BrewBilt Brewing Co - FORM 10-Q

Attached files

file	filename
EX-32 - CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT - BrewBilt Brewing Co	ex32-1.htm
EX-31 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13A-14 - BrewBilt Brewing Co	ex31-2.htm
EX-31 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13A-14 - BrewBilt Brewing Co	ex31-1.htm

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 March 31, 2021

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

For the transition period from ______ to _______

Commission File Number 000-53276

(SIMLATUS LOGO)

SIMLATUS CORPORATION

(Name of small business issuer in its charter)

Nevada	20-2675800
(State of incorporation)	(I.R.S. Employer Identification No.)

175 Joerschke Dr., Ste. A

Grass Valley, CA 95945

(Address of principal executive offices)

(530) 205-3437

(Registrant’s telephone number)

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

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

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	x
Emerging growth company	o

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

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

As of May 12, 2020, there were 9,690,963,637 shares of the registrant’s $0.00001 par value common stock issued and outstanding.

SIMLATUS CORP.

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	30
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4.	CONTROLS AND PROCEDURES	33

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	33
ITEM 1A.	RISK FACTORS	33
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	33
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	33
ITEM 4.	MINE SAFETY DISCLOSURES	33
ITEM 5.	OTHER INFORMATION	33
ITEM 6.	EXHIBITS	34

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 Simlatus Corp. (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,” “SIML,” “our,” “us,” the “Company,” refers to Simlatus Corp.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIMLATUS CORP.

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2021			2020
	(Unaudited)			(Audited)
ASSETS
Current Assets
Cash	$	243,088		$	134,855
Accounts receivable		17,290			5,563
Inventory, net		6,053			4,133
Other current assets		200,000			10,000
Total current assets		466,431			154,551

Financial lease assets - related party		30,115			31,178
Operating right-of-use assets		86,071			—
Security deposit		5,162			5,162

Total assets	$	587,779		$	190,891

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	479,894		$	522,418
Accrued wages		464,818			321,530
Accrued expenses		26,354			29,416
Accrued interest		131,060			148,233
Convertible notes payable in default		65,490			203,167
Convertible notes payable, net of discount		90,426			29,771
Current financing lease liabilities - related party		4,437			3,988
Current operating lease liabilities		39,781			—
Derivative liabilities		4,360,392			7,996,994
Loans payable		87,420			87,420
Related party liabilities		211,698			245,323
Total Current liabilities		5,961,770			9,588,260

Non-current financing lease liabilities - related party		25,678			27,190
Non-current operating lease liabilities		46,290			—

Total liabilities		6,033,738			9,615,450

Series A convertible preferred stock: 10,000,000 shares authorized, par value $0.001		8,585,747			11,162,005
4,796,507 shares issued and outstanding at March 31, 2021
6,235,757 shares issued and outstanding at December 31, 2020

Series C convertible preferred stock, 45,750 shares authorized, par value $0.0001		—			355,830
0 shares issued and outstanding at March 31, 2021
35,583 shares issued and outstanding at December 31, 2020
Convertible preferred stock payable		—			754,249

Stockholders’ deficit:
Series B preferred stock: 10,000,000 shares authorized, par value $0.001		2			1
1,500 shares issued and outstanding at March 31, 2021
500 shares issued and outstanding at December 31, 2020
Common stock, $0.00001 par value 10,000,000,000 authorized		96,910			48,967
9,690,963,637 shares issued and outstanding at March 31, 2021
4,896,736,884 shares issued and outstanding at December 31, 2020
Additional paid in capital		2,829,382			(6,107,768	)
Accumulated deficit		(16,958,000	)		(15,637,843	)
Total stockholders’ deficit		(14,031,706	)		(21,696,643	)
Total liabilities and stockholders’ deficit	$	587,779		$	190,891

The accompanying notes are an integral part of these financial statements

SIMLATUS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended
	March 31,
	2021			2020
Sales	$	87,407		$	115,377
Cost of materials		2,491			—
Gross profit		84,916			115,377

Operating expenses:
G&A expenses		230,255			97,924
Professional fees		11,657			6,830
Salaries and wages		1,243,130			136,790
Total operating expenses		1,485,042			241,544

Loss from operations		(1,400,126	)		(126,167	)

Other income (expense):
Loss on conversion of debt		(147,379	)		—
Loss on conversion of debt of preferred shares		(1,122,681	)		—
Derivative expense		1,506,631			(51,627,443	)
Interest expense		(156,602	)		(658,875	)
Total other income (expense)		79,969			(52,286,318	)

Net loss before income taxes		(1,320,157	)		(52,412,485	)
Income tax expense		—			—
Net loss	$	(1,320,157	)	$	(52,412,485	)

Per share information
Weighted average number of common shares outstanding, basic and diluted		7,586,358,713			4,524,504
Net income (loss) per common share, basic	$	(0.00	)	$	(11.58	)

The accompanying notes are an integral part of these financial statements

SIMLATUS CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Unaudited)

	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		6,235,757		$	11,162,005			35,583		$	355,830		$	754,249			500	$	1		4,896,736,884	$	48,967	$	(6,107,768	)	$	(15,637,843	)	$	(21,696,643	)

Conversion of debt to common stock		—			—			—			—			—			—		—		1,641,619,256		16,416		373,758			—			390,174
Convertible preferred stock converted to common stock		(1,944,413	)		(3,480,499	)		(35,583	)		(355,830	)		—			—		—		3,117,607,497		31,177		4,927,834			—			4,959,011
Convertible preferred stock payable converted to preferred stock		421,367			754,249			—			—			(754,249	)		—		—		—		—		—			—			—
Preferred stock issued for services		83,796			149,992			—			—			—			1,000		1		—		—		881,197			—			881,198
Common stock issued for services		—			—			—			—			—			—		—		35,000,000		350		87,150			—			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		4,796,507		$	8,585,747			—		$	—		$	—			1,500	$	2		9,690,963,637	$	96,910	$	2,829,382		$	(16,958,000	)	$	(14,031,706	)

