0001399306-23-000027.txt : 20230922 0001399306-23-000027.hdr.sgml : 20230922 20230922141118 ACCESSION NUMBER: 0001399306-23-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 89 CONFORMED PERIOD OF REPORT: 20230630 FILED AS OF DATE: 20230922 DATE AS OF CHANGE: 20230922 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BrewBilt Brewing Co CENTRAL INDEX KEY: 0001399306 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 202675800 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53276 FILM NUMBER: 231271211 BUSINESS ADDRESS: STREET 1: 175 JOERSCHKE DR. STREET 2: SUITE A CITY: GRASS VALLEY STATE: CA ZIP: 94945-5259 BUSINESS PHONE: (530) 205-3437 MAIL ADDRESS: STREET 1: 175 JOERSCHKE DR. STREET 2: SUITE A CITY: GRASS VALLEY STATE: CA ZIP: 94945-5259 FORMER COMPANY: FORMER CONFORMED NAME: Simlatus Corp DATE OF NAME CHANGE: 20160505 FORMER COMPANY: FORMER CONFORMED NAME: Grid Petroleum Corp. DATE OF NAME CHANGE: 20091120 FORMER COMPANY: FORMER CONFORMED NAME: Sunberta Resources Inc. DATE OF NAME CHANGE: 20070511 10-Q 1 brbl-10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 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 September 18, 2023, there were 8,838,743,427 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	34
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37
ITEM 4.	CONTROLS AND PROCEDURES	37

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	37
ITEM 1A.	RISK FACTORS	38
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38
ITEM 4.	MINE SAFETY DISCLOSURES	38
ITEM 5.	OTHER INFORMATION	38
ITEM 6.	EXHIBITS	38

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

	June 30,			December 31,
	2023			2022
	(unaudited)			(audited)
ASSETS
Current Assets
Cash	$	198,971		$	32,624
Accounts receivable		25,254			17,247
Inventory, net		39,049			26,434
Prepaid expenses		3,887			1,500
Other current assets		2,793			14,776
Total current assets		269,954			92,581

Property, plant and equipment, net		1,498,479			1,468,933
Finance lease assets		33,714			—
Finance lease assets - related party		46,540			51,088
Operating right-of-use assets		323,737			357,150
Security deposit		6,500			6,500
Total assets	$	2,178,924		$	1,976,252

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	393,410		$	298,642
Accrued wages		1,482,309			1,185,363
Accrued expenses		111,080			61,571
Accrued interest		416,010			330,154
Convertible notes payable in default		1,181,121			66,490
Convertible notes payable, net of discount		196,183			925,440
Current finance lease liabilities		11,203			—
Current finance lease liabilities - related party		9,568			9,252
Current operating lease liabilities		73,373			69,180
Derivative liabilities		3,411,044			2,398,176
Loans payable, net of discount		64,888			145,322
Related party liabilities		453,913			378,110
Total Current liabilities		7,804,102			5,867,700

Non-current finance lease liabilities		22,511			—
Non-current finance lease liabilities - related party		36,972			41,836
Non-current operating lease liabilities		250,364			287,970
Non-current related party note payable, net of discount		1,202,221			977,396
Total liabilities		9,316,170			7,174,902

Series A convertible preferred stock: 10,100,000 shares authorized, par value $0.0001 ⁽¹⁾ 46,380 shares issued and outstanding at June 30, 2023 50,256 shares issued and outstanding at December 31, 2022		12,453,030			13,493,736
Convertible preferred stock payable		1,799,829			599,829

Stockholders’ deficit:
Series B preferred stock: 5,000 shares authorized, par value $0.0001 1,000 shares issued and outstanding at June 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⁾ 7,810,710,094 shares issued and outstanding at June 30, 2023 207,723,162 shares issued and outstanding at December 31, 2022		781,071			20,772
Additional paid in capital		15,809,923			11,728,527
Accumulated deficit		(37,981,099	)		(31,041,514	)
Total stockholders’ deficit		(21,390,105	)		(19,292,215	)
Total liabilities and stockholders’ deficit	$	2,178,924		$	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						Six months ended
	June 30,						June 30,
	2023			2022			2023			2022
Sales	$	115,448		$	32		$	192,304		$	27,739
Cost of sales		124,539			20			230,899			9,795
Gross profit (loss)		(9,091	)		12			(38,595	)		17,944

