Item
1.01 Entry into a Material Definitive Agreement
On
November 22, 2019, we entered into a Merger Asset Purchase Agreement with BrewBilt Manufacturing, LLC (www.BrewBilt.com;
a California Limited Liability Corporation established on May 31, 2016). Pursuant with the Asset Purchase Agreement the Board
of Directors has authorized that BrewBilt shall sell, assign and transfer all of its right, title and interest to its IP, fixed
assets and “know how” to the Company (collectively, the “Seller’s Assets”). The Company and BrewBilt
mutually agree that BrewBilt will assign certain assets, and provide the “Know-How” regarding the designing and building
of the finest craft brewing equipment in the industry today. BrewBilt manufactures cannabis systems used for extraction of hemp
and CBD. The IP and assets pursuant to schedule are valued at $5,000,000 based upon 4 years
of operations and revenues. Total revenue in 2017 was $800,000 and 2018 was $1,700,000, and in 2019 $1,600,000 YTD as of September
30, with additional new orders pending of $1,100,000. Further, BrewBilt is manufacturing and has additional commitments for manufacturing
CBD/Hemp Extraction systems for major agricultural growers through various suppliers. As consideration for the IP, fixed assets
and the “Know -How”, the Company shall issue, or cause to be issued, $ 5,000,000 worth of Preferred Series A Stock
(PAR $.001) within thirty (30) days from the date of this agreement. The number of Preferred Series A shares to be issued is 500,000
Preferred Series A shares at a price of $10.00 per share and convertible pursuant the conversion rights as specified in the Articles
of Incorporation and certificate of designation for VTNL.
Located
in Grass Valley, CA, BrewBilt is one of the only California companies that custom designs, hand crafts, and integrates processing,
fermentation and distillation processing systems for the craft beer, cannabis and hemp industries using “Best in Class”
American made components integrated with stainless steel processing vessels using only American made steel. Founded in 2014, the
company began in a backyard shop by Jeff Lewis with a vision of creating a profitable company in “Rural America” by
hiring excellent personnel, designing and fabricating products to exceed customer’s expectations and compensating craftsmen
with living wages and profit sharing to financially sustain their families within the community. Mr. Lewis, has 15+ years
experience as a craft beer brewer, a custom tank/vessel designer, fabrication and integration expert and business owner who initially
founded Portland Kettle Works, a nationally recognized manufacturer of craft beer brewing equipment located in the Northwest.
The Company has grown from 3 employees in 2015 to 9 in 2017. Since inception, BrewBilt has successfully grown its business by
closing sales of approximately $350,000 in 2015, $900,000 in 2016, $1,500,000 in 2017, $1,800,000 in 2018 and $1,600,000 in 2019
YTD ending September 30. BrewBilt has been built by having 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 that 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 to locate its manufacturing facility in the
Sierra foothills. All BrewBilt products are designed and fabricated as “food grade” quality which enables the company
to build vessels for food & beverage processing , the company is now building systems that are pharmaceutical grade for clients
involved in distillation for the cannabis and hemp industries, thus making the revenue potential much greater. BrewBilt buys materials
and components mostly from California suppliers which enables them to closely monitor quality , while the company’s revenues
are generated from sales to customers throughout the country. The company is aggressively pursuing international orders and has
held meetings with the Center for International Trade Development and U.S. Commercial Service to develop international opportunities.
Presently, a great deal of sales interest in coming from Mexico, Japan, Europe and Australia. BrewBilt competes against a number
of companies, most of which are selling mass produced equipment from China made from less costly inferior quality Chinese steel
which often neither food or pharmaceutical grade quality. While this broader market is very competitive, there continues to be
little competition and strong market demand for higher quality, custom designed, hand crafted and integrated systems that BrewBilt
produces. In July of 2016, BrewBilt moved from the small facility in Nevada City, CA to lease an eight thousand (8,000) square
foot manufacturing facility in Grass Valley, CA. This facility was purchased by BrewBilt in January, 2018 and upgraded with substantial
tenant improvements. BrewBilt is prepared to expand again by leasing an additional seventy six hundred (7,600) square feet in
the same facility. 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 cannabis and hemp industries. BrewBilt has also created distribution sales agreements with individuals
and companies to represent BrewBilt in both the domestic and international markets.