	Convertible Preferred Stock															Preferred Stock								Additional			Accumulated			Total
	Series A						Series C						Shares			Series B				Common Stock (1)				Paid-In			Earnings			Shareholders’
	Shares			Amount			Shares			Amount			Payable			Shares		Amount		Shares		Amount		Capital			(Deficit)			Equity (Deficit)
Balances for December 31, 2019		5,985,248		$	10,713,594			35,583		$	355,830		$	—			500	$	1		4,524,351	$	45	$	(12,857,352	)	$	(4,179,521	)	$	(17,036,827	)

Imputed interest		—			—			—			—						—		—		—		—		3,376			—			3,376
Common shares issued due to reverse stock split rounding		—			—			—			—						—		—		3,476		—		—			—			—
Net loss		—			—			—			—						—		—		—		—		—			(52,412,485	)		(52,412,485	)
Balances for March 31, 2020		5,985,248		$	10,713,594			35,583		$	355,830		$	—			500	$	1		4,527,827	$	45	$	(12,853,976	)	$	(56,592,006	)	$	(69,445,936	)

The accompanying notes are an integral part of these financial statements

SIMLATUS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three months ended
	March 31,
	2021			2020
Cash flows from operating activities:
Net profit (loss)	$	(1,320,157	)	$	(52,412,485	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of convertible debt discount		134,255			388,174
Stock based compensation		1,118,691			—
Imputed interest		8,000			3,376
Loss on conversion of debt		147,379			—
Loss on conversion of preferred shares to common stock		1,122,681			—
Change in fair value of derivative liability		(1,506,631	)		51,627,443
Penalties on notes payable		—			194,691
Decrease (increase) in operating assets and liabilities:
Accounts receivable		(11,727	)		(14,601	)
Inventory		(1,920	)		(6,071	)
Other current assets		10,000			—
Prepaid expenses		—			2,719
Accrued interest		14,345			72,634
Accounts payable		(42,524	)		29,869
Accrued expenses		140,226			80,374
Advances from related parties		(33,625	)		(662	)
Deferred revenue		—			4,801
Net cash (used in) provided by operating activities		(221,007	)		(29,738	)

Cash flows from investing activities:
Deposit on equipment - related party		(200,000	)		—
Net cash (used in) provided by investing activities		(200,000	)		—

Cash flows from financing activities:
Proceeds from convertible debt		529,240			37,500
Payments on promissory notes		—			(2,000	)
Net cash (used in) provided for financing activities		529,240			35,500

Net increase (decrease) in cash		108,233			5,762

Cash, beginning of period		134,855			25,495
Cash, end of period	$	243,088		$	31,257

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

Schedule of non-cash investing & financing activities:
Stock issued for debt conversion	$	242,795		$	—
Discount from derivative	$	364,871		$	232,191
Preferred stock converted to common stock	$	3,836,330		$	—
Derivative settlements	$	2,494,842		$	—
Warrant discounts	$	164,369		$	—
Lease adoption recognition	$	89,567		$	—

The accompanying notes are an integral part of these financial statements

SIMLATUS CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

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

Satel Group is the premier provider of DirecTV to high-rise apartments, condominiums and large commercial office buildings in the San Francisco metropolitan area and is now expanding both their DirecTV and Internet services across the Bay Area. Simlatus continues to manufacture its own proprietary systems for major broadcast studios, such as Warner Bros., Fox News, CBS, and DirecTV. Its video technology supports the major system used for underwater oil exploration in the world. Satel’s revenues will support BrewBilt Brewing Company during construction of the brewing facility and ramp-up of craft beer revenues.

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 & spirits industries continue to grow worldwide. California is where craft brewing began and now has over 900 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 started construction of its brewing facility in Grass Valley, California. This facility was leased by BrewBilt and upgraded with substantial tenant improvements to include a 10 BBL brewhouse and compliance with Title-24. BrewBilt is prepared to expand again by leasing additional space. BrewBilt obtains the majority of its leads through customer referrals and from online marketplaces. The company’s website is being expanded for online sales to include online educational/marketing videos that feature the company and its expanded integrated product line for the craft beer industry. BrewBilt has also created distribution sales agreements with individuals and companies to represent BrewBilt in both the domestic and international markets.

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 have approved an Agreement and Plan of Merger pursuant to which the Company will merge with and into BrewBilt Brewing Company, a Florida corporation and wholly-owned subsidiary of the Company, which would result 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 9,205,964,937 shares of common stock outstanding, 4,952,931 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 will have a greater number of authorized shares of common stock available for issuance than the Company currently has 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, our Chief Executive Officer; Bennett Buchanan, a director of ours, Samuel Berry, our Chief Operations Officer; and Richard Hylen, our Chairman of the Board, to the actions described in the Information Statement. Messrs. Lewis, Berry and Hylen collectively hold 102,369 shares of our common stock, 991,863 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.

As of the date of this filing, this transaction has not closed. The Company is following the steps and guidelines required of this process and therefore the transaction has not been finalized.

Financial Statement Presentation

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

Reclassification

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

Fiscal Year End

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

Use of Estimates

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

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

Cash Equivalents

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

Leases

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

Revenue Recognition and Related Allowances

During the three months ended March 31, 2021, the Company’s main revenue stream is from selling DirecTV services to corporate and residential customers. 49% of the Company’s revenue is from commissions, 21% is from corporate service subscribers, 11% is from residential service subscribers, and 11% was from installations and equipment. In addition, the Company’s sales for audio/video systems represented 8% of revenues.

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

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

We determine revenue recognition through the following steps:

●

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

●

identification of the performance obligations in the contract;

●

determination of the transaction price;

●

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

●

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

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’s evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at March 31, 2021 and December 31, 2020 is $0.

Accounts Payable and Accrued Expenses

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

Loss Per Share

Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on December 18, 2019 (see Note 12).

Inventories

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

Fair Value of Financial Instruments

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

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

These levels are:

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

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

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

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 for each fair value hierarchy level:

December 31, 2020	Derivative Liabilities		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	4,360,392	$	4,360,392

December 31, 2019	Derivative Liabilities		Total
Level I	$	—	$	—
Level II	$	—	$	—
Level III	$	7,996,994	$	7,996,994

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

Income Taxes

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

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

Recent Accounting Pronouncements

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

GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2021, the Company has a shareholders’ deficit of $14,031,706 since its inception, working capital deficit of $5,495,339, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

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

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

OTHER ASSETS

During the three months ended March 31, 2021, the Company paid a deposit of $200,000 to begin fabrication of a brewery system. The Company anticipates the system will be complete within nine to twelve months.