Operating expenses:
Depreciation		6,475			15,895			13,552			23,542
G&A expenses		135,764			270,595			253,588			628,636
Professional fees		5,147			21,469			7,475			30,628
Salaries and wages		263,124			156,949			1,323,454			716,484
Total operating expenses		410,510			464,908			1,598,069			1,399,290

Loss from operations		(419,601	)		(464,896	)		(1,636,664	)		(1,381,346	)

Other income (expense):
Interest income		11			2			12			4
Debt forgiveness		—			9,940			—			9,940
Gain (loss) on settlement of debt		—			—			25,000			(750	)
Loss on cashless warrant exercise		(22,066	)		—			(22,066	)		—
Gain (loss) on conversion of debt		349,467			(148,790	)		(25,373	)		(130,554	)
Loss on conversion of preferred shares		—			(139,228	)		(30,530	)		(275,982	)
Loss on conversion of preferred shares - related party		—			—			(1,501,362	)		—
Derivative income (expense)		(3,411,084	)		151,963			(2,555,692	)		(406,403	)
Interest expense		(713,929	)		(377,512	)		(1,187,359	)		(914,425	)
Interest expense - related party		(5,551	)		—			(5,551	)		—
Total other income (expense)		(3,803,152	)		(503,625	)		(5,302,921	)		(1,718,170	)

Net loss before income taxes from continuing operations		(4,222,753	)		(968,521	)		(6,939,585	)		(3,099,516	)
Income tax expense		—			—			—			—
Net loss from continuing operations		(4,222,753	)		(968,521	)		(6,939,585	)		(3,099,516	)

Discontinued operations (Note 3)
Loss from operation of discontinued operations		—			(135,593	)		—			(233,700	)
Total loss from discontinued operations, net of tax		—			(135,593	)		—			(233,700	)

Net loss	$	(4,222,753	)	$	(1,104,114	)	$	(6,939,585	)	$	(3,333,216	)

Deemed dividend from related party note payable		(400,000	)		—			(400,000	)		—
Net loss attributable to common shareholders	$	(4,622,753	)	$	(1,104,114	)	$	(7,339,585	)	$	(3,333,216	)

Per share information

Weighted average number of common shares outstanding, basic ⁽¹⁾		7,041,513,976			2,690,488			4,975,486,804			2,277,745
Net loss per common share, basic, for continued operations	$	(0.0006	)	$	(0.3600	)	$	(0.0014	)	$	(1.3608	)
Net loss per common share, basic, for discontinued operations	$	—		$	(0.0504	)	$	—		$	(0.1026	)
Net loss per common share, basic, attributable to common shareholders	$	(0.0007	)	$	(0.4104	)	$	(0.0015	)	$	(1.4634	)

Per share information
Weighted average number of common shares outstanding, diluted ⁽¹⁾		7,041,513,976			2,690,488			4,975,486,804			2,277,745
Net loss per common share, diluted, for continued operations	$	(0.0006	)	$	(0.3600	)	$	(0.0014	)	$	(1.3608	)
Net loss per common share, diluted, for discontinued operations	$	—		$	(0.0504	)	$	—		$	(0.1026	)
Net loss per common share, diluted, attributable to common shareholders	$	(0.0007	)	$	(0.4104	)	$	(0.0015	)	$	(1.4634	)

(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	)

	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	)

(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)


