steps:

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

● identification of the performance obligations in the contract;

● determination of the transaction price;

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

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

Accounts Receivable and Allowance for Doubtful Accounts

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

Accounts Payable and Accrued Expenses

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

Basic and Diluted Loss Per Share

In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on September 30, 2022 (see Note 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.

Inventories

Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of September 30, 2022 and December 31, 2021, the Company has inventory of $34,925 and $11,576, respectively.

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.

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

September 30, 2022	Derivative Liabilities		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	1,649,413	$	1,649,413

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

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

Income Taxes

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

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

Recent Accounting Pronouncements

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

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

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2. GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2022, the Company has a shareholders’ deficit of $18,334,473 since its inception, working capital deficit of $4,584,462, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

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

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

3. 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 support BrewBilt Brewing Company during construction of the brewing facility and ramp-up of craft beer revenues

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

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

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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, 2022, discontinued operations consisted of $93,420 in revenue, $302,171 in operating expenses, and $29,949 in interest for a net loss of $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, 2022 and December 31, 2021, prepaid expenses consisted of the following:

September 30,