ACCRUED EXPENSES

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

	March 31,		December 31,
	2021		2020
Accrued expenses
Credit cards	$	4,812	$	407
Customer deposits		18,307		18,307
Employee liabilities		—		7,612
Sales tax payable		235		90
Short-term loans		3,000		3,000
Total accrued expenses	$	26,354	$	29,416

Accrued interest
Interest on notes payable	$	22,647	$	44,855
Interest on short-term loans		665		5,826
Interest on accrued wages		107,748		97,552
Total accrued interest	$	131,060	$	148,233

Accrued wages	$	464,818	$	321,530

CONVERTIBLE NOTES PAYABLE

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

	Original	Due	Interest	Conversion	March 31,			December 31,
	Note Date	Date	Rate	Rate	2021			2020
BHP Capital NY #6	5/30/2019	2/29/2020	18%	Variable		—			27,500
BHP Capital NY #7	7/22/2019	7/22/2020	8%	Variable		—			37,950
BHP Capital NY #9	12/20/2019	12/20/2020	12%	Variable		—			11,075
Emunah Funding #4	10/20/2018	7/20/2019	24%	Variable		2,990			2,990
Emunah Funding #8*	1/31/2019	1/31/2020	24%	Variable		—			33,652
FirstFire Global	3/8/2021	3/8/2022	12%	0.0006		300,000			—
Fourth Man #9	8/3/2020	8/3/2021	8%	Variable		—			27,500
Fourth Man #10	12/15/2020	12/15/2021	8%	Variable		33,000			33,000
Fourth Man #11	3/5/2021	3/5/2022	12%	0.0006		140,000			—
Jefferson St Capital #2*	3/5/2019	10/18/2019	0%	Variable		5,000			5,000
Jefferson St Capital #6	6/21/2019	3/21/2020	18%	Variable		—			27,500
Jefferson St Capital #7*	8/20/2019	5/20/2020	18%	Variable		38,500			38,500
Jefferson St Capital #8*	12/20/2019	12/20/2021	12%	Variable		19,000			19,000
Labrys Fund	2/8/2021	2/8/2022	12%	0.0006		140,000			—
Optempus Invest #4	11/2/2020	11/2/2021	10%	Variable		20,000			20,000
Optempus Invest #5	11/5/2020	11/5/2021	10%	Variable		20,000			20,000
Optempus Invest #6	12/31/2020	12/31/2021	6%	Variable		20,000			20,000
Power Up Lending #5	6/15/2020	6/15/2021	10%	Variable		—			13,100
Power Up Lending #6	6/24/2020	6/24/2021	10%	Variable		—			33,000
Redstart Holdings #2	1/25/2021	1/25/2022	10%	Variable		63,500			—
						801,990			369,767
Less debt discount						(646,074	)		(136,829	)
Notes payable, net of discount					$	155,916		$	232,938

As of March 31, 2021, the balance of notes payable that are in default is $65,490.

BHP Capital NY, Inc.

On May 30, 2019, the Company issued a convertible note to BHP Capital NY for $27,500, which includes $16,667 paid Auctus Fund pursuant to a settlement agreement, $5,000 to settle outstanding accounts payable, transaction fee interest of $3,000, and cash consideration of $2,833. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on February 29, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the three months ended March 31, 2021, the Company issued 142,971,542 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $6,063, and conversion fees of $750. As of March 31, 2021, the note has been fully satisfied.

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

On July 22, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $37,950, of which $33,500 was received in cash and $4,450 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on July 22, 2020, and is convertible into common stock at 65% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $37,950 due to this conversion feature, which has been amortized to the statement of operations. During the three months ended March 31, 2021, the Company issued 354,413,389 common shares upon the conversion of principal in the amount of $37,950, accrued interest of $5,344, and conversion fees of $2,400. As of March 31, 2021, the note has been fully satisfied.

On December 20, 2019, the Company received funding pursuant to a convertible note issued to BHP Capital NY for $19,000 of which $15,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 12% (increases to 22% per annum upon an event of default), matures on December 20, 2020, and is convertible into the lower of 1) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $19,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 196,361,455 common shares upon the conversion of principal in the amount of $7,925, interest of $2,375 and conversion fees of $500. During the three months ended March 31, 2021, the Company issued 105,697,273 common shares upon the conversion of principal in the amount of $11,075, accrued interest of $52, and conversion fees of $500. As of March 31, 2021, the note has been fully satisfied.

Emunah Funding LLC

On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matured on July 20, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,440 due to this conversion feature, which has been amortized to the statement of operations. On October 26, 2018, the principal amount of $40,000 was reassigned to Fourth Man, LLC. Pursuant to the default terms of the note, the Company entered a late filing penalty of $1,000. Prior to the period ended December 31, 2020, the note has converted $13,450 of principal and $4,918 of interest into 7,145 shares of common stock. As of March 31, 2021, the note has a principal balance of $2,990 and accrued interest of $1,256. This note is currently in default.

On January 31, 2019, the Company received funding pursuant to convertible note issued to Emunah Funding LLC for $33,000, which includes $5,000 to settle outstanding accounts payable, $4,500 in transaction fees and cash consideration of $23,500. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on January 31, 2020, and is convertible into common stock at 50% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, and $33,000 has been amortized to the statement of operations. Pursuant to the default terms of the note, the Company entered late filing penalties of $50,652. During the year ended December 31, 2020, the Company made cash payments of $50,000. During the three months ended March 31, 2021, the Company issued 300,479,214 common shares upon the conversion of principal in the amount of $33,652, and accrued interest of $11,819. As of March 31, 2021, the note has been fully satisfied.

FirstFire Global Opportunity Fund LLC

On March 8, 2021, the Company received funding pursuant to a convertible note issued to FirstFire Global Opportunities Fund LLC for $300,000 of which $242,900 was received in cash and $57,100 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on March 8, 2022 and is convertible into common shares at a fixed rate of $0.0006. The Company recorded a debt discount from the derivative equal to $300,000 due to this conversion feature, and $18,904 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at March 31, 2021 of $281,096. As of March 31, 2020, the note has a principal balance of $300,000 and accrued interest of $2,268.