	Six months ended
	June 30,
	2023			2022
Cash flows from operating activities:
Net loss from continued operations		(6,939,585	)		(3,099,516	)
Net loss from discontinued operations		—			(233,700	)
Net loss		(6,939,585	)		(3,333,216	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible debt discount		781,364			793,075
Depreciation		96,583			23,542
Stock based compensation		800,000			707,400
(Gain) loss on settlement of debt		(25,000	)		750
Preferred stock issued for services		—			25,000
Imputed interest		89,062			22,735
Forgiveness of debt		—			(9,940	)
Loss on cashless warrant exercise		22,066			—
Loss on conversion of debt		25,373			130,554
Loss on conversion of preferred shares		30,530			275,982
Loss on conversion of preferred shares - related party		1,501,362			—
Change in fair value of derivative liability		2,555,692			406,403
Penalties on notes payable		140,772			—
Decrease (increase) in operating assets and liabilities:
Accounts receivable		(8,007	)		—
Inventory		(12,615	)		(24,951	)
Other current assets		11,983			—
Prepaid expenses		(2,387	)		1,786
Accrued interest		180,236			117,245
Accounts payable		94,768			307,840
Accrued expenses		346,455			133,181
Advances from related parties		(22,749	)		26,831
Net cash used in continuing operating activities		(334,097	)		(395,783	)
Net cash used in discontinued operating activities		—			216,269
Net cash used in by operating activities		(334,097	)		(179,514	)

Cash flows from investing activities:
Property, plant and equipment, additions		(61,191	)		(716,640	)
Net cash used in investing activities		(61,191	)		(716,640	)

Cash flows from financing activities:
Proceeds from convertible debt		—			836,600
Proceeds from promissory notes		70,750			25,000
Payments on promissory notes		(13,626	)		(4,000	)
Proceeds from related party loans		484,856			—
Payments on finance lease		(4,548	)		—
Proceeds from sale of stock		24,203			21,000
Net cash provided for financing activities		561,635			878,600

Net increase (decrease) in cash		166,347			(17,554	)

Cash, beginning of period		32,624			46,427
Cash, end of period	$	198,971		$	28,873

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

Schedule of non-cash investing & financing activities:
Finance lease adoption recognition	$	35,585		$	—
Debt converted to common stock	$	483,024		$	572,930
Preferred stock converted to common stock	$	530,556		$	256,955
Preferred stock converted to common stock - related parties	$	510,150		$	—
Deemed dividend from preferred stock issuable with a related party note payable	$	400,000		$	—
Debt discount on related party note payable	$	200,000		$	—
Discount from derivative	$	282,545		$	839,661
Related party exchange of accrued wages for note payable	$	—		$	114,354
Derivative settlements	$	1,825,369		$	546,100
Warrant discount from debt	$	—		$	276,606
Cashless warrant exercise	$	7,380		$	4
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		$	109,302
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

June 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 birth places 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, using renewable energy, sourcing local ingredients, and implementing eco-friendly practices.

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 Convertible Preferred Series A 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:

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Liability for legal contingencies.

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Useful life of assets.

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Deferred income taxes and related valuation allowances.

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Impairment of finite-lived intangibles.

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Obsolescence of inventory

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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 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 $12,771 and $22,022, for the six months ended June 30, 2023 and June 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 June 30, 2023 and December 31, 2022, the Company has deferred revenue of $0.

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 June 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 six months ended June 30, 2023 and 2022, the number of diluted shares that have been excluded are 44,163,567,776 and 20,118,263, 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 June 30, 2023 and December 31, 2022, the Company has inventory of $39,049 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 six months ended June 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 June 30, 2023 and December 31, 2022 for each fair value hierarchy level:

June 30, 2023	Derivative Liabilities		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	3,411,044	$	3,411,044

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 June 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 six months ended June 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 June 30, 2023, the Company has a shareholders’ deficit of $21,390,105 since its inception, working capital deficit of $7,534,148, 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 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.

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 six months ended June 30, 2023 and June 30, 2022, discontinued operations consisted of the following:


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

Schedule of Prepaid Expenses

	June 30,		December 31,
	2023		2022
Prepaid accounting fees	$	—	$	1,500
Prepaid rent and utilities		3,887		—
Prepaid Expenses	$	3,887	$	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 June 30, 2023 and December 31, 2022:

	June 30,			December 31,
	2023			2022
Brewing Equipment	$	1,219,180		$	1,185,271
Computer Equipment		2,933			2,933
Construction in Progress		66,582			—
Leasehold Improvements		383,748			394,352
Vehicles		31,694			—
Property, plant, and equipment, gross		1,704,137			1,582,556
Less accumulated depreciation		(205,658	)		(113,623	)
Property, plant, and equipment, net	$	1,498,479		$	1,468,933

During the six months ended June 30, 2023, the Company received $33,909 in brewing equipment, recorded construction in progress expenses of $55,978, reclassified leaseholder improvements of $10,604 to construction in progress, and purchased a vehicle for $31,694. During the six months ended June 30, 2023 and June 30, 2022, the Company recorded depreciation on fixed assets of $92,035 and $23,542, respectively.

