DERIVATIVE LIABILITIES

9 Months Ended

Sep. 30, 2023

NOTE 11 – DERIVATIVE LIABILITIES

During the nine months ended September 30, 2023, the Company valued the embedded conversion feature of the convertible notes and warrants. The Company uses the Black-Scholes option pricing model to estimate fair value for those instruments convertible into common shares at inception, at conversion or extinguishment date, and at each reporting date.

The following table represents the Company’s derivative liability activity for the embedded conversion features for the nine months ended September 30, 2023:

	Notes			Warrants			Total
Balance, beginning of period	$	1,088,633		$	41,213		$	1,129,846
Initial recognition of derivative liability		2,386,118			116,101			2,502,219
Derivative settlements		(1,730,597	)		(25,041	)		(1,755,638	)
Loss (gain) on derivative liability valuation		(371,901	)		(131,371	)		(503,272	)
Balance, end of period	$	1,372,253		$	902		$	1,373,155

Convertible Notes

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

	Valuation date
Expected dividends		0%
Expected volatility		318.57% - 358.52%
Expected term		.01 - .52 years
Risk free interest		5.28% - 5.60%

Warrants

We account for common stock purchase warrants as derivative liabilities and debt issuance costs on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance sheet date subsequent to the initial issuance of the warrant.

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

	Valuation date
Expected dividends		0%
Expected volatility		579.66% - 1529.05%
Expected term		1.72 – 4.52 years
Risk free interest		4.70% - 5.03%

BrewBilt Manufacturing Inc. 10-Q