Fourth Man LLC

On August 3, 2020, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $27,500 of which $25,000 was received in cash and $2,500 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on August 3, 2021, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the three months ended March 31, 2021, the Company issued 242,397,433 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $1,088, and conversion fees of $500. As of March 31, 2021, the note has been fully satisfied.

On December 15, 2020, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $33,000 of which $27,600 was received in cash and $5,400 was recorded as transaction fees. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on August 3, 2021, and is convertible into common stock at 60% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, and $9,584 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at December 31, 2020 of $23,416. As of March 31, 2021, the note has a principal balance of $33,000 and accrued interest of $767.

On March 5, 2021, the Company received funding pursuant to a convertible note issued to Fourth Man LLC for $140,000 of which $113,420 was received in cash and $26,580 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on March 5, 2022 and is convertible into common shares at a fixed rate of $0.0006. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, and $9,973 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at March 31, 2021 of $130,027. As of March 31, 2020, the note has a principal balance of $140,000 and accrued interest of $1,197.

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 10,691 common shares upon the conversion of principal in the amount of $24,000 and $1,000 in conversion fees. As of December 31, 2020, the note has a principal balance of $5,000. This note is currently in default.

On June 21, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $27,500, which includes transaction fee interest of $4,000, and cash consideration of $23,500. The note bears interest of 8% (increases to 18% per annum upon an event of default), matures on March 21, 2020, and is convertible into common stock at 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $27,500 due to this conversion feature, which has been amortized to the statement of operations. During the three months ended March 31, 2021, the Company issued 127,049,294 common shares upon the conversion of principal in the amount of $27,500, accrued interest of $3,352, and conversion fees of $1,500. As of March 31, 2021, the note has been fully satisfied.

On August 20, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $38,500, of which $32,000 was received in cash and $6,500 was recorded as transaction fees. The note bears interest at 10% (increases to 18% per annum upon an event of default), matures on May 20, 2020, and is convertible into the lower of 1) 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of the note, and 2) 65% of the lowest trading price of the 15 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $38,500 due to this conversion feature, which has been amortized to the statement of operations. As of March 31, 2021, the note has a principal balance of $38,500 and accrued interest of $8,308. This note is currently in default.

On December 20, 2019, the Company issued a convertible note to Jefferson Street Capital LLC for $19,000, of which $15,000 was received in cash and $4,000 was recorded as transaction fees. The note bears interest of 12% (increases to 22% per annum upon an event of default), matures on December 20, 2020, and is convertible into the lower of 1) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of the note, and 2) 55% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $19,000 due to this conversion feature, which has been amortized to the statement of operations. As of March 31, 2021, the note has a principal balance of $19,000 and accrued interest of $3,360. This note is currently in default.

Labrys Fund, LP

On February 8, 2021, the Company received funding pursuant to a convertible note issued to Labrys Fund, LP for $140,000 of which $112,900 was received in cash and $27,080 was recorded as transaction fees. The note bears interest of 12% (increases to 16% per annum upon an event of default), matures on February 8, 2022 and is convertible into common shares at a fixed rate of $0.0006. The Company recorded a debt discount from the derivative equal to $140,000 due to this conversion feature, and $19,562 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at March 31, 2021 of $120,438. As of March 31, 2020, the note has a principal balance of $140,000 and accrued interest of $2,347.

Optempus Investments, LLC

On November 2, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 2, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, and $8,164 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at March 31, 2021 of $11,836. As of March 31, 2021, the note has a principal balance of $20,000 and accrued interest of $816.

On November 5, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000, of which $10,000 was received in cash and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on November 5, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, and $8,000 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at March 31, 2020 of $12,000. As of March 31, 2021, the note has a principal balance of $20,000 and accrued interest of $800.

On December 31, 2020, the Company issued a convertible note to Optempus Investments, LLC. for $20,000. The Company received a cash payment of $10,000 on January 8, 2021, and $10,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on December 31, 2021, convertible into 60% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature, and $4,932 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at March 31, 2021 of $15,068. As of March 31, 2021, the note has a principal balance of $20,000 and accrued interest of $296.

Power Up Lending Group Ltd.

On May 18, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $16,000, of which $15,600 was paid to settle accounts payable, and $400 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on May 18, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $16,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 278,333,333 common shares upon the conversion of principal in the amount of $16,000 and accrued interest of $700. As of March 31, 2021 the note has an accrued interest balance of $100.

On June 15, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $43,000, of which $40,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 15, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $43,000 due to this conversion feature, which has been amortized to the statement of operations. During the year ended December 31, 2020, the Company issued 498,333,333 common shares upon the conversion of principal in the amount of $29,900. During the three months ended March 31, 2021, the Company issued 159,444,444 common shares upon the conversion of principal in the amount of $13,100 and accrued interest of $2,150. As of March 31, 2021, the note has been fully satisfied.

On June 24, 2020, the Company issued a convertible note to Power Up Lending Group Ltd. for $33,000, of which $30,000 was received in cash, and $3,000 was recorded as transaction fees. The note bears interest at 10% (increases to 22% per annum upon an event of default), matures on June 24, 2021, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $33,000 due to this conversion feature, which has been amortized to the statement of operations. During the three months ended March 31, 2021, the Company issued 209,166,667 common shares upon the conversion of principal in the amount of $33,000 and accrued interest of $1,650. As of March 31, 2021, the note has been fully satisfied.

Redstart Holdings Corp.

On January 25, 2021, the Company received funding pursuant to a convertible note issued to Redstart Holdings Corp. for $63,500 of which $60,000 was received in cash and $3,500 was recorded as transaction fees. The note bears interest of 10% (increases to 22% per annum upon an event of default), matures on January 25, 2022, and is convertible into 61% multiplied by the average of the two lowest trading prices during the 20 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $64,500 due to this conversion feature, and $11,308 has been amortized to the statement of operations. The debt discount and transaction fee interest had a balance at March 31, 2021 of $52,192. As of March 31, 2020, the note has a principal balance of $63,500 and accrued interest of $1,131.