6. ACCRUED EXPENSES

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

Schedule of Accrued Expenses

	June 30,		December 31,
	2023		2022
Accrued expenses
Credit cards	$	25,476	$	11,881
CRV payable		978		720
Customer keg deposits		5,250		2,580
Payroll liabilities		70,854		34,035
Sales tax payable		522		355
Other short-term liabilities		8,000		12,000
Total accrued expenses	$	111,080	$	61,571

Accrued interest
Interest on notes payable	$	129,115	$	96,796
Interest on accrued wages		286,895		233,358
Total accrued interest	$	416,010	$	330,154

Accrued wages	$	1,482,309	$	1,185,363

7. CONVERTIBLE NOTES PAYABLE

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

Schedule of Convertible Notes Payable

	Note Date	Date	Rate	Rate	2023			2022
1800 Diagonal #1^*	10/10/2022	10/10/2023	22%	Variable		38,300			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%	0.18		31,000			31,000
Fourth Man #13	1/10/2022	1/10/2023	12%	0.45		—			48,000
Fourth Man #14	12/22/2022	12/22/2023	12%	0.0009		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%	0.9		248,787			248,787
Mast Hill Fund #2^*	3/3/2022	3/3/2023	16%	0.3		63,000			63,000
Mast Hill Fund #3^*	4/1/2022	4/1/2023	16%	0.18		328,479			381,144
Mast Hill Fund #4	7/13/2022	7/13/2023	12%	0.06		—			125,000
Mast Hill Fund #5	9/6/2022	9/6/2023	12%	0.06		19,691			125,000
Mast Hill Fund #6	10/14/2022	10/14/2023	12%	0.0035		230,766			245,000
Pacific Pier Capital #1^*	5/20/2022	5/20/2023	16%	0.105		71,800			60,000
Pacific Pier Capital #2	11/3/2022	11/3/2023	12%	0.0015		20,000			20,000
						1,503,578			1,577,171
Less debt discount						(126,274	)		(585,241	)
Notes payable, net of discount					$	1,377,304		$	991,930

As of June 30, 2023 and December 31, 2022, the balance of notes payable that are in default is $1,181,121 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 trading 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 six months ended June 30, 2023, the Company issued 532,525,334 common shares upon the conversion of principal in the amount of $28,075, and interest of $3,877. As of June 30, 2023, the note has a principal and accrued interest balance of $38,300 and $23, respectively.

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

On November 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 trading 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 June 30, 2023, the note has a principal and accrued interest balance of $81,375 and $6,097, 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 trading 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 June 30, 2023, the note has a principal and accrued interest balance of $66,375 and $4,658, 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 June 30, 2023, the note has a principal and accrued interest balance of $76,877 and $5,914, 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 $125,000 due to this conversion feature which has been amortized to the statement of operations. During the six months ended June 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 June 30, 2023, the note has a principal and accrued interest balance of $139,638 and $3,994, 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 June 30, 2023, the note has a principal balance of $2,990 and accrued interest of $2,870. 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 $300,000 due to this conversion feature, which has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered a penalty of $84,000. During the year ended December 31, 2021, the Company issued 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 June 30, 2023, the note has a principal balance of $31,000 and accrued interest of $9,552. 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 $140,000 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 six months ended June 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 June 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 $52,000 due to this conversion feature, and $27,069 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2023 of $24,931. As of June 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 June 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 $27,500 due to this conversion feature, which has been amortized to the statement of operations. As of June 30, 2023, the note has a principal balance of $27,500 and accrued interest of $6,564. 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 $157,500 was paid to Labrys Fund, L.P. to settle the principal amount of $140,000 and accrued interest of $16,800. The company recorded a loss on settlement of debt of $750. The note bears interest of 12% per annum, 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 $258,484 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 June 30, 2023, the note has a principal balance of $248,787 and accrued interest of $28,407. 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 $63,000 due to this conversion feature, which has been amortized to the statement of operations. As of June 30, 2023, the note has a principal balance of $63,000 and accrued interest of $10,846. 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 $425,000 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 six months ended June 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 June 30, 2023, the note has a principal balance of $328,479 and accrued interest of $21,078. 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 $125,000 due to this conversion feature, which has been amortized to the statement of operations. During the six months ended June 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 June 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 $125,000 due to this conversion feature, and $101,712 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2023 of $23,288. During the six months ended June 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 June 30, 2023, the note has a principal balance of $19,691 and accrued interest of $695.