Convertible Note Conversions

During the year ended December 31, 2020, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:

	Principal		Interest		Total		Conversion		Shares
Date	Conversion		Conversion		Conversion		Price		Issued		Issued to
1/5/2021	$	13,000	$	—	$	13,000	$	0.00009		144,444,444	Power Up
1/7/2021		10,000		—		10,000		0.00010		107,500,000	Jefferson St
1/11/2021		100		2,150		2,250		0.00015		15,000,000	Power Up
1/11/2021		15,000		—		15,000		0.00015		100,000,000	Power Up
1/12/2021		11,075		52		11,127		0.00011		105,697,273	BHP
1/14/2021		18,000		1,650		19,650		0.00018		109,166,667	Power Up
1/15/2021		—		6,300		6,300		0.00010		63,000,000	Emunah
1/20/2021		30,000		5,000		35,000		0.00012		301,666,667	BHP
1/22/2021		—		3,300		3,300		0.00010		33,000,000	Emunah
1/26/2021		27,500		1,088		28,588		0.00012		242,397,433	Fourth Man
2/8/2021		5,400		2,105		7,505		0.00015		50,035,712	Emunah
2/8/2021		7,950		344		8,294		0.00018		52,746,722	BHP
2/9/2021		7,550		19		7,569		0.00015		50,457,178	Emunah
2/11/2021		27,500		6,063		33,563		0.00024		142,971,542	BHP
2/16/2021		20,702		95		20,797		0.00020		103,986,324	Emunah
3/8/2021		17,500		3,352		20,852		0.00111		19,549,294	Jefferson St
Total conversions		211,277		31,518		242,795				1,641,619,256
Loss on conversion		—		—		141,729
Conversion fees		—		—		5,650
	$	211,277	$	31,518	$	390,174				1,641,619,256

LEASES

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

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

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

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

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

Operating Leases

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

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

On March 1, 2021, BrewBilt Brewery entered into a commercial lease for approximately 4,000 square feet of space, located in the Wolf Creek Industrial Building at 110 Spring Hill Dr, Grass Valley, CA 95945. The lease has a term of two years, from March 1, 2021 through February 28, 2023, with a monthly rent of $4,000. Lease payments shall increase on March 1, 2022 based upon the CPI published in the Wall Street Journal. During the three months ended March 31, 2021, the Company recorded of ROU assets of $89,567 and lease liabilities of $89,567 in recognition of this lease.

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

	March 31, 2021
Right-of-use assets	$	86,071
Current operating lease liabilities		39,781
Non-current operating lease liabilities		46,290

Years Ending
December 31,	Operating Leases
2021	$	36,000
2022		48,000
2023		8,000
Total		92,000
Less imputed Interest		5,929
Total liability	$	86,071

Financing Leases

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

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

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

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

	March 31, 2021
Right-of-use assets	$	30,115
Current financing lease liabilities		4,437
Non-current financing lease liabilities		25,678

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

Years Ending
December 31,	Finance Leases
2021	$	4,750
2022		6,334
2023		6,334
2024		6,334
2025		6,334
Thereafter		6,334
Total		36,420
Less imputed Interest		6,305
Total liability	$	30,115

Other information related to leases is as follows:

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

LOANS PAYABLE

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

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

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

The Loan, which was in the form of a Note dated May 3, 2020 issued by the Borrower, matures on May 3, 2022, and bears interest at a rate of 1% per annum, payable monthly commencing on November 3, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. As of March 31, 2021, the Company has accrued interest of $665 on the PPP loan.

DERIVATIVE LIABILITIES

During the three months ended March 31, 2021 the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at March 31, 2021 based on the lattice model.

The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended March 31, 2021:

	Notes			Warrants			Stock Payable			Total
Balance, beginning of period	$	3,933,475		$	27,343		$	4,036,176		$	7,996,994
Initial recognition of derivative liability		3,528,240			2,159,858			—			5,688,098
Derivative settlements		(2,494,842	)		—			—			(2,494,842	)
Loss (gain) on derivative liability valuation		(3,453,573	)		(1,368,255	)		(2,008,030	)		(6,829,858	)
Balance, end of period	$	1,513,300		$	818,946		$	2,028,146		$	4,360,392

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 March 31, 2021:

	Valuation date
Expected dividends		0%
Expected volatility		249.88%-349.81%
Expected term		.09 - .94 years
Risk free interest		.01%-.07%

Warrants

On January 2, 2019, the Company executed a Common Stock Purchase Warrant for 1,821,875 shares (1,821 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.016 per share and expire on December 31, 2023.

On January 31, 2019, the Company executed a Common Stock Purchase Warrant for 2,200,000 shares (2,200 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.016 per share and expire on January 30, 2024.

On March 26, 2019, the Company executed a Common Stock Purchase Warrant for 1,643,678 shares (1,643 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.017 per share and expire on March 25, 2024.

On April 9, 2019, the Company executed a Common Stock Purchase Warrant for 550,000 shares (550 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.10 per share and expire on April 8, 2024.

On April 23, 2019, the Company executed a Common Stock Purchase Warrant for 105,000 shares (105 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.25 per share and expire on April 22, 2024.

On May 30, 2019, the Company executed a Common Stock Purchase Warrant for 625,000 shares (625 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.040 per share and expire on May 29, 2024.

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

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

On June 21, 2019, the Company executed a Common Stock Purchase Warrant for 1,000,000 shares (1,000 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.025 per share and expire on June 20, 2024.

On July 22, 2019, the Company executed a Common Stock Purchase Warrant for 1,679,204 shares (1,679 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.023 per share and expire on July 22, 2024.

On August 7, 2019, the Company executed a Common Stock Purchase Warrant for 2,200,000 shares (2,200 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.015 per share and expire on August 7, 2024.

On August 12, 2019, the Company executed a Common Stock Purchase Warrant for 1,173,333 shares (1,173 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.015 per share and expire on August 7, 2024.

On August 20, 2019, the Company executed a Common Stock Purchase Warrant for 3,500,000 shares (3,500 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.01 per share and expire on August 7, 2024.

On October 9, 2019, the Company executed a Common Stock Purchase Warrant for 17,187,500 shares (17,188 post-split). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0016 per share and expire on October 9, 2024.

On February 8, 2021, the Company executed a Common Stock Purchase Warrant for 140,000,000 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on February 8, 2024.

On March 5, 2021, the Company executed a Common Stock Purchase Warrant for 140,000,000 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on March 5, 2024.

On March 8, 2021, the Company executed a Common Stock Purchase Warrant for 500,000,000 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share and expire on March 9, 2024.

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

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

		Valuation date
Expected dividends		0%
Expected volatility		500.86%-542.91%
Expected term		2.76 – 3.53 years
Risk free interest		0.16%-.35%

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		362.08%
Expected term		1 year
Risk free interest		0.07%

9. RELATED PARTY TRANSACTIONS

The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. During the three months ended March 31, 2021 the Company made payments of $40,627 to amounts due to related parties, and $7,002 was advanced to the Company by related parties. As of March 31, 2021 and December 31, 2020, the Company owed related parties $211,698 and $245,322, respectively. During the three months ended March 31, 2021, the Company recorded imputed interest of $8,000 to the statement of operations with a corresponding increase to additional paid in capital.

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

10. CONVERTIBLE PREFERRED STOCK

Series A Convertible Preferred Stock

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

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

On October 26, 2018, the Company issued 488,827 Series A Convertible Preferred shares at $1.79 per share to Donna Murtaugh, to settle liabilities of $875,000 owed to her pursuant to the Asset Purchase Agreement dated March 9, 2016.

As of November 13, 2018, 3,489,510 shares of Series A Convertible Preferred stock were transferred into the Company in connection with the reverse merger.

On November 13, 2018, the Company granted 1,086,592 Series A Convertible Preferred shares at $1.79 per share to Richard Hylen, valued at $1,945,000, pursuant the Merger Agreement.

On January 9, 2019, the Company entered into an Asset Purchase Agreement Proscere Bioscience Inc., a Florida Corporation. Pursuant to the Asset Purchase Agreement, Proscere Bioscience assigned and transferred all of its right, title, and interest to its fixed assets and “know how” to Simlatus Corporation. These assets and “know how” pursuant to the 5 year Exclusive Distribution & License Agreement dated January 9, 2019 are valued at $3,000,000. As consideration for the assets and “know how” Simlatus Corporation issued 1,675,978 shares of Convertible Preferred Series A stock at a price of $1.79 per share. At that time, Proscere Bioscience became a wholly subsidiary of Simlatus Corporation.

On March 19, 2019, Richard Hylen entered into a Debt Settlement Agreement with Xillient, LLC to settle $362,261 in outstanding debt owed to Xillient, LLC for $200,000. Mr. Hylen transferred 111,732 of his Convertible Preferred Series A that are valued at $1.79 per share. The liability amount of $362,261 was reclassed to additional paid in capital due to the contributed capital by a related party.

On April 10, 2019, the Board of Directors repurchased and returned to treasury 25,140 Convertible Preferred Series A Shares in the name of Optempus Investments, LLC. The company authorized and paid the payment of $45,000 to Optempus Investments, LLC for the repurchase of 25,140 Convertible Preferred Series A at $1.79 per share. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Convertible Preferred Series A Stock is convertible to common stock at market price the day of conversion.

On June 3, 2019, the Board of Directors repurchased and returned to treasury 18,159 Convertible Preferred Series A Shares in the name of Optempus Investments, LLC. The company authorized and paid the payment of $32,505 to Optempus Investments, LLC for the repurchase of 18,159 Convertible Preferred Series A at $1.79 per share. This transaction is pursuant with the Asset Purchase Agreement of Proscere Bioscience and the IP of the Cold-Water CBD/HEMP Extraction Systems. The Convertible Preferred Series A Stock is convertible to common stock at market price the day of conversion.

On June 21, 2019, 43,299 Convertible Preferred Series A shares held in treasury were retired.

During the year ended December 31, 2019, 712,360 shares of Convertible Series A Preferred stock were converted to 2,150,330 common shares in accordance with the conversion terms.

On November 27, 2020, the Company and a note holder agreed to convert the principal and interest balance of $212,054 to 118,466 shares of Convertible Series A Preferred stock.

On December 28, 2020, the Company converted wages and accrued interest owed to Richard Hylen and Mike Schatz to Convertible Series A Preferred stock. The Company issued 97,732 shares at $1.79 per share in exchange of principal and interest of $174,930 owed to Richard Hylen. The Company issued 317,821 shares at $1.79 per share in exchange of principal and interest of $568,899 owed to Mike Schatz.

During the year ended December 31, 2020, 283,510 shares of Convertible Series A Preferred stock were converted to 1,217,871,970 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,349, which was recorded to the statement of operations.

During the three months ended March 31, 2021, 1,944,413 shares of Convertible Series A Preferred stock were converted to 3,017,607,497 common shares in accordance with the conversion terms. The issuances resulted in a loss on conversion of $1,278,517, which was recorded to the statement of operations.

During the three months ended March 31, 2021, the Company issued 13,966 shares each of Convertible Series A Preferred stock at $1,79 per share to Richard Hylen, Jef Lewis, and Bennett Buchanan and 41,898 shares of Convertible Series A Preferred stock at $1.79 per share to Sam Berry, pursuant to employee, consulting, and director agreements (Note 14). These shares were issued at a value at $149,992 and resulted in a loss of conversion of $6, which was recorded to the statement of operations.

The Series A Convertible Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception. Each share of the Convertible Series A Preferred Stock has a fixed value of $1.79 per share, has no voting rights, and is convertible into common stock at closing market price on the date of conversion. The Company has recorded $8,585,747 which represents 4,796,507 Series A Preferred Stock at $1.79 per share, issued and outstanding as of March 31, 2021, outside of permanent equity and liabilities.

Series C Convertible Preferred Stock

On June 13, 2019, the Company’s Board of Directors authorized the creation of 45,750 shares of Series C Convertible Preferred Stock with a par value of $0.0001, and on June 13, 2019, a Certificate of Designation was filed with the Nevada Secretary of State. The Convertible Preferred Series C shall have no voting rights as to corporate matters unless, and until, they are converted into common shares, at which time, they will have the same voting rights as all common stock shareholders. Convertible Preferred Series C shares cannot be sold, assigned, hypothecated, or otherwise disposed of, without first obtaining the consent of the majority Convertible Preferred Series C shareholders. Convertible Preferred Series C shares shall have a value of $10.00 USD per share and shall convert into common shares at the rate of the closing market price on the day of conversion notice equal to the dollar amount of the value of the Convertible Preferred Series C share. At no time may the shareholder convert their shares into more than 4.99% of the issued and outstanding.