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 $245,000 due to this conversion feature, and $173,850 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2023 of $71,150. During the six months ended June 30, 2023, the Company issued 324,700,000 common shares upon the conversion of principal in the amount of $14,234, accrued interest of $16,485, and conversion fees of $1,750. As of June 30, 2023, the note has a principal balance of $230,766 and accrued interest of $4,100.

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 $60,000 due to this conversion feature, which has been amortized to the statement of operations. During the six months ended June 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 June 30, 2023, the note has a principal balance of $71,800 and accrued interest of $10,026.

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 $20,000 due to this conversion feature, and $13,086 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at June 30, 2023 of $6,904. As of June 30, 2023, the note has a principal balance of $20,000 and accrued interest of $2,400.

Convertible Note Conversions

During the six months ended June 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		0.0035		9,430,000	Mast Hill
1/12/2023		30,000		—		1,750		31,750		0.0035		9,071,428	Fourth Man
1/20/2023		23,790		1,274		1,750		26,814		0.0015		17,875,900	Mast Hill
1/26/2023		18,000		8,000		1,750		27,750		0.0011		25,227,272	Fourth Man
1/30/2023		6,515		8,178		1,750		16,443		0.0009		17,400,000	Mast Hill
2/2/2023		17,789		117		1,750		19,656		0.0009		20,800,000	Mast Hill
2/23/2023		25,230		695		1,750		27,675		0.0003		102,500,000	Mast Hill
2/24/2023		—		25,638		1,750		27,388		0.0003		109,550,642	Fourth Man
3/2/2023		56,423		174		1,750		58,347		0.0003		216,100,000	Mast Hill
3/8/2023		19,042		38		1,750		20,830		0.0003		77,149,592	Mast Hill
3/13/2023		48,912		7,685		1,750		58,347		0.0003		216,100,000	Mast Hill
3/21/2023		56,397		200		1,750		58,347		0.0003		216,100,000	Mast Hill
5/2/2023		14,235		16,486		1,750		32,471		0.0001		324,700,000	Mast Hill
5/3/2023		10,362		19,638		—		30,000		0.0001		333,333,333	Coventry
5/4/2023		10,000		—		—		10,000		0.0001		166,666,667	1800 Diagonal
6/28/2023		5,000		—		1,750		6,750		0.0001		112,500,000	Pacific Pier
6/29/2023		18,075		3,876		—		21,951		0.0001		365,858,667	1800 Diagonal
Total conversions		388,644		94,380		24,500		507,524				2,340,363,501
Conversion fees								(24,500	)
Loss on conversion		—		—		—		25,373
	$	388,644	$	94,380	$	24,500	$	508,397				2,340,363,501

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 2.83 years to 4.33 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 Convertible Preferred Series A shares each to Mr. Lewis and Mr. Buchanan as collateral for the personal guarantee. On August 25, 2022, the Company issued 1,118 shares of Convertible Preferred Series A stock to Jeffrey Lewis and Bennett Buchanan at $268.50 per share, for a total value of $600,366.