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

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

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

During the three months ended March 31, 2021, 355,830 shares of Convertible Series C Preferred stock were converted to 100,000,000 common shares in accordance with the conversion terms. The issuances resulted in a gain on conversion of $155,830, which was recorded to the statement of operations.

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

As of March 31, 2021, 10,000,000 Series A Convertible Preferred shares and 45,750 Series C Convertible Preferred shares were authorized, of which 4,952,931 Series A Convertible Preferred shares were issued and outstanding and 0 Series C Convertible Preferred shares were issued and outstanding.

Preferred Stock Payable

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

The Company agreed to issue 52,931 Preferred Series A shares to Baron Tennelle in exchange for accrued wages of $90,000 and interest of $4,745. The Company agreed to issue 50,615 Preferred Series A shares to Dusty Vereker in exchange for accrued wages of $86,250 and interest of $4,350. The Company agreed to issue 317,821 Preferred Series A shares to Robert Stillwaugh in exchange for accrued wages of $427,708 and interest of $141,190.

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

11. PREFERRED STOCK

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

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

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

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

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

On January 20, 2020, newly appointed President, Jef Lewis and Satel’s President were issued 500 Preferred Series B Control Shares each, pursuant to their employee agreements dated January 1, 2021. The Company determined the Control shares have a value of $881,192 which was recorded as stock based compensation on the statement of operations and an offsetting entry to additional paid in capital.

As of March 31, 2021, 10,000,000 Series B Preferred shares were authorized, of which 1,500 shares were issued and outstanding.

12. COMMON STOCK

On June 15, 2016, the Company approved the authorization of a 1 for 1,000 reverse stock split of the Company’s outstanding shares of common stock, which was effective on July 22, 2016. The financial statements have been retroactively adjusted to take this into account for all periods presented.

As of November 13, 2018, 2,918 shares of common stock were transferred into the Company in connection with the reverse merger.

On November 13, 2018, the Company issued 102,368 shares of restricted common stock to Richard Hylen as collateral, pursuant to the Asset Purchase Agreement dated November 13, 2018. The shares are valued at $4,298,450 based on the market price of the Company’s common stock on the date of the agreement.

During the year ended December 31, 2018, the holders of convertible notes converted a total of $10,448 of principal and interest into 2,792 shares of common stock. The issuance extinguished $115,941 worth of derivative liabilities which was recorded to additional paid in capital.

On April 16, 2019, the Company issued 424 common shares at to Hanson & Associates to settle outstanding stock payable liabilities pursuant to a Consulting Agreement dated April 1, 2017. The stock was valued at $24,953 on the date of issuance, which extinguished $24,953 in derivative liabilities.

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

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

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

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

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

During the year ended December 31, 2019, 712,360 shares of Series A preferred stock were converted to 2,161,158 common shares in accordance with the conversion terms.

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

During the year ended December 31, 2019, warrant holders exercised the warrants and the Company issued 118,280 shares of common stock through a cashless exercise of the warrants in accordance with the conversion terms.

During the year ended December 31, 2019, the holders of convertible notes converted a total of $866,299 of principal and interest, and $16,500 in note fees, into 2,119,224 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $86,719 and settled $1,784,469 worth of derivative liabilities which was recorded to additional paid in capital.

On March 27, 2020, 3,476 shares of common stock were issued due to rounding in conjunction with the reverse stock split.

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

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

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

During the year ended December 31, 2020, 283,510 shares of Convertible Series A Preferred stock were converted to 1,217,871,970 common shares, valued at $507,483, in accordance with the conversion terms. The issuances resulted in a loss on conversion of $191,349, which was recorded to the statement of operations.

During the year ended December 31, 2020, the holders of convertible notes converted a total of $1,005,664 of principal and interest, and $30,935 in note fees, into 3,674,337,087 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $41,116 and settled $4,976,556 worth of derivative liabilities which was recorded to additional paid in capital.

During the three months ended March 31, 2021, the holders of convertible notes converted a total of $242,795 of principal and interest, and $5,650 in note fees, into 1,641,619,256 shares of common stock in accordance with the conversion terms. The issuances resulted in a loss on conversion of $147,379 and settled $2,494,842 worth of derivative liabilities which was recorded to additional paid in capital.

As of March 31, 2021, 10,000,000,000 common shares, par value $0.00001, were authorized, of which 9,690,963,637 shares were issued and outstanding.

13. INCOME TAXES

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

The deferred tax asset and the valuation allowance consist of the following at March 31, 2021:

	March 31, 2021
Net tax loss carry-forwards	$	2,588,875
Statutory rate		21	%
Expected tax recovery		543,664
Change in valuation allowance		(543,664	)
Income tax provision	$	—

Components of deferred tax asset:
Non capital tax loss carry-forwards	$	543,664
Less: valuation allowance		(543,664	)
Net deferred tax asset	$	—

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

14. COMMITMENTS AND CONTINGENCIES

Employee and Director Agreements

On January 1, 2021, the Company dismissed Richard Hylen as CEO, and appointed Richard Hylen as the Chairman and Secretary of the company, and the President of Satel Group Inc., a wholly owned subsidiary of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $1.79 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares of the company at a price of $1.79 per share. On January 20, 2021, the Company issued 13,966 shares, pursuant with the Certificate of Designation for conversion rights of said shares.

On January 1, 2021, the Company appointed Jef Lewis as a Director and the Chief Executive Officer, President and Treasurer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $200,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $1.79 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. Pursuant to the agreement, the company issued 500 Preferred Series B shares on January 20, 2021. Said shares are control shares and have voting rights only. As Director the undersigned is hereby granted $25,000 of Convertible Preferred Series A shares of the company at a price of $1.79 per share. On January 20, 2021, the Company issued 13,966 shares, pursuant with the Certificate of Designation for conversion rights of said shares.

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

On January 1, 2021, the Company appointed Samuel Berry as a Director and the Chief Operations Officer of the company and pursuant with the Employment Agreement and Director Agreement dated January 1, 2021. These Agreements will replace all previous agreements. The employee will receive an annual salary of $100,000 to be paid in equal monthly installments. Amounts unpaid will accrue annual interest of 6% and may be converted to Convertible Preferred Series A stock of the company in value of $1.79 per share and under the conversion guidelines of the Certificate of designation for Convertible Preferred Series A stock. The company will issue to the employee $50,000 of Preferred Series A shares at a value of $1.79 per share. As Director the undersigned is hereby granted $25,000 of Preferred Series A shares of the company at a price of $1.79 per share, pursuant with the Certificate of Designation for conversion rights of said shares. On January 20, 2021, the Company issued 41,898 shares of Convertible Preferred Series A shares, pursuant to these agreements.

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

On March 1, 2021, the Company appointed Bennett Buchanan as a Director and of the company and pursuant with the Employment Agreement and Director Agreement dated March 3, 2021. Pursuant to the Employment Agreement, Mr. Buchanan will be employed on at-will basis and receive an annual salary of $100,000 payable in monthly installments, with unpaid amounts accruing interest at the rate of 6% per annum. Unpaid salary may be converted by Mr. Buchanan into shares of Convertible Series A Preferred Stock of the Company. On March 4, 2021, the Company issued 13,966 shares of Convertible Series A Preferred Stock pursuant to the Employment Agreement.

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

Legal Matters

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

15. SUBSEQUENT EVENTS

On April 19, 2021 Simlatus filed a DEF14C disclosing the merger between BrewBilt Brewing and Simlatus. The Company is currently waiting for notification of approval and completion from the Securities and Exchange Commission.

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

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

FORWARD-LOOKING STATEMENTS

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

RESULTS OF OPERATIONS

Three Months Ended March 31, 2021 Compared with the Three Months Ended March 31, 2020

Revenues:

The Company’s revenues were $87,407 for the three months ended March 31, 2021 compared to $115,377 for the three months ended March 31, 2020. The company has a strong relationship with DirecTV and has focused its efforts on expanding services outside of the San Francisco metropolitan area. For the three months ended March 31, 2021, the Company had one major customer who represented approximately 49% of total revenue. The decrease in revenue is due to a decrease in customer sales and a reduction in sales efforts due to COVID-19. In addition, Richard Hylen has been focused on expansion, and local customer base retention has declined. Satel has strong relationships with commercial and residential building owners and management, and as a public company with the adequate funding, Satel can expand its services and anticipates increasing revenues over the next 24 months. Satel recognizes the customer needs, and the importance of competitive pricing and services. The company believes that it can invest its capital into faster internet, bundling of various internet based services, and expanding its customer base into the entire Bay Area.

Cost of Sales:

The Company’s cost of sales was $2,491 for the three months ended March 31, 2021, compared to $0 for the three months ended March 31, 2020. This is due to audio/video equipment that was sold in the quarter ending March 31, 2021.

Operating Expenses:

Operating expenses consisted primarily of consulting fees, professional fees, salaries and wages, share based compensation, office expenses and fees associated with preparing reports and SEC filings relating to being a public company. Operating expenses for the three months ended March 31, 2021, and March 31, 2020, were $1,485,042 and $241,544, respectively. The increase was primarily attributable to an increase in share based compensation and general and administrative expenses.

Other Income (Expense):

Other income (expense) for the three months ended March 31, 2021 and March 31, 2020 was $79,969 and $(52,286,318), respectively. Other income (expense) consisted of derivative valuation gains and losses, gains or losses on settlement of debt and conversion of debt, and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The increase in other income primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities.

Net Loss:

Net loss for the three months ended March 31, 2021 was $1,320,157 compared to $52,412,485 for the three months ended March 31, 2020. The increase in net loss can be explained by the changes in the loss in the fair value of derivative liabilities and an increase in share based compensation.

Impact of Inflation

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

Liquidity and Capital Resources

	March 31,			December 31,
	2021			2020
Current Assets	$	466,431		$	154,551
Current Liabilities		5,961,770			9,588,260
Working Capital (Deficit)	$	(5,495,339	)	$	(9,433,709	)

The overall working capital (deficit) decreased from $(9,433,709) at December 31, 2020 to $(5,495,330) at March 31, 2021 due to the change in value of derivative liabilities, an increase in cash on hand and deposits paid for brewery equipment.

	March 31,			March 31,
	2021			2020
Cash Flows (used in) provided by Operating Activities	$	(221,007	)	$	(29,738	)
Cash Flows (used in) provided by Investing Activities		(200,000	)		—
Cash Flows (used for) provided by Financing Activities		529,240			35,500
Net Increase (decrease) in Cash During Period	$	108,233		$	5,762

During the three months ended March 31, 2021 cash (used in) provided by operating activities was $(221,007) compared to $(29,738) for the three months ended March 31, 2020. The increase in the cash used in operating activities is primarily attributed to the change in fair value of derivative liabilities, stock based compensation and loss on conversion.

During the three months ended March 31, 2021 cash (used in) provided by investing activities was $(200,000) compared to $0 for the three months ended March 31, 2020. This increase in cash used in investing activities is due to a deposit paid to begin fabrication of a brewery system.

During the three months ended March 31, 2021, cash (used for) provided by financing activities was $529,240 compared to $35,500, for the three months ended March 31, 2020. The increase in cash used by financing activity primarily resulted from an increase in proceeds from notes payable during the three months ended March 31, 2021.

As of March 31, 2021, the Company had a cash balance and current asset total of $243,088 and $587,779 respectively, compared with $134,855 and $190,891 of cash and current assets, respectively, as of December 31, 2020. The increase in assets was due to an increase in cash from notes payable and a deposit made to begin fabrication of brewery equipment.

As of March 31, 2021, the Company had total liabilities of $6,033,738 compared with $9,588,260 as of December 31, 2020. The decrease in total liabilities was primarily attributed to a decrease in accounts payable, derivative liabilities, and related party liabilities.

Going Concern

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

As of March 31, 2021, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our December 31, 2020 audited financial statements that they have substantial doubt that we will be able to continue as a going concern.

Future Financings

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

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

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

Recent Accounting Pronouncements

Contractual Obligations

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our Company’s officers, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our Company’s officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses in our internal control over financial reporting identified in our Annual Report on Form 10-K for the year ended December 31, 2020, that was filed with the SEC on March 31, 2021, the Company’s officers concluded that our disclosure controls and procedures are ineffective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act, during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

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

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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

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

SIGNATURES

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

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

Dated: May 17, 2021

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

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