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

	June 30, 2023
Right-of-use assets	$	323,737
Current operating lease liabilities		73,373
Non-current operating lease liabilities		250,364

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

Years Ending
December 31,	Operating Leases
2023	$	46,200
2024		96,000
2025		102,000
2026		85,256
2027		39,312
Total		368,768
Less imputed Interest		45,031
Total liability	$	323,737

Other information related to leases is as follows:

Lease Type		Weighted Average Remaining Term		Weighted Average Interest Rate
Operating Leases		3.63 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.

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.

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

	June 30, 2023
Right-of-use assets	$	33,714
Current finance lease liabilities		11,203
Non-current finance lease liabilities		22,511

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

Years Ending
December 31,	Finance Lease
2023	$	6,568
2024		13,136
2025		13,136
2026		4,289
Total		37,129
Less imputed Interest		3,415
Total liability	$	33,714

Other information related to the lease is as follows:

Lease Type		Weighted Average Remaining Term		Weighted Average Interest Rate
Finance Lease		2.83 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 six months ended June 30, 2023, the Company depreciated $4,548 of the right of use asset.

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

	June 30, 2023
Right-of-use assets - related party	$	46,540
Current finance lease liabilities - related party		9,568
Non-current finance lease liabilities - related party		36,972

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	$	6,209
2024		12,417
2025		12,417
2026		12,417
2027		10,348
Total		53,808
Less imputed Interest		7,268
Total liability	$	46,540

Other information related to the lease is as follows:

Lease Type		Weighted Average Remaining Term		Weighted Average Interest Rate
Finance Lease		4.33 years		7%

9. LOANS PAYABLE

On October 1, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before October 1, 2020. As of June 30, 2023 and December 31, 2022, the principal balance owed to Direct Capital Group was $14,500 and $14,500, respectively.

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, and as of June 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 six month ended June 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 June 30, 2023, the balance on the loan is $30,388.

During the six months ended June 30, 2023, Maguire & Associates, LLC advanced the company $20,000, which is. expected to be paid in Q3 2023.

10. DERIVATIVE LIABILITIES

During the six months ended June 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 June 30, 2023 based on the lattice model.

The following table represents the Company’s derivative liability activity for the embedded conversion features for the six months ended June 30, 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		(1,825,252	)		(117	)		—			(1,825,369	)
Loss (gain) on derivative liability valuation		2,889,855			(126,638	)		(374,884	)		2,388,333
Balance, end of period	$	1,844,197		$	6,642		$	1,560,205		$	3,411,044

Convertible Notes

The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of June 30, 2023:

		Valuation date
Expected dividends		0%
Expected volatility		366.71%-420.69%
Expected term		.09 - .53 years
Risk free interest		5.24%-5.47%

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		276.86%-505.60%
Expected term		.51 – 4.48 years
Risk free interest		4.31%-.5.47%

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		324.12%
Expected term		1 year
Risk free interest		5.40%

11. WARRANTS

Common Stock

A summary of warrant activity for the six months ended June 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		$	0.5267		4.83	$	—
Granted		—			—		—		—
Exercised		(388,563	)		—		—		—
Forfeited or expired		—			—		—		—
Outstanding at June 30, 2023		66,429,397		$	0.544		4.33	$	—
Exercisable at June 30, 2023		66,429,397		$	0.544		4.33	$	—

(*)

The opening shares and exercise price were adjusted to reflect a reverse split at a ratio of 1-for-300 on September 22, 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 June 30, 2023.

Convertible Preferred Stock

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.

12. RELATED PARTY TRANSACTIONS

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

Schedule of Related Party Transactions

	June 30,		December 31,
	2023		2022
Assets:
Related party financial lease assets	$	46,540	$	51,088

Current liabilities:
Accrued wages	$	1,482,309	$	1,185,363
Accrued interest on wages	$	286,895	$	233,358

Related party accounts payable	$	205,235	$	200,593
Related party advances		248,678		177,517
Total related party liabilities	$	453,913	$	378,110

Related party note payable, net of discount	$	—	$	—

Related party financial lease liabilities	$	9,568	$	9,252

Non-current liabilities:
Related party financial lease liabilities	$	36,972	$	41,836
Related party notes payable	$	1,202,221	$	977,396

Related party deposits and accounts